s.365 - Application to deal with contraventions involving dismissal

Application to deal with contraventions involving dismissal - jurisdictional question - whether applicant was dismissed or resigned - applicant found to have been dismissed

• [1] North Homes Pty Ltd employed Sarah Verheyen as its General Manager - Operations. In April 2025, it decided to make that position redundant.

• [2] North Homes commenced discussions with Ms Verheyen regarding the possibility of redeployment to another role in the business or, in the alternative, termination on the basis of redundancy. The parties were unable to reach an agreement.

• [3] On 4 July 2025, Ms Verheyen commenced proceedings in the Commission by filing an application under section 365 of the Fair Work Act 2009 ("Act").[1] In her application, she alleged that during her employment she had been subjected to adverse action in breach of sections 342 and 351, and coercive conduct in breach of section 342. She claimed that this had resulted in a "constructive dismissal" - that is, she had been placed in a position of having no real or practical choice but to treat her employment as at an end.

• [4] North Homes denies any contravention of the Act. More particularly for present purposes, it has raised a jurisdictional objection to the Application - that is, that Ms Verheyen had not been dismissed.
• [5] Section 365 relevantly provides that if a person "has been dismissed" and they allege that the dismissal contravened Part 3-1 of the Act, they may apply to the Commission to deal with the dispute. Given the language of the section, a person must have been dismissed for it to apply. If a respondent asserts that there has been no dismissal, it gives rise to a dispute as to whether the applicant is entitled to make the application. That dispute must be resolved before the Commission can exercise any of the powers the Act confers on it.[2]

• [6] This decision deals with the jurisdictional objection.

• [7] I find that Ms Verheyen was dismissed. These are my reasons.

• [8] The Act defines "dismissed" in section 386(1). That section contemplates two scenarios.

• [9] First, a person will have been dismissed where their employment was terminated on the employer's initiative.[3] A termination will be "on the employer's initiative" if it is brought about by the employer without the employee's agreement. In circumstances where the employment relationship is not left voluntarily by the employee, the focus of the enquiry is whether an action on the part of the employer was the principal contributing factor which resulted, directly or consequentially, in the termination of the employment.[4] That is, had the employer not taken the action it did, the employee would have remained in the employment relationship.[5]
• [10] Second, a person will have been dismissed where they resigned from their employment, but were forced to do so because of conduct, or a course of conduct, engaged in by their employer.[6] This reflects the common law concept of constructive dismissal.[7] The test to be applied is whether the employer engaged in the conduct with the intention of bringing the employment to an end, or whether termination of the employment was the probable result of the employer's conduct such that the employee had no effective or real choice but to resign.[8] The second limb of that test makes it clear that it is not necessary to show that the employer engaged in the relevant conduct with the subjective intention of forcing the employee to resign.[9] The requisite employer conduct is the essential element.

• [11] An objective analysis of the employer's conduct is required.[10] Where questions of jurisdiction are involved, it is the facts which are relevant, not the parties' subjective beliefs or the reasonableness of their conduct.[11]

• [12] The parties adduced a significant amount of evidence. North Homes relied on:

(1) three statements from Rashed Panabig, a director of North Homes;

(2) two statements from Jim Dionysatos, a director of North Homes;

(3) two statements from Crystal Feng, North Homes' Financial Controller; and

(4) three statements from Gabriel Alkan, an HR Consultant to North Homes.

• [13] Ms Verheyen made and relied on two statements.

• [14] The evidence traversed a number of matters that I do not consider to be particularly germane to the jurisdictional objection. I consider the following to be the most pertinent factual context.

• [15] Ms Verheyen commenced employment with North Homes on 16 August 2021 in the role of Customer Care and Workflow Manager. In January 2023 she was promoted to the position of General Manager - Operations ("Position").

• [16] At the time she was appointed to the Position, North Homes operated a "Co GM" model. That is, it had two general managers. Ms Verheyen was one; the other was Daniel Holmes, the General Manager - Construction.

• [17] Mr Panabig, Mr Dionysatos and Ms Feng comprised the "executive board" of North Homes ("Executive Board").

• [18] In early 2025, the Executive Board began to have concerns with the Co GM model. It commenced a review of the arrangement. It explored the possibility of dispensing with the Co GM model and appointing a sole general manager, or, in the alternative, what changes might need to be made to address the Executive Board's concerns.

• [19] Ms Verheyen was made aware that the Executive Board was reviewing the Co GM structure and considering appointing a sole general manager. On 15 April 2025, she sent an email to the Executive Board setting out her views. In summary, she supported the maintenance of the Co GM model, subject to certain changes to make it more effective and efficient.

• [20] The Executive Board ultimately resolved to dispense with the Co GM model and to appoint Mr Holmes as the sole General Manager.

• [21] On 23 April 2025 the Executive Board met with Ms Verheyen. Mr Alkan was also present. During the meeting, Ms Verheyen was informed of the Executive Board's decision. She was also informed that North Homes would seek to redeploy her into a sales and marketing role on her current remuneration or, should she not wish to be redeployed, negotiate a redundancy package with her.

• [22] On 24 April 2025 Ms Verheyen embarked on a period of personal (sick) leave.

• [23] On 7 May 2025 Ms Verheyen sent a letter to the Executive Board.[12] In her letter, Ms Verheyen referred to "the offer of [her] demotion to lead Sales & Marketing in North Homes, reporting to Dan Holmes". She stated that after carefully considering the role, she felt unable to accept it. She set out at considerable length the reasons why she had come to that view. She stated that she "would like to hear the offer of redundancy payment that you suggested would be an alternative".

• [24] On 14 May 2025 Mr Panabig sent an email to Ms Verheyen providing a draft redundancy package for her review.

• [25] On 16 May 2025 Ms Verheyen sent an email to Mr Panabig. She stated that she had sought legal advice and had asked her lawyers to communicate with North Homes moving forward.

• [26] In an email sent in response to Ms Verheyen on 19 May 2025, Mr Panabig informed Ms Verheyen that North Homes had appointed Mr Alkan to represent the company and that Mr Alkan had "been granted full authority to act on behalf of the company and find a resolution".[13] The email requested that Ms Verheyen refrain from contacting any of the Executive Board or staff members about the matter and to direct all future communications to Mr Alkan in writing.

• [27] There followed without prejudice correspondence between DINA Lawyers (for Ms Verheyen) and Mr Alkan directed towards resolving the matter. Mr Alkan gave evidence that this correspondence continued into July 2025.

• [28] Throughout this period, Ms Verheyen remained on leave. During her absence she suffered an injury to her knee. She underwent surgery on 21 May 2025. On 4 June 2025 she was certified fit to return to work from home, but with restricted weight bearing.

• [29] On the same day, Ms Verheyen requested that she be permitted to work from home while recovering from her knee injury. She proposed that she perform duties remotely until she was medically fit to return to the workplace.

• [30] On 24 June 2025 North Homes sent a letter to DINA Lawyers stating that Ms Verheyen's request to work from home was not approved. The letter set out what the company described as its "reasonable business grounds" for refusing the request.[14] These included that:

"The role, as a senior manager, involves significant in-person collaboration, team supervision, and face-to-face stakeholder engagement. These duties are inherent to the position and cannot be effectively or sustainably carried out remotely."

"The company has never operated such a role on a remote basis, and it is not operationally practicable to accommodate fulltime remote work."

• [31] On 4 July 2025 Ms Verheyen commenced these proceedings. Her application gave 24 June 2025 as the date on which she was notified of her dismissal and the date it took effect.

• [32] On 7 July 2025 Ms Verheyen returned to North Homes the company property that she then had in her possession.

• [33] On 9 July 2025 Ms Feng sent an email to Ms Verheyen, which stated:[15]

"We write to acknowledge receipt of the North Holmes vehicle, laptop and access card, which you returned on 07/07/2025 without prior communication or notice to any member of our team.

Given these circumstances we are seeking clarification as to whether this action is intended to be your formal resignation from your position with North Homes.

If that is the case, please confirm the effective date of your resignation so that we may process that necessary documentation and finalise your entitlements.

If this was not your intention, we request that you inform us by COB tomorrow."

• [34] On 10 July 2025 DINA Lawyers sent a letter to Ms Feng, which stated in part:[16]

"For the avoidance of doubt, our client has not resigned from her employment. The return of company property on 7 July 2025 was undertaken as a practical and professional step, consistent with her obligations, and to minimise further distress.

Any suggestion that the return of property constitutes a resignation is expressly rejected. If your organisation intends to treat the return of property as a resignation, please confirm that position in writing, including the legal and factual basis for such a characterisation. Should any steps be taken to finalise the employment relationship on that basis, our client reserves the right to seek urgent interlocutory relief with at further notice."

• [35] On 14 July 2025 North Homes sent a letter to DINA Lawyers, which stated in part:[17]

"We acknowledge the prior uncertainty following Sarah's voluntary return of company property. At the time, this was reasonably interpreted by the company as an indication of resignation.

Following your clarification that this was not Sarah's intention, we are more than happy to acknowledge that Sarah remains employed by North Homes and as such we will continue to treat her accordingly."

• [36] North Homes' submissions, to the extent that they properly bear on the jurisdictional objection, may be summarised in this way:

(1) The company considered whether to implement a business change, about which it consulted with Ms Verheyen.

(2) While it implemented a change to appoint Mr Holmes as the sole General Manager, it did not wish to sever its employment relationship with Ms Verheyen.

(3) It sought to engage in consultation with Ms Verheyen about an ongoing role in the business or, if necessary, the terms on which her employment would end due to redundancy. This was frustrated by her absence on leave and her engagement of lawyers to communicate on her behalf.

(4) Indeed, an inference can be drawn that rather than engaging in the consultation, Ms Verheyen instead decided to take various actions to prolong and obstruct the discussions in bad faith in a bid to maximise her negotiating position for maximum financial gain.

(5) Ms Verheyen resigned, as evidenced by her returning her company property.

(6) North Homes did not act intentionally to force Ms Verheyen her to resign, nor did its conduct leave her with no reasonable alternative but to resign.

(7) In the circumstances, the resignation is to be seen as voluntary.

• [37] Ms Verheyen submitted that her employment had been terminated at North Homes' initiative. She contended that North Homes had dismissed her through demoting her.[18] In the alternative, she argued that it had repudiated her employment contract by declaring the Position redundant and that she had accepted that repudiation by commencing these proceedings.

• [38] Ms Verheyen submitted in the further alternative that she had been forced to resign. Her written submissions included the following contentions:[19]

"The Applicant's case, as set out in her Outline filed on 14 August 2025, is that: first, her employment ended at the initiative of the employer within s 386(1)(a), because her co-General Manager role was abolished and her authority and duties were materially diminished; and secondly, in the alternative, any resignation was compelled within s 386(1)(b)."

• [39] However, Ms Verheyen denied that she had resigned from her employment.[20] She had also done so in the letter from DINA Lawyers to North Homes of 10 July 2025, to which I have referred.

• [40] Having regard to Ms Verheyen's evidence and the reference in her submissions to "any resignation", I consider her submissions as to having been compelled to resign were advanced in the event that I found, contrary to her evidence, that she resigned. That is, were I to find that she resigned, I should also find that she had been forced to do so through a course of conduct in which North Homes had engaged. As will become clear, it is not necessary to consider this submission or traverse all of the evidence led by the parties regarding the alleged "course of conduct".

• [41] It was common ground that North Homes made the Position redundant.[21] The controversy centred on the consequences of that decision for Ms Verheyen's employment.

• [42] North Homes' jurisdictional objection is premised in large part on its assertion that it had offered Ms Verheyen ongoing employment in a management position, and that its attempts to consult with her about redeployment had been thwarted (whether by circumstances or design). However, I make two points in relation to the alleged "offer".

• [43] First and most significantly, I am not persuaded that North Homes offered Ms Verheyen a particular role into which she could be redeployed. During the meeting on 23 April 2025, the Executive Board raised with Ms Verheyen the possibility of redeployment. In that meeting and in subsequent correspondence it expressed a willingness to consult with her about redeployment. However, no specific role was identified or offered to her.

• [44] In this regard, Mr Panabig referred to Ms Verheyen being offered the position of "Head of Sales and Marketing".[22] Ms Feng referred to the "proposed Sales and Marketing Manager role".[23] Mr Dionysatos referred to an "alternative role in senior management including sales and marketing" being discussed.[24]

• [45] Tellingly, though, Mr Alkan described the parties discussing "redeployment to a senior management role that could be agreed by all" (my emphasis).[25] He also stated that "[t]he Head of Sales and Marketing role was conceptual and floated with the Applicant as an opening option to permit her to remain employed with the Respondent..." (my emphasis).[26] In her oral evidence, Ms Feng accepted that the "precise role" for Ms Verheyen "had not been decided".[27] Consistent with that evidence, North Homes submitted that "the full detail and scope of her new role was yet to be determined through the consultation"[28] and "the role was not even finalised and remained subject to consultation".[29]

• [46] Second, to the extent that redeployment into a sales and marketing role was mooted, I accept Ms Verheyen's submissions that it would have resulted in a demotion for her. In her written and oral evidence, she described the scope of her responsibilities in the Position and how a role confined to sales and marketing would have resulted in a significant diminution in those responsibilities. She would also have had to report to her former peer, Mr Holmes.

• [47] North Homes did not properly grapple with Ms Verheyen's evidence in this regard. In its written material, it sought to argue that the proposed sales and marketing role would not have resulted in a significant diminution in Ms Verheyen's status or responsibilities, relying in large part on the fact that she would remain a senior management role on the same salary. At the hearing, each of Mr Panabig, Mr Dionysatos and Ms Feng gave evidence to the effect that Ms Verheyen's role would remain essentially the same as the Position, with only her reporting line changing. However, after hearing from Ms Verheyen in cross-examination, North Homes conceded in its closing submissions that the suggested sales and marketing role would have been different to the Position. In light of all of the evidence, that concession was properly made.

• [48] North Homes further sought to argue that any proposed changes to Ms Verheyen's duties and reporting line were contemplated by her employment contract. The contract in evidence was the one on which Ms Verheyen initially commenced employment with North Homes in 2021 as Customer Care and Workflow Manager.[30] It provided that she was to perform the duties required of that position "and all other duties, functions and responsibilities as North Homes may reasonably require from time to time". It also required her to report to the then General Manager "or such other person that North Homes nominates".

• [49] North Homes' reliance on the employment agreement is misplaced. Its terms cannot properly be read as permitting the company to declare Ms Verheyen's position redundant and requiring her to accept redeployment into a lesser role. I observe that the company had not sought to rely on the employment agreement in this way when exploring redeployment with Ms Verheyen.

• [50] North Homes placed significant reliance on its asserted willingness to engage in consultation with Ms Verheyen regarding her ongoing employment. It contended that it had maintained that position up to and including its letter to DINA Lawyers of 14 July 2025. It blamed circumstances (or bad faith on Ms Verheyen's part) for the fact that the consultation process had not been concluded. To my mind, these contentions were self-serving and disingenuous.

• [51] In her letter to the Executive Board of 7 May 2025 Ms Verheyen had made it clear that she did not wish to explore redeployment. Instead, she wished to take the alternative option that had been offered to her, that is, negotiating a redundancy package. North Homes entered into those negotiations, which I infer continued in the without prejudice correspondence between DINA Lawyers and Mr Alkan. There is nothing to suggest that redeployment was being considered by either party in those negotiations.

• [52] In any event, no alternative position had been offered to Ms Verheyen, and there was no evidence of any role other than the sales and marketing position being available. What North Homes intended to consult with Ms Verheyen about remained completely opaque. Its repeated protestations that it wished to continue discussions to secure Ms Verheyen's continued employment rang hollow.

• [53] For these reasons, I do not accept that Ms Verheyen deliberately avoided engaging in consultation regarding redeployment to maximise her financial return, much less that she acted in bad faith. Nothing other than a redundancy package was up for discussion. There is nothing necessarily untoward in Ms Verheyen seeking maximise her payout.

• [54] I further observe that Ms Verheyen was under no obligation to consult with North Homes regarding redeployment or to accept another role. Any failure by her to do so did not lead to a stalemate, as North Homes' submissions suggested. That is, North Homes had made the Position redundant. It could have terminated Ms Verheyen's employment on that basis. If it considered that she had been offered "other acceptable employment", it could have applied to the Commission under section 120 for a variation in the amount of redundancy pay that Ms Verheyen would otherwise have been entitled to receive under section 119.

• [55] Instead of doing that, North Homes put Ms Verheyen on the proverbial "long finger". Its conduct might be seen as the flip side of that which it alleged against her. That is, that it asserted a willingness to "consult" with Ms Verheyen about an alternative position to put pressure on her to reduce her expectations regarding a redundancy payment, or simply to leave. However, it is not necessary that I make any findings in that regard.

• [56] Ms Verheyen submitted that North Homes' decision to make the Position redundant was a repudiation of her contract of employment. Repudiation of contract in employment can be broadly understood to encompass either:[31]

(1) a party breaching the employment contact in such a way that the other party is entitled to terminate the contract; or

(2) a party engaging in conduct that evinces an intention to no longer be bound by the employment contract and/or an intention to only fulfil the contract in a manner substantially inconsistent with that party's obligations under the contract.

• [57] At common law repudiatory conduct does not of itself terminate the contract.[32] A repudiation gives the innocent party the right to elect to terminate the contract. The innocent party is "confronted" with 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", 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.[33]

• [58] Where an employee elects to terminate the employment because of a repudiation by the employer, they are likely to be "a person who has been dismissed" for the purposes of section 386(1). Importantly, it is only once the employee makes the election to accept the repudiation that the dismissal occurs.[34]

• [59] I find that in making the Position redundant, North Homes repudiated Ms Verheyen's employment contract. Her situation was analogous to that described by Madgwick J in Westen v Union des Assurances de Paris:[35]

"He was thus offered new and different employment from what he had contracted for. He declined it, as was his contractual right. The respondent by its officers made clear that it would not continue to employ him to do his previously-contracted work. He was entitled to, and did, treat the contract of employment as breached in a fundamental way by the respondent and to regard it as terminated at the instance of the employer."

• [60] North Homes submitted that Ms Verheyen's request of 4 June 2025 that she be permitted to work from home was an affirmation of the employment contract. I do not agree. On the company's evidence, negotiations regarding Ms Verheyen's departure were continuing at that time. Asking that she be permitted to work from home while those negotiations continued was, to my mind, "keeping the question open". I consider it to be relevant in this regard that at that time there was no job for Ms Verheyen to return to.

• [61] Which leads to North Homes' decision to refuse Ms Verheyen permission to work from home. Its reasons for doing so do not bear scrutiny.

• [62] As I have observed above, North Homes wrote to DINA Lawyers on 24 June 2025 setting out those reasons. They included that "the role" could not effectively or sustainably carried out remotely, and that the company had "never operated such a role on a remote basis". However, at that time Ms Verheyen had no role. Further, North Homes' witnesses accepted under cross-examination that between 19 May 2025 and 24 June 2025 she had not been directed to perform any duties. I am mindful that for some of that period Ms Verheyen was on sick leave, but as of 4 June 2025 she had been certified fit to work even if she was unable to attend at work. Her request to work from home was consistent with her then capacity.

• [63] Ms Verheyen submitted that the refusal of her "proposal for medically supported flexible work" was the "final straw" leaving her with no real choice but to resign.[36] As I have stated, Ms Verheyen denied that she resigned. However, I accept that the refusal of her request to work from home was the catalyst for her commencing these proceedings. That is consistent with her giving 24 June 2025 as the date on which she was notified of her dismissal and the date it took effect.

• [64] I accept Ms Verheyen's submission that the commencement of these proceedings is to be regarded as her acceptance of North Homes' repudiation of her employment contract. The date on which she filed her application - 4 July 2025 - is properly to be regarded as the date on which her employment came to an end.

• [65] It is well established that a dismissal occurs when an employer engages in repudiatory conduct and the employee accepts the repudiation and elects to end the contract. Even though it is the employee's election that brings the contract to an end, the employment has ended at the initiative of the employer.[37] For the reasons set out above, I find that is what occurred in this case.

• [66] It follows that Ms Verheyen was dismissed within the meaning of section 386(1). Consequently, she was entitled to make the application under section 365. The jurisdictional objection is dismissed.

• [67] The matter will be listed for a conference under section 368 at a time to be determined.

Mr B Miles of Counsel, on behalf of the Applicant

Mr O Wolahan of Counsel, on behalf of the Respondent

[1] In this decision, unless otherwise stated, references to legislative provisions are to provisions of the Act

[2] Coles Supply Chain Pty Ltd v Milford (2020) 300 IR 146; [2020] FCAFC 152 at [67]. See also Lipa Pharmaceuticals Ltd v Mariam Jarouche (2023) 324 IR 375; [2023] FWCFB 101 at [4].

[4] Saeid Khayam v Navitas English Pty Ltd [2017] FWCFB 5162 at [75(2)], citing Mohazab v Dick Smith Electronics Pty Ltd (No 2) [1995] IRCA 625; (1995) 62 IR 200

[5] Mohazab v Dick Smith Electronics Pty Ltd (No 2) [1995] IRCA 625; (1995) 62 IR 200 at 205-206

[7] Explanatory Memorandum for the Fair Work Bill at par 1530; City of Sydney RSL & Community Club Limited v Roxana Balgowan [2018] FWCFB 5 at [9] and [13]

[8] Bupa Aged Care Australia Pty Ltd v Tavassoli (2017) 271 IR 245; [2017] FWCFB 3941 at [47]

[9] Kylie Bruce v Fingal Glen Pty Ltd [2013] FWCFB 5279 at [23]

[10] O'Meara v Stanley Works Pty Ltd PR973462 (AIRCFB, Giudice J, Watson VP, Cribb C, 11 August 2006) at [23]

[11] Searle v Moly Mines Ltd (2008) 174 IR 21; [2008] AIRCFB 1088 at [38]

[12] Statement of Sarah Verheyen, 13 August 2025, Annexure BI Part 2

[13] Statement of Gabriel Alkan, 7 August 2025, Annexure GA-6; Statement of Sarah Verheyen, 13 August 2025, Annexure BS

[14] Attachment to Further Witness Statement of Gabriel Alkan, 21 August 2025

[15] Statement of Gabriel Alkan, 7 August 2025, Annexure GA-9

[16] Further Witness Statement of Sarah Verheyen, 8 September 2025, Annexure SV-1

[17] Attachment to Further Written Statement of Gabriel Alkan, 21 August 2025

[18] Relying on NSW Trains v Mr Todd James [2022] FWCFB 55

[19] Applicant's Reply Submissions, 8 September 2025, par 4

[20] See for example Further Witness Statement of Sarah Verheyen, 8 September 2025, at pars 14 and 35

[21] See Further Submissions of the Respondent, 21 August 2025, par 83e

[22] Further Witness Statement of Rashed Panabig, 21 August 2025, par 15

[23] Statement of Crystal Feng, 21 August 2025, par 9

[24] Statement of Jim Dionysatos, 21 August 2025, par 16c

[25] Statement of Gabriel Alkan, 7 August 2025, par 35c

[26] Further and Additional Witness Statement of Gabriel Alkan, 18 September 2025, par 7b

[28] Further Submissions for the Respondent, 21 August 2025, par 35

[29] Further Submissions for the Respondent, 21 August 2025, par 83a

[30] Statement of Gabriel Alkan, 7 August 2025, Annexure GA-1

[31] Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61; (2007) 233 CLR 115 at 135-6; [2007] HCA 61at [44]

[32] Visscher v The Honourable President Justice Giudice [2009] HCA 34; (2009) 239 CLR 361 at 379-381 and 388; [2009] HCA 34 at [53]- [55]

[33] Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634 at 656

[34] Eunhye Hong v 2022 Trading Pty Ltd [2025] FWC 2821 at [91]

[35] (1996) 88 IR 259 at 261

[36] Applicant's Reply Submissions, 8 September 2025, par 25

[37] Eunhye Hong v 2022 Trading Pty Ltd [2025] FWC 2821 at [95]

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