NSW Trains v Mr Todd James [2022] FWCFB 55

NSW Trains v Mr Todd James [2022] FWCFB 55 | Case summary | Zoe

[63]

[23] The Deputy President found that s.386(2)(c) of the FW Act necessarily implies that a demotion in employment which involves a significant reduction in the employee's remuneration or duties is a dismissal, even if the employee remains in the employer's employment and there has been no dismissal within the meaning of s.386(1).

[24] The Appellant contends that the Deputy President misconstrued ss.386(1)(a) and 386(2)(c). The Appellant submits that the correct interpretation is that 's.386(1) defines, exhaustively and exclusively, the circumstances which give rise to a person being "dismissed" by an employer under the FW Act and s.386(2) merely creates a series of independent exceptions to s.386(1). It follows that a person who has been demoted in employment has been "dismissed" only if that person's employment has been terminated on the employer's initiative within the meaning of s.386(1)(a) or the employee resigns from his or her employment by reason of being "forced to" by reason of the employer's conduct (which could include a demotion) (s.386(1)(b)).'[9]

[25] The Appellant raises 6 points in support of its construction:

• The plain meaning of the words used in s.386(1) indicates that it is the operative provision in defining where a 'dismissal' occurs. Section 386(1) provides by use of the conditional 'if', that a person may only be dismissed where one of the 2 circumstances in subparagraph (a) or (b) applies.[10]

• It is instructive that the chapeau in s.386(2) is in different terms to the chapeau in s.386(1). The conditional adverb 'however' indicates that it is to be contrasted with the earlier subsection, signalling the creation of a set of different circumstances for which 'a person is not dismissed'.[11] It is intended to mean 'regardless' of whether a person falls within the meaning of dismissed in s.386(1), the matters in s.386(2) are not circumstances giving rise to a dismissal.[12] It is intended to make clear for abundant caution the circumstances when a person is not dismissed.[13]

• The use of 2 separate subsections reinforces the separate operation and purpose of ss.386(1) and 386(2) and is a strong indicator that each subsection must be construed in the logical sequence in which they appear; first, s.386(1) sets out exclusively the meaning of 'dismissed'; and, second, s.386(2) sets out circumstances where a person is deemed to not be 'dismissed'. Had Parliament intended for s.386(2) to establish further circumstances capable of giving rise to a dismissal, it would have framed the chapeau to s.386(2) and the subsections in opposite terms to how they are worded, or those circumstances would have logically been inserted into further subsections of s.386(1).[14]

• 'The Deputy President's interpretation is contrary to the genesis of, and rationale for, the insertion of an earlier iteration of s.386(2) in predecessor legislation.' When s.170CD(1B) - the forerunner to the current s.386(2)(c) - was inserted into the Workplace Relations Act 1996 (Cth) (WR Act), the expression 'termination of the employment' in the WR Act[15] included either the termination of the employment contract (such as demotion of an employee who remains in employment) or the termination of the employment relationship or both.[16] The insertion of s.170CB(1B) was directed to the mischief that had been created by virtue of this interpretation of s.170CB(1) and was designed to exclude certain demotions from giving rise to unfair dismissal claims. Given this history, when one interprets ss.386(1)(a) and 386(2)(c) of the FW Act, it can be presumed that Parliament considered and accepted the same interpretation to the same words in the specialised field of workplace relations.[17]

• For the reasons set out in the decision of Bradley v Solarig Australia Pty Ltd[18] (Solarig), the statutory context of ss.386(2)(a) and 386(2)(b) does not support the construction that each of these paragraphs operate as independent deemed categories of dismissal. The apparent logic of the Deputy President's reasoning is that, even though s.386(2)(c) uses negative language to describe when a type of demotion does not give rise to dismissal, s.386(2)(c) is capable of being read conversely to implicitly create a further independent class of dismissal. It is not apparent why the Deputy President applied the process of inverting the first limb of s.386(2)(c) but not the second limb (remaining in employment). Had the Deputy President done so, then a demotion would only involve a dismissal if the employee did not remain in ongoing employment. The absurdity of the partial inversion of s.386(2)(c) underscores the incoherent approach of construing s.386(2)(c) as an extended category of dismissal.[19]

• The Deputy President's contention that s.386(2) extends the classes of dismissals created in s.386(1) is contrary to dicta of the Federal Court and Full Bench authorities on the construction of the predecessor provision in the WR Act. Katzmann J of the Federal Court of Australia in Broadlex Services Pty Ltd v United Workers' Union[20] (Broadlex) held, in referring to s. 386(2), that it 'does not erect a class of deemed dismissals'. In so doing, Katzmann J expressly renounced the contrary approach of the Deputy President in Harrison v FLSmidth Pty Limited[21] (Harrison) at [26]. The Full Bench is bound to apply the construction adopted by the Federal Court in seriously considered dicta.[22]

[26] The Respondent submits that, read fairly, the Deputy President in the Decision does no more than identify that s.386(1) does not purport to set out the bounds of circumstances which are captured by the provision, and no error is disclosed in that finding.[23] We do not agree with this reading of the Decision.

[27] The Respondent further submits that in order for a person to have been 'dismissed' for the purposes of the FW Act, the person must satisfy the definition in s.386(1):

• The word 'dismissed' is defined in the FW Act by reference to s.386: see s.12. On a plain and natural reading, s.386(1) provides the definition of 'dismissed'. The 2 limbs of s.386(1) cover 2 scenarios - the employer terminating the employment (on its initiative), or the employee resigning, but being forced to do so due to the employer's conduct. Both are, on their face, broad in scope and require a finding of fact that will, necessarily, require an assessment of the conduct of the employer.[24]

• Section 386(1) therefore excludes scenarios where the contract comes to an end at neither the employer's nor the employee's initiative and/or through agreement between the employer and employee.[25]

• Focusing on the text of s.386(2)(c), the Deputy President found that an employee has been 'dismissed' for the purposes of the FW Act where they have been demoted by the employer and this involves a significant reduction in the employee's remuneration or duties, even if the employee remains in employment. That is necessarily correct, reading s.386 of the FW Act as a whole.[26]

• Section 386(2) provides a list of categories of 'termination' that are, for avoidance of doubt, not 'dismissals' for the purposes of the FW Act, even though the scenario may be captured by s.386(1). If the scenarios in s.386(2) could never amount to a dismissal pursuant to s.386(1), then subsection (2) would have no utility.[27]

• This is evident from the language in the chapeaux to s.386(2), contrasted with the chapeaux in s.386(1). As the Full Bench in Philip Moyle v MSS Security Pty Ltd[28] found, at [9]: 'Section 386(1) sets out a general definition of what constitutes a dismissal. Section 386(2) then sets out three sets of circumstances which, even if they fall within the general definition, are deemed not to be dismissals. These are, in effect, exceptions to s.386(1).' That decision is correct, and is consistent with the decision in Broadlex, where the Federal Court observed (in obiter) at [85] that 's.386 does not erect a class of deemed dismissals'.[29]

• By the inclusion of s.386(2)(c) and reading s.386 as a whole, there is a clear inference that a demotion that does involve a significant reduction in the employee's remuneration or duties, whereby the employee remains employed with the employer, at the very least can amount to a dismissal for the purposes of s.386(1).[30]

[28] The Respondent also submits that even if Appeal ground 1(a) of the appeal is upheld, Appeal ground 1(b) ought to be dismissed as it is misconceived. He says the Deputy President made clear at [16] of the Decision:

[69]

[36] At first instance the Deputy President said - citing Khayam v Navitas English Pty Ltd[36] (Navitas) - that 'employment ... has been terminated' in s.386(1)(a) means termination of the employment relationship, and that termination of a contract of employment, by demotion or otherwise, cannot of itself constitute a dismissal within the meaning of s.386 of the FW Act.[37] In Harrison[38] the Deputy President asserted that in reaching this view, which is contrary to Charlton v Eastern Australian Airlines[39] (Charlton), the majority in Navitas relied upon Visscher v The Honourable President Justice Giudice (Visscher).[40]

[37] The Appellant submits that, as a result of this construction, the Deputy President did not properly consider the Appellant's argument that s.386(2)(c) is only intended to apply where an employee's demotion had amounted to a termination of the contract of employment under s.386(1)(a) (or the employee had accepted the repudiatory breach and s.386(1)(b) applied, which did not apply in this case).[41]

[38] The Appellant submits that 'employment ... has been terminated' in s.386(1)(a) means the termination of the employment relationship or the termination of the contract of employment, even though the employment relationship may continue after the contract of employment is terminated and replaced by a new contract.[42] Where an employer imposes fundamental changes to an employee's contractual arrangements, there may be a repudiation of a contract which is capable of giving rise to a termination of employment.[43] Whether there has been a termination of the employment contract depends on the employee's response to the repudiation - the employee may accept the repudiation, the parties agree to terminate the contract of employment by consent and enter into a new contract of employment, or the parties may agree to vary the contract of employment.[44]

[39] The Appellant contends that the origins of s.386(1)(a) and the authorities construing it and its predecessors, speak with one voice (other than Harrison) in support of construing s.386(1)(a) as including termination of the employment contract even where the employment relationship continues after the demotion.[45] The Appellant further contends that the operation of ss.386(2)(a) and 386(2)(b) confirm Parliament's intent to make clear that a termination of the contract by operation of its terms will [not] be a dismissal under s.386(1)(a).[46]

[40] The Respondent submits that a person can satisfy s.386(1) if an employment relationship is on foot but an employment contract has ended (including by reason of a demotion involving a significant reduction in remuneration or duties as per s.386(2)(c)).[47] The Respondent makes the following submissions:

• Properly construed and having regard to the legislative history and previous consideration of the provisions by the Commission, its predecessors, and the Federal Court, the phrase 'termination of employment' in the predecessor legislation and the phrase 'the person's employment with his or her employer has been terminated' in s.386(1) include the termination of a contract of employment and/or the termination of employment relationship.[48]

• It follows (having regard to s.386(2)(c)) that a demotion which involves a significant reduction in the employee's remuneration or duties may (as a matter of fact) amount to a repudiation of the employment contract which would satisfy s.386(1) of the FW Act.[49]

• On one view, the Deputy President purported to read down s.386(1)(a) so that the provision could only be enlivened if there is a termination of the employment relationship - and not merely a termination of an employment contract (with the employment relationship continuing): at [10]. To the extent that there was a reading down of s.386(1)(a), such a narrow construction is not supported by the authorities.[50]

• The Full Bench in Charlton[51] found that a termination of employment occurs when a contract of employment is terminated. It was said that this necessarily occurs when the employment relationship comes to an end. However, it can also occur even though the employment relationship continues. Where a contract of employment has been terminated, but the employment relationship continues, this will be because a new contract of employment has come into existence.[52]

[41] The ACTU contends that, correctly construed, s.386(1)(a) encompasses:

both the situation where a particular contract has been terminated but the employment relationship persists in altered form, and the situation where the contract and the employment relationship has ended, and

• thus, circumstances including demotion (although in the case of demotion, being limited by s.386(2)(c) to demotion involving a significant reduction in remuneration or duties).[53]

[42] The ACTU submits the meaning of 'employment' is further clarified by the express exclusions from s.386(1) in s.386(2)(a)-(c). All 3 exclusions are concerned with particular contractual arrangements coming to an end (in the case of a demotion the termination of a particular contract for alleged breach and the imposition of a new contract) and all 3 are broad enough to encompass circumstances where the employment relationship continues (and this is express in s.386(2)(c)).[54] In the ACTU's view:

[71]

[43] The ACTU submits that if s.386(1)(a) was only concerned with the end of the employment relationship, then s.386(2)(c) would have no work to do (as its terms refer to circumstances that would never fall under s.386(1)(a)). That would be inconsistent with the legislative history and case law.[56] The ACTU submits that 'caution should be exercised' before departing from the system that existed under the predecessor legislation, as there is not textual or contextual support for such an interpretation.[57]

[44] The ACTU considers its construction consistent with Navitas, on the basis that that decision 'is better understood as suggesting that the termination of a contract will not necessarily lead to a dismissal where the persisting employment relationship remains on foot and unchanged, not that contract termination is irrelevant.'[58]

[45] We agree with the proposition that the expression 'employment ... has been terminated' in s.386(1)(a) means termination of the employment relationship and/or termination of the contract of employment. Contrary to the Deputy President's view at first instance, on this construction, unless the circumstances in s.386(2)(c) apply, an employee may be dismissed within the terms of s.386(1)(a) if the employer has repudiated the employee's contract of employment by demoting the employee and the employee has accepted that repudiation but has continued to be employed by the employer under a new employment contract.

[46] Given our preferred construction of s.386(1)(a) of the FW Act, it is unnecessary for us to decide whether the repudiation of a contract of employment that is accepted and that gives rise to a new contract of employment also results in the termination of the employment relationship. However, we note that the Federal Court's decision in Broadlex provides support for this proposition.[59]

[47] Whilst the parties are in general agreement as to the proper construction of s.386(1)(a), given its central importance to the Commission's unfair dismissal jurisdiction and Deputy President Easton's dissenting view, we consider that it warrants a more detailed examination of its legislative history and Commission case law, as follows.

[48] Deputy President Saunders related the origins of s.386(1)(a) and relevant authorities in Harrison as extracted in the Decision at first instance.[60] That history included the decision of the Full Court of the Industrial Relations Court of Australia in Brackenridge v Toyota Motor Corporation Australia Ltd[61] (Brackenridge). Brackenridge is authority for the proposition that 'termination' and 'termination of employment' in the Termination of Employment Convention (Convention) refer to termination of the employment relationship. As the Industrial Relations Act 1988 (IR Act) adopted the meaning of expressions used in the Convention, a demotion after which employment continued did not constitute a 'termination of employment' for the purposes of Div. 3 of Part VIA of the then IR Act.

[49] The decision of the Full Bench of the Australian Industrial Relations Commission (AIRC) in Bluesuits Pty Ltd v Graham[62] confirmed that as a result of amendments made to the IR Act by the Workplace Relations and Other Legislation Amendment Act 1996 there was no requirement to interpret Subdiv.B of Div.3 Part VIA of the WR Act by reference to the Convention. Shortly thereafter, the AIRC in Boo Hwa Chan v Christmas Island Administration[63] (Boo Hwa Chan) expressed a preliminary view that following the Full Court of the Supreme Court of South Australia decision in Advertiser Newspapers P/L v Industrial Relations Commission of South Australia,[64] a 'significant demotion in employment' where the employee continues in employment may constitute a termination of employment.[65]

[50] The Workplace Relations Amendment (Termination of Employment) Act 2001 (Cth) inserted an exclusion for demotion in employment in similar terms to s.386(2)(c) of the FW Act. New s.170CD(1B) of the WR Act provided:

[77]

[52] After surveying the history of the termination provisions in the WR Act,[68] the Full Bench found that a termination of employment occurs when an employment contract is terminated. This necessarily occurs when the employment relationship comes to an end but can occur even though the employment relationship continues (because a new employment contract has come into existence). Whether the appellant's demotion involved his employment being 'terminated by the employer' within the meaning of s.170CE turned on whether his contract of employment was terminated notwithstanding the continuing employment relationship. That question was answered by reference to general law principles relating to the termination of contracts of employment.[69]

[53] The Full Bench observed that a demotion that involves a significant reduction in remuneration will amount to a repudiation of the contract of employment (unless it is agreed to by the employee or otherwise authorised). If that repudiation is accepted, either expressly or by conduct, then the contract of employment is terminated and if the demoted employee remains in employment with the employer, this is pursuant to a new contract of employment. [70] The Full Bench found on the facts in Charlton that by filing an application for relief against termination of employment, the appellant had accepted the respondent's repudiation so that the pre-existing employment contract was terminated.[71]

[54] The AIRC Full Bench in Department of Justice v Lunn[72] (Lunn) cited Charlton in proceeding on the basis that, since the 1996 amendments to the IR Act, 'termination of employment at the initiative of the employer' in s.170CE of the WR Act 'has its ordinary meaning and refers to termination of the contract of employment'.[73]

[55] Navitas concerned a termination of employment at the end of a series of 'maximum term' employment contracts. The majority in Navitas rejected the above proposition from Lunn and correctly pointed out that 'it is difficult to glean that bald proposition from the reasoning in Charlton.'[74] The majority decision also surveys the history of s.386(1)(a) and relevant case law.[75]

[56] Prior to the 1996 amendments to the IR Act, the Full Court of the Industrial Relations Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd[76] (Mohazab) was of the view that 'termination of employment' in the then IR Act was to be understood as referring to termination of the employment relationship:

[90]

[65] It may assist to outline the unusual circumstances in Visscher. This decision concerned a seafarer who was promoted to Chief Officer in September 2001, but the employer purported to rescind the promotion a short time later that month. The employee did not accept the rescission and in fact continued to be assigned work and paid as a Chief Officer until January 2004, when the employee was informed that he would be required to work at the lower level. As such, no issue arose between the parties as to performance of the 2001 contract until 2004.[91]

[66] At issue was whether Teekay had demoted Mr Visscher in 2004 and thereby repudiated the 2001 contract with Mr Visscher accepting that repudiation (as asserted by Mr Visscher), or whether his purported demotion in 2001 had been effective and he was to be taken as having resigned in 2004 (as asserted by Teekay). Accordingly, the underlined text in extract from Visscher at [62] above can be understood as identifying the issue arising on the singular facts of that case, rather than identifying the test to be applied under Div.3 of Part VIA of the then WR Act more[92]enerally.92

[67] We note that Deputy President Easton endorses the reasoning and conclusions in Navitas, in concluding that there is no textual or other basis to read termination of 'employment' in s.386(1) as encompassing termination of the contract of employment only. Contrary to the position put by all of the parties in the matter, the Deputy President considers that termination of 'employment' in s.386(1)(a) means termination of the employment relationship (at [176]). The Deputy President also expresses the view that there is no textual or other basis in s.386(1) to treat the common law consequences of a repudiation differently when determining, in any particular scenario involving demotion, whether there was a termination of the employment relationship (at [193]). Accordingly, the Deputy President considers that it is only where the employee has accepted the repudiation by electing to bring about the end of the contract and leaving the employment that the employee is eligible to make an unfair dismissal application.

[68] A consequence of the Deputy President's construction is that an employee who has been demoted but remains employed by the employer who effected the demotion is not eligible to make an unfair dismissal application. This proposition was not advanced by any party in the matter and is contrary to Commission authority. For instance, in Phillip Moyle v MSS Security Pty Ltd[93], the Full Bench overturned Senior Deputy President O'Callaghan's decision at first instance, saying:

[92]

[69] In contractual terms, in response to repudiatory conduct an injured party may choose to affirm the contract and stay in the contractual relationship or accept the repudiation and bring the contractual relationship to an end. While there might be seen to be a tension between an employee both accepting a repudiation of the contract of employment (thereby bringing the contract to an end) and, at the same time, remaining in employment with the employer who effected the demotion, this is expressly contemplated by the statutory provisions and is consistent with the authorities considered below.

[70] As the Appellant contends, whether there has been a termination of the contract of employment following an employer's repudiatory conduct 'depends on the resolution of a factual inquiry as to the response to the repudiatory conduct.'[94] For example, the employee might affirm the contract by negotiating with the employer and agreeing to changes to the contract of employment. Alternatively, the employee could elect to accept the repudiation by lodging an application under Part 3-2 of the FW Act and leaving the employment or (reluctantly) continuing in employment with the employer in the demoted position under a new contract of employment, whilst pursing the unfair dismissal application.

[71] Here, Deputy President Saunders found that Mr James did not agree with the NSW Trains' unilateral decision to reduce his grade and pay, although he remained employed by NSW Trains in the position of Shift Manager. We agree with the Deputy President's findings in this regard. While Mr James continued in employment with NSW Trains as a Shift Manager, he purported to accept the employer's alleged repudiatory conduct by lodging an unfair dismissal application under Part 3-2 of the FW Act.

[72] In the context of a demotion, in Charlton the Full Bench of the AIRC held that if the repudiation of the contract of employment is accepted, either expressly or by conduct, then the contract of employment is terminated:

[94]

[73] We agree with this observation.

[74] Deputy President Easton notes that '[w]hilst an employee/innocent contractual party is generally allowed a reasonable time before they must choose between two inconsistent options, the notion of an alleged election/acquiesce, or an acquiesce that the Commission might look behind, is not a concept known to the common law' (at [189]). The Deputy President also observes that 'it may be necessary in particular cases for the Commission to inquire and make findings about whether the employee has made an election' (at [190]).

[75] The use of the term 'acquiescing' in the passage above cited above (although coupled with 'allegedly'), may be apt to confuse in this context. The central question is whether the employee has accepted the employer's repudiation of the contract of employment, thereby bringing that contract of employment to an end. We do not read the Full Bench in Charlton as suggesting otherwise.

[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.[95]

[77] In the Victorian Supreme Court case of Crowe Horwath (Aust) Pty Ltd v Loone, (Crowe Horwath) McDonald J found that the respondent was not to be taken to have affirmed his contract of employment, and was not thereby precluded from accepting the employer's repudiatory conduct as bringing his contract to an end, by reason of a delay of 11 days in accepting the repudiation.[96]

[78] His Honour observed:

[109]

[79] The Federal Court's decision in Broadlex provides an example of where repudiatory conduct (not involving demotion) was accepted by the employee, who continued in employment with the employer. In that case, the employee's full-time employment was changed to part-time employment, with a consequent 40% reduction in salary. Katzmann J observed that the employee 'was invited to sign a form of consent to this change, which was described as a "transfer from full time to part time" with a change in hourly rates. Unsurprisingly, she refused. Nevertheless, she began working the reduced hours on 12 September 2017 because she considered she had no choice.'[107]

[80] Broadlex accepted that, in reducing the employee's employment status from full-time to part-time, it had repudiated her employment contract and the magistrate found that the employee had accepted the repudiation by refusing to sign the consent form or agreeing to the variation in terms.[108] The Federal Court upheld the employee's claim that her employer was required to pay her redundancy pay under s.119 of the FW Act, finding that Broadlex's repudiation of the employment contract had brought the employment relationship to an end and that the relationship in which the employee entered after she accepted the repudiation was a fundamentally different relationship from that which the parties had previously enjoyed.[109]

[81] Before leaving this issue, we also wish to touch upon the implications of an alternative construction of s.386(1)(a) on s.386(2)(c) of the FW Act.

[82] As noted at [34], s.386(2)(c) clarifies that s.386(1) does not apply to certain circumstances and does not give rise, by implication or otherwise, to a category of dismissal that is separate to s.386(1). While Deputy President Easton recognises that 'to include only the termination of the contract of employment [within the ambit of s.386(1)(a)] is more readily reconcilable with the exception found in s.386(2)(c), at least in relation to demotion', he holds that '[t]here is no conflict between the two provisions and there is ample work for s.386(2)(c) to do without requiring a different construction of s.386(1)' (at [191]-[192]).

[83] While we agree that there is no direct conflict between the operation of s.386(2)(c) and a construction of s.386(1)(a) that confines termination of employment to termination of the employment relationship, in view of the legislative history the 2 provisions cannot be read comfortably together and we do not consider that there would nevertheless be 'ample work for s.386(2)(c) to do'.

[84] On the Deputy President's construction of s.386(1)(a), s.386(2)(c) might be seen to wrongly suggest that a demotion involving a significant reduction in remuneration or duties may be a dismissal, whether or not the employee remains employed with the employer that effected the demotion. Further, if Parliament had intended to exclude all demoted employees who remain employed with the employer following their demotion from accessing the unfair dismissal provisions, it could simply have provided for this − that a person is not dismissed if they have been demoted in employment but remain employed with the employer who effected the demotion.

[85] Accordingly, for the above reasons Appeal grounds 2 and 3a are upheld.

[86] For completeness, we take the opportunity here to address some aspects of the decision in Solarig, referred to above.

[87] We agree with Deputy President Anderson's conclusion in Solarig that s.386(2) does not create independent categories of deemed dismissal, and that a person who has been demoted in employment (and does not fall within the description in s.386(2)(c)(i)) must meet the statutory definition in s.386(1) in order to have been 'dismissed' within the meaning of the FW Act.

[88] However, we do not agree with certain aspects of Deputy President Anderson's reasoning and make the following observations:

[89] First, in considering whether Mr Bradley was dismissed for the purposes of s.386(1) of the FW Act, Deputy President Anderson held that 'dismissal' means termination of the employment relationship.[110] For the reasons given above, we disagree with this construction.

[90] The Deputy President then goes on to suggest, citing Broadlex (at [70]), that a repudiatory breach that has been accepted by the employee may have the effect of terminating the employment relationship, even where the employee continues working for the employer, 'where the post-repudiation relationship "was a fundamentally different relationship from the relationship the parties previously enjoyed"'.[111] We disagree with any suggestion that, where an employee has been demoted but remains in employment and the demotion amounts to repudiatory conduct that has been accepted by the employee, the Commission must nevertheless undertake an additional assessment of the 'post-repudiation relationship' in order to ascertain whether s.386(1)(a) has been satisfied.

[91] Second, while paragraph [92] of Solarig correctly takes issue with a construction of s.386(2)(c) that creates a category of deemed dismissal, it is difficult to follow its internal logic where it says: 'Under this construction, section 386(2)(c) creates a category of dismissed employee where the person continues in employment but has not been "demoted" within the meaning of section 386(2)(c) because each of sections 386(2)(c) (i) and (ii) do not apply to the given facts. Such decisions construe section 386(2) as deeming a dismissal to have occurred in circumstances where the statutory definition of demotion is not made out.' Our concerns include that there is no 'statutory definition of demotion' in the FW Act, and there is no scenario where an applicant could continue in employment and yet s.386(2)(c)(ii) not apply to their circumstances.

[92] Third, Solarig says that a construction of s.386(2) that creates categories of deemed dismissal risks failing to provide a 'fair go all round' because:

• if a dismissal is deemed 'where subsections (i) and (i) [sic, of s.386(2)(c)] are not made out, then no factor other than a significant reduction in remuneration or duties would be relevant to whether there had been a dismissal'[112], and

• when considering if a person has been dismissed because they have been employed on varied terms, there are other relevant factors in addition to remuneration or duties which may arise and warrant consideration.[113]

[93] These propositions are confusing and do not seem to follow from the premise. Section 386(2)(c) deals with demotions in employment, not with other unilateral variations to an employment contract that may give rise to a repudiation of the employment contract.

[116]

[95] The Deputy President at first instance was of the view that a legal right to demote an employee under an industrial instrument or legislation 'does not say anything about whether the employee was dismissed within the meaning of the FW Act.'[114] Accordingly, the fact that both the NSW Trains Enterprise Agreement 2018 (Enterprise Agreement) and the Transport Administration (Staff) Regulation 2012 (NSW) (Transport Regulations) conferred on NSW Trains a discretion to reduce employees', such as Mr James', 'position, rank or grade and pay' did not have any bearing on whether Mr James had been dismissed within the meaning of s.386 of the FW Act.[115]

[96] Instead, the Deputy President held that the existence of such rights and the fairness with which they are exercised in particular circumstances are relevant to the s.387 factors which the Commission must consider when considering whether the dismissal was harsh, unjust or unreasonable.[116]

[97] The Appellant submits that as Mr James' demotion was authorised under cl.32.14 of the Enterprise Agreement and reg.20(1)(c) of the Transport Regulations, there was no repudiation of his employment contract and no dismissal under s.386(1)(a).

[98] Clause 32.14 of the Enterprise Agreement sets out the disciplinary measures that may be taken after an investigation by NSW Trains that concludes in a finding of fault and includes '(c) reduction in position, rank or grade and pay.' Regulation 20(1) of the Transport Regulations makes similar provision and includes as one of the 'punishments in disciplinary proceedings' that may be imposed: '(c) reduction in position, rank or grade and pay.'[117]

[99] As Mr James' demotion had a statutory basis, the Appellant says that it could not amount to a termination of his employment under s.386(1)(a) and that there is a long line of Commission and AIRC authority to this effect.[118]

[100] The Respondent submits that the Deputy President did not err in his findings above[119] and that Appeal grounds 3(b), 3(c) and 4 ought be dismissed for the following reasons:

• The authorities on repudiation of contract in an employment context have made it plain that whether there has been repudiation is a question of fact and, in the context of employment contracts, a significant diminution in remuneration, status or responsibility may constitute a repudiation. This is a question of fact in each case.[120]

• As summarised in City of Sydney RSL & Community Club Limited v Balgowan[121] at [18]:

[118]

• The provisions of the Enterprise Agreement and Transport Regulations say nothing as to the question of whether an employee has been dismissed for the purposes of the FW Act. The provisions deal with the possible outcomes of a disciplinary process (including dismissal). The fact that a reduction in (relevantly) pay is contemplated as an outcome says nothing as to whether there has been a repudiation of the employment contract. Section 386(2)(c) clearly contemplates the situation where there has been a demotion but the employment continues. Statutory rights and obligations are not converted to contractual rights and obligations.[122]

• The provisions of the Enterprise Agreement and the Transport Regulations do not answer the question as to whether there has been a demotion involving a 'significant reduction' in the employee's remuneration or duties. The mere fact that there is a statutory right for the Appellant to demote an employee (following a disciplinary process) under one statutory regime cannot (and does not) limit the operation of the unfair dismissal protections afforded by the FW Act.[123] While an enterprise agreement may confer a right to demote an employee, the exercise of that right has contractual consequences.[124]

[101] The ACTU submits that powers to demote under statute or in enterprise agreements tend to be facilitative rather than necessarily substantive and therefore the exercise of these powers is more likely to mean that the demotion is not separately unlawful, not that the conduct falls outside s.386(1)(a).

[102] The ACTU further contends that such powers to demote stand separately to the contract of employment (subject to incorporation), and the exercise of such powers would, as a consequence, lead to the termination of the underpinning contract and to the employee being 'dismissed' for the purposes of Part 3-2.[125]

[103] In its reply submissions, the Appellant refers to Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited[126] (Koompahtoo) and Cameron v Asciano Services Pty Limited[127] and submits that it is telling that the Respondent does not address or point to an express or implied term of his contract of employment which is alleged to have been breached, 'let alone whether such a term is an essential term, a serious breach of [a] non-essential term, whether there has been an unwillingness or inability to render substantial performance of the contract or a renunciation of the whole of the contract or of a fundamental term.' Further, the Respondent does not refer to the terms and conditions contained in his written contract of employment and has opposed admitting evidence of his contract of employment.[128]

[104] The Appellant submits that the uncontested facts indicate that there has been no repudiation of the contract of employment as there have been no adverse changes to Mr James' terms and conditions of the contract of employment − following the demotion, Mr James has been placed in the same grade in which he was initially employed and his reduced salary remains substantially higher than the salary contained in his written contract of employment.[129]

[105] The Appellant submits further that it is clear that Mr James' contract of employment is intended to operate together with and have his terms and conditions of employment supplemented by applicable industrial instruments. Other than his position, classification and starting remuneration, Mr James' contract does not contain his substantive terms and conditions of employment but refers to an applicable enterprise agreement and policies and procedures. The reference to the RailCorp Enterprise Agreement is intended to refer to enterprise agreements which may apply to Mr James' employment from time to time.[130]

[106] We have decided to admit into evidence Mr James' written offer of employment dated 15 July 2013 (accepted on 24 July 2013), as it relevant to establishing the jurisdictional fact of whether or not Mr James has been dismissed for the purposes of s.386 of the FW Act. Due to the findings that follow, it is not necessary for us to determine whether, as submitted by the Appellant, Mr James' employment contract is represented solely by this written offer of employment (and therefore there have been no adverse changes to Mr James' terms and conditions of employment based on the written contract).[131]

[107] It was not in dispute that the Enterprise Agreement and the Transport Regulations on their terms authorise the demotion of NSW Trains employees as a disciplinary outcome.[132] We agree that clause 32.14 of the Enterprise Agreement and reg.20(1)(c) of the Transport Regulations empower NSW Trains to demote its employees as an outcome of disciplinary proceedings, after following prescribed steps.

[108] It was agreed at the hearing that Mr James' contract of employment does not incorporate the Enterprise Agreement or the Transport Regulations.[133] However, an employee's contract of employment will be governed by an applicable statute or enterprise agreement in respect of the matters with which the statute or enterprise agreement deals. As the High Court observed in Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169:

[145]

[122] We consider, properly construed, the relevant clauses in the Enterprise Agreement and the Transport Regulations support the conclusion that demotions authorised by those instruments do not constitute termination of employment:

The Enterprise Agreement contains a number of clauses which separately deal with termination of employment, including clause 18. Clause 32 deals with disciplinary matters and sets out a range of procedural matters, including the timeframes for investigation and giving of updates and pay arrangements during an investigation. Clause 32.14 sets out the disciplinary measures NSW Trains may take after an investigation, including demotion ('reduction in position, rank or grade and pay)', suspension from duty without pay and dismissal.

Reg.20(1) of the Transport Regulations is framed in similar terms to clause 32.14. Division 2 of Part 4 of the Transport Regulations sets out the disciplinary proceedings for NSW Trains staff. Under reg.20(1)(c), punishments in disciplinary proceedings include demotion ('reduction in position, rank or grade and pay'), suspension from duty without pay and dismissal. Regulation 23 sets out the procedure in disciplinary hearings. Regulation 27, which deals with the return of property on termination of employment or suspension, defines 'termination' for the purposes of that clause only as 'resignation, retirement, dismissal, retrenchment or other cessation of employment, and includes unauthorised absence from duty'.

[123] It was not in issue before us that Mr James' demotion was authorised by and taken in accordance with the Enterprise Agreement. Accordingly, for the reasons given above we do not consider that the demotion of Mr James could be characterised as repudiatory conduct. The Appellant was acting within the provisions of the Enterprise Agreement, which prevailed over the contract of employment and displaced the contract of employment to the extent of any inconsistency.[148]

[124] While Mr James' written employment contract was silent as to the right to demote, the contract clearly sat alongside and was intended to operate together with the Enterprise Agreement (as well as the Transport Regulations), which expressly contemplate demotion without termination of employment. As we have observed it is well established that:

[147]

[125] The High Court has described repudiation as referring to conduct of a party 'which evinces an unwillingness or an inability to render substantial performance of the contract' or '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'.[150] 'Repudiation of a contract is a serious matter and is not to be lightly found or inferred'.[151] 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.[152]

[126] As the Appellant submits, the Respondent has not identified any contractual provision which had been repudiated.[153]

[127] If this conclusion were wrong, then taking the example of another disciplinary outcome contemplated by the Enterprise Agreement and the Transport Regulations - suspension from duty without pay - any such suspension that was not in accordance with a contractual term would also likely be a repudiatory breach which could be accepted by the employee to bring the contract to an end. In both such cases, the employer's capacity to exercise powers under statute or under an industrial instrument with statutory force - to demote or suspend without pay - would be undermined and a different disciplinary outcome imposed on the employer. This would give primacy to the employment contract over these superior instruments, contrary to legal authority.

[128] In these circumstances, we are satisfied that the Appellant's demotion of Mr James, in reducing his grade from Rail Classification (RC) 6 Level E to RC6 Level A and his gross pay from $141,442 to $127,569, does not give rise to a dismissal under s.386(1)(a) of the FW Act.

[129] We recognise that a consequence of this finding is that it deprives Mr James of access to the statutory unfair dismissal provisions. The implications of this are considered further in our observations below.

[130] The existence of a power to demote in contract or other governing instrument is not necessarily determinative in all cases.

[131] A critical question in each case will be whether properly construed, the relevant instrument(s) provide that a demotion authorised by the instrument does not constitute termination of employment. Put simply, a demotion may not amount to a termination of employment for the purposes of Part 3-2 of the FW Act where the instrument permits the demotion and provides in effect that it is not a termination. This will require consideration of the terms of the specific instrument purportedly authorising the demotion to ascertain its effect in the particular case.[154]

[132] We note that in Holland v Qantas Airways Limited[155], Senior Deputy President Drake rejected a submission that a clause dealing with demotion must necessarily make it clear by its express terms that any demotion the subject of a particular clause is not a termination of employment and that if the clause does not do so, such a demotion must be a termination of the employment contract if there is also a significant decrease in remuneration and responsibilities.[156]

[133] The Senior Deputy President concluded in that case that the context of the clause in the enterprise agreement (which dealt with termination of employment in separate clauses), the subject matter of the clause itself and the language of the clause were all factors that distinguished a demotion pursuant to the clause from a termination of employment at the initiative of the employer.[157] In the circumstances, the Commission was satisfied that the clause authorised Qantas to consider the flight competence of a pilot and demote that pilot if appropriate, and a demotion arising from the application of the clause was not a termination of employment at the initiative of the employer or a repudiation of the employment contract.

[134] This 'is a matter that arises for consideration having regard to the facts of each case and the construction of each clause and agreement.'[158]

[135] The Commission must also be satisfied that the employer has acted in accordance with the terms of the instrument authorising the employee's demotion, in effecting a demotion.[159]

[136] Further, the FW Act itself protects the operation of the unfair dismissal provisions in Part 3-2. Section 194(d) of the FW Act provides that a term of an enterprise agreement is an unlawful term if it excludes or modifies the application of a provision under Part 3-2 of the FW Act to the detriment of an employee. The EM gives as an example a term of an agreement that purports to extend the minimum employment period (from 6 or 12 months) to 24 months. However, an agreement may supplement the unfair dismissal provisions, such as by including a term that provides that the employer must not dismiss an employee for poor performance except in accordance with the employer's performance management procedure, as this is for the benefit of an employee.[160]

[137] It is also clear that parties cannot simply 'contract out' of the Commission's unfair dismissal jurisdiction.

[138] As explained in Gorczyca, a demotion may not amount to a termination of employment for the purposes of Part 3-2 of the FW Act where the industrial instrument that authorises the demotion provides in effect that it is not a termination. That is because the industrial instrument derives its legal effect from the FW Act and prevails over the contractual position. In such circumstances, a demotion permitted by the instrument is not 'contracting out' or 'ousting' the unfair dismissals provisions.

[139] In this case, the Enterprise Agreement contained detailed provisions regarding the investigation and disciplining of NSW Train employees, and the penalty decision was subject to merits review. It was not suggested that NSW Trains demoted Mr James as a means to avoid the Commission's unfair dismissals jurisdiction. Indeed, this could not be the case given the Appellant's initial decision was to dismiss Mr James; this was reduced to demotion following a review application made by Mr James.

[140] In contrast, a standard form contract containing a bare statement that the employee may be demoted, and that does not include any procedural protections such as merits review, might be regarded by the Commission as a mere device that impermissibly seeks to oust its unfair dismissals jurisdiction.

[141] In considering whether a contractual term that provides for demotion may be a device, some guidance might be drawn from the following observations in Brackenridge (where the Full Court was considering whether Ms Brackenridge's contract of employment contained an implied term empowering Toyota to demote her):

[158]

[149] Under s.386(2), a person has not been dismissed if the person was demoted in employment, but the demotion does not involve a significant reduction in the person's remuneration or duties and the person remains employed with the employer that effected the demotion: s.386(2)(c).

[150] It was not argued before us that the reduction in Mr James' pay within the classification for his position was not a demotion in employment. We agree with this position.

[151] While the term 'demoted' is not defined in the FW Act, as related by the Deputy President at first instance, the Macquarie Dictionary defines 'demote' as: 'to reduce to a lower grade or class (opposed to promote)'.[173] We consider that 'demote' has its ordinary meaning in s.386(2)(c). As contended by the Respondent, it follows that 'demoted in employment' means a change - that is, a decrease - in an employee's grade or class.[174] We also consider that the ordinary meaning of 'demote' entails it being an act of the employer.

[152] The phrase 'remains employed with the employer that effected the demotion' should also be given its plain meaning; it simply means that the employee continues to be employed by the employer that effected the demotion. It is unnecessary to read into this, as suggested by the Appellant and the Respondent, that this is pursuant to a new contract of employment[175] or that it entails an 'ongoing employment relationship' with the person responsible for the demotion.[176]

[153] As a general proposition, the Appellant submits that whether a reduction in remuneration or duties is 'significant' involves consideration of the size of the reduction in the employee's remuneration or duties relative to the employee's entitlement to receive wages and other monetary benefits and the duties of the employee's role under the contract of employment.[177]

[154] The Appellant contends that the Deputy President erred in finding that there was a significant reduction in Mr James' remuneration in circumstances where the reduction did no more than reduce his pay within the classification for his position, and which another Shift Manager would earn for the same duties if hired into the position.[178]

[155] In its reply, the Appellant submits that '[w]hether the reduction in remuneration is significant is a relative assessment that cannot be considered by looking at absolute numbers but the pay of others in the same position.'[179] As submitted by the Appellant, this involves an evaluative consideration of the size of the reduction in the employee's remuneration and/or the nature of the employee's duties.[180]

[156] The Respondent submits that pursuant to s.400(2) of the FW Act, the Appellant is required to establish that there was a significant error of fact, as it relates to the Deputy President's finding. This was not challenged by the Appellant.

[157] The Respondent submits that the only submission made in support of this ground amounts to no more than a bare assertion that the Deputy President erred and that submission ought be rejected.[181]

[158] The Respondent submits that the Deputy President was correct to find that a significant reduction in remuneration or duties is one which is important, or notable, or of consequence, having regard to its context and intensity. The purpose of the adjective 'significant' is to exclude impacts that are properly seen as minor or unlikely.[182]

[159] The Respondent submits that whether a reduction in remuneration or duties is 'significant' is an objective test, having regard to all the relevant circumstances.[183]

[160] The Respondent contends that the demotion of Mr James resulted in NSW Trains reducing his remuneration by almost 10%. As noted in the Decision (at [33]), there are other flow on effects, including a decrease to the value of Mr James' accrued annual leave entitlements, accrued long service leave entitlements, superannuation benefits and, importantly and relevantly, Mr James' redundancy pay benefits. It is submitted that on no view can such a reduction in remuneration be regarded as minor.[184]

[161] We agree that the expression 'significant reduction [in remuneration or duties]' takes its ordinary meaning as being a reduction that is 'important; of consequence'.[185] Previous AIRC and Commission decisions give an indication of the magnitude of a reduction that may constitute a significant reduction.[186] We also agree that whether a reduction in remuneration or duties is 'significant' is an objective test, having regard to all the circumstances.

[162] While we do not need to decide this point in view of our overall conclusion that Mr James' demotion does not constitute a dismissal within the meaning of s.386(1)(a), we are not satisfied that the Appellant has established a significant error of fact in relation to the Deputy President's finding of a significant reduction in remuneration. Accordingly, this appeal ground is dismissed.

[164]

[165] The Appellant submits that based on this evidence, the Deputy President erred in not finding that the Respondent sought and consented to the demotion and as a result, there was no termination of employment on the initiative of the Appellant for the purposes of s 386(1)(a).

[166] As a threshold point, the Respondent contends that the Appellant requires leave to press this argument, as it was not squarely put to the Deputy President below. [192] In reply, the Appellant submits that the relevant facts are not in dispute and concern a jurisdictional objection that the Respondent has addressed in his submissions (at [46]-[49]), and no prejudice has been shown to have been suffered by Mr James having to address this point on appeal.[193]

[167] For expediency and in the interests of justice, we have decided to entertain this point. However, for the reasons that follow Appeal ground 6 must fail.

[168] The Respondent contends that the Appellant must establish that the Deputy President's finding involves a significant error of fact, pursuant to s.400(2) of the FW Act.[194] We agree.

[169] The Respondent submits that he did not, at any stage, consent to the demotion and the evidence does not support a submission to the contrary.[195] The Appellant's submission ought to be rejected as:

on any fair reading of the correspondence between the parties in the period from 20 November 2020 to 21 January 2021, it is evident that the Respondent, through his solicitors, was seeking an outcome other than dismissal;

• the Respondent offered up as appropriate outcomes a 'caution or reprimand' or 'fine of an amount not exceeding $100', and not the outcome of a demotion or a reduction in his pay.[196]

[170] The Appellant contends that although the Respondent did not specifically identify demotion as a disciplinary non-dismissal outcome, his solicitor's correspondence makes clear that he sought an 'alternative disciplinary penalty' and gave some examples of this. The Respondent left open other independent disciplinary action short of dismissal as being a preferred and appropriate course of action, which necessarily must include demotion by reducing grade and pay.'[197]

[171] We agree that in the context of termination of employment, where an employee voluntarily consents to a demotion and the employer acts on that consent, there will be a mutually agreed outcome that does not amount to a dismissal. Such consent can be express or implied or inferred from the circumstances of the case.[198] However, that is not the case here.

[172] It is clear that between November 2020 and January 2021, the Respondent was facing dismissal. In these circumstances, it is understandable that the Respondent would seek an outcome alternative to dismissal. Contrary to the Appellant's contention, the fact that the Respondent specifically sought non-dismissal outcomes does not amount to him impliedly consenting to the imposition of any alternative penalty, including demotion. The evidence does not sustain this contention.

[173] The Deputy President did not err in this regard. Appeal ground 6 must fail.

[172]

[180] Courts and tribunals generally consider cases involving demotion by reference to notions of repudiation of contract.

[181] In the employment context, an employer's decision to demote an employee is generally understood to be an indication that the employer is prepared to continue the employment of the employee, but on different/reduced terms. Cases invariably focus on the degree to which the terms are changed or reduced.[201]

[182] This approach to demotion properly aligns with common law notions of repudiation. Repudiation can be broadly understood to encompass a party breaching a contact in a way that evinces an intention to no longer to be bound by the contract, and/or an intention to fulfil the contract only in a manner substantially inconsistent with that party's obligations.[202] The focus in repudiation cases may be on whether the conduct is in breach of an essential/material term of the contract, whether the conduct is a sufficiently serious breach of a non-essential term, and whether the other party is entitled to conclude that the contract will not be performed substantially according to its requirements.

[183] At common law repudiatory conduct does not terminate the contract of itself.[203] A repudiation gives the innocent party the right to elect to terminate the contract. The innocent party is "confronted" by two inconsistent options: either to accept the repudiation and bring about the end of the contract, or to affirm the contract and continue it. The innocent party may "keep the question open, so long as he does not affirm the contract ... and so long as the delay does not cause prejudice to the other side"[204], but ultimately must make an election because the law does not allow a party to maintain two inconsistent rights (or positions) and requires a choice to be made.[205]

[184] If an employer engages in repudiatory conduct by demoting an employee, at common law the employee has the right to elect to terminate the employment. If the employee so elects then, for the purposes of s.386(1), the employment is likely to have been terminated at the initiative of the employer. That is, where an employee elects to terminate the employment because of the repudiation by the employer, they are likely to be "a person who has been dismissed" for the purposes of s.386(1) and s.385(a). Importantly, it is only once the employee makes the election to accept the repudiation that the dismissal occurs.

[185] Alternatively, if an employee elects to stay in employment then the employment relationship continues under either a new or varied contract of employment. Recognising the long-established distinction between the employment relationship and the contract of employment, the previous contract of employment may or may not have been terminated, but the employment relationship continues.[206]

[186] If the employee elects to stay in employment with full knowledge of the employer's repudiation, then there has been no termination of the employment relationship.

[187] If the words "employment ... has been terminated" in s.386(1) are read to include the termination of an employment relationship and/or a contract of employment, then an employee who elects to continue the employment relationship may be a "person who has been dismissed" - even if only the contract of employment has been terminated.

[188] In Charlton v Eastern Australia Airlines Pty Ltd (2006) 154 IR 239 a Full Bench endorsed the obiter comments of SDP Polities in Boo Hwa Chan v Christmas Island Administration [1999] AIRC 1371 and adopted the analysis in Advertiser Newspapers Pty Ltd v Industrial Relations Commission (SA) [1999] SASC 300; (1999) 90 IR 211 to conclude that a termination of employment occurs when a contract of employment is terminated.[207] As the majority in Navitas observed of the conclusion in Charlton, "no reasoning process for these propositions was disclosed in the decision."[208]

[189] In my view there is no room for an employee to "allegedly acquiesce" (per Charlton at [34]) to a change in the terms of their employment - either they have elected to take action to rescind the contract (i.e. constructive dismissal) or they have elected to abandon their right to rescind the contract. Whilst an employee/innocent contractual party is generally allowed a reasonable time before they must choose between two inconsistent options, the notion of an alleged election/acquiesce, or an acquiesce that the Commission might look behind, is not a concept known to the common law.

[190] Recognising that an unaccepted repudiation is "a thing writ in water"[209], and that a dismissal can only occur once the employee has made an election, it may be necessary in particular cases for the Commission to inquire and make findings about whether the employee has made an election.[210] If, as a matter of fact, the employee has not made any election at all, then no dismissal has occurred.

[191] In reaching my overall conclusion I recognise that understanding the words "employment ... has been terminated" in s.386(1) to include only the termination of the contract of employment is more readily reconcilable with the exception found in s.386(2)(c), at least in relation to demotion. The exception in s.386(2)(c) does imply that other kinds of demotion might constitute a dismissal and there is some attraction to the argument that interpreting s.386(1) in this way gives s.386(2)(c) more work to do.

[192] However, s.386(2)(c) does not change the way s.386(1) is understood to apply to only the termination of the employment relationship. There is no conflict between the two provisions and there is ample work for s.386(2)(c) to do without requiring a different construction of s.386(1). In this regard s.386(2)(c) can be understood as one of three circumstances that parliament has specified do not constitute a dismissal. Each subsection of s.386(2) contains a scenario with two essential components.

[193] I also recognise that parliament can specifically include or exclude scenarios from the unfair dismissal jurisdiction regardless of the way in which the common law might treat the same circumstance. However, as Deputy President Colman concluded in Navitas[211], "there is no textual or other basis to read termination of 'employment' in s 386(1) as a reference to termination of the contract of employment" and, in my view, there is no textual or other basis in s.386(1) to treat the common law consequences of a repudiation differently when determining, in any particular scenario involving demotion, whether there was a termination of the employment relationship.

At a glance

Court

Decision date

Before

Source

Judgment (316 paragraphs)

NSW Trains v Mr Todd James [2022] FWCFB 55 (8 April 2022)

Parties

Legislation Cited (6)

Cases Cited (45)