The chance to resign - a poison chalice in dismissal claims

An employee who is offered the chance to resign by their employer should think long and hard as it may prevent any claim against the employer thereafter no matter how well-placed that claim would otherwise have been.

MARGE:     The power plant called and said if you don’t come in tomorrow, don’t bother coming in Monday.
HOMER:     Woo-hoo! A four day weekend!

The recent decision of the Fair Work Commission (‘FWC’) in Hudson v Transport for NSW involving an application to deal with an unlawful termination dispute has provided a timely reminder of how Australia’s workplace legislation deals with matters of dismissal.

Samantha Hudson (the employee) was ‘Director – Service Design’ with Transport with New South Wales (the employer). In April 2018 the employer commenced the procedure for managing her allegedly unsatisfactory performance.

In July the employer raised concerns about the employee’s conduct for the first time, following allegations of harassment and bullying by two other employees. The employee was subsequently informed by the employer that these allegations were groundless.

In October the employee was informed of the allegations made against her by the employer. She was given until 22 October 2018 to respond. On 18 October the employee was granted an extension of time to respond to the allegations in writing. On 23 October the employee provided her written response to the allegations.

On 29 October the employee was informed by letter that a decision had been made to “proceed with termination on the grounds of unsatisfactory performance”. This was because the employee “did not adequately address those concerns [about her performance].” In this letter, the employee was presented with two alternatives. The first was to have her employment terminated; the second was to resign prior to termination, an offer that is required by legislation under the Government Sector Employment Act 2013.

In her response, the employee elected “to have the termination reflected as a resignation effective 30 October 2018” to improve her chance of re-employment in the public service.

In November the employee filed an application with the FWC for the employer’s unlawful dismissal.

The application alleged that the employee had been “systematically discriminated against on the grounds of her gender (as had other female employees).” She sought reinstatement and “protection from ongoing discrimination.”

It is worth taking a moment to re-familiarise ourselves with Australia’s workplace dismissal legislation.

•    Wrongful dismissal boils down to an employer failing to terminate their employee correctly, per the necessary notice periods, completion of terms, giving the employee reasonable time to justify their actions, and so on. Employees are wrongfully dismissed based on a breach of contract or Common Law.

•    Unfair dismissal occurs when an employer terminates an employee without a valid reason, usually relating to conduct or capacity. Employees are unfairly dismissed if the FWC finds that the dismissal was harsh, unjust or unreasonable or it was not a case of genuine redundancy.

•    Unlawful dismissal is the termination of an employee based on a number of unlawful reasons (usually discrimination based on their sex, or on being a member of a particular minority, or on being a member of a union or on being absent from work despite having a good reason).

The employer’s case relied primarily on the matter of jurisdiction. Unlawful termination laws do not cover employees who resign and were not forced to do so as a result of their employer’s conduct.

Interestingly, the employer accepted that “its conduct led to the employee’s employment being terminated, [though] it did not cause the termination of employment, nor did it force the employee to resign”. The employer alleged that its own behaviour was the catalyst, not the mechanism, for the employee’s termination.

The employee’s case relied on a broader approach. The employee’s solicitor made note of the employee’s considerable work ethic, her substantial track record for success, her glowing reviews from her supervisor, the small time frame in which the employee was given to respond to allegations, and even the argument that “conduct” and “performance” are not the same thing.

The employee argued that she had been coerced into resigning by the fact that the she took the employer’s offer for resignation as an ultimatum.

The FWC found in favour of the employer, agreeing that the employee had resigned voluntarily before termination. The employee had not successfully demonstrated that she was forced to resign, despite the fact that she had been informed that termination would certainly follow.

The FWC’s decision makes no mention of the employee’s case for gender discrimination of which she had allegedly been made a victim. That’s because she was held to have voluntarily resigned and no termination was involved.

An employer considering dismissing an employee, should consider offering them the chance to resign first. It’s not bullet-proof, but the Commission might see their resignation as an impediment to any claim against the employer.

If you’re “given the elbow” at work, call the FWC and your solicitor before accepting the employer’s terms, particularly if they offer you an ‘honourable’ opportunity to resign as opposed to being dismissed.  Don’t assume, as Homer did, that the other party is offering you favourable terms.

Media Release