05 October 2006
Key Points:
The law regarding termination at the initiative of the employer has changed.
For an employee to claim that they have been unfairly or unlawfully terminated and seek relief pursuant to the Workplace Relations Act (Cth) 1996 ("the WR Act"), the employee must demonstrate that their employment has been "terminated at the initiative of the employer".
Under section 642(4) of the WR Act, the onus now rests with the employee to prove, on the balance of probabilities, that he or she did not voluntarily resign, but that he or she was forced to do so because of conduct, or a course of conduct, engaged in by the employer. Essentially, there must be an element of compulsion to resign at the hands of the employer.
Pre-reform situation
Prior to the WR Act being amended (effective from 27 March 2006), a "termination of employment at the initiative of the employer" was said to occur where the principle contributing factor which lead to the termination of the employment relationship was the employer's action.
The leading case was that of the Full Court of the Industrial Relations Court of Australia in Mohebatullah Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200.
This case concerned an employee of Dick Smith Electronics Pty Ltd ("Company") who was questioned on the disappearance of an item of stock - a toy radio. It was alleged that during the interview, the Company had essentially presented the employee with an ultimatum - to resign or to face police involvement.
In any event, as a result of the interview and discussions between the employee and representatives of the Company, the employee's employment came to an end. Immediately after the abovementioned discussions took place, a letter of resignation was prepared by a Company representative and the employee was accompanied to his office to collect his personal items and subsequently escorted from the premises. After waiting in the car park outside the Company premises, the employee was handed the prepared letter of resignation and was requested to sign it, which he did so. The employee brought a claim for unlawful termination, contending that his employment has been terminated by the Company. The Company defended the claim, maintaining that the employee voluntarily resigned due to personal concerns related to police involvement.
The case was initially heard by a judicial registrar who found that the employee's employment had been terminated by the employer, not the employee. Orders were made for reinstatement and lost income.
The case was brought on for review before Wilcox CJ, who found that the employee's decision to resign was one that he had made and that he had terminated the employment, not the employer. Wilcox CJ made orders to set aside the decision of the judicial registrar and to have the application dismissed.
A further appeal was brought on before the Full Court which held that on the finding of fact that the Company had directed the employee to resign or have the police 'called in', what had occurred was a termination of employment at the initiative of the employer. The Court [at 206] went on to say that:
"When an employee has no effective or real choice but to resign it can hardly be said that the termination of her or his employment is truly at the employee's initiative. But for the insistence of the employer, termination of employment would not cross the mind of the employee".
Orders were made to set aside the decision of Wilcox CJ and the matter was remitted to a single Judge of the Court.
Post Work Choices
In the recent case of Annette Megna v No. 1 Riverside Quay (SEQ) Pty Ltd. PR973785 (24 August 2006), in the Australian Industrial Relations Commission, Senior Deputy President Roberts stated that section 642(4) of the WR Act is comprised of the following elements:
(a) that the onus is on an employee to demonstrate certain facts on the balance of probabilities; and
(b) the facts that the employee must demonstrate are that:
(i) the employee did not resign his or her employment voluntarily, but;
(ii) was forced to do so, indicating an element of compulsion;
(iii) because of the employer's conduct, or course of conduct.
The case involved an application under section 643(1) of the WR Act for relief in respect of termination of employment. The applicant was employed by the respondent, a company which operates food outlets at various BP Connect Service Stations. During her employment with the respondent, the applicant's car broke down and she was unable to attend work for 6-8 weeks. She approached the respondent and inquired into alternative employment. The evidence indicates that the respondent informally mentioned that it would do its best to find alternative employment, however, the applicant would first have to resign from her current position. The applicant resigned on a mistaken belief that alternative employment was guaranteed.
The Commission held, amongst other things, that the initiating circumstances in this case were unrelated to the respondent, the applicant was not forced to resign and the termination of employment was not at the employer’s initiative.
Significantly, the Commission held that due to the statutory test in section 642(4) of the WR Act, it was no longer required to consider the principles set out in Dick Smith Electronics.
Comments
Changes to the WR Act have placed a heavy onus on an employee seeking relief for unfair or unlawful termination. Employees must now provide evidence that his or her actions were based on an element of compulsion to resign at the hands of the employer.
Prior to changes to the WR Act, employees could successfully claim a termination at the initiative of the employer in many situations, for instance, where the employer invited the resignation or where the employee resigned because their employment contract was breached by the employer. Unless an employee can show the required level of force or compulsion, such cases will not be a "termination at the initiative of the employer".
Thanks to Elaine Wambeck for her help in writing this article.
For further information, please contact Glen Bartlett.
