This decision of the Fair Work Commission examines the circumstances in which a person who is an officer of a company (in this case a director) can also be regarded as an employee.
“Was Ms Sawyer an employee?
[34] Grounds 1 to 5 of the amended notice of appeal allege that the Deputy President erred in various ways in determining that Ms Sawyer was not an employee of Wards Accounting. In short, the grounds contend that the Deputy President erred in applying the test in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; (2022) 275 CLR 165 and Jamsek v ZG Operations Pty Ltd [2022] HCA 2; (2022) 275 CLR 254 to the question of whether a director and shareholder was also an employee of a company, in assuming that being an employee is incompatible with being a director and shareholder at the same time, in finding that the Securityholders Deed had the implicit effect of terminating Ms Sawyer’s earlier employment and in failing to consider relevant post-contractual conduct. The consequence of the grounds is said to be that, by erring in the proper approach to be adopted, the Deputy President reached the wrong conclusion and that the correct conclusion is that Ms Sawyer was an employee.
[35] The method of ascertaining the ordinary meaning of the terms “employee” and “employer” for the purposes of the Act has now been adjusted by amendment.12 The amendments were made by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) and commenced on 26 August 2024. However, the Act as it existed prior to those amendments applies to an application made, or proceedings on foot, as at the commencement of the amendments as well as an application for review of, or an appeal relating to, such an application or proceedings.13 Ms Sawyer’s application was made on 21 August 2024. As a result, the law as it was prior to the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) is required to be applied to determine whether Ms Sawyer was an employee of Wards Accounting.
[36] Ms Sawyer was, after July 2010, a director and shareholder of Wards Accounting. The question is whether she was also an employee. It is clear that a person who is a director and shareholder of a company can also be an employee of the company, even if the person is the sole director and shareholder.14 In Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2014) 217 CLR 424, for example, Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ explained:15
During argument, the submissions of Andar evidenced a reluctance to accept that an individual may act both as a director of a company and that company’s employee without unduly affecting the company’s legal capacity. However, in Peate v Federal Commissioner of Taxation, Windeyer J remarked:
“It is not in legal theory impossible or incompatible for a person to be both governing director in sole control of a company and servant of that company or its agent to contract on its behalf, ‘always assuming’, said Lord Morris, ‘that the company was not a sham’. If a company is duly incorporated and registered under the Act and the proper records are kept in due form and the prescribed returns are made, it continues to exist as a legal entity.”
[37] Ascertaining whether a person who is a director and shareholder of a company is also an employee requires the application of broadly the same approach as is to be applied when determining whether an employment relationship has been created in any other context. It is necessary to first determine whether, expressly or impliedly, a separate agreement was made for the person to perform work for the company distinct from their role as a director and shareholder. That is, did the person simply perform work as a director or shareholder? If a separate agreement for the performance of work is found to exist, it will be necessary to consider whether the relationship created by that agreement is one of employment or not.
[38] The assessment required by the second step will be informed by the approach of the majority of the High Court in Personnel Contracting and Jamsek. However, it is important to bear in mind that both those decisions, and most of the decisions which have subsequently explained the approach required by Personnel Contracting and Jamsek, were concerned with whether a person was engaged as an employee or independent contractor. Whilst Personnel Contracting and Jamsek remain significant in the present context, particularly the emphasis on characterising the relationship by reference to the legal rights and obligations of the parties, some modification to the significance of certain factors may be required when examining whether a
[39] In particular, whether a person is engaged as an employee or an independent contractor is a binary question.16 A person cannot be engaged as both as an employee and an independent contractor in relation to performing the same work under a contract. In contrast, and as we have observed, a person can be both a director and shareholder and an employee of a company at the same time. One person may function in dual capacities.17 When considering the factors relevant to whether a work relationship can be characterised as one of employment, it will be necessary to identify the capacity in which the person is acting and recognise that a person may have the role of a director as well as an employee.
[40] Furthermore, the significance to be attached to some factors ordinarily used to distinguish an employee from an independent contractor may vary when considering whether a person is both a director/shareholder and an employee. Control over the manner in which work is performed, or at least a right of control, remains an important consideration in many cases in which it is necessary to identify a relationship of employment. The significance of control has been emphasised in the context of distinguishing an employee from an independent contractor. In Personnel Contracting, Kiefel CJ, Keane and Edelman JJ explained:18
Like the “own business/employer’s business” dichotomy, the existence of a right of control by a putative employer over the activities of the putative employee serves to sensitise one to the subservient and dependent nature of the work of the employee, so as to assist in an assessment of whether a relationship is properly to be regarded as a contract of service rather than a contract for services.
[41] The weight to be attributed to “control” may differ when the question arises in a different context.19 In a case such as the present, consideration of the element of “control” must account for the circumstance that the person is a director and shareholder of the putative employer. It will be necessary to distinguish between the control capable of being exercised by the person as a director or controlling shareholder and the control capable of being exercised over the person as an employee. That the person may exercise control over the company and its operations in the capacity as a director does not preclude the person also being subject to the control and direction of the company as an employee. It must also be recognised that, even if the person is plainly also employed by the company, it may be less likely that evidence of actual control of the employee will exist where the person is a director and shareholder without that being inconsistent with the existence of a relationship of employment.
[42] A number of decisions are instructive as to the correct approach. Secretary of State for Business, Enterprise and Regulatory Reform v Neufeld [2009] EWCA Civ 280; [2009] ICR 1183, for example, concerned whether a director who was also a controlling shareholder of a company was employed by the company. The court observed that whether or not such a shareholder/director is an employee of the company is a question of fact and that, in such a case, there may, in theory, be two such issues: whether the putative contract is a genuine contract or a sham and whether, assuming it is a genuine contract, it amounts to a contract of employment.20 The court observed:21
In deciding whether a valid contract of employment was in existence, consideration will have to be given to the requisite conditions for the creation of such a contract and the court or tribunal will want to be satisfied that the contract meets them. In Lee’s case the position was ostensibly clear on the documents, with the only contentious issue being in relation to the control condition of a contract of employment. In some cases there will be a formal service agreement. Failing
that, there may be a minute of a board meeting or a memorandum dealing with the matter. But in many cases involving small companies, with their control being in the hands of perhaps just one or two director/shareholders, the handling of such matters may have been dealt with informally and it may be a difficult question as to whether or not the correct inference from the facts is that the putative employee was, as claimed, truly an employee. In particular, a director of a company is the holder of an office and will not, merely by virtue of such office, be an employee: the putative employee will have to prove more than his appointment as a director. It will be relevant to consider how he has been paid. Has he been paid a salary, which points towards employment? Or merely by way of director’s fees, which points away from it? In considering what the putative employee was actually doing, it will also be relevant to consider whether he was acting merely in his capacity as a director of the company; or whether he was acting as an employee.
[43] Similarly, in ACN 079 638 501 Pty Ltd v Pattison [2012] VSC 445, it was necessary to consider whether an accountant was an employee of a consulting company of which he was the sole director and shareholder. Ferguson J concluded:22
I have formed the view that Mr Pattison was an employee of the Company in addition to his role as the sole director. Whilst it might be said that Mr Pattison controlled the Company rather than it controlling him, that is only one factor to be taken into account in determining whether the relationship was one of employee/employer. In my opinion, although still relevant, the control factor is of less significance here than other matters to be taken into account because the Company is a sole director company. In that sense, the question of who is controlling who is of little assistance in determining Mr Pattison’s status as an employee. There are a number of other facts that lead to the conclusion that he was an employee. Mr Pattison established and oversaw the systems in operation in the Company, including the issue of payslips to him as an employee and the time recording system. The Company’s books recorded him as an employee. In essence he performed tasks beyond those that would be performed if he were only a director. The work that he undertook as an administrator, liquidator and trustee in bankruptcy falls into the category of work beyond that of a director. That work was recorded as work of the Company. There was no separate work that Mr Pattison performed on the various administrations that was recorded separately or for which a separate charge was made by him. The full amount of the fees charged (including for Mr Pattison’s time) was paid to the Company either through the endorsement of the cheques by Mr Pattison or by electronic transfer. Mr Pattison did not seek to deduct any amount or receive payment of any part of the fees before the payment was made to the Company. Rather, until at least January 2007, Mr Pattison was entitled to fortnightly wages of a fixed amount plus superannuation less tax. Those wages were not linked to the work that he performed on any particular administration. Even if Mr Pattison’s evidence is accepted that after January 2007 he was paid amounts in lieu of wages, nevertheless in substance he remained working as an employee. He continued to record the work that he performed on the various administrations in the Company’s records; he made no separate charge for that work and he received from the Company amounts for that work that replicated wages rather than payment of the hourly fees charged for his time working on the administrations.
[44] Ferguson J referred to the judgment of Ipp J (with whom Pidgeon and Parker JJ agreed) in Southern Group Ltd v Smith (1997) 37 ATR 107 where his Honour said in relation to a managing director:23
There may be particular cases where a managing director may not be regarded as an employee. But that is not the case where the managing director performs managerial functions different and in addition to the functions ordinarily performed by a director … .
In the present case, the [director] was not merely required to perform functions as a director. He was also required to manage the [company] on a day-to-day basis and in so doing was under the control of … the board. He was entitled to significant remuneration otherwise than in the form of director’s fees … . In my opinion, his appointment as managing director in these circumstances necessarily involved him being an employee of the appellant.
[45] These authorities make clear that, in assessing whether a director is also employed by a company, it will commonly be necessary to examine whether the person is performing work which goes outside the usual duties and responsibilities of a director, the nature of the remuneration received by the director and the other arrangements under which the work is performed. Control, whilst relevant, may be of less significance than it is when distinguishing between an employee and an independent contractor.
[46] Having considered the evidence and the factual findings made by the Deputy President, we have concluded that Ms Sawyer was an employee of Wards Accounting. A number of features of the evidence are important. First, it is acknowledged that Ms Sawyer commenced working for Wards Accounting as an employee working as a professional accountant in 2008. After she became a director and shareholder of the company in 2010, she continued to perform work as a professional accountant for the company, albeit being paid a higher salary, until 31 July 2024. There is no doubt that she was performing work which went outside the usual duties and responsibilities of a director. Ms Sawyer was performing professional accounting work for clients of Wards Accounting. She received a regular salary for performing that work as well as superannuation payments, leave entitlements and some allowances. Ms Sawyer continued to receive those payments after she ceased to be a director on 9 July 2024. In our opinion, those facts strongly support the conclusion that there was a distinct agreement for Ms Sawyer to perform work for Wards Accounting in addition to being a director and shareholder and that it must be inferred that a separate contract existed, or was created by the conduct of the parties, to govern the performance of that work for reward.
[47] Second, the Deputy President may have been correct to regard the Securityholders Deed as representing an attempt to formalise the relationship between the shareholders and the responsibilities of directors of the company. It does not, however, purport to otherwise govern the relationship between securityholders and Wards Accounting or preclude the separate employment of securityholders. To the contrary, the Deed expressly contemplates that securityholders may be employed by the company. The recitals recorded in the Deed expressly indicate that it is intended to govern the relationship of the parties “as Securityholders”. The definitions of “Good Leaver” and “Key Person” and the default events in clause 8 each contemplate that a securityholder will be separately employed by the company and will have a separate employment capable of being terminated outside of the operation of the Deed. To the extent that the Deputy President regarded the Deed as being inconsistent with an employment relationship existing between Ms Sawyer and Wards Accounting, or militating against that conclusion, in our opinion, he was wrong to do so.
[48] Third, if Ms Sawyer was not merely performing work as a director and there was a discrete agreement for Ms Sawyer to perform work as an accountant, it is necessary to characterise the nature of the relationship created by that agreement. This is an instance in which there was not a written contract governing the performance of her work at all, much less a comprehensive written contract. In the absence of a written contract or evidence of a particular conversation during which the contract was made, evidence of the parties’ conduct must
necessarily be considered in order to draw inferences as to whether the meeting of minds necessary to create a contract has occurred and what obligations they have thereby undertaken.24 For the reasons which we have already given, it must be inferred that a separate contract existed under which Ms Sawyer performed work distinct from her role as a director and shareholder. No submission was advanced that Ms Sawyer was engaged as an independent contractor and there is no basis upon which to suggest that Ms Sawyer was conducting a distinct business and providing services under contract to Wards Accounting. It must follow that the relationship was one of employment.
[49] Fourth, Ms Sawyer submits that the Deputy President did not find that the employment she had between 2008 and 2010 had been terminated when she became a director and shareholder and, in any event, there was no evidence to support such a finding. As such, Ms Sawyer submits that she must have continued as an employee. Whether a change in the position, salary or working arrangements of an employee results in the termination of an existing contract of employment depends upon an objective assessment of the intention of the parties.25 It is arguable that the change in her salary, status and title which occurred when Ms Sawyer became a director and shareholder in 2010 was sufficiently profound to warrant the conclusion that the parties intended to terminate her existing contract of employment.26 However, nothing turns on that question. Even if Ms Sawyer’s existing contract of employment was terminated, she continued to perform work as an accountant which cannot be understood to be part of the role of a director and was paid a salary for that work. In those circumstances, the existence of a contract can be inferred from the conduct of the parties.27
[50] Fifth, the Deputy President attached too much significance to the question of whether Ms Sawyer was subject to the control of Wards Accounting. The Deputy President regarded the issue of control as weighing heavily against a finding that Ms Sawyer was an employee because the partners had a degree of independence and ownership which differed from that of an employee and she reported only to the other partners as a group.28 With respect, the analysis fails to acknowledge that one person may have “dual capacities”. The authorities to which we have referred above demonstrate that a person may exercise control over a business in the capacity as a director and also be an employee subject to control of the company. Ms Sawyer plainly reported to, and was responsible to, the company represented by the directors generally. The fact that Ms Sawyer is involved in the operation of the business as a director does not preclude her from also being an employee even if the extent of the control exercised over her in her employment was limited because she is also a director.
[51] Sixth, the use of the title “partner” to describe Ms Sawyer, and other directors who worked in the business, is immaterial to the characterisation of the relationship. Wards Accounting acknowledges that the directors were not “partners” in a strict sense because the business was not operated as a partnership. In those circumstances, the fact that the directors were referred to as “partners” does not assist the task of characterising the nature of the relationship under which Ms Sawyer performed work for the company. In any event, the label that the parties attach to their relationship is not determinative and is rarely of assistance in ascertaining the character of the relationship.29 In our opinion, the same can be said of the title given to a person’s position or job. In our opinion, the title attributed to Ms Sawyer when working for Wards Accounting does not assist at all.
[52] For these reasons, the Deputy President erred in concluding that Ms Sawyer was not an employee of Wards Accounting and that she was unable to apply to the Commission under s 365 of the Act for that reason.
Was Ms Sawyer dismissed from her employment?
[53] It is necessary to turn to the second jurisdictional objection raised by Wards Accounting and accepted by the Deputy President. Even if Ms Sawyer was an employee, she can only apply to the Commission under s 365 of the Act if she was dismissed from that employment. The term “dismissed” is defined in s 386(1) of the Act as follows:
386 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.
…
[54] Section 386(2) and (3) exclude from the concept of a person being “dismissed” certain circumstances which are not presently relevant. As such, whether Ms Sawyer was dismissed depends on whether her employment was “terminated on the employer’s initiative” or she resigned “but was forced to do so because of the conduct, or a course of conduct, engaged in by … her employer”.
[55] Grounds 6 to 8 of the amended notice of appeal allege that the Deputy President erred in concluding that Ms Sawyer was not dismissed for the purposes of s 386(1) of the Act. In short, it is contended that the Deputy President erred by limiting his consideration to whether Wards Accounting intended to bring Ms Sawyer’s employment to an end, by failing to find that the termination of Ms Sawyer’s employment was the probable result of the conduct of the employer such that she had no real or effective choice but to resign and in finding that Ms Sawyer had not resigned in the heat of the moment and in a state of emotional distress such that she could not reasonably be understood to be conveying a real intention to resign for the purposes of s 386(1) of the Act. The consequence of the grounds is ultimately a contention that the Deputy President was wrong to conclude that Ms Sawyer was not dismissed for the purposes of s 386(1) either because she never resigned or because, if she did, she was forced to do so because of the conduct of Wards Accounting.
[56] The error alleged to exist in the reasoning of the Deputy President is that he considered only whether the conduct of Wards Accounting was intended to bring Ms Sawyer’s employment to an end. In Bupa Aged Care Australia Pty Ltd (t/as Bupa Aged Care Mosman) v Tavassoli [2017] FWCFB 3941; (2017) 217 IR 245, the Full Bench conducted an extensive survey of relevant authorities in relation to the expression “termination on the employer’s initiative” and considered the effect of the inclusion of s 386(1)(b) in the Act. The Full Bench summarised the approach to be adopted to the two limbs of s 386(1) as follows:30
Having regard to the above authorities and the bifurcation in the definition of “dismissal” established in s 386(1) of the FW Act, we consider that the position under the FW Act may be summarised as follows:
(1) There may be a dismissal within the first limb of the definition in s 386(1)(a) where, although the employee has given an ostensible communication of a resignation, the resignation is not legally effective because it was expressed in the “heat of the moment” or when the employee was in a state of emotional stress or mental confusion such that the employee could not reasonably be understood to be conveying a real intention to resign. Although “jostling” by the employer may contribute to the resignation being legally ineffective, employer conduct is not a necessary element. In this situation if the employer simply treats the ostensible resignation as terminating the employment rather than clarifying or confirming with the employee after a reasonable time that the employee genuinely intended to resign, this may be characterised as a termination of the employment at the initiative of the employer.
(2) A resignation that is “forced” by conduct or a course of conduct on the part of the employer will be a dismissal within the second limb of the definition in s 386(1)(b). The test to be applied here is whether the employer engaged in the conduct with the intention of bringing the employment to an end or whether termination of the employment was the probable result of the employer’s conduct such that the employee had no effective or real choice but to resign. Unlike the situation in (1), the requisite employer conduct is the essential element.
[57] Ms Sawyer contends that the Deputy President misapplied s 386(1)(b) by considering only whether the conduct of Wards Accounting was intended to bring her employment to an end and failing to consider whether that was the probable result of the employer’s conduct. The relevant part of the Deputy President’s decision is as follows:
[67] I do not consider the conduct of the Respondent was conduct intending to bring the Applicant’s employment to an end. On the contrary, I find that the Respondent raised issues of the restructure of the Respondent, and existing issues regarding expenses, dividends payments and the reconciliation spreadsheets. As the Applicant accepted, Mr Ward was in fact asking the Applicant to participate in making a decision.
[68] As the Applicant described in re-examination, the trigger for her resigning was a dispute over the structure and shareholding of the Respondent going forward. The Applicant said:
… once again the plan or the scheme was changed to benefit Damien and only Damien, and I did not want any part of it at all, and I had said that to him on so many times that I did not want to be a part of it. And I was happy for Count, I was happy for Hayes Knight to buy 100 per cent. That was the original plan. I was happy for Count to buy my 10 per cent. That was the second plan. But then the final plan was that he was basically dropping a bombshell looking after himself and walking out and leaving the shit for me to deal with. Excuse my language.
[69] The Respondent did not engage in conduct with the intention of bringing the relationship to an end. The sole intention was for whatever relationship to continue, albeit with a different structure and shareholding. The Applicant had an effective and real choice as to whether to resign.
[70] While, in the circumstances of the meeting of 31 July 2024, there is some initial attraction to the submission that the Applicant was in a state of emotional stress or mental confusion such that she could not reasonably be understood to be conveying a real intention to resign, I ultimately reject that submission because, while that meeting occurred between 1.00 and 1.30pm, the Applicant remained in the Respondent’s office until about 5.00pm, and the
following day refused to meet with the Respondent and Mr Ward. I accept that the Respondent
stopped the Applicant’s computer and email access as a security measure.
[58] We are conscious that the Deputy President’s decision should be read as a whole and not minutely or finely with an eye keenly attuned to the detection of error. However, having considered the reasons of the Deputy President as a whole, we accept the submission of Ms Sawyer that the reasons suggest that the Deputy President’s analysis was limited to considering whether Wards Accounting intended to bring Ms Sawyer’s employment to an end. The only aspect of the reasoning which might suggest that consideration was given to whether termination of the employment was a probable result of the conduct of the employer is the final sentence of paragraph [69] and, in particular, the reference to whether Ms Sawyer had “an effective and real choice as to whether to resign”. In the context of the remainder of the reasons, including the first two sentences of paragraph [69], that conclusion appears to flow solely from the assertion that Wards Accounting did not engage in conduct with the intention of bringing the relationship to an end. We do not consider that the final sentence of paragraph [69] demonstrates that the Deputy President considered the probable consequences of the conduct of Wards Accounting relied upon by Ms Sawyer.
[59] It is necessary then for the Full Bench to consider whether Ms Sawyer was dismissed either because her employment was “terminated on the employer’s initiative” for the purposes of s 386(1)(a) or she resigned “but was forced to do so because of the conduct, or a course of conduct, engaged in by … her employer” for the purposes of s 386(1)(b). Whether Ms Sawyer was dismissed or resigned primarily turns on the inference to be drawn from what occurred at the meeting on 31 July 2024 albeit understood in the context of the events leading up to and surrounding that meeting. It is appropriate that we consider that question based on the factual findings made by the Deputy President. The Deputy President appears to have accepted the evidence of Ms Sawyer in relation to the events leading up to the meeting on 31 July 2024 and as to what occurred at the meeting itself. That is unsurprising. Mr Ward did not give a comprehensive account of what occurred and, aside from limited cross-examination, did not challenge Ms Sawyer’s account. Wards Accounting did not call Mr Cassone, who was also present at the meeting, as a witness. In the circumstances, it is appropriate that the appeal be decided based on the evidence of Ms Sawyer apart from her assertion that Mr Ward blocked the door to stop her leaving the meeting on 31 July 2024. The Deputy President recorded that Mr Ward denied blocking the door and did not resolve that conflict in the evidence. It is also unnecessary to resolve that matter on appeal.
[60] It is appropriate to first consider whether Ms Sawyer resigned at all. The proceedings at first instance appear to have been conducted on the basis that Ms Sawyer did resign save that Ms Sawyer submitted that, if she did resign, she did so in the heat of the moment and under pressure. The Full Bench had concerns as to whether that underlying assumption is correct and raised that matter with the parties on the hearing of the appeal.31 It is apparent from the submissions advanced by counsel for Ms Sawyer that she now submits that unequivocal words of resignation were not used by her in the meeting on 31 July 2024 and separately that, if what she said did amount to a resignation, the words were spoken in the heat of the moment such that a reasonable person in the position of Mr Ward would not have understood her to be conveying a real intention to resign.
[61] The usual position is that where an employee uses unambiguous words of resignation, the employer is entitled to treat this as an effective resignation which operates to terminate the
employment.32 Implicit in that approach is a recognition that it is a necessary incident of the employment relationship that the other party must be notified in clear and unambiguous terms if a right to bring the contract to an end is being exercised.33 Consistent with that principle, an employee will not be found to have resigned unless the employee has clearly communicated an intention to do so to the employer.34 The only words spoken by Ms Sawyer at the meeting that could constitute notice of resignation were the final words said at the meeting which were as follows:
Damien, you need to move. I am done with your accusations. I’m leaving and I won’t be back,
especially after your behaviour today.
[62] Those words were spoken after what appeared to be a heated discussion about the proposed purchase of shares in Wards Accounting, the apparent intention of Mr Ward to continue working as a tax agent despite the investigation being conducted by the Tax Practitioners Board and in which Mr Ward questioned Ms Sawyer about alleged financial irregularities.
[63] The words attributed to Ms Sawyer, particularly in the context of the discussion as a whole, do not appear to us to represent unambiguous words of resignation. The phrase “I’m leaving and I won’t be back” is equally consistent with being a statement that Ms Sawyer was leaving the meeting and would not be returning to the meeting. The words attributed to Ms Sawyer were spoken in the context of what was obviously a serious disagreement in relation to the conduct, and future operations, of the business. However, the context also included that Ms Sawyer had been working for Wards Accounting for nearly 16 years, had bought into the business and was treated as a partner of the firm. In the circumstances in which the words were spoken, including that they were said in the course of a heated meeting, we do not consider that Ms Sawyer could reasonably be understood to have conveyed a real intention to permanently end her employment. We also note that Ms Sawyer did not, in fact, leave the workplace and continued to perform work until approximately 5pm that day.
[64] One aspect of the evidence before the Deputy President causes us some concern in reaching that conclusion. Ms Sawyer’s witness statement and some aspects of her oral evidence proceeded on the assumption that what had occurred at the meeting on 31 May 2024 was that she had resigned.35 That perhaps reflects that the case advanced by Ms Sawyer was primarily focused on an assertion that she was forced to resign because of the conduct of Wards Accounting. However, we do not think the apparent assumption underlying Ms Sawyer’s witness statement and evidence in cross-examination is determinative. The question of whether an employee has resigned does not depend on the subjective intention or understanding of the employee, but an objective assessment of the intentions of the parties. For example, in Koutalis v Pollett [2015] FCA 1165; (2015) 235 IR 370, Rares J explained:36
The question whether a resignation did or did not occur does not depend upon the parties’ subjective intentions or understandings. Rather, it depends upon what a reasonable person in the position of the parties would have understood was the objective position immediately after Mr Pollett left the Koutalis’ business’ premises on the morning of 5 May 2014, based on what each party to the conversation had said or done, in light of the surrounding circumstances. …
[65] After referring to the Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, his Honour continued:37
In my opinion, the same considerations apply to the evaluation of the circumstances where parties engage in conversations and conduct that affects their legal rights under a contract, including the assessment of whether or not words and or conduct can be seen to amount to a resignation. Nonetheless, in employment contexts, a court must be conscious that situations can arise in which one or other of the parties acts in the heat of the moment in such a way that a reasonable person in the position of the parties in all the circumstances would not understand the employee to be resigning or the employer to be terminating the employee’s employment, as the case may be. So much is reflected in what May LJ, with whom Croom-Johnson and Woolf LJJ agreed, said in Sovereign House Security Services Ltd v Savage [1989] IRLR 115 at 116, namely:
In my opinion, generally speaking, where unambiguous words of resignation are used by an employee to the employer direct or by an intermediary, and are so understood by the employer, the proper conclusion of fact is that the employee has in truth resigned. In my view tribunals should not be astute to find otherwise. However, in some cases there may be something in the context of the exchange between the employer and the employee or, in the circumstances of the employee him or herself, to entitle the Tribunal of fact to conclude that notwithstanding the appearances there was no real resignation despite what it might appear to be at first sight. (Emphasis added.)
[66] The question is whether a reasonable person in the position of the parties would have understood Ms Sawyer to have resigned permanently from her employment at the conclusion of the meeting on 31 May 2024. For the reasons we have given, we do not consider that the proper conclusion to be drawn from the words spoken, considered in light of all of the circumstances, is that Ms Sawyer intended to resign.
[67] The consequence is that, where the employee has not in fact resigned or an apparent resignation is ineffective, purported acceptance of the resignation by the employee will constitute a termination of employment at the initiative of the employer for the purposes of s 386(1)(a).38 In this matter, Wards Accounting cut off Ms Sawyer’s access to its email and computer systems on the evening of 31 July 2024 and wrote to her on the morning of 1 August 2024 purporting to confirm her resignation and demanding that she return office keys, account logins and password details for company accounts/subscriptions, company credit cards, banking access toggles, client files and any other property owned by Wards Accounting. If, as we have concluded, Ms Sawyer did not unambiguously resign at the meeting on 31 July 2024, it was the conduct of Wards Accounting that brought her employment to an end. The employment was terminated on the employer’s initiative.
[68] For these reasons, the Deputy President erred in concluding that Ms Sawyer was not dismissed for the purposes of s 386(1). We believe that the correct conclusion to be drawn from the factual findings made by the Deputy President is that Ms Sawyer’s employment was terminated on the employer’s initiative for the purposes of s 386(1)(a). In light of that conclusion, it is unnecessary to address the submission advanced by Ms Sawyer that, if she did resign, she was forced to do so by the conduct of Wards Accounting for the purposes of s 386(1)(b).
Conclusion and disposition
[69] Permission to appeal should be granted, the appeal allowed, and the decision of the Deputy President quashed. Ms Sawyer’s application under s 365 of the Act should be remitted to Deputy President Grayson to be dealt with in accordance with s 368 of the Act.
[70] The Full Bench makes the following orders:
(a) Permission to appeal is granted;
(b) The appeal is allowed; (c) The decision of the Deputy President in [2025] FWC 450 in Matter Number C2024/5957 is quashed; and
(d) The application in Matter Number C2024/5957 is remitted to Deputy President Grayson to be dealt with in accordance with s 368 of the Fair Work Act 2009 (Cth).”
Appeal by Sawyer v Wards Accounting Group Pty Ltd [2025] FWCFB 167 delivered 5 August 2025 per Gibian VP, Saunders DP and Grayson DP