When does a dismissal become legally effective?

The date and time of a dismissal may be critical to whether or not the dismissed employee may pursue an unfair dismissal case. Here is a good statement of the legal principles which apply to determining when a dismissal become legally effective.

“Meaning of dismissal

[25] The question of when a person has been dismissed is governed by s 386 of the Act:

“(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.”

[26] A dismissal takes effect when the employment relationship has ended. 3 The termination of the employment relationship is a different concept from the termination of an employment contract.4

[27] The employment relationship, in Australia, operates within a legal framework defined by statute and by common law principles, informing the construction and content of the contract of employment. 5

[28] The unfair dismissal regime in Part 3–2 of the Act applies to “national system employees” and “national system employers”. 6 National system employees are employees of national system employers, being employers which bear particular characteristics such as to make them amenable to particular heads of legislative power of the Commonwealth in s 51 of the Constitution.7 Beyond this, the Act does not seek to establish a statutory definition of what constitutes an employee. National system employees for the purposes of Part 3–2 of the Act are parties to an employment relationship at law.8

[29] Because the question of whether an employment relationship continues to exist is a question of fact, 9 it is necessary to consider all the relevant circumstances to determine whether there has been a communication of a dismissal by words or conduct. The range of facts or factors which may need to be examined to answer the question of whether an employment relationship has ceased to exist by reason of the communication of a dismissal by words or conduct will be determined by the circumstances of a particular case, and may include, without limitation, whether the employee is being paid a wage or other benefits or entitlements, whether the employee is attending or performing work for the employer, whether the employee is being rostered to work or offered work, whether, in the case of a business employing casuals, the employer is rostering other employees to do work in the same role as the applicant in a particular case, whether the employer is exercising, or has the ability to exercise, control over the execution of work by the employee,10 whether either party has communicated to the other party a decision to terminate the relationship, and the terms of the employment contract.

[30] The question of whether an employment relationship has ceased to exist 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. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. 11

[31] There is no suggestion in this case that Ms Stimson was dismissed within the meaning of s 386(1)(b) of the Act. Ms Stimson contends that her employment with Dr Tawadrous has been terminated on her employer’s initiative.

[32] The expression “termination at the initiative of the employer” is a reference to a termination that is brought about by an employer and which is not agreed to by the employee. In circumstances where the employment relationship is not left voluntarily by the employee, the focus of the inquiry is whether an action on the part of the employer was the principal contributing factor which results, directly or consequentially, in the termination of the employment. 12 There must be action by the employer that either intends to bring the relationship to an end or has that probable result.13

When does a dismissal take effect?

[33] In Ayub v NSW Trains (Ayub), 14 a Full Bench of the Commission considered when a dismissal takes effect under s 394(2) of the Act (references omitted):

“[17] At common law, a contract of employment may unilaterally be terminated by the employer with notice or by way of a summary dismissal. The general principle is that to effect the termination of a contract of employment, an employer must, subject to any express provision in the contract, communicate to the employee by plain or unambiguous words or conduct that the contract is terminated…

[35] We see no reason to depart from the above line of authority insofar as it is consistent with the general principle at common law that a dismissal may not take effect prior to it being communicated to the employee…

[36] Having regard to the language, purpose and context of s.394(2)(a), we do not consider in relation to either question that the provision should be interpreted or applied so that the 21-day period to lodge an application for an unfair dismissal remedy could begin to run before an employee who has been dismissed at the initiative of the employer became aware that he or she had been dismissed, or at least had a reasonable opportunity to become aware of this. The combination of the very restricted time period to lodge an application under s.394(2)(a), together with the very high bar of “exceptional circumstances” required to be surmounted in order to obtain an extension of time to lodge an application, clearly demonstrates that it was intended that the timeframe to agitate such an application was to be strictly limited. Indeed s.394(2)(a) of the FW Act as originally enacted provided for a 14-day period only; this was extended to 21 days by the Fair Work Amendment Act 2012. On any view, the period allowed by s.394(2)(a) is extremely short having regard for the need for a dismissed person to take stock of his or her situation, seek advice or information about his or her rights, make a decision to seek a remedy, and complete and lodge an application. In that context it would require express language to justify an interpretation of the provision under which the 21-day time period allowed is further shortened because a dismissal is taken to have had effect before the employee has become aware that it has occurred. Were it otherwise, it would be possible for a dismissal with retrospective effect to be constructed which significantly diminished or even entirely eliminated the time allowed for an employee to lodge an unfair dismissal remedy application.

[41] We therefore do not consider that there is any proper exception to the general proposition established by the authorities under the WR Act and the FW Act that a dismissal cannot take effect for the purposes of those statutes before it is communicated to the employee. There is little support for the existence of any such exception which may be derived from the common law. While it is not inconceivable, as earlier stated, that a contract of employment might expressly provide that it may be terminated by the employer on notice to the employee effective from a time prior to receipt of the notice by the employee, we do not consider for the reasons we have stated that any such contract could be treated as determining the date of effect of a dismissal for the purposes of s.394(2)(a). Termination of employment in accordance with such a provision would be in contravention of s.117(1). Statutory industrial instruments such as modern awards and enterprise agreements could also conceivably allow a date of dismissal which is effectively retrospective (although we are not aware of any which actually do so), but again this could not be treated as determinative of the operation of s.394(2)(a) in a particular case such as to deprive a dismissed employee of the full time period allowed by the provision. In relation to statutory provisions governing public sector employment, we have already noted what was said by the Full Bench in ATO v Wilson about the Public Service Act 1999. We do not consider that such legislation could establish an effectively retrospective date of effect of a dismissal for the purpose of s.394(2)(a) of the FW Act unless that was made clear by express words or by necessary implication. There is no such provision in the Public Service Act as it currently stands.

[42] We likewise consider that the mere delivery of a document to an employee’s usual address notifying the employee of his or her dismissal would not of itself constitute communication of that dismissal, and concomitantly the time at which the dismissal took effect, if the circumstances were that this did not constitute a reasonable opportunity for the employee to actually read the document. That is, we do not consider that s.394(2)(a) requires the strict application of a “postal delivery rule” where the employee has a legitimate explanation for not being able to read the document immediately upon delivery. The circumstances in which this may be the case are undoubtedly manifold, but for example if an employee is on an approved period of annual leave and is holidaying away from home when a dismissal letter is delivered, there is no reason to conclude that the date of dismissal is the date of delivery and not when the employee returns home and first has a reasonable opportunity to read the letter.

[48] Nonetheless the critical point made in Gisda Cyf that the shortness of the period allowed to lodge a claim must inform the way in which the time-limiting provision is interpreted is valid in the context of the FW Act. Indeed the proposition is a fortiori given that time period allowed by the FW Act is much shorter and the circumstances in which an extension of time may be obtained are more constrained. An interpretation of s.394(2)(a) which would have the practical effect of reducing further what is already a very limited opportunity to lodge an unfair dismissal claim would be rejected if another is reasonably available. Our conclusion is that, in respect of a dismissal without notice, s.394(2)(a) is to be interpreted on the basis that the dismissal cannot not take effect for the purposes of Pt.3-2 of the FW Act until an employee knows, or at least has a reasonable opportunity to find out, that he or she has been dismissed. It is in that sense the dismissal is regarded as having been communicated to the employee.

[49] In relation to a dismissal with notice, drawing on the common law principles earlier identified, the dismissal would take effect upon the date of the expiration of the specified period of notice. It is necessary however for that date to be clearly identifiable. This would equally apply to a conditional notice of termination. In the case of a dismissal with a payment in lieu of notice, the dismissal would need to be communicated to the employee in such a way that the employee knows, or at least has a reasonable chance to find out, that he or she has been dismissed. There may also be an additional requirement that the payment in lieu of notice has actually been received by the employee.

[50] In a situation where an employee is informed by email that he or she has been dismissed, the employee can usually be regarded as knowing or having a reasonable opportunity to know of the dismissal when the email is received in the inbox of the employee’s usual email address. We note in this connection that s.14A of the Electronic Transactions Act 1999 (Cth) provides that an email is deemed to have taken place when the email becomes capable of being retrieved by the addressee at an email address designated by the addressee. There may be circumstances in which mere receipt of an email may not constitute a reasonable opportunity to become aware of a dismissal – for example when the employee has not read the email because of an incapacitating illness or is legitimately unable to access their email for other reasons. However a simple refusal to read an email would of course not operate to delay the date of effect of the dismissal.”…………………………

Consideration of dismissal

[37] Ms Stimson worked in Dr Tawadrous’s practice 5 days per week in the period from when the new practice opened in January 2020 until 25 March 2020. Prior to January 2020, Ms Stimson had undertaken regular work for Dr Tawadrous in a different medical practice in Coffs Harbour.

[38] On 25 March 2020, Ms Stimson became ill and needed to leave work. She did so and then communicated by email with Dr Tawadrous about her concerns regarding compliance with COVID-19 requirements at Coffs Vascular.

[39] On 11 April 2020, Ms Stimson informed Dr Tawadrous by email that she was keen to return to work. On 12 April 2020, Dr Tawadrous told Ms Stimson that he was “reconsidering the viability of the vascular lab as it currently stands. At this stage, please continue to stay home and stay safe.”

[40] On 6 May 2020, Ms Stimson visited the premises of Coffs Vascular and became aware that another sonographer was doing her work. On 8 May 2020, Ms Stimson asked Dr Tawadrous to “clarify my position there”. Ms Stimson also asked Dr Tawadrous to act as a referee for her because she was looking for “part-time sonography work in view of the uncertainty and your previous email”.

[41] In his email reply dated 12 May 2020, Dr Tawdrous did not make any clear statement about whether Ms Stimson was still engaged to work at Coffs Vascular. Instead, Dr Tawadrous informed Ms Stimson that he had “condensed all the US scans to 2 days a week. We will try to add extra days and let you know”. Dr Tawadrous also acceded to Ms Stimson’s request to use him as a referee.

[42] The clear inference arising from Dr Tawadrous’s email response of 12 May 2020 was that the current level of demand for a sonographer at Coffs Vascular was for two days a week and Ms Stimson was not required to undertake that work because another sonographer was performing it. Further, although there was a possibility that Ms Stimson would be offered further work in the future at Coffs Vascular, that was contingent on “extra days” of work for a sonographer being required.

[43] Ms Stimson was not offered, and did not perform, any work for Dr Tawadrous at Coffs Vascular or elsewhere at any time after 25 March 2020, nor was Ms Stimson paid by Dr Tawadrous in respect of the period after 25 March 2020.

[44] Having regard to the facts and circumstances summarised in the previous seven paragraphs, I find that Ms Stimson’s working relationship with Dr Tawadrous came to an end on 12 May 2020. I am satisfied that a reasonable person in the position of Ms Stimson would have formed the view upon reading Dr Tawadrous’s 12 May 2020 email that her working relationship with Dr Tawadrous had come to an end. There was a chance on 12 May 2020 that a new working relationship between Ms Stimson and Dr Tawadrous may have been established in the future, but that was nothing more than a contingent possibility.

[45] Further, I am satisfied that Ms Stimson was dismissed within the meaning of s 386(1)(a) of the Act. It is clear that Ms Stimson did not agree to the termination of her engagement with Dr Tawadrous. It was the conduct of Dr Tawadrous, as summarised in paragraphs [37] to [43] above, which was the principal contributing factor which resulted, directly or consequentially, in the termination of Ms Stimson’s engagement with Dr Tawadrous. Although I am satisfied that Dr Tawadrous did not subjectively intend to bring his working relationship with Ms Stimson to an end, I am satisfied that his conduct, as summarised in paragraphs [37] to [43] above, had that probable result. It is unrealistic to think that there would be a result other than termination of a working relationship when a person who has been working in a business five days per week is replaced by a new worker and effectively informed that they will not have work made available to them in the future unless work increases.

[46] I find that Ms Stimson’s dismissal took effect on 12 May 2020. I am satisfied that is the date on which the dismissal was communicated to Ms Stimson. The communication took place by reason of a combination of the content of Dr Tawadrous’s email dated 12 May 2020 and his conduct as summarised in paragraphs [37] to [43] above.

[47] Because I have found that Ms Stimson was dismissed on 12 May 2020, there is no need to consider Ms Stimson’s alternative argument that her dismissal took effect on 3 June 2020 as a consequence of her acceptance of Dr Tawadrous’s repudiation of her employment contract.

[48] The 21 day period for Ms Stimson to lodge her unfair dismissal application in the Commission expired on 2 June 2020. Her application was lodged on 3 June 2020. It was therefore one day late.”

Stimson v Michael Tawadrous (2020) FWC 3999 delivered 30 July 2020 per Saunders DP