s.394 - Unfair dismissal

Application for an unfair dismissal remedy - jurisdictional objection - whether applicant was dismissed

• [1] On 26 April 2025, Mr Connor Nicholson lodged an application with the Fair Work Commission (the Commission) under s. 394 of the Fair Work Act 2009 (Cth) (FW Act) for a remedy, alleging that he had been unfairly dismissed from his employment with Macarthur Energy Pty Ltd (Macarthur Energy).

• [2] A threshold issue to determine in this matter is whether Mr Nicholson has been dismissed from his employment.

• [3] Mr Nicholson commenced employment with Macarthur Energy on 22 January 2024 as the Installation Manager.

• [4] On 7 April 2025, Mr Nicholson approached the manager of Macarthur Energy, Mr Mathew Cox, to inform him that he had put an offer on a house to purchase and wanted to confirm that he had job stability before he paid a deposit. Mr Cox informed Mr Nicholson that he was worried that Macarthur Energy was 'going under' and that he had spent the past six weeks sleeping on the office floor. Mr Cox requested that Mr Nicholson give him a day to work everything out and asked Mr Nicholson to keep this information to himself. Later that day, Mr Cox told Mr Nicholson to call all the customers and cancel their jobs and that he will be having a meeting with all employees tomorrow morning.

• [5] On 8 April 2025 at 6:30am, Mr Cox called a company meeting. Mr Nicholson claimed that at the meeting, Mr Cox advised employees that Macarthur Energy was going into administration and that all employees had to find new jobs. Mr Nicholson said that Mr Cox sent all employees home and advised them that an administrator would be in contact with them. Mr Nicholson said that for the rest of the day, he waited for a call from the administrator but never received one.

• [6] Mr Cox's version of this meeting is that Macarthur Energy was owed a lot of money by customers, and he advised Mr Nicholson and the rest of the team that he was not sure if he was able to pay the wages that week. Mr Cox explained to the Commission that he thought that it was unfair for Macarthur Energy to require employees to work if Mr Cox was not sure if they would be paid. I asked Mr Cox what he thought would happen when he sent his employees home. Mr Cox said that at that stage he was not sure what would happen, so he told employees to wait for a phone call the following day either from Mr Cox or from some advisers that he was getting advice from at the time. Mr Cox said that his advisors were administrators, but that Macarthur Energy was not in administration. Mr Cox denied that he informed employees that Macarthur Energy was going into administration. Mr Cox agreed that Mr Nicholson did not hear from him until 10 April 2025.

• [7] Mr Nicholson said that as he did not hear anything on 9 April 2025, he began making arrangements for a new job and ultimately secured a job and signed a contract with a previous employer.

• [8] On 10 April 2025, Mr Cox called a number of staff including Mr Nicholson and invited them to return to work. Mr Cox said that this was the day that the pays were usually processed. Mr Cox said that he told Mr Nicholson that he had sorted everything out, that Mr Nicholson could come back to work and that he was able to pay him. Mr Cox said that Macarthur Energy had to cut operational costs and part of those costs were wages. Mr Cox said that Macarthur Energy had to let some people go because it did not have enough work to keep them on.

• [9] Mr Nicholson said that he did not return to Macarthur Energy as he signed a contract with a different employer. Mr Nicholson explained that he required stable employment because he was in the process of purchasing a house. Mr Nicholson said that he had lost a lot of trust towards Mr Cox because of Mr Cox's actions. Later that day, Mr Nicholson returned the work vehicle to Macarthur Energy. He saw Mr Cox in the office who advised Mr Nicholson that he had found some investors.

• [10] Mr Nicholson produced a number of text messages between Mr Cox and himself which included the following:

Mr Nicholson: Hope you're all good mate, here to chat if you need

Mr Nicholson: Hey mate, hope you're holding up. Are you aware of when the administrators will be reaching out? Alternatively, would you be able to send the administrators number, just need to confirm a few things. Also, when do you need me to return the Ute, I have sorted out other means of transportation.

Mr Cox: Hey mate, are you able to drop the Ute in today?

Mr Nicholson: Yeah of course, I'll call around and see if someone can pick me up

Mr Cox: Hey mate, what's the password to your computer?

Mr Nicholson: Hey mate, it should be [redacted]. Quick question, regarding leftover pay + holidays will that get sorted by you, or do I need to lodge a claim for it.

Mr Cox: Cheers. I will get it sorted in the next week or so and get it up to date for you.

• [11] Despite Mr Cox's commitment to 'get [Mr Nicholson's pay and holidays] sorted in the next week or so', this did not occur although Mr Nicholson sent multiple text messages to Mr Cox which Mr Cox did not respond to.

• [12] Mr Nicholson said that on 17 April 2025 he became aware that all employees who returned to Macarthur Energy received outstanding pay for the period from 31 March 2025 to 11 April 2025. Mr Nicholson called Mr Cox asking for his wages and Mr Cox said that he would receive payment that week. This did not occur. By the time of the hearing on 22 July 2025, Mr Nicholson received outstanding wages for the period from 31 March 2025 to 11 April 2025 many weeks after they were due but had not received 19.548 hours of annual leave and 16.6 hours in relation to rostered days off.

• [13] At the hearing, Mr Cox said that Mr Nicholson had accepted employment with a competitor, which was prohibited by his contract of employment. Mr Cox also claimed that Mr Nicholson was required to provide a notice period when he resigned and work during this notice period which he did not do. Mr Cox said that he was advised that he was entitled to deduct this notice period from Mr Nicholson's annual leave.

• [14] It was clear during both the initial case management conference and the hearing that Mr Nicholson's primary motivation in pursuing the unfair dismissal claim was to recoup his outstanding entitlements. I explained to the parties that the Commission does not have power to order an employer to pay outstanding wages and leave in response to an unfair dismissal application. I also explained that although the Commission has the power to order compensation as a remedy in an unfair dismissal claim, this may not be available in Mr Nicholson's case as he had advised the Commission that he experienced no financial loss with respect to wages between the time he ceased employment with Macarthur Energy and commenced employment with a new employer the following working day. Mr Nicholson said he wanted to pursue the unfair dismissal application because he had experienced so much difficulty in being paid his entitlements and felt that commencing legal proceedings was the only way that Mr Cox would seriously consider his claims.

When can the Commission order a remedy for unfair dismissal?

• [15] Section 390 of the FW Act provides that the Commission may order a remedy if:

(a) the Commission is satisfied that the person was protected from unfair dismissal at the time of being dismissed; and

• [16] Both limbs must be satisfied. I am therefore required to consider whether Mr Nicholson was protected from an unfair dismissal at the time of being dismissed and, if I am satisfied that Mr Nicholson was protected, whether Mr Rosenthal has been unfairly dismissed.

• [17] Section 385 of the FW Act provides that a person has been unfairly dismissed if the Commission is satisfied that:

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

• [18] A threshold issue to determine is whether Mr Nicholson has been dismissed from his employment.

(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.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person's employment, to avoid the employer's obligations under this Part.

• [20] The expression 'terminated on the employer's initiative' in s.386(1)(a) is well understood to be 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.[1]

• [21] The evidence before me establishes that on 8 April 2025, Mr Cox sent home all employees of Macarthur Energy because the company was experiencing financial difficulty, and he was not sure if he would be able to pay employees when their next pay was due on 10 April 2025. There is a dispute about whether Mr Cox advised the employees that Macarthur Energy was under administration. However, Mr Nicholson does not allege that Mr Cox advised employees that their employment was terminated. In fact, Mr Nicholson stated in the application that Mr Cox did not confirm his verbal advice on 8 April 2025 in writing, 'nor did he officially sign off that we were required to find new jobs or that our employment was redundant'.

• [22] I accept that when Mr Nicholson was sent home, it is likely that he was uncertain about whether he still had a job with Macarthur Energy. I accept Mr Nicholson's evidence that Mr Cox told employees on 8 April 2025 that they had to find new jobs. It is understandable that Mr Nicholson acted decisively the following day by looking for alternative employment when he had not heard from Mr Cox or his advisors. Given that Mr Nicholson was messaging Mr Cox at 7:57am on 10 April 2025 about returning the ute, it is likely that he secured alternative employment by that time and that this occurred before Mr Cox advised Mr Nicholson that he still had a job at Macarthur Energy, Mr Nicholson obtained this employment within two days of being sent home and at a time when Mr Nicholson's wages were paid up to date by Macarthur Energy.

• [23] While Mr Cox's advice to employees that they had to find new jobs indicates that Macarthur Energy may have been initiating the termination of Mr Nicholson's employment, I do not believe that this occurred when all of the other circumstances are considered. The timeframe between Mr Nicholson being sent home and then being advised by Mr Cox that he still had a job at Macarthur Energy was only two days. Mr Nicholson was paid up to date and his next pay was due on 10 April 2025, the day that Mr Cox confirmed that Mr Nicholson was still employed. Taking into account all of these matters, I find that Mr Nicholson was not dismissed by Macarthur Energy. I also find that the employment relationship was terminated at Mr Nicholson's initiative when he obtained alternative employment.

• [24] My finding about this matter may have been different if:

• a longer period had elapsed between Mr Nicholson being sent home and being advised that he still had a job at Macarthur Energy; and
• Mr Nicholson was not paid up to date at the time that Mr Cox confirmed that Mr Nicholson was still employed.

• [25] As I have found that Mr Nicholson was not dismissed, the Commission does not have jurisdiction to hear the application and it must be dismissed. However, I believe that it is important to make a number of observations in relation to the outstanding payments owed to Mr Nicholson by Macarthur Energy for the benefit of Mr Cox.

Outstanding payments owed to Nicholson by Macarthur Energy

• [26] The messages exchanged between Mr Nicholson and Mr Cox during the period from 9 to 11 April 2025 show that Mr Nicholson was compassionate about Mr Cox's financial circumstances and was cooperative in relation to returning the Ute to Macarthur Energy and providing the password to his computer. As no time during that exchange did Mr Cox advise Mr Nicholson that he was required to work during his notice period or that he was in breach of his contract of employment. These claims appear to be recent inventions by Mr Cox designed to avoid fulfilling the legal obligations of Macarthur Energy with respect to outstanding entitlements owed to Mr Nicholson.

• [27] Mr Cox may have believed that he was acting appropriately when he sent employees home on 8 April 2025 but this does not change the likely adverse impacts that the financial circumstances of Macarthur Energy had on employees, through no fault of their own. In Mr Nicholson's case, he said he lost the opportunity to proceed with the purchase a house because Mr Cox's advice caused him concerns about his job security and financial stability. Against this background, Mr Nicholson's decision to find alternative employment appears to be a reasonable response so it is difficult to understand why Mr Cox, having put his employees in a situation where their job security was threatened, required Mr Nicholson to work out a notice period and complained about Mr Nicholson working for a competitor. In any event, the text messages between Mr Cox and Mr Nicholson, including Mr Cox's request that the Ute be returned on 10 April 2025, suggest that Mr Cox wanted the employment relationship to cease immediately and that Mr Cox waived the notice period.

• [28] Regardless of Mr Nicholson's contractual obligations towards Macarthur Energy, Macarthur Energy was obliged by s.90(2) of the FW Act to pay Mr Nicholson for his untaken leave when Mr Nicholson's employment ended. Macarthur Energy was also likely to be obliged by Mr Nicholson's contract or an industrial instrument to pay Mr Nicholson for untaken rostered days off. I note that the rostered days off entitlement was referred to in Mr Nicholson's final payslip which suggests that it able to be recovered by Mr Nicholson from Macarthur Energy.

• [29] The issue of unpaid annual leave was recently the subject of a decision by Justice Raper in the Federal Court. The case of Dorsch v HEAD Oceania Pty Ltd[2] dealt with an employer who delayed paying an employee's outstanding annual leave entitlement of $8,022.82 for a period of three months. In an earlier decision, Justice Raper found that the delay in payment of annual leave was in breach of s 90(2) of the FW Act[3] and awarded the employee $10,000 general damages. In the penalty decision, Justice Raper found that it was appropriate for the Court to impose a pecuniary penalty of $17,000 for the late payment of annual leave on the employer, payable to the employee in that matter,[4] and observed that an entitlement to payment of annual leave upon termination is one of the National Employment Standards (NES) enshrined in the FW Act and that 'any breach of the NES is objectively serious.'[5]

• [30] Given that Mr Cox has relied upon advice to withhold Mr Nicholson's entitlements, and that this remains a live dispute between the parties which was ventilated in the proceedings before me, I believe that it is appropriate to suggest that Mr Cox revisit his position with his advisors, having regard to both decisions in Dorsch v HEAD Oceania Pty Ltd.

• [31] As I have found that Mr Nicholson was not dismissed, the Commission does not have jurisdiction to hear the application. Further, the Commission does not have power to order an employer to pay outstanding entitlements in response to an unfair dismissal application. The application is dismissed.

• [32] Nevertheless, the parties are encouraged to resolve the outstanding issues between them.

[1] Mohazab v Dick Smith Electronics Pty Ltd [1995] IRCA 625; 62 IR 200

[2] [2024] FCA 484

[3] Dorsch v HEAD Oceania Pty Ltd [2024] FCA 162,[5]

[4] Dorsch v HEAD Oceania Pty Ltd, [2024] FCA 484, [39]

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