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[2024] FWC 2063
General information, not legal advice.
Fair Work Commission
2024-08-02
Original judgment source is linked above.
s.365 - General protections
General protections dismissal dispute - jurisdictional objection alleging no dismissal - employee commenced other employment without notifying employer - repudiation by employee - repudiation accepted by employer - employer argument inconsistent with FW Act - termination at the employer's initiative - jurisdictional objection dismissed.
(b) the person, or an industrial association that is entitled to represent the industrial interests of the person, alleges that the person was dismissed in contravention of this Part;
the person, or the industrial association, may apply to the FWC for the FWC to deal with the dispute.
(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.
"(1) The analysis of whether there has been a termination at the initiative of the employer for the purpose of s 386(1)(a) is to be conducted by reference to termination of the employment relationship, not by reference to the termination of the contract of employment operative immediately before the cessation of the employment. This distinction is important in the case of an employment relationship made up of a sequence of time-limited contracts of employment, where the termination has occurred at the end of the term of the last of those contracts. In that situation, the analysis may, depending on the facts, require consideration of the circumstances of the entire employment relationship, not merely the terms of the final employment contract.
(2) As stated in Mohazab, 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.
(3) In Mahony v White the Full Court stated that a termination of employment may be done at the initiative of the employer even though it was not done by the employer. In circumstances where the parties to a time-limited contract have agreed that their contract will expire on a specified date but have not agreed on the termination of their employment relationship, it may be the case that the termination of employment is effected by the expiry of the contract, but that does not exclude the possibility that the termination of employment relationship occurred at the initiative of the employer - that is, as a result of some decision or act on the part of the employer that brought about that outcome..."
"In its letter of termination, Koompahtoo claimed that the conduct of Sanpine amounted to repudiatory breach of contract. The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. (In this case, we are not concerned with the issues that arise where the alleged repudiation takes the form of asserting an erroneous interpretation of the contract. Nor are we concerned with questions of inability as distinct from unwillingness.) Secondly, it may refer to any breach of contract which justifies termination by the other party. It will be necessary to return to the matter of classifying such breaches. Campbell J said this was the sense in which he would use the word "repudiation" in his reasons. There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words..."
"Relevantly, for present purposes, repudiation may exist where an employer reduces the wages of an employee without the employee's consent[8] or where there is a serious non-consensual intrusion on the nature of the employee's status and responsibilities in a way which is not permitted by the contract.[9] Similarly, if an employer seeks to bring about a change in the employee's duties or place of work which is not within the scope of the express or implied terms of the contract of employment, the conduct may evince an intention to no longer be bound by those terms. Therefore, in these circumstances if an employee does not agree to the change, which if agreed would amount to a variation of the contract, the employee may claim to have been constructively dismissed."
"Conduct of an employer which repudiates the contract of employment does not by that act alone bring the contract of employment to an end. A repudiation of the contract by the employer gives the employee who is not in breach the option to decide whether to continue, that is to affirm the contract, or to treat the contract as at an end by accepting the repudiation.[10]"
"It is well-established that where a party engages in repudiatory conduct, it is the conduct of the party responsible for the repudiatory breach which causes the employment relationship to end and not the party accepting the repudiation."[11]
"Abandonment of employment" is an expression sometimes used to describe a situation where an employee ceases to attend his or her place of employment without proper excuse or explanation and thereby evinces an unwillingness or inability to substantially perform his or her obligations under the employment contract. This may be termed a renunciation of the employment contract. The test is whether the employee's conduct is such as to convey to a reasonable person in the situation of the employer a renunciation of the employment contract as a whole or the employee's fundamental obligations under it. Renunciation is a species of repudiation which entitles the employer to terminate the employment contract.[13] Although it is the action of the employer in that situation which terminates the employment contract, the employment relationship is ended by the employee's renunciation of the employment obligations.[14]"
"However, it is the combination of those statements that I consider Fonterra has misconstrued. I do not consider that any fair reading of those two sentences, or paragraphs [21] - [22] in Abandonment of Employment, supports the wide proposition that appears to be advanced by Fonterra that where conduct of an employee constitutes renunciation, that conduct will necessarily result in a termination at the initiative of the employee. The Full Bench was dealing with a factual scenario of 'abandonment'. Necessarily, that is conduct that will be at the initiative of an employee.
Fonterra submitted that a 'refusal to perform work' or to 'comply with a reasonable and lawful direction' have been found to constitute a repudiatory breach of the employment contract, justifying summary dismissal. So much might be accepted. Such circumstances of dismissal might provide a very sound reason to underpin a 'valid reason' for a dismissal (where this is an unfair dismissal case) but the cases I was referred to undermine Fonterra's antecedent proposition that there is no statutory "dismissal" at all."
"On the other hand, the reliance by the courts on the doctrine of frustration in the area of employment law has been the subject of some criticism by academic commentators (for example, Collins, Ewing and McColgan, Labour Law: Text and Materials (Hart Publishing, 2001) pp 535-540). As Bristow J, sitting in the Employment Appeal Tribunal, said in a case cited in that volume, Harman v Flexible Lamps Ltd [1980] IRLR 418 at 419:
"In the employment field the concept of discharge by operation of law, that is frustration, is normally only in play where the contract of employment is for a long term which cannot be determined by notice. Where the contract is terminable by notice, there is really no need to consider the question of frustration and if it were the law that, in circumstances such as are before us in this case, an employer was in a position to say 'this contract has been frustrated', then that would be a very convenient way in which to avoid the provisions of the Employment Protection (Consolidation) Act. In our judgment, that is not the law in these sort of circumstances...
This is a further circumstance which tells against the role of the doctrine of frustration in modern industrial or award regulated employment, except in the case of the death of the employee. So much was recognised as to long service leave etc by Wootten J in Finch v Sayers at 547 when his Honour, in a passage cited earlier, referred to benefits such as long service leave "commonly [depending] on, or [being] proportioned to, continuity of service". However, his Honour may not have been alive to the other reason noted above; not only that the doctrine of frustration could have an unforeseen and arbitrary effect on accruing rights (presumably what his Honour was referring to was the cessation of the accrual of such rights) but also that the availability of the doctrine could destroy the rights altogether in some cases."
"It was submitted on behalf of the appellant that in cases of summary dismissal there can be no valid reason for the termination within the terms of s.170CG(3)(a) unless the employee is guilty of conduct justifying summary dismissal at common law. In this respect it was further submitted that the common law requirement goes beyond wilful disobedience in that the conduct must amount to a refusal to be bound by the terms of the contract: Adami v Maison de Luxe Limited [1924] HCA 45; (1924) 35 CLR 143. Mr Langmead submitted that the appellant's conduct on 17 February, 1998 could not be so regarded because there was no instruction given to the appellant, only a request, and the appellant provided an adequate explanation for not doing the work he was asked to do.
We think there are a number of answers to this submission. It is generally accepted that the term "valid reason" should be construed to mean "sound, defensible or well-founded": Selvachandran v Peterson Plastics Pty Ltd [1995] IRCA 333; (1995) 62 IR 371 at 373. Although that case concerned legislation which has now been repealed it is still regarded as authoritative. To limit the meaning of the term "valid reason" by importing a test amounting to repudiation of the contract at common law is unwarranted and impermissible. Secondly 170CG(3)(a) focuses on the reason for termination. The appellant's construction would result in an arbitrary application of the section in some circumstances. Take a case where an employee is guilty of conduct which does not amount to misconduct justifying summary termination. If the employer terminates the employment on notice there would be a valid reason for doing so. If the employer terminates the employment summarily there would not be a valid reason for doing so. The validity of the reason cannot be made to depend on whether or not the termination was on notice. Thirdly, however, we are not convinced that if the common law test were applied it would make any difference in this case. The Senior Deputy President found that the appellant had refused to do the duties he was requested to do and that the explanation he gave for the refusals was unreasonable. We think these findings were clearly open to her. The appellant did not say during the enquiry into his conduct that he was not given a direction. Furthermore he continued to maintain his right to refuse to do work which was not his and to refuse to rectify work which somebody else had performed unsatisfactorily. The appellant took this position in an interview more than a week after the day of the refusals. This amounts to the unilateral inclusion of a new term in the employment contract and by necessity amounts to a refusal to observe the fundamental requirement of any contract of service - to be ready, willing and available to carry out the lawful directions of the employer. In the circumstances we reject the submission that the Senior Deputy President should have found that there was no valid reason for the termination of the appellant's employment."
"Whether disobedience, misconduct, or incompetence by an employee constitutes grounds for summary dismissal depends on whether, in the circumstances, such conduct amounts to a breach of an essential term of the contract of employment and/or a repudiation of the contract.[19]
It follows that to determine whether an employer is entitled to dismiss summarily an employee, it is necessary to determine, first, whether the employee has breached an essential term of the contract of employment, and/or whether that breach evinces an intention by the employee no longer to respect the employee's obligations under the contract. As such, this test requires the court to determine the express and implied terms of the contract of employment and to assess the seriousness of the misconduct. Importantly, the focus of the court's assessment of the seriousness of the misconduct is not the gravity of the breach per se, but whether the employee's conduct amounts to a repudiation of his or her essential obligations under the contract of employment.[20]
These principles were aptly condensed in the following oft-quoted passage from Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698; [1959] 2 All ER 285:
To my mind, the proper conclusion to be drawn from the passages which I have cited and the cases to which we have been referred is that, since a contract of service is but an example of contracts in general, so that the general law of contract will be applicable, it follows that the question must be - if summary dismissal is claimed to be justifiable - whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service ... I do, however, think (following the passages which I have already cited) that one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and ... therefore ... the disobedience must at least have the quality that it is "wilful"; it does (in other words) connote a deliberate flouting of the essential contractual conditions.[21]
The language used in the cases appears to treat the ground of breach of an essential term or condition of the contract and the ground of repudiation of the contract as one in the same. It is, however, important to note that they are two independent grounds which if established give rise to a right by the employer to terminate the employment contract without the giving of notice. Mark Freedland explained it in the following way in his work on the contract of employment:
The right to rescind a contract for breach of condition arises by reason of a failure of performance which has occurred in the past, provided that the failure is of sufficient gravity or relates to a sufficiently major term of the contract. The right to rescind a contract in response to repudiation arises, not so much by reason of a failure of performance in the past, as by reason of the manifesting of an intention not to perform contractual obligations in the future.[22]
Further, in relation to the ground of repudiation, the conduct of the employee is assessed in accordance with an objective standard. That is:
The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.[23]
At common law, where an employer has summarily dismissed an employee for misconduct, disobedience, neglect, or incompetence, the employer bears the onus of proving the facts upon which their decision to dismiss without notice can be justified.[24] In justification of such action, an employer may rely upon facts not known to the employer at the time of the summary dismissal.[25]"
"The Employer may terminate your employment without notice or without payment in lieu of notice for any of the following reasons, if you:
(a) commit any serious or persistent breach of any of the terms of the Contract
(b) are guilty of dishonesty, misconduct or neglect in the performance of your obligations under the Contract
(e) refuse to comply with any reasonable instruction or direction including any failure to comply with your obligations under any of the Employer's rules, policies and/or procedures and any directions given by management of the Employer..."
These provisions clearly contemplate that summary dismissal will be the consequence of a serious and repudiatory breach of the employment contract. There is no reference to acceptance of repudiation in this clause.
Mr Milinkic from Northern Coast Solicitors representing Ms Sowden.
Mr Hassall from Sparke Helmore Lawyers representing Design True.
[1] Coles Supply Chain Pty Ltd v Milford [2020] FCAFC 152 and Lipa Pharmaceuticals Ltd v Mariam Jarouche [2023] FWCFB 101 at [23].
[2] Saeid Khayam v Navitas English Pty Ltd t/a Navitas English [2017] FWCFB 5162 at [75].
[3] Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115.
[4] See for example Whittaker v Unisys Australia Pty Ltd [2010] VSC 9; (2010) 192 IR 311 at [32] - [41] and Fishlock v The Campaign Palace Pty Ltd [2013] NSWSC 531; (2013) 234 IR 1 at [126].
[5] See Woods v W M Car Services (Peterborough) Ltd [1982] ICR 693 at 698,699-700, 701-702.
[6] Shevill v Builders Licensing Board (1982) CLR 620, 633.
[7] City of Sydney RSL & Community Club Limited v Balgowan [2018] FWCFB 5 at [18].
[8] See for example Rigby v Feredo Ltd [1988] ICR 29 and Brockton Holdings No V Pty Ltd v Kara Kar Holding Pty Ltd ( 1994) 57 IR 288.
[9] See for example Whittaker v Unisys Australia Pty Ltd [2010] VSC 9; (2010) 192 IR 311 at [41] - [46], [68] and Fishlock v The Campaign Palace Pty Ltd [2013] NSWSC 531; (2013) 234 IR 1 at [126].
[10] See Automatic Fire Sprinklers v Watson [1946] HCA 25; (1946) 72 CLR 435 at 450 - 453, 461 - 463, 465 - 467; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 47 - 428; Visscher v Giudice [2009] HCA 34; (2009) 239 CLR 361 at [53] - [55].
[11] Citing Byrne v Australian Airline [1995] HCA 24, Brennan CJ, Dawson and Toohey JJ and Automatic Fire Sprinklers v Watson [1966] HCA 25 per Dixon J.
[12] [2018] FWCFB 139 at [21].
[13] Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61, 233 CLR 115 at [44]- [47].
[14] Visscher v Giudice [2009] HCA 34, 239 CLR 361 at [53].
[15] Kiril Simonovski v Fonterra Brands (Australia) Pty Ltd [2023] FWC 429.
[16] Hilton Hotels of Australia Ltd v Pasovska [2003] NSWIRComm 17 at [42] and [48].
[17] Annetta v Ansett Australia Ltd Print S6824 (AIRCFB, Giudice J, Williams SDP, Cribb C, 7 June 2000) at [9] and [10].
[18] Published by Thomson Reuters Australia on Westlaw.
[20] Blyth Chemicals Ltd v Bushnell [1933] HCA 8; (1933) 49 CLR 66, Dixon and McTiernan JJ at 81-82.
[21] Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698; [1959] 2 All ER 285 (CA), Lord Evershed MR at 700 (WLR), cited with approval in North v Television Corp Ltd [1976] CthArbRp 1465; (1976) 11 ALR 599; 177 CAR 1278 (IRCA), Smithers and Evatt JJ at 609 (ALR) and in Gooley v Westpac Banking Corp [1995] IRCA 658; (1995) 53 IR 262; 129 ALR 628, Wilcox CJ at 270 (IR).
[22] FreedlandMR , The Contract of Employment (Clarendon Press, 1976) p 208; See also SappideenC , O'GradyP , RileyJ and WarburtonG with SmithB , Macken's Law of Employment (7th ed, Thomson Reuters (Professional) Australia, 2011) p 315.
[23] Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; 82 ALJR 345; [2007] HCA 61, Gleeson CJ, Gummow, Heydon and Crennan JJ at [44].
[24] Clouston & Co Ltd v Corry [1905] UKLawRpAC 66; [1906] AC 122, Lord James for the Council at 129; North v Television Corp Ltd [1976] CthArbRp 1465; (1976) 11 ALR 599; 177 CAR 1278 (IRCA), Smithers and Evatt JJ at 602 (ALR); Industrial Relations Bureau v Knox Auto Parts & Accessories Pty Ltd (1982) 1 IR 314 (FCA), Keely J at 314.
[26] Mahony v White [2016] FCAFC 160.
Printed by authority of the Commonwealth Government Printer
Elizabeth Sowden
Design True Pty Ltd [2024] FWC 2063
(1924) 35 CLR 143
(2007) 233 CLR 115
(2010) 192 IR 311
(2013) 234 IR 1
(1946) 72 CLR 435
(1995) 185 CLR 410
(2009) 239 CLR 361
(1976) 11 ALR 599
(1933) 49 CLR 66
(1995) 53 IR 262
(1982) 1 IR 314
(1990) 27 FCR 427