Unfair dismissals and demotions

It is legitimate for an employer to demote an employee, provided that the changes in the terms of employment are introduced in a fair and reasonable way and provided also that the alterations to terms is carried out in conformity with the rights of the employer under the contract of employment.

In this extract from an unfair dismissal case the employer was held to have gone too far when it dismissed an employee who did not accept that the demotion and reduction in remuneration was reasonable and left her place of work in protest.

“s.387(a) — Whether there was a valid reason for the Applicant’s dismissal which is related to her capacity or conduct

[28] An employer bears the persuasive onus of establishing that there was a valid reason for an employee’s dismissal. 29

[29] In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded”, and should not be “capricious, fanciful, spiteful or prejudiced”. 30 Further, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.31

[30] Where the dismissal relates to conduct, the reason for dismissal may be valid because the conduct occurred and justified dismissal. However, the reason may not be valid because the conduct did not occur, or it did occur but did not justify dismissal. 32 The question of whether the alleged conduct took place, and what it involved, is to be determined by the Commission on the basis of the evidence in the proceedings before it.33 The onus of proof in relation to misconduct rests with an employer, and the standard of proof is based upon the balance of probabilities (the more serious an allegation, the higher the burden upon an employer to prove that allegation).34

[31] Where a dismissal relates to capacity (i.e. where the reason is associated or connected with the ability of the employee to do the job), 35 and there is a dispute as to an employee’s requisite capacity, it is for the Commission to resolve that dispute as a matter of fact.36

[32] The Respondent submits that there was a valid (conduct) reason for the Applicant’s dismissal. In this regard, the Respondent submits:

(a) The Applicant walked out of the Respondent’s workplace on 6 January 2022 and “did not provide any details [to the Respondent or its relevant employees] of her being unwell, did not seek permission to leave the workplace, and did not advise [anyone] when she would return [to work]” (Desertion Reason). The Respondent says that the Desertion Reason is a valid reason for the Applicant’s dismissal. The Respondent further submitted that the focus is not upon whether the “reason given” by the Respondent, at the time or after the Applicant’s dismissal occurred, was a valid reason, but whether or not (in all of the circumstances of the case) there existed a valid reason for the Applicant’s dismissal on the evidence before the Commission. 37 In other words, irrespective of what the Respondent (through Mr and/or Ms McDowell) may have previously (including erroneously) expressed as being the reason for the Applicant’s dismissal, the Commission should find (on the basis of the evidence before the Commission) that the Desertion Reason is a ‘valid reason’ for the Applicant’s dismissal.38

(b) The Desertion Reason constituted “serious misconduct, particularly in the context of [the Applicant’s] previous absenteeism and performance issues”. 39

(c) The Applicant’s claims that she needed to remove herself from the workplace on 6 January 2022, because Mr McDowell was yelling or screaming at her are not sustained on the evidence. Relevantly, the Applicant’s justification for leaving the workplace on 6 January 2022 (on the basis that she was being yelled or screamed at) is not a basis upon which the Desertion Reason is to be undermined, or otherwise found to be an invalid reason for the Applicant’s dismissal, because the evidence is that the Applicant was not yelled or screamed at on 6 January 2022. 40

[33] I reject the Respondent’s core contention that the Applicant deserted her employment on 6 January 2022. In doing so, I equally reject that the Desertion Reason was a valid reason for the Applicant’s dismissal. Having regard to all of the relevant facts and circumstances, I make the following findings and conclusions:

(a) The Applicant was unilaterally demoted from the CCM role to the AOE role on 24 December 2021. As part of the demotion, the Applicant’s annual salary was unilaterally reduced from $85,000 to $65,000.

(b) On any view, the Demotion Letter represented a substantial change to the terms and conditions of the Applicant’s employment with the Respondent, being a substantial change that the Applicant neither authorised, nor agreed to (as evidenced by the Applicant’s refusal to sign the Demotion Letter when presented with it by the Respondent’s courier on 24 December 2021).

(c) Based upon the evidence tendered in these proceedings, including the terms of the Employment Contract, there is no foundation to the Respondent’s contention that it had a right, express or implied, to unilaterally demote the Applicant and/or reduce her salary by $20,000 per annum. 41 Whatever be the conduct of the Applicant on 24 December 2021, such conduct in no way entitled the Respondent to unilaterally demote the Applicant, or reduce her annual salary. That said, the evidence of the Applicant is that she slept in on 24 December 2021 as a result of the effect of Endone tablets taken for the back pain that she had been experiencing. This evidence was not challenged by the Respondent in cross-examination. Nor was it submitted by the Respondent that it was in fact “practicable” (in all the circumstances) for the Applicant to have notified it of her absence on 24 December 2021, prior to the start of her normal working time that day (i.e. the Applicant had slept in on 24 December 2021, apparently, at least in part, due to back pain and the effects of the medication (Endone) she had taken for same).42

(d) At no time did the Applicant accept the demotion, or the reduction in her annual salary. More specifically, I reject the Respondent’s contentions that the Applicant, by her actions or conduct, somehow accepted the demotion and/or salary reduction (whether that be by reference to the Applicant returning to work from annual leave on 4 January 2022, sitting or not sitting in a particular chair, starting work at 7.30am as opposed to 8.30am, questioning or not questioning her annual leave cash-out payment, and/or in doing whatever work she was assigned by the Respondent to do at the workplace from 4 January 2022). 43 I accept the Applicant’s evidence that she did not consider herself to be in a position to openly dispute her demotion or salary reduction prior to or post her returning to work on 4 January 2022 (i.e. beyond her actions in verbally disputing same with Ms Hamad over the telephone on 24 December 2021, and in refusing to sign the Demotion Letter for return to the Respondent by its courier on 24 December 2021). I also take into account the Applicant’s evidence that she did not consider herself to have actually been demoted (legally, or practically),44 however, became aware that the Respondent was implementing its unilateral demotion of her when she went to sit down at her desk on 4 January 2022 (and found Ms Landon sitting in her office chair, presumably having been directed to do so by Mr or Ms McDowell).45

(e) The Respondent’s demotion of the Applicant, and its reduction of her salary, were substantial and serious breaches of the Employment Contract, which the Applicant was not obliged to accept. Rather, in my view, the Applicant had every right to insist that the terms of the Employment Contract be maintained (i.e. as in place immediately before the Respondent’s purported demotion and salary reduction on 24 December 2021).

(f) I accept the evidence of the Applicant that she was confused and uncertain about accepting the AEOFCR role, as offered to her on 6 January 2022, and that she harboured a concern (or fear) that in accepting the AEOFCR role, she may prejudice her ability to subsequently challenge the demotion and salary reduction that was unilaterally imposed upon her on 24 December 2021. 46 I equally accept the Applicant’s evidence that requiring her to give a yes or no answer to the AEOFCR role, in the space of only around ten minutes, absent any ability for her to obtain advice about such a decision, gave rise to a level of anxiety and panic on her part, culminating in her being upset, crying, attending upon the toilet to be physically ill, and thereafter advising Ms Landon that she did not consider herself to be in a state to remain at the workplace, and was leaving work immediately to go to the doctor.47

(g) I reject that the Applicant leaving work on 6 January 2022, after advising Ms Landon that she was going to the doctor, 48 gave rise to a valid reason for dismissal because the Applicant “did not provide any details [to the Respondent or its relevant employees] of her being unwell, did not seek permission to leave the workplace, and did not advise [anyone] when she would return [to work]”. In my view, in the facts and circumstances of this case, these matters do not provide a sound, defensible or well-founded reason for the Applicant’s dismissal. Rather, in all of the circumstances, such matters are more appropriately classified as attempting to ground a capricious and spiteful reason for the Applicant’s dismissal.49

(h) Whilst the evidence supports the Respondent’s contention that Mr McDowell did not scream, yell or raise his voice in his interactions with the Applicant on 6 January 2022, the matter is of little moment. It in no way alters the position that the Applicant had been placed in on 6 January 2022, whereby she had to decide (within the space of around ten minutes) whether or not she wished to accept the AEOFCR role (having come to realisation that the Respondent was indeed carrying through on its promise to unilaterally demote and reduce her salary). Whether or not there was yelling and screaming, the undisputed evidence is that the Applicant was upset and crying as a result of the predicament she had been placed in, and decided that it would be in her best interest to remove herself from the workplace and attend upon her doctor. 50

[34] I find that there was no valid reason to dismiss the Applicant from her employment. This leans toward a finding that the Applicant’s dismissal was harsh, unjust and unreasonable.”

Raffie v Allied Express Transport (2022) FWC 2398 delivered 9 September 2022 per Boyce DP