s.365 - General protections

Jordan Lovini & George Padinjarethalackal Jacob

Application to deal with contraventions involving dismissal - demotion with substantial remuneration reduction constituted a dismissal.

• [1] Mr Jordan Lovini and Mr George Padinjarethalackal Jacob both work at Youturn Limited (the Respondent), an organisation that operates in the child safety, homelessness, mental health and suicide prevention spaces. Mr Lovini and Mr Jacob are Case Managers.

• [2] Mr Lovini works in the Intensive Family Support Program (IFSP) for the Respondent and commenced employment with the Respondent in November 2017.

• [3] Mr Jacob commenced working for the Respondent in November 2018.

• [4] Mr Lovini and Mr Jacob have each made an application to the Fair Work Commission (the Commission) pursuant to s.365 of the Fair Work Act 2009 (the Act) to deal with a general protections dispute involving dismissal. Mr Darce Foley, the Respondent's General Manager - Community Services, was named as an additional Respondent in Mr Lovini's application.

• [5] Mr Lovini and Mr Jacob had, up until 30 June 2025, been classified and paid by the Respondent as a Level 5 under the Social, Community, Home Care and Disability Services Award (the Award). From 1 July 2025, the Respondent has determined to classify and pay both applicants as a Level 4. Both applicants continue to work for the Respondent but contend that the unilateral decision to reduce their classification and pay from a Level 5 to a Level 4 constitutes a dismissal pursuant to s.386 of the Act.

• [6] Mr Lovini commenced working for the Respondent as a Support Worker. At that time, Case Managers were paid a Level 6 rate under the Award. As a Support Worker, Mr Lovini commenced as a Level 3.

• [7] In 2018, the Respondent conducted a review and restructured the IFSP program, creating six Case Manager roles at Level 5. A Domestic and Family Violence Specialist role was introduced as a Level 6. During the consultation process, staff were offered redundancies due to changes in pay and roles. A small number of staff members decided to stay with the Respondent rather than accept a redundancy. At the end of 2018, Mr Lovini completed his tertiary studies and by mid-2019 was successful in being appointed as a Case Manager at a Level 5.

• [8] In 2020, the Respondent rebranded from United Synergies to Youturn Youth Support and Mr Lovini was issued with a contract variation on 8 May 2020. His contract confirmed that the Case Manager was recognised as a Level 5 under the Award.

• [9] Mr Lovini stated that in October 2021, a meeting was held where it was explained that the former General Manager had 'made a mistake' and some roles were being removed due to lack of funding. He and other Case Managers were informed that prospectively, new IFSP Case Managers would be employed at Level 4 of the Award and employed as Case Officers, not Case Managers. Existing Case Managers would be grandfathered in their existing classification - Level 5. Mr Darce Foley, General Manager - Community Services was present during the meeting and gave the explanation to Mr Lovini and the other Case Managers.

• [10] In 2022, a new Case Officer position description was created for new hires. Mr Lovini stated that the position description is broader and less focussed on the specialised case management work that he undertakes. He considers that it was designed to reflect less complex responsibilities, enabling new staff to be paid at a lower level due to prior budget constraints.

• [11] Mr Lovini considers that the Level 5 classification accurately reflects his role and daily responsibilities. He undertakes complex case management, provides intensive in-home support, coordinates specialist services, develops integrated case plans and manages high-risk situations. He manages complex, high-risk cases with substantial autonomy, makes independent decisions within policy guidelines, responses to crises and provides professional guidance to Support Workers.

• [12] Level 4 roles involve moderately complex work, operate within set frameworks and require more supervision.

• [13] Mr Lovini noted that new Case Officers were hired as Level 4 and discovered that he and other existing Case Managers had been grandfathered as Level 5 employees. The three grandfathered employees are male, while all new Case Officers are female. This has resulted in questions regarding gender inequality and pay gaps.

• [14] On 10 June 2025, Mr Lovini was informed that his role had been reclassified from Level 5 to Level 4 following external and internal reviews. He was told the change aimed to ensure fairness across the team. When he queried the grandfathering of his Level 5 classification, he was informed that no record existed of the 2021 arrangement, despite Mr Foley being present at the meeting.

• [15] Mr Lovini states that he was advised that because all remaining Level 5 Case Mangers are male and all Level 4 Case Officers are female, the organisation sought to "make things equitable".

• [16] As part of this, a $10,000 payment was made to Level 4 Case Officers for performing Level 5 duties. Despite seeking clarification on the commitment to maintain a grandfathered Level 5 classification, Mr Lovini was told that mistakes had been made and that an end date should have been included on his contract. He considers that the Respondent has noted that Level 4 Case Officers have performed Level 5 duties and notes that the grandfathering of certain Case Manager roles was discussed openly at the Respondent's national conference in 2024.

• [17] Mr Lovini stated that no consultation had occurred regarding Case Manager roles and responsibilities. If consultation had occurred, he would have been able to demonstrate that he performed complex case management.

• [18] Mr Lovini has tried to deal with Ms Isabella Spurdle, Employee Relations Partner and Mr Foley, to no avail. His legal representative wrote to the Respondent on his behalf on 19 June 2025, seeking to demonstrate how he is correctly classified as a Level 5 employee. The correspondence noted that if the Respondent unilaterally reduced him to Level 4 with a corresponding reduction in pay, Mr Lovini would consider that to be a repudiation of the employment contract. The correspondence noted that his remuneration was proposed to be reduced from $101,787.51 per annum to a declared $91,598.47 per annum, a 10.1% reduction. Reference was made to several Commission decisions citing a unilateral demotion with the employee's consent, particularly one involving a substantial pay cut may amount to a repudiation of the employment contract.

• [19] In a hearing before me on 22 September 2025, attended by Mr Lovini, Mr Jacob, Ms Spurdle and Mr Foley, Mr Lovini noted that he has tertiary qualifications which are not required for a Level 4 Case Officer role. He noted that he is being paid $94,791.84 per annum with the 3.5% annual wage increase having been applied to a Level 4 rate. Had he remained at a Level 5, his annual remuneration would be in excess of $104,000 (noting the 3.5% increase applied to wages only and not to a motor vehicle component).

• [20] In reply material filed by Mr Lovini, he noted that he has declared that he continues to work for the Respondent under protest. He stated that he is being compelled to perform his duties while being paid less than the correct classification under the Award and he does not consent to this.

• [21] He refuses to sign a contract variation agreeing to being classified as a Level 4 employee. Despite all earlier notifications requiring a signature, he has been issued with a contract variation by the Respondent which does not require his signature. He stated that he is performing work under significant stress and duress.

• [22] Mr Lovini is open to a resolution by way of a compromise such as grandfathering the Level 5 rate of pay until such time as the Level 4 rate catches up with the higher rate, but this has been refused by the Respondent. His primary position is that he is entitled to be a Level 5 and be paid as a Level 5 employee, with pay increases.

• [23] Mr Lovini noted that in 2024, some Case Officers were voicing concern that they are paid at Level 4 while the three Case Managers are paid at Level 5. Mr Lovini stated that at a meeting on 7 July 2024, Ms Lauren Charman, Youturn Child Safety Manager explained to Level 4 employees that they had accepted their roles as Level 4, and the Case Managers are grandfathered at Level 5 and this would not change. Ms Charman directed that there be no further discussion on the issue.

• [24] Mr Lovini noted that he attended a meeting on 10 June 2025 with Ms Spurdle and Mr Foley. He was very upset upon learning of the Respondent's decision to reduce his classification and pay. He relayed the impact this would have on his family.

• [25] In evidence given during the hearing, Mr Lovini stated that Ms Angela Robertson spoke at a company-wide meeting on 22 May 2024, and in answering a question, confirmed that some employees are subject to grandfathering of their classification and pay rate. Mr Lovini called for the Respondent to produce the recording of the announcement following the hearing.

• [26] Mr Jacob's evidence largely mirrors that of Mr Lovini. He had been a Level 5 employee since 2018. On 10 June 2025, he was informed that his role had been reclassified as a Level 4 role. He was not consulted in respect of this decision.

• [27] Mr Jacob considers that he is required to make independent, professional decisions within policy guidelines, and explained that the scope, complexity and level of responsibility clearly exceed the descriptors for Level 4.

• [28] He has not agreed to his role being reduced from Level 5 to Level 4.

• [29] In his reply material, Mr Jacob stated that at the meeting between himself, Ms Spurdle and Mr Foley on 10 June 2025, he was made to feel that there was no option but to accept being reclassified as a Level 4 employee. Mr Jacob reported to management that he felt disrespected during the meeting.

• [30] Mr Jacob wrote an email to Mr James Blevin, CEO who responded:

"As previously communicated by Darce and Isa, the outcome of the classification review has been finalised. We believe the decision is fair, equitable, and in the best interests of the IFS team and Youturn as a whole."

• [31] In evidence given during the hearing, Mr Jacob stated that he continues to do the same work that he did when he was classified as a Level 5 employee. The impact has been significant, affecting his pay and also his value. He stated that his self-worth has been affected.

• [32] In its Form F8A - Response to general protections application involving dismissal, the Respondent stated that Mr Lovini and Mr Jacob's roles were reclassified from a Level 5 to Level 4 under the Award, consistent with the duties performed by them and aligning with the classifications of other employees in the same role.

• [33] The Respondent denied that Mr Lovini and Mr Jacob have been dismissed. The Respondent stated that each of the applicants remain employed in their substantive positions with no loss of duties, status or employment. The Respondent stated that it is committed to lawful and equitable classification practices and cannot accommodate retaining the applicants as Level 5 employees without undermining fairness and consistency across the workforce.

• [34] The Respondent submitted that classification decisions must align with the Award's descriptors [my emphasis].

• [35] Ms Spurdle is the Respondent's Employee Relations Partner and commenced with the Respondent in April 2025. She stated that she and Mr Foley met with Mr Lovini on 10 June 2025 to inform him that after a 12-month review, his classification of Level 5 was incorrect, and Level 4 was the appropriate classification. He was informed that the only change is he would now be classified as a Level 4.4 and there would be a reduction of $3.54 per hour in his pay rate.

• [36] Mr Lovini inquired about a redundancy entitlement, to which Ms Spurdle responded that the role was not redundant, and the position remained necessary. She stated that it was a reclassification, not a termination and the only impact was the adjusted wage.

• [37] Ms Spurdle and Mr Foley also met with Mr Jacob on 10 June 2025 to inform him of the outcome of the review.

• [38] In evidence given during the hearing, Ms Spurdle agreed that consultation around the classification review occurred within the business, but Mr Lovini and Mr Jacob were not consulted. They were "consulted" as to the outcome, not the review.

• [39] Ms Spurdle does not think the reduction in pay from $101,787.51 per annum to $91,598.47, now $94,793.00 (with a national wage increase) is significant. She considers the only change to the affected employees is a reduction in payment. She considers that the reduction in pay is only 6.87% and not 10.1% on account of the national wage increase.

• [40] After the external review was completed, it was internally reviewed by the CEO, Mr Foley and Ms Spurdle.

• [41] She acknowledged that an ex-gratia payment of between $10,000 and $12,000 was paid to female Case Managers as a matter of 'fairness and equality' to make up for the difference in their rate of pay and those received by Mr Lovini and Mr Jacob and another employee.

• [42] Mr Foley is the Respondent's General Manager - Community Services. On 26 October 2022, Ms Charman informed him that she had consulted with then Acting Program Coordinator, Ms Tarnya Tyler regarding the award classifications applicable within the IFS team. Ms Charman advised that she had explained to Ms Tyler that Level 4 of the Award had been consistently applied across comparable Case Officer positions and that it was unlikely the IFS team would receive a higher classification of Level 5.

• [43] On 7 June 2024, Ms Charman advised Mr Foley that she had attended an IFS team meeting where she had explained that a pay review process was about to commence. Benchmarking would be undertaking against position descriptions by an independent specialist organisation. Following that meeting, Ms Charman spoke with Ms Tyler, who expressed that she hoped to soon advise her team that all Case Officers would be classified at Level 5 of the Award.

• [44] Later in June 2024, Ms Tyler informed Ms Charman and Mr Foley that some IFS team members would be dissatisfied if they were not classified at Level 5 of the Award, as they believed their work was more complex than that of other Case Officers. On 4 July 2024, a communication went to staff to inform them that the benchmarking project had formally commenced.

• [45] At the staff Christmas party in December 2024, a female Case Officer approached Mr Foley and the CEO, asking for their views on certain Case Officers being paid less than others. The Case Officer asked the CEO what he intended to do about the perceived pay disparity.

• [46] The letters to Mr Lovini and Mr Jacob inform them that on account of the review, their position as Case Officer was incorrectly classified at Level 5, and the salary of $101,787.51 per annum was not aligned with the correct classification for the role. Each of the applicants were informed:

"We have now rectified this issue to ensure consistency and fairness across the team."

• [47] In evidence given during the hearing, Mr Foley was asked what he thought occurred in the meeting of October 2021 referred to at [9]. He stated that he thought it was the pay rate that was to be grandfathered. He acknowledged that the pay rate did not become stagnant and that it has increased with annual wage increases. The effect of that is that the three Level 5 employees had, up until July 2025, been Level 5 employees and received the rate of pay of Level 5, including annual increases.

• [48] Mr Foley agreed that for the IFS program, employees are requested to have a university degree and the IFS guidelines state that they should have university qualifications. He agreed that other agencies pay some IFS employees at Level 5, and Mr Lovini and Mr Jacob are working with complex family situations.

• [49] Mr Foley stated that he was not at the conference referred to at [25] where the statement regarding grandfathering was mentioned.

• [50] During the hearing, the issue of the conference of 22 May 2024 referred to at [25] was discussed. Following the hearing, a copy of the recording was provided to my chambers for me to view. Having viewed the recording, the following relevant transcript was provided to the parties:

I think there have been a couple of questions about this so gender pay gaps, there's just no place for it within Youturn whatsoever.

Since I've started, I've had three complaints made where people have identified that a gender pay gap has existed. All three have been investigated.

We found that sometimes there is a gender pay gap where there is a historical thing where people have been what we call grandfathered.

So it might be a role that historically was higher, it's since changed, but rather than reduce someone's wages, we've grandfathered it.

So there were two situations like that and then the third there was a genuine gender pay gap which was escalated to James and resolved immediately.

So if there are ever any concerns about gender pay issue, please don't hesitate to raise them.

And the appetite of the executive is to stamp that type of thing out.

• [51] Clearly, at 36 minutes, 8 seconds, Ms Robertson informed the group, "rather than reduce someone's wages, we've grandfathered it."

• [52] In written closing submissions following the hearing, the Respondent submitted that despite the above transcript, there is no evidence that Mr Lovini and Mr Jacob had their pay rate or classification grandfathered. It was submitted that Ms Robertson's remark was in direct response to an anonymous question concerning gender pay equity across the business, not employee classifications. Ms Robertson referred to historical situations where wages, not classifications had been grandfathered. It was submitted that Ms Robertson's remark must have been in reference to an unnamed senior position outside the scope of any modern award and therefore it is unreasonable for the applicants to believe the remarks were directed at them.

• [53] Despite Mr Foley's evidence that grandfathering did apply to the applicants, it was submitted that the applicants did not have any grandfathering arrangement apply to them. It was noted that they have continued to receive pay increases in accordance with the Award and a true grandfathering arrangement would 'freeze' an employee's wage at a fixed level, irrespective of increases to the Award rate.

• [54] The Respondent referred to the Full Bench decision in NSW Trains v James Todd (NSW Trains),[1] submitting that the factual circumstances, legal issues and statutory frameworks are fundamentally different.

• [55] It was noted that Mr James' case involved a disciplinary issue and the bringing of an unfair dismissal application. The present matters are general protections applications and not involving disciplinary issues.

• [56] Mr James' employment was governed by an enterprise agreement as opposed to an award in these applications. It was submitted that the Award requires employers to ensure the correct classification of employees. It was submitted that if it is discovered that an employee is at a higher classification than they should be the employer may reclassify them in order to comply with the Award. It was submitted that the applicants cannot be considered to have been demoted or dismissed as the reclassification was a legal requirement to ensure their roles were correctly aligned with the descriptors and classifications set out in the Award.

• [57] Mr James suffered a reduction of approximately $14,000, whereas the applicants suffered a reduction of 'only' $10,606.92 before the national wage increase was added to the Level 4 rate, resulting in a difference of $7,044.51. It was submitted that the reductions to pay to the applicants is not significant.

• [58] The Respondent submitted that reclassification under the Award is about ensuring compliance, not imposing punishment. It was submitted that the reduction in pay is modest and a proportionate reduction aligning duties with the correct classification and it is not harsh, unreasonable, nor a repudiation of the employment contract.

• [59] The Respondent submitted that the Award expressly allows for roles to be reassessed and reclassified without providing any source for the assertion.

• [60] It was submitted that it would be contrary to industrial principles for employees performing the same role within the same sector and business to be paid at different classification levels under the Award, and reclassification ensures consistency and prevents inequity in wage outcomes.

• [61] The Respondent submitted that allowing an employee to remain in an incorrect higher classification could create expectations from other employees. It can lead to claims of unfair or unequal treatment and disputes from colleagues or unions. It was submitted that over-classifying an employee can lead to disputes if another employee challenges the fairness of the classification practices.

• [62] It was submitted that the Respondent cannot arbitrarily elect when to apply the Award classifications, descriptors or governance provisions. It was submitted that a failure to move Mr Lovini and Mr Jacob to a Level 4 when the Respondent had determined that they are a Level 4 could constitute a breach of both the Award and the Act. The Respondent did not nominate which provisions of the Award or the Act would be breached.

• [63] Mr Lovini and Mr Jacob submitted that any suggestion that they were not the subject of the grandfathering comment at the conference on 22 May 2024 is incorrect. Ms Tara McLelland was sitting next to Mr Lovini during the conference and repeatedly asked questions about pay equity. Mr Lovini and Mr Jacob state that to their knowledge, they, together with Mr Craig McDonald, Case Manager are the only employees they know of who have had their pay and classification grandfathered by the Respondent.

• [64] Mr Lovini and Mr Jacob submitted that it is not only their pay that is grandfathered; it is their classification at a Level 5. All contract notices since 2021 have specified Level 5.

• [65] With respect to the NSW Trains authority, both applicants assert this authority is relevant, particularly where their annualised salary has reduced by over 10%. It was submitted that the unilateral reclassification of the role and substantial reduction in pay, undertaken without any consultation constitutes a clear repudiation of the contract.

• [66] On 10 October 2025, the applicants sought to file a witness statement of Mr Craig McDonald. Mr McDonald is also a Case Manager employed by the Respondent and was on six months' unpaid leave when the June 2025 notification was made. Mr McDonald was telephoned by Ms Spurdle and Mr Foley to inform him of the impending reclassification and reduction in pay.

• [67] Mr McDonald commenced with the Respondent in March 2018 as a Case Manager, Level 6 under the Award. In mid-2018 after a three-month consultation, the Respondent decided to reclassify Case Manager roles to Level 5. Two colleagues accepted redundancy payments, and Mr McDonald chose to remain.

• [68] From 2018 to 2021, all new Case Managers were employed as Level 5, including Mr Lovini and Mr Jacob. Around 2021, the Respondent began employing new hires as Case Officers on Level 4 despite the duties being the same. Level 4 employees later became aware of the three male Case Managers being classified and paid as Level 5. The Level 4 employees happened to be female.

• [69] On 21 February 2024, Mr McDonald raised this issue at his Personal Supervision and Development (PSD) Session. Ms Lauren Charman informed him it was her understanding that he and Mr Lovini and Mr Jacob had been grandfathered and would remain as Level 5 employees until such time as they left the Respondent's employment.

• [70] Mr McDonald had a six-month break off work between March and October 2025. He too has made a general protections application regarding the same matters in these applications. I have issued a decision in Mr McDonald's application in McDonald v Youturn Limited [2025] FWC 3758.

• [71] In a supplementary statement made in this matter, Mr Foley stated that one male employee was employed as a Case Officer at Level 4. In Ms Spurdle's supplementary statement, she stated that the male employee was on a fixed-term contract.

• [72] Section 386 of the Act governs when a person has been dismissed. It provides that:

(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, engage in by his or her employer.

(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."

• [73] In Harrison v FLSmidth Pty Limited,[2] Deputy President Saunders said the following:

"[26] On another view, an employee who is demoted and elects to remain employed by their employer is "dismissed" within the meaning of s 386 in circumstances where the demotion involves a significant reduction in their remuneration or duties. For the reasons set out below, this construction is supported by the legislative purpose of s 386, as well as the context of the words within the FW Act as a whole. Context also includes the existing state of the law and the mischief the legislative provision was intended to remedy.[3]

[27] First, s 386(1) of the FW Act does not purport to define the term "dismissal" exhaustively. It identifies that a person has been dismissed if s 386(1)(a) or (b) is satisfied, but does not, in terms, limit the circumstances which may constitute a "dismissal" to only those identified in s 386(1)(a) or (b). Section 386 of the FW Act must be construed as a whole, not just by reference to subsection 386(1).

[28] Secondly, the purpose of s 386(2)(c) of the FW Act is to define the circumstances in which the demotion of an employee who remains employed by their employer will not constitute a "dismissal" within the meaning of s 386 of the FW Act. Such a purpose, by implication, suggests that there will be circumstances in which the demotion of an employee who remains employed by their employer may constitute a "dismissal" within the meaning of s 386 of the FW Act.

[29] Thirdly, if a "dismissal" within the meaning of s 386 of the Act were limited to a circumstance in which the employment relationship had been terminated, then s 386(2)(c)(i) would have no work to do. That is, if the existence of an ongoing employment relationship could, in and of itself, defeat an argument that a demoted employee had been dismissed, it would never be relevant to inquire whether the person who remained in employment had suffered a significant reduction in their remuneration or duties.

[30] Fourthly, the fact that paragraphs 386(2)(c)(i) and (ii) are phrased in present tense (i.e. "the demotion does not involve a significant reduction..." as opposed to "the demotion did not involve a significant reduction..." and "he or she remains employed.." as opposed to "he or she remained employed") suggests that employees who have been demoted and (1) suffer a significant reduction in their remuneration or duties and (2) remain in employment with their employer, have access to unfair dismissal protection.

[31] Fifthly, s 386(2)(c) of the FW Act can be contrasted with ss 386(1)(a), (1)(b), (2)(a) and (2)(b), all of which are directed to circumstances in which the employment relationship has come to an end. The requirement in s 386(2)(c) that an employee "remains employed" suggests that it is addressing a quite different circumstance to the other parts of s 386 of the FW Act.

[32] Sixthly, s 386(2)(c) does not stipulate any period for which an employee must "remain employed". A demotion by its very nature does not, of itself, terminate an employment relationship. The purpose of a demotion is usually to maintain the employment relationship, rather than to terminate it. When an employee is demoted, they remain employed for at least some period of time. It may be a very short period. For example, an employee who is told they have been demoted may respond seconds later by informing their employer that they resign immediately, thereby terminating the employment relationship. Another employee who has been demoted may remain employed for a number of days, weeks or months before deciding they are not willing to work in the demoted position and resigning from their employment. Given the absence of any period for which an employee must "remain employed" in s 386(2)(c) and the fact that every demotion results in an employee remaining employed for at least some period of time, the only sensible way to construe the expression "remain employed" in s 386(2)(c) is by interpreting it to mean that the employee "remains employed with the employer that effected the demotion" at the time they lodge an unfair dismissal application in the Commission. That is, s 386(2)(c) deals with a particular circumstance in which the employment relationship is ongoing and has not been terminated. In circumstances where an employee is demoted and the employment relationship is subsequently terminated, such an employee may contend they were dismissed, in that they were forced to resign by their employer's conduct in demoting them (s 386(1)(b)).[4]

[33] Notwithstanding the logic and initial attraction of the first construction (set out in paragraph [26] above), I am of the view that the second construction (set out in paragraph [27] above) is the correct one. That is, an employee will be "dismissed" within the meaning of s 386 of the FW Act if they are demoted in employment in circumstances where the demotion involves a significant reduction in their remuneration or duties and they remain employed by the employer that effected the demotion. Such an interpretation arises, by implication, from the terms of s 386(2)(c) considered in the context of s 386 as a whole and is supported by the textual indicators and legislative purpose set out in paragraphs [28] to [33] above.[5]"

• [74] The Deputy President adopted his above reasoning in James Todd v NSW Trains [2021] FWC 4733. At [24] of the decision, the Deputy President concluded that the ordinary meaning of the word "demote" is "to reduce to a lower grade or class (opposed to promote)". The Deputy President determined that Mr James had been demoted and had suffered a substantial reduction in pay and therefore had been dismissed.

• [75] On appeal,[6] the Full Bench in NSW Trains stated the following:

"[32] Contrary to Deputy President Saunders' construction, we consider that s.386(1) exclusively defines the circumstances which give rise to a person being 'dismissed' by an employer for the purposes of Part 3-2 the FW Act. It follows that a person who has been demoted in employment, but who remains in the employ of the employer, has only been 'dismissed' if the person's employment has been terminated on the employer's initiative within the meaning of s.386(1)(a) of the FW Act.

[33] We agree with the Appellant's and the Respondent's construction that s.386(2) serves to clarify the scope of s.386(1). This is evident from the language and structure of ss.386(1) and 386(2).

[34] Section 386(2)(c) clarifies that s.386(1) does not apply to certain circumstances. It does not give rise (by implication or otherwise) to a category of dismissal that is separate to s.386(1). That is not to say that in the absence of s.386(2), all circumstances in ss.386(2)(a)-(c) would necessarily be caught by s.386(1)(a). Contrary to the ACTU's submission, the use of the word 'however' in the chapeau to s.386(2) cannot be sensibly read to suggest this.

[35] The effect of the Deputy President's construction of s.386(2)(c) is that by implication, a demotion in employment which involves a significant reduction in the employee's remuneration or duties is a dismissal under the FW Act. In the circumstances, Appeal ground 1 is upheld."

• [76] Dealing with the question as to whether s.386(1)(a) can encompass termination of the employment relationship and/or termination of the employment contract, the Full Bench stated the following:

"[76] The question of whether a demotion constitutes a dismissal for the purposes of s.386(1)(a) must be considered in its statutory context and common law principles applied in this context. It is clear from the legislative history and previous consideration of the provisions by the Commission and its predecessors that Parliament did not intend s.386 to exclude all demoted employees who remain employed after their demotion from accessing the unfair dismissal provisions in the FW Act. Section 386(2)(c) proceeds on the premise that a demotion where employment continues can amount to a 'termination of employment' (and then clarifies that particular demotions fall outside the scope of s.386(1)). As a general proposition, provided the employee makes clear their objection to the demotion, they should not be taken to have affirmed their original contract of employment merely by continuing to work in the demoted position and being paid for that work whilst challenging the alleged dismissal before the Commission. Of course, it will be a question of fact in each case as to whether the conduct of an employee constitutes an affirmation of their contract."

• [77] Ultimately in NSW Trains, the Full Bench determined that the enterprise agreement governing Mr James' employment authorised a demotion for the reasons given to Mr James and could not be categorised as repudiatory conduct.[7]

• [78] In NSW Trains, it was held that a dismissal may be given effect to either by the termination of the employment relationship or the contract of employment. In either case, the termination must be "on the employer's initiative".

• [79] The Respondent in these applications has submitted that the reclassification from Level 5 to Level 4 is correct, and because it has determined it is correct, it must reduce the classification for Mr Lovini, Mr Jacob (and Mr McDonald). Firstly, a court or tribunal has not established that the Respondent is correct in its reclassification. It is simply asserted by the Respondent that it is correct.

• [80] Secondly, no consultation occurred with affected employees, denying them an opportunity to convince the Respondent that it is not correct.

• [81] The Respondent's submission that, because it has declared that the applicants are appropriately a Level 4, they must be correctly classified and be paid at a lower pay grade, is not accepted. An employer can pay employees at a higher pay grade if it wishes. There is nothing compelling the Respondent to move Mr Lovini and Mr Jacob to a Level 4. There is no breach of the Act or the Award in continuing to categorise the applicants as Level 5. Quite disappointingly, the Respondent's desire to ensure an equitable pay grade and remuneration among its employees, and with a frustrated cohort of female Case Officers considering they are underpaid against their longer serving male Case Manger colleagues, has resulted in the Respondent tearing the applicants down instead of honouring the common law contract it had with them to grandfather their classification and pay rate.

• [82] The evidence is clear that the applicants' classification and pay rates had been grandfathered for many years. They were told that in the presence of Mr Foley in October 2021. Mr Foley's evidence that he considered only the pay rate to have been grandfathered cannot be accepted, considering the amount paid to the applicants increased every year in line with annual wage increases. Regrettably, Mr Foley does not understand the concept of grandfathering. What it means is that the three Case Managers were grandfathered at Level 5, and all new employees would be employed at Level 4.

• [83] Further, it is abundantly clear that at the conference in May 2024, the grandfathering arrangement of the three male Case Managers being paid at Level 5 was discussed. Female Level 4 Case Officers were agitating the issue. Mr Lovini and Mr Jacob took comfort in the fact that it was declared that their wages were not being reduced. Yet, just over one year later the Respondent did reduce their wages all in the name of "equality and fairness". Fairness to Mr Lovini, Mr Jacob (and Mr McDonald) was not considered. They were informed in writing that their reduction in wages was in the best interests of the IFS team and the Respondent as a whole.

• [84] One does not break the proverbial glass ceiling by amputating the legs of the men above. The applicants are entitled to have their employment contract enforced which specifies their classification and rate of pay. The Respondent is not entitled to arbitrarily decide that it will no longer be held to its end of the bargain.

• [85] In these applications, the Respondent clearly initiated the demotion and informed Mr Lovini and Mr Jacob of the demotion in June 2025. Despite their protests, it took effect in July 2025. I am satisfied that the contract of employment entered into by the applicants with the Respondent was ended on the employer's initiative.

• [86] As an aside, Mr Lovini and Mr Jacob have not been presented with contract variations to sign, despite all earlier contract variations requiring their signature. In this case the Respondent simply informed them they would be Level 4 from July 2025. Mr Lovini and Mr Jacob had no say in the matter. When Mr Lovini continued to agitate the matter, he was informed by Ms Spurdle on 11 June 2025, one day after he was notified of the reclassification:

"We also want to highlight that this ongoing back-and-forth is filled with similar context to previous emails by both parties, is not constructive. We have provided on multiple occasions a response in regards to your contract and decision-making process via email and in person, this is not progressing in a constructive direction. The classification decision has been finalised based on legislative requirements and the duties you perform, and continuing to revisit the same points will not change the outcome. Please refer to the justification as per my previous 2 emails. The company considered all avenues before landing on a decision, as you are aware we have been reviewing for over 12 months and this has been a thorough review process."

• [87] In effect, Mr Lovini was told to put up and shut up. Equally, Mr Jacob was told by the Respondent's CEO that his reduction in pay was in the best interests of the IFS team and the Respondent as a whole.

• [88] Having satisfied myself that the contract of employment entered into by the applicants with the Respondent was ended on the employer's initiative, it is necessary to determine if there was a demotion resulting in a significant reduction in remuneration or duties while noting that the applicants remain employed with the employer that effected the demotion.

• [89] Mr Lovini and Mr Jacob are performing the same duties they had been when they were employed at the Level 5 rate. They have, however, been reduced to a lower classification grade under the Award. I am satisfied that they have each been demoted.

• [90] In James, the Deputy President determined that the reduction in salary of 9.8% by Mr James' demotion was significant. It would have future impact on paid leave and superannuation entitlements. In NSW Trains, the Deputy President's first instance decision that Mr James' salary had been significantly reduced on account of his demotion was not disturbed on appeal.[8] The test as to whether there has been a significant reduction is an objective test, having regard to all of the circumstances.[9]

• [91] The Respondent in these applications has submitted that the reclassification from Level 5 to Level 4 is modest. It is not. It erodes several years' worth of annual wage increases.

• [92] If the applicants had not been demoted, their annual pay would have risen from $101,787.51 to over $104,000. Instead, it reduced to $91,598.47 and then moved to $94,743.00 on account of the annual wage increase in accordance with the Award. It puts them in a position marginally better than they were in 2022.

• [93] Whether the amount of the reduction is:

• $7,044.51 on the Respondent's best case;
• over $10,000 against the $101.787.51 to $91,598.47; or
• around $10,000 against the approximate $104,000 to $94,743.00;

• [94] It is so significant a sum that the Respondent considered it necessary to provide a one-off bonus of $10,000 - $12,000 to female Case Officers at Level 4 to make up the difference in their rate of pay with those of the applicants' when the issue of gender pay disparity was being vocally agitated.

• [95] The reduction in remuneration is significant not just in respect of the fortnightly pay to the applicants, but also in respect of any sum that they may receive when they finally leave the Respondent's employment. The applicants are not far off becoming entitled to long service leave, whether they take the leave beyond 10 years of service or have it paid out to them beyond 10 years of service. The significant drop in remuneration also affects the applicants' superannuation in the vicinity of $1,000 per annum; the loss compounded when it is time to retire.

• [96] I am satisfied that each applicant has been dismissed at the initiative of the Respondent and the demotion of each of the applicants resulted in a significant reduction in their remuneration.

Accordingly, the Commission has jurisdiction to convene a conference pursuant to s.368 of the Act to see if the Commission can assist the parties in resolving the matter by way of conciliation.

[1] NSW Trains v James Todd [2022] FWCFB 55.

[2] [2018] FWC 6695.

[3] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at [4]; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at p. 408; Project Blue Sky [1998] HCA 35; (1998) 194 CLR 355 at [78] per McHugh, Gummow, Kirby and Hayne JJ.

[4] Bupa Aged Care Australia Pty Ltd t/a Bupa Aged Care Mosman v Shahin Tavassoli [2017] FWCFB 3941 at [47].

[6] NSW Trains v Todd James [2022] FWCFB 55.

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