What is a dismissal for fair work laws?

In this extract from an unfair dismissal case dealt with recently in the Fair Work Commission many of the legal issues which arise from the issue whether an employee was dismissed at the initiative f the employer are in play.

“APPROACH TO APPLYING LEGISLATIVE PROVISIONS

[26] In relation to whether an employee has been dismissed, s. 386(1) of the FW Act encompasses both termination of employment on the employer’s initiative and a resignation forced by the conduct of the employer. In the present case, the Applicant did not resign but instead, contends that he was dismissed by virtue of correspondence sent to him on 12 May 2021 by the Respondent’s lawyers. The Explanatory Memorandum to the Fair Work Bill 2008 states as follows in relation to s. 386:

“Clause 386 – Meaning of dismissed

  1. This clause sets out the circumstances in which a person is taken to be dismissed. A person is dismissed if the person’s employment with his or her employer was terminated on the employer’s initiative. This is intended to capture case law relating to the meaning of ‘termination at the initiative of the employer’ (see, e.g., Mohazab v Dick Smith Electronics Pty Ltd (1995) 62 IR 200).
  2. Paragraph 386(1)(b) provides that a person has been dismissed if they resigned from their employment but were forced to do so because of conduct, or a course of conduct, engaged in by their employer. Conduct includes both an act and a failure to act (see the definition in clause 12).
  3. Paragraph 386(1)(b) is intended to reflect the common law concept of constructive dismissal, and allow for a finding that an employee was dismissed in the following situations:
  • where the employee is effectively instructed to resign by the employer in the face of a threatened or impending dismissal; or
  • where the employee quits their job in response to conduct by the employer which gives them no reasonable choice but to resign.”

[27] In Mohazab v Dick Smith Electronics Pty Ltd the Industrial Relations Court of Australia was dealing with a case where an employee resigned his employment after being directed to do so or the police would be called. The Court did not consider the issues in that case solely within the paradigm commonly described as “constructive dismissal”. Rather the Court considered the meaning to be given to the term “termination at the initiative of the employer” and held that:

“…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 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.”30

[28] The Court went on to cite with approval the judgement of Wilcox CJ in APESMA v David Graphics Pty Ltd where his Honour said:

“I agree with the proposition that termination may involve more than one action. But I think it necessary to ask oneself what was the critical action or what were the critical actions, that constituted a termination of the employment?”32

[29] In relation to Mohazeb a Full Bench of the Australian Industrial Relations Commission said in O’Meara v Stanley Works Pty Ltd:

“[23] 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… 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.”

[30] Section 386(1) covers a wide range of circumstances whereby the employment relationship is not left voluntarily by the employee. These include but are not limited to repudiation of the contract of employment by the employer, which is accepted by the employee and constructive dismissal. It is well established that where there is conduct by the employer that amounts to repudiation of the employment contract, which is accepted by the employee, it is the conduct of the employer that brings the employment relationship to an end.

[31] In relation to consideration of whether a dismissal was unfair, the matters in s. 387(a) – (e) relate to dismissals on the grounds of capacity or conduct. The matters in those sections go to both substantive and procedural fairness and it is necessary to weigh each of those matters in any given case, and decide whether on balance, a dismissal is harsh, unjust or unreasonable. A dismissal may be:

Harsh – because of its consequences for the personal and economic situation of the employee, or because it is disproportionate to the gravity of the misconduct;

Unjust – because the employee was not guilty of the misconduct on which the employer acted; and/or

Unreasonable – because it was decided on inferences that could not reasonably have been drawn from the material before the employer.1

[32] In the present case, the Applicant’s dismissal was not based on his capacity or conduct but rather the Respondent contends that it was due to shortage of work. The Respondent – which had access to legal representation when drafting its Response to the application and its submissions for the hearing – does not press an objection on the grounds of genuine redundancy……………………………………………………..CONSIDERATION

Whether the Applicant was dismissed

[127] On balance, I am satisfied that the Applicant’s employment was terminated at the Respondent’s initiative. Notwithstanding that the Applicant was a casual employee, I accept his uncontested evidence that in the 12-month period prior to the termination of his employment, the Applicant worked over 42 hours per week, Monday to Friday from 7.00 am to 4.00 pm. I also accept that the Applicant was expected to be at work each day, and that he effectively had a standing instruction in this regard. From 28 January 2021, the Applicant was not provided with any work. I accept that the Respondent had a downturn in its business, but I do not accept that there was no work that the Applicant could have performed.

[128] The subcontractors hired by the Respondent may have performed some work that the Applicant was not qualified to do, but on balance, I am satisfied that there was work that the subcontractors did that could equally have been undertaken by the Applicant. The Applicant’s evidence in relation to this point was confirmed by Mr Farrell who stated that on the date that the Applicant photographed Mr Pronk, Mr Pronk was doing work that the Applicant would normally have done and that there was other such work available in the first part of 2021. Other than making general assertions about the downturn in the Respondent’s business, no business records were produced by the Respondent’s witnesses to verify the extent of the claimed downturn.

[129] It is also the case that the timing of the Respondent advising the Applicant that there was no work for him to perform, coincided with the Applicant making a claim in relation to unpaid wages. The Applicant has not made a general protections application in relation to his dismissal, and I make no finding that the Applicant was dismissed because he made the wages claim. However, I am of the view that the response to the claim, particularly the correspondence from the Respondent’s legal representative, brought about the termination of the Applicant’s employment and the claim and the ending of the Applicant’s employment are linked.

[130] While the way the Applicant advanced his wages claim was aggressive and inappropriate, the claim had some basis and the Applicant had been underpaid. I accept that the Applicant was justifiably aggrieved at the fact he had been underpaid. The Applicant’s sense of grievance would have undoubtedly been exacerbated by the fact that when he made a claim for unpaid wages, he was informed at or around that time, that there was no work for him in circumstances where he had worked on a full time basis for in excess of 12 months. Further, the Applicant was self-represented and did not have recourse to legal assistance in formulating his claim.

[131] Against the background of his wages claim and the fact that he had been offered no work since 31 January 2021 and in circumstances where immediately prior to that time he had worked 42 hours per week on a regular basis, the Applicant was sent contradictory and ambiguous correspondence by the Respondent and its legal representatives, which can be summarised as follows:

  • 19 February 2021 – from the Respondent advising the Applicant that his request for conversion of his casual employment to full time employment was not agreed and that he would be offered casual joinery work if and when such work became available.
  • 19 February 2021 – from the Respondent’s legal representative advising the Applicant that it is the Respondent’s view that his role was covered by the Level 2 classification under the Award and offering him an amount of $9,900.35 in settlement of his wages claim on the basis that he resign his employment and accept the amount in full and final settlement of any claims and subject to a deed of settlement, with such offer being open until 25 February 2021.
  • 2 March 2021 – from the Respondent advising that as previously advised the Respondent did not have sufficient work to support a conversion of the Applicant’s employment to full time and advising of an intention to restructure by subcontracting joinery work to other companies so that the Applicant’s job would be “removed from the organisation and …not replaced” and seeking the Applicant’s feedback in respect to the proposed “redundancy”.
  • 2 March 2021 – from the Respondent’s legal representative advising that the Respondent accepted that it owed him $9,900.35 and that the amount had been paid to him and taxed according to the Australian Taxation Office’s Schedule 5 – Tax Table for Back Payments, Commissions, Bonuses and Similar Payments.
  • 19 March 2021 – from the Respondent’s legal representative advising that the Applicant was still engaged as a casual employee and seeking clarification as to whether the Applicant was agreeable to returning to work as a level 3 casual employee “when/if” work was available.
  • 12 May 2021 – from the Respondent’s legal representative confirming that the Applicant was not prepared to be employed by the Respondent in a Level 3 position under the Award and would only be employed in a Level 5 position and that the Respondent would only engage a Level 5 employee who is a qualified cabinetmaker and that the applicant was not qualified to perform this Level 5 position.

[132] There were no concrete offers of work made to the Applicant. It is significant that in all the correspondence sent to the Applicant by the Respondent’s legal representative, there is no reference to the rate that the Applicant will be paid if he accepts the level 3 classification if/when he is offered work. There is also no guarantee in any of the correspondence that the Applicant will maintain his existing pay rate. It was not disputed that the level 3 casual rate under the Award at the time the Applicant’s employment ended, was $27.58 and the rate the Applicant had been paid at the time he last performed work for the Respondent was $28.00 per hour. Although this difference in rates of $0.42 per hour may be viewed as insignificant, to the Applicant, in the context of his dealings with the Respondent, his rate and classification was a significant issue. The Applicant said in his evidence that he would have accepted any work that he was offered by the Respondent but would not have accepted a lower rate of pay than the rate he was already receiving. In my view, the ambiguity of the correspondence makes it reasonable for the Applicant to have believed that he would be paid a lower rate of pay if he accepted the level 3 classification. Further, even if the Applicant had accepted the level 3 classification, there was no guarantee that he would be provided with work.

[133] After receiving the two pieces of correspondence on 19 February 2021, the Applicant can have been in little doubt that the Respondent was seeking to exit him from its business. That view can only have been cemented after the further correspondence and the significant gap in correspondence between 19 March and 12 May 2021. I do not accept that the Applicant was under any obligation to contact the Respondent to seek work. The correspondence he received did not request that he make contact for this purpose and offered him only the possibility of work upon confirmation that he would accept a lower wage rate.

[134] If the Applicant ended his employment by abandoning his employment in the face of the Respondent’s conduct, then I am also satisfied that he did so because the Respondent engaged in a course of conduct which had the probable result of bringing the Applicant’s employment to an end. Accordingly, I am satisfied and find that the Applicant was dismissed within the meaning in s. 386(1). I am also of the view that the dismissal took effect at an earlier date than the 12 May 2021 when the final letter was sent by the Respondent to the Applicant. The Applicant was seeking other employment before that date and obtained other employment at or around 12 May. The fact that the Applicant was seeking other employment earlier than 12 May indicates that his employment ended at an earlier date.

[135] As I have previously stated, for the application to have been made within the time required in s. 394(2) of the Act, the Applicant was required to have been dismissed on or after 7 May 2021 and I am satisfied that the dismissal occurred at this point.”

White v Trend Constructions NQ T/A Trend Constructions NQ (2022) FWC 752 delivered 11 April 2022 per Asbury DP