Unlawful termination of employment Part 2

Yesterday I identified the provisions of the Fair Work Act which deal with unlawful termination of employment together with the constitutional basis of the legislation. I also identified how rarely the jurisdiction is invoked and cited a case heard by a senior member of the Commission about it. The decision also included an analysis of whether the so-called doctrine of constructive dismissal apples in that jurisdiction. Here is the answer which is yes.

“That said, and as I will come to in due course, the question of whether the application is beyond jurisdiction is, in my opinion, a relatively straightforward question, because the unlawful termination of employment provisions cannot apply if the applicant resigned voluntarily. This would mean that there could be no termination at the ‘initiative of the employer’.

Before coming to this central issue, it is necessary to comment on a number of the submissions of the parties. Firstly, Mr Zeng submitted that the notion of ‘constructive dismissal’, often encountered in unfair dismissal cases, cannot be imported into the unlawful termination of employment provisions of the Act. I disagree for the following reasons:

(a) A finding of ‘constructive dismissal’ invariably requires a conclusion as to whether the termination of employment was at the ‘initiative of the employer’. So much is evident from the large body of authority which was relied on by both parties in their submissions. These principles are well known and firmly established in industrial jurisprudence. There is no reason to conclude that the words used in the Object of Division 2 of Part 6-4 of the Act ‘to give effect, or further effect, to:

(c) the ILO Convention (No. 158) concerning Termination of Employment at the Initiative of the Employer, done at Geneva on 22 June 1982 ([1994] ATS 4)’

should be given a different meaning to that which has been authoritatively determined by the Courts and the Commission over many years.

(b) The meaning of ‘dismissed’ in Part 3-2 – Unfair Dismissal of the Act are relevant to the words in s 773(a). The only relevant definition of that term is found at s 386 which reads:

‘Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.’

There are no words in Part 6-4 which expressly or impliedly suggest the words ‘termination of employment’ mean something different, or should be read in some other way, than how they are applied in Part 3-2. It is one of the principles of statutory construction that the same words or phrases appearing in different sections of the same Act, are to be afforded the same meaning, unless there is an express intention to the contrary. I propose to adopt that principle to the words in s 773.

(c) I have some difficulty reconciling Mr Zeng’s submission that the notion of constructive dismissal cannot be imported into Part 6-4, when the bulk of his submissions addressed exactly that issue by reference to the well-known authorities and with his conclusion that the termination of the applicant’s employment was not brought about at the ‘initiative of the employer’.

Secondly, Ms Fisher focused her submissions on the alleged unfair process undertaken by the respondent in coming to its decision to terminate the applicant’s employment for unsatisfactory performance. While it is understandable why these submissions would be made, I make three observations on these submissions:

(a) The process leading to an employee’s termination of employment (including by resignation) is, in essence, a submission on the merits of the case. It is irrelevant to the jurisdictional objection.

(b) The option to resign under s 68(2)(a) of the GSE Act, does not import any consideration of the veracity and fairness or otherwise, of the decision taken by the employer to terminate the employee’s employment. The right to do so is a statutory right which does not require justification, or consideration of whether the employee disputes the allegations against her, or challenges the procedures taken and the dismissal decision.

(c) Accepting there is relevance of the unfair dismissal provisions to the unlawful termination provisions of the Act, a recent Full Bench decision of the Commission concluded that the process taken by the employer (to dismiss), is irrelevant to the Commission’s task for itself to determine whether a particular dismissal is unfair. In Illawarra Coal Holdings Pty Ltd T/A South32 v Matthew Gosek [2018] FWCFB 749, the Full Bench, by majority, found at [92]:

‘We agree that any flaws in this internal decision making process was an irrelevant consideration in determining if there was a valid reason for the dismissal. The role of the Commission, in determining if there is valid reason for dismissal based on the conduct of the employee, is to determine if the conduct occurred based on the evidence before the Commission and not based on the evidence before the decision maker. If the employer reached that conclusion based on a flawed investigation then that is irrelevant. The Commission is not being asked to determine if the employer had reasonable grounds for believing the conduct occurred. It is difficult to see how any flaws in the investigation could be a relevant factor. Here the Commissioner had regard to the internal decision making process under s.387(h). Even if we were to accept that there were flaws in the investigation, it is for the Commission to determine if the conduct occurred; if the employee was afforded procedural fairness as provided for in s.387(b), (c) and (d); and whether there were mitigating factors which would make the dismissal harsh. A dismissal may be unfair even if the employer’s internal decision making process is fair and a fair internal dismissal process will not by itself turn an unfair dismissal into a fair one.’

Thirdly, I do not accept Ms Fisher’s submission that the termination of employment preceded the applicant’s exercise of her option to resign. The 29 October 2018 letter to the applicant ([9] above), makes abundantly plain that the termination of employment was to take effect on Tuesday 30 October 2018. Obviously, she remained an employee until that time or if in the alternative she resigned by 4pm on 30 October 2018. Rather than wait until the deadline the next day, the applicant resigned at 4.12pm on 29 October 2018, effectively ending the employment relationship before her termination at the initiative of the employer could take effect and while she was still employed.

It is trite to observe that if the applicant was not dismissed at the employer’s initiative, or had not been forced to resign by the conduct of the employer on 29 October 2018, the Commission has no jurisdiction to determine her unlawful termination application.

According to the Macquarie Dictionary ‘initiative’ is defined as:

‘1. An introductory act or step; leading action.’

The oft quoted authority as to the meaning of ‘termination at the initiative of the employer’ is that found in Mohazab where the Full Court of the Industrial Relations Court of Australia said:

‘These definitions reflect the ordinary meaning of the word ‘initiative’. Viewed as a whole, the Convention is plainly intended to protect workers from termination by the employer unless there is a valid reason for termination. It addresses the termination of the employment relationship by the employer. It accords with the purpose of the Convention to treat the expression ‘termination at the initiative of the employer’ as a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship. We proceed on the basis that the termination of the employment relationship is what is comprehended by the expression ‘termination of employment’: Siagian v Sanel [1994] IRCA 2; (1994) 1 IRCR 1 at 19; 54 IR 185 at 201. In many, if not most, situations the act of the employer that terminates the employment relationship is not only the act that puts in train the process leading to its termination but is, in substance, the entire process. An example would be a situation where the employer decided to dismiss an employee and did so orally or in writing with immediate effect. Other situations may be more complex as exemplified by the circumstances considered by Moore J in Grout v Gunnedah Shire Council (1994) 1 IRCR 143; 57 IR 243 where an employee had given written notice purporting to terminate the employment relationship. The notice was not reasonable but was accepted by the employer which later refused to allow the employee to withdraw the notice. A question arose as to whether that was a termination of the employment at the initiative of the employer and his Honour held it was. His Honour said at 160-161; 259:

‘I have already said that Div 3 concerns termination at the initiative of the employer. The respondent submits that “initiate” means “to begin, commence, enter upon; to introduce, set going, or initiate”: see Shorter Oxford English Dictionary. In this matter, it is submitted, it was the applicant and not the respondent that initiated the termination by writing the letter of 18 May. This, in my opinion, gives the expression “termination” in the Act, read in conjunction with Art 3 of the Convention which speaks of “termination … at the initiative of the employer”, a narrow meaning that was not intended. A principal purpose, if not the sole purpose, of Div 3 is to provide an employee with a right to seek a remedy in circumstances where the employee did not voluntarily leave the employment. An employee may do some act which is the first in a chain of events that leads to termination. An example would be an employee who engaged in misconduct at work which ultimately led to the employer dismissing the employee. However, that situation and the present are not situations where the termination was at the initiative of the employee. In both instances the step or steps that effectively terminated the employment or purported to do so were taken by the employer.’

In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship. This issue was addressed by Wilcox CJ in APESMA v David Graphics Pty Ltd (unreported, Industrial Relations Court of Australia, 12 July 1995, Wilcox CJ). His Honour, at p 3, referred to the situation of an employee who resigned because ‘he felt he had no other option’. His Honour described those circumstances as:

‘… a termination of employment at the instance [of] the employer rather than of the employee.’

And at p 5:

‘I agree with the proposition that termination may involve more than one action. But I think it is necessary to ask oneself what was the critical action, or what were the critical actions, that constituted a termination of the employment.’’

In O’Meara, a Full Bench of the AIRC said:

‘In our view the full statement of reasons in Mohazab which we have set out together with the further explanation by Moore J in Rheinberger and the decisions of Full Benches of this Commission in Pawel and ABB Engineering require that there to be some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment”. Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.’

Thus, it can be seen that the conclusion of the Full Bench in O’Meara is:

  • there must be action by the employer that either intends to bring the relationship to an end or has that probable result; and
  • that in determining whether a termination was at the initiative of the employer, an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the employee had no effective or real choice, but to resign.

A Full Bench of the AIRC in Stubbs v Austar Entertainment Pty Ltd Print Q0008 said:

‘We do not doubt that Mr Stubbs believed he had good reason to resign. However, the fact that an employee has good reason to resign does not of itself establish that the employment is not voluntarily left by the employee. To constitute termination at the initiative of the employer the termination must be the direct or consequential result of ‘some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect.’

A Full Bench of the AIRC in ABB Engineering said:

‘Often it will only be a narrow line that distinguishes conduct that leaves an employee no real choice but to resign employment, from conduct that cannot be held to cause a resultant resignation to be a termination at the initiative of the employer. But narrow though it be, it is important that that line be closely drawn and rigorously observed. Otherwise, the remedy against unfair termination of employment at the initiative of the employer may be too readily invoked in circumstances where it is the discretion of a resigning employee, rather than that of the employer, that gives rise to the termination. The remedies provided in the Act are directed to the provision of remedies against unlawful termination of employment. Where it is the immediate action of the employee that causes the employment relationship to cease, it is necessary to ensure that the employer’s conduct, said to have been the principal contributing factor in the resultant termination of employment, is weighed objectively. The employer’s conduct may be shown to be a sufficiently operative factor in the resignation for it to be tantamount to a reason for dismissal. In such circumstances, a resignation may fairly readily be conceived to be a termination at the initiative of the employer. The validity of any associated reason for the termination by resignation is tested. Where the conduct of the employer is ambiguous, and the bearing it has on the decision to resign is based largely on the perceptions and subjective response of the employee made unilaterally, considerable caution should be exercised in treating the resignation as other than voluntary.’

The Full Bench went on:

‘… in Minato v Palmer Corporation Ltd where Murphy JR referred to a number of cases dealing with the situation where “special circumstances” arise. He referred in particular to a UK decision where Wood J stated:

‘If words of resignation are unambiguous then prima facie an employer is entitled to treat them as such, but in the field of employment personalities constitute an important consideration. Words may be spoken or actions expressed in temper or in the heat of the moment or under extreme pressure (“being jostled into a decision”) and indeed the intellectual make-up of an employee may be relevant …These we refer to as “special circumstances”. Where “special circumstances” arise it may be unreasonable for an employer to assume a resignation and to accept it forthwith. A reasonable period of time should be allowed to lapse and if circumstances arise during that period which put the employer on notice that further inquiry is desirable to see whether the resignation was really intended and can properly be assumed, then such inquiry is ignored at the employers risk. He runs the risk that ultimately evidence may be forthcoming which indicates that in the “special circumstances” the intention to resign was not the correct interpretation when the facts are judged objective.’’

In PawelDowsett J said:

‘When an employee resigns, he or she has usually reached a decision, taking into account many factors. Some may be entirely personal and unrelated to any “misconduct” on the part of the employer. An employee may resign because he or she has been passed over for promotion, has not received a pay increase, has a more attractive job offer or, as in the present case, finds aspects of his or her work uncongenial or undesirable. There can be any number of reasons for an employee to feel dissatisfaction, and there is always the possibility that it will lead to resignation. That dissatisfaction will often have been arguably caused (in part or in whole) by a decision or decisions of the employer. If “initiative” implies only causation, it will usually be arguable that the employer has “initiated” the termination. Although it may be good managerial practice to offer job satisfaction, it cannot be guaranteed. Many dissatisfied employees resign. The process prescribed in Division 3, which depends on termination, is too cumbersome to have been intended to resolve issues of that kind. I do not accept that any employee whose decision to resign was, to some extent, motivated by action or inaction on the part of the employer, may initiate proceedings pursuant to subs 170CE(1). Mere “causation” or “motivation” will not satisfy the requirement that the termination be at the initiative of the employer.’

Did the applicant resign voluntarily?

In my view, there is an air of unreality about the applicant’s submissions in this case. Firstly, it is not true that the applicant had no option, other than resignation. The option which would have obviously avoided this jurisdictional objection, would be to have been dismissed. She would then have had the option to dispute the allegations, challenge the process and seek remedies, including reinstatement, under either this section of the Act, the General Protections provisions, or in terms of her possible contractual rights in the Courts. The decision to resign was hers, and hers alone.

Secondly, I do not accept the applicant’s email of 29 October 2018 was unclear or ambiguous, and presumably, somehow not a true resignation. This submission ignores the reality of the correspondence from the respondent and any reasonable interpretation of her response email. Her response was cordial, almost friendly. There is not a whiff of force, coercion or duress. She did not even ponder her decision for another 24 hours. It appears from her statement that she was, in fact, balancing the benefits of resignation. Objectively, the resignation email was a considered and deliberate exercise of her right to resign, rather than be dismissed. The focus on the word ‘reflected’ as not meaning a true resignation is, with respect, a very long bow to draw. To attempt to focus on the word ‘reflected’ as somehow meaning the applicant was ‘reflecting’ on her decision, or that it implied some form of coercion, is with respect, an entirely misplaced connotation. On any view, the plain intention was to ‘reflect’ or ‘record’ her termination of employment as a resignation in the respondent’s employment files as the accurate characterisation of the termination of employment – an entirely unremarkable administrative consequence of her resignation.

Thirdly, I do not accept the submission that s 68 of the GSE Act was not complied with because it refers to ‘performance’, rather than ‘conduct.’ In my opinion, and in the present context of the GSE Act, the concepts of unsatisfactory performance and unsatisfactory conduct will often overlap. It may be said to be a ‘distinction without a difference’. Often, a person’s conduct will also be illustrative of unsatisfactory performance. Although I make no findings about the merits, it seems reasonable to assume that some of the allegations against the applicant related to her capacity to properly interact with other employees. When viewed in this way, the allegations can be alternatively described as unsatisfactory performance in her role as a Senior Manager.

Fourthly, the applicant made a curious submission, in that by recording her departure as a resignation and not a dismissal in the respondent’s records, this represented an attempt to force or coerce her to resign. This submission is without substance. There is no evidence that there was any discussion in the meeting on 16 October 2018 or in the exchange of correspondence, that the benefits or detriments of resignation were raised; let alone discussed. There is certainly no evidence that anyone mentioned amending the respondent’s records from dismissal to resignation. If nothing was said about it at the time, it is not possible to claim it was a factor in her being subsequently forced to resign. The truth is Ms Graham was doing no more than fulfilling her statutory duty to advise the applicant of the option of resignation under the GSE Act. She was ambivalent about whether the applicant took the option or not.

In coming to the heart of the matter, it must be said, contrary to the applicant’s submission, that resignation is self-evidently a preferable option than dismissal based on unsatisfactory performance. The benefits are obvious; a person will carry their employment record throughout their working life. Resigning from a position during this journey means the ignominy of dismissal, even if the employee strongly denies the reasons for it, should not impact on the likelihood of obtaining alternative employment. When seeking future employment and the employee is asked why they left employment, they must be truthful about the reason. It goes without saying that such non-disclosure or falsehood could result in adverse consequences.

It should also be observed that in this case, public sector employees in New South Wales have a statutorily enshrined right to resign, rather than face dismissal. This is not an automatic right available to a private sector employee, being an alternative to dismissal for cause. This is why, in many cases of unfair dismissal which come before the Commission, and where a settlement is negotiated, there is often a request from an applicant (often agreed to) to convert a dismissal to a resignation, even when the dismissed employee has already obtained alternative employment.

Moreover, it is also apparent that at the time, the applicant herself was weighing up the benefits of resigning when she said in her statement:

‘I was hopeful that if I chose the “resignation” option, HR would elect to mark me suitable for re-hire so as to improve my chance of re-employment in the public service.’

Lastly, it is unclear whether there is a differential superannuation treatment in the context of dismissal or resignation. The applicant did not believe this to be the case. In any event, even if there are no superannuation implications based on the reason for dismissal, the important consideration is the one I have just set out about resignation replacing dismissal on a person’s resume.

For all these reasons, I am satisfied that in the exercise of her right to resign under s 68(2) of the GSE Act, the applicant did so willingly and voluntarily, without coercion or pressure. Her termination of employment was not at the ‘initiative of the employer’ and she was not dismissed by Transport for New South Wales (Sydney Trains). It follows that the Commission has no jurisdiction to determine the matter.

The application must be dismissed pursuant to s 587(1)(c) of the Act, as it has no reasonable prospects of success. I order accordingly.”

Hudson v Transport for NSW (2019) FWC 3906 delivered 12 June 2019 per Sams DP