s.365 - General protections

Application for the Commission to deal with a general protections dispute involving dismissal - whether dismissed - failure to pay salary for 8 months - no effective or real choice but to resign - jurisdictional objection dismissed.

• [1] Mr Hervé Genin was employed by Cartelux Australia Pty Ltd (Cartelux) from 1 February 2021 until his resignation from the role of Global Head of Sales on 6 March 2025. On 27 March 2025, Mr Genin applied to the Commission to deal with a general protections dispute involving dismissal under section 365 of the Fair Work Act 2009 (the Act).

• [2] Mr Genin says he was dismissed within the meaning of s.386(1)(b) of the Act when he was forced to resign because of conduct, or a course of conduct, engaged in by Cartelux. In this regard, it is not in dispute that Mr Genin:
  1. was an Australian-based employee of Cartelux,
  2. had a contractual right to payment of an agreed salary, and
  3. was not paid any salary for the period of approximately 8 months immediately preceding his resignation.

• [3] Cartelux submits that Mr Genin resigned voluntarily and was not dismissed. It says that Mr Genin agreed to a "salary deferral" agreement during ongoing executive management discussion within the business that would result in him not getting paid until some future, unspecified date. Mr Genin denies entering into any kind of salary deferral agreement.

• [4] The question is whether Mr Genin was forced to resign from his employment because of conduct, or a course of conduct, engaged in by Cartelux. For reasons that follow, the answer is 'Yes'. It follows that Mr Genin was dismissed and the jurisdictional objection fails. The matter will now be listed for conference.

• [5] On 21 January 2021, the parties entered into a contract of employment providing for the full‑time employment of Mr Genin in the role of General Manager - Europe, Middle East and Africa (EMEA) on and from 1 February 2021. Essential terms of the contract included payment of a base annual salary of CHF130,000 (CHF being a reference to Swiss Francs) plus commission and provision for leave and notice of termination. Other relevant terms of the contract included a restraint of trade (clause 20) and clause 21, which provided for variation of the contract only by agreement in writing, except in the case of notice of changes to company policy or notified changes in a letter of promotion.

• [6] Over the period of employment, Mr Genin experienced regular delays in payment of his employment entitlements and had to repeatedly chase them up with Cartelux. As a self-described 'start up', Cartelux appears to have had difficulty meeting its debts as and when they fell due for some time. The CFO of Cartelux, Mr Stephen Burns and the sole director and CEO of Cartelux, Mr Joshua Williams, each gave evidence about decisions to defer their own salaries in early 2024. They say there was a similar agreement reached with Mr Genin before 1 July 2024 for him not to be paid until December 2024, January 2025 or February 2025 when they received anticipated revenue from sales generated by Mr Genin to the value of approximately $750,000.[1]

• [7] I reject the submission that Mr Genin agreed to defer payment of his salary for the period after 1 July 2024. There is some evidence of an agreement in late 2023/early 2024 for commission owed to Mr Genin at that time to be paid after the majority of Australian staff had been paid, and payment from one of Cartelux's main clients had been received. This appears to have been resolved in or about February 2024. But for the period after 1 July 2024, the evidence is to the contrary.

• [8] On 4 July 2024, a meeting was scheduled between the parties with the subject of "Outstanding payment review".

• [9] On 9 July 2024, Mr Genin wrote to Cartelux asking for "an answer on when the first payments will be made" and stating that he was "in a very uncomfortable situation now".

• [10] An email chain in September 2024 between Mr Genin and Mr Burns, copied to Mr Williams, continued along the same theme. Mr Genin spoke of the status of overdue payments to him and to Cartelux SARL (an entity he had set up in Switzerland to facilitate the employment of another Swiss employee on the basis that it would be purchased by Cartelux) and sought commitments to pay him what was overdue and outstanding. On 16 September 2024, Mr Genin advised that "the situation is no longer sustainable and we need to find a solution". He described his request for payment as "an ongoing request since months". Mr Williams' response did not assert any agreement on salary deferral. At its highest, it sought Mr Genin's feedback on the option of a convertible note.

• [11] On or about 17 September 2024, there was a discussion between Mr Genin and Mr Burns. In an email after the meeting on 17 September 2024, Mr Genin reiterated that the situation was no longer sustainable and proposed a payment plan to address the more than $234,000 owing to him, including interest. Mr Genin asserts a verbal agreement on this date for the payment of interest on delayed payments. On 25 September 2024, the parties met again and an offer of a 'convertible note' was made to Mr Genin in lieu of salary. MR Genin declined the offer on 30 September 2024.

• [12] Even if there was an agreement with Mr Genin for the deferral of his salary (which I do not accept), it was not a lawful one. Section 323 of the Act requires national system employers to pay their national system employees the amounts payable to them in relation to the performance of work "in full ... , in money ... , and at least monthly". Such an agreement would also be inconsistent with Mr Genin's contract of employment, which required Cartelux to pay Mr Genin's salary "in arrears monthly by direct deposit into [his] nominated account by the 15th of the following month". There is no evidence of any agreement in writing to vary this term of the contract.

• [13] From December 2024, Mr Genin says his "tension went to the roof and was putting my health at risk. I lost 12kg. When you cannot pay your bills, you are obliged to sell your own assets or borrow money to friends / family too... you have to make a stop. It was no longer sustainable."

• [14] On 19 February 2025, Mr Genin wrote two letters to Cartelux. The first was in relation to his employment and titled "Urgent demand for payment of unpaid salary, social taxes & pensions, other benefits & expenses". The amount claimed including payment of salary for July 2024 to February 2025 and the total amount of claim was in excess of $253,000 (AUD). The letter included the following:

"Immediate Action Required

I request full payment of the outstanding amount within 10 working days from the date of this letter. If I do not receive payment by March 6th,2025 I will have no choice but terminate my work contract with immediate effect and to consider additional actions."

• [15] Confirmation of receipt of the letter and a timeline for payment was sought within 7 days (that is, by 26 February 2025).

• [16] The second letter was in relation to the risk he bore as responsible officer of Cartelux SARL and was titled "Unfulfilled financial and legal responsibilities regarding Cartelux Sarl". In this letter, Mr Genin explained that he was in an untenable position as he was now personally liable for the company's financial obligations, including employee salaries, social contributions and other corporate liabilities. He foreshadowed potential bankruptcy proceedings and legal claims and asked that Cartelux resume financial support to cover employee salaries and operational costs of over $127,000 (AUD). He also asked it to formally assume responsibility for Cartelux SARL and provide a plan for its future. He said he would have "no choice but to terminate Cartelux SARL" on 27 February 2025 if an adequate response was not provided within 3 working days.

• [17] On 21 February 2025, in a meeting with Mr Williams about another matter, Mr Genin asked if Mr Williams had received his letters of 19 February 2025. Mr Williams replied that he was surprised at the use of legal terms and mentioned avoiding legal costs. Mr Genin replied, in words to the effect:

"I had no choice, Josh, the situation is no longer sustainable. You know it. I asked you and Stephen numerous times to come back to me. I have no money, I have been working for over 6 months not being paid. Valery got no wages payment for over 4 months as well. What do you plan to do?"

• [18] Mr Williams replied, in words to the effect:

"I did not take too much time to review your letter but I will come back to you".

• [19] On 24 February 2025, there was a meeting between Mr Genin and Mr Williams. Mr Genin asked for feedback, and Mr Williams replied, in words to the effect:

"But Hervé, what do you want exactly? Do you want to take leave?"

• [20] Mr Genin said, in words to the effect:

"I need and I want to get paid, if not I will have no other choice but to terminate my contract. I need you to come back to me with a written proposal with timing as specified in my letter of demand."

• [21] On 26 February 2025, Cartelux wrote to Mr Genin advising that it was in the process of preparing a considered response to his letter and that it would be provided "as soon as possible". It asked for supporting documentation for Mr Genin's financial calculations and advised that once received, Cartelux would "schedule a call to address and reconcile any outstanding discrepancies". Mr Genin replied the same day with a link to a folder containing the information sought, which had been available to Cartelux in a shared folder since 17 September 2024. It appears that Mr Genin and Mr Williams met again to discuss the information requested on 27 February 2025. Cartelux did not respond to the substantive claims for payment from Mr Genin in the timeframe provided.

• [22] On 4 March 2025, Mr Genin sent a 'Slack' message to Mr Williams asking how he wanted to handle a handover of customer and employee information and management. Mr Williams responding by proposing a meeting the following day, but the meeting did not occur.

• [23] On 5 March 2025, Mr Genin wrote to Cartelux advising that "since no resolution has been reached nor was attempted, my final working day with Cartelux Pty Ltd will be tomorrow, March 6 2025, due to non-payment of my wages and entitlements". By this email, Mr Genin accepted the alleged repudiation of his contract of employment and brought the employment relationship to an end.

Was Mr Genin forced to resign because of conduct, or a course of conduct, engaged in by Cartelux?

• [24] In Bupa Aged Care Australia Pty Ltd v Tavassoli,[2] a Full Bench of the Commission summarised the approach to dealing with alleged 'forced' resignations under section 386(1)(b) of the Act as follows:

"(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."[3]

• [25] I am comfortably satisfied that termination of the employment relationship was the probable result of Cartelux's failure to pay Mr Genin's salary for such a prolonged period, such that he had no effective or real choice but to resign. This was no underpayment of the ordinary kind, for which a separate claim could be made and dealt with through the appropriate channels while the employment relationship continued. It was the wholesale failure to pay any wages for an 8-month period, with no certainty as to when, how, or to what extent, the failure would be remedied. It followed earlier repeated failures to pay salary over the period of employment. It is no answer to these failures to say that Cartelux is a 'start up' or that Mr Genin had an important role in revenue generation for the business. The responsibility for meeting its contractual obligations ultimately lay with Cartelux, including in relation to payment of employee salaries.

• [26] Cartelux submits that Mr Genin's decision to terminate the employment was in reality an attempt to 'cut and run' after his misconduct in connection with failing to secure payment of three significant client invoices became apparent. The submission is rejected. The payment of the invoices was, by the time of Mr Genin's resignation, anticipated for March 2025. In the circumstances, he had more to gain by remaining in employment with Cartelux - in the hope of finally receiving payment for his salary - than by leaving and commencing legal proceedings against it.

• [27] The course of conduct engaged in by Cartelux left Mr Genin with no income to support himself and no way of mitigating his losses in the near term. The contract of employment required him to perform work on a full-time basis in the best interests of Cartelux and prevented him from obtaining alternative employment as a means of mitigating his loss. The situation caused him undue stress, compounded by his personal legal exposure to the increasingly unmet financial obligations of Cartelux SARL, which Cartelux had said it would take over but had so far failed to do. As Mr Genin expressed to Cartelux on more than one occasion, the situation was no longer sustainable.

• [28] Mr Genin was dismissed by Cartelux for the purposes of s.386(1)(b) of the Act.

• [29] The jurisdictional objection is dismissed.

Mr S. Kollmorgen of Hire-Archi Workplace Legal Consultancy for the applicant.

Mr T Spence of Counsel for Cartelux Australia Pty Ltd and the individual respondent.

[1] Approximate value of invoices described in witness statement of Mr Joshua Williams at paragraph 23, converted from British Pounds to Australian Dollars

[2] [2017] FWCFB 3941

Printed by authority of the Commonwealth Government Printer