Worker's 'ultimate departure was not on the terms he believed,' says FWC
The Fair Work Commission (FWC) recently dealt with a case involving a worker who claimed to have been dismissed by their employer, a coffee roasting company, in contravention of his workplace rights.
The employer raised a jurisdictional objection, arguing that the worker had not been dismissed but had instead resigned.
The worker, a former owner of the coffee roasting business, had sold it to the current owner and entered into a full-time employment contract as a production manager. This arrangement seemed to be, in part, to provide guidance to the new owner and assist in a smooth business transition.
On October 26, 2023, the worker verbally resigned, and the employer accepted. However, the parties agreed that the worker would stay on to train a new employee.
The length of time the worker was to remain employed and whether there was an agreement regarding the use of accrued leave or a lump sum payout seemed to be in dispute.
The worker began taking predominantly Annual Leave about three weeks after the verbal resignation. Somewhere between November 25 and December 1, 2023, the worker worked a single shift for the employer.
On December 18, 2023, the worker submitted a formal resignation letter, indicating that February 9, 2024, would be his last day of employment. This date roughly coincided with the depletion of the worker's accrued leave balance.
However, on December 19, 2023, the employer sent a text message to the worker seeking to end the employment relationship immediately by paying out the balance of the accrued Annual Leave, citing pay and processing difficulties if the worker were to use the remainder of his leave.
The parties then had a text message chain, with the worker pushing back on the request to end the employment relationship immediately, citing timeline and tax issues from the amount of pay that would be withheld with a lump sum.
In the pay cycle of December 16-22, 2023, the worker's pay slip included a lump sum payout of the accrued Annual Leave, effectively ending the employment relationship.
Relevant legislation and case law
The FWC considered the relevant legislation, specifically sections 365 and 386(1) of the Fair Work Act 2009 (the Act).
It pointed out that the term 'dismissed' is defined under section 386(1) of the Act, which states that a person has been dismissed if their employment has been terminated on the employer's initiative or if the person resigned but was forced to do so because of the employer's conduct.
The FWC also referred to the Full Bench decision in O'Meara v Stanley Works Pty Ltd, which emphasized the importance of examining all circumstances, not just the employer's actions, when determining whether a termination was at the employer's initiative.
Commissioner Roberts' decision in Nohra v Target Australia Pty Ltd was also cited, where it was found that "Target's action in purporting to accept the resignation but making it immediate was indisputably a termination at the initiative of the employer."
The FWC’s consideration
The FWC accepted that the worker verbally resigned on October 26, 2023, and that there was an agreement for the worker to stay on until a new employee had been found and trained.
It also accepted that it was agreed that the worker would be able to take his accrued Annual Leave rather than have it paid out in a lump sum.
The employer's conduct in paying the worker Annual Leave while he remained employed from November 18, 2023, until the week ending December 22, 2023, was seen as indicative of a pre-existing arrangement between the parties.
The Commission believed that the employer, at some point during late November and early December 2023, realized that they would no longer need the worker and decided to pay out his leave. As evidenced by their text messages, the worker did not consent to this.
‘Consented’ resignation vs. termination
The FWC found that the worker had been dismissed within the meaning of section 386(1)(a) of the Act, as the ultimate termination of the employment was at the employer's initiative. The Commission stated:
"As discussed in the Target decision, in a situation where there is a consented resignation, but the employer then turns around and terminates the employment relationship on their initiative, the employee was dismissed within the meaning of 386(1)(a) of the Act."
The Commissioner also noted that the worker's subsequent conduct in making a written and formal resignation to take effect on February 9, 2024, indicated that no agreement had been reached regarding a two-week notice period.
"In summary, in answering the question of whether termination is at the initiative of the employer, the worker did not voluntarily leave the employment relationship. Although he did as of 26 October 2023 when he handed in his resignation, his ultimate departure from the employer's employ was not on the terms he believed to be agreed upon."
As a result of these findings, the FWC dismissed the employer's jurisdictional objection, concluding:
"Given my findings, the worker has been dismissed within the meaning of section 386(1) of the Act, meaning the employer's jurisdictional objection is dismissed. The worker is therefore entitled to have the Commission deal with the dispute according to sections 365 and 368 of the Act."
Consequently, the FWC referred the dispute to a conciliation conference, where the parties will explore the possibility of resolving the matter.
The FWC reminded employers about the importance of clear communication and agreement with their employees regarding the terms of resignation and the use of accrued leave entitlements.
