DEFENDING UNWARRANTED UN-FAIR DISMISSAL CLAIMS
Employers targeted by unreasonable unfair dismissal claims may take comfort following a recent tribunal ruling in the decision of G. Dircks v JimRoy Pty Ltd1.
Jim Roy was successful when the full bench of the AIRC confirmed that an applicant, and her representative, Gary Dircks, were jointly and severably liable to pay the former employer’s party-party costs as a result of their unreasonable conduct in an unfair dismissal claim against JimRoy.
The decision is a significant win for employers who may be the subject of unfair dismissal claims where the former employee decides to pursue a claim that has little prospects of success.
In May 2008 an employee of Jim Roy, Natasha Vukadinovic, was sacked after she allegedly lied, on two occasions, about the death of her parents in order to obtain compassionate leave.
Her representative, Dircks, with whom Vukadinovic had entered into a contingency fee agreement, continued to seek a financial settlement of her claim even after acknowledging that the applicant could not dispute that she had lied about her parents’ death in order to obtain the compassionate leave, and that, in any event, his argument would be that honesty was not “a requirement of her employment.”
Commissioner Tolley of the AIRC, rejected Dircks’s contention that an employee was not required to tell an employer the truth finding that ‘Honesty and trust between employers and employees lie at the foundation of the employment relationship’.
Commissioner Tolley ordered Dircks and the worker to jointly pay all of the employer’s costs. The full bench confirmed the findings made by Commissioner Tolley, at first instance.
This decision puts Applicants and their representatives on notice that unreasonable claims of unfair dismissal, made for the purposes of extracting settlement monies from former employers can come at a very high personal cost.
Nevertheless, employers ought to be continually mindful of taking preventative measures to avoid unfair dismissal claims by having comprehensive termination processes in place and following due process when forced to terminate employment relationships.
For more information about this article or to discuss your termination processes please contact Kenneth Law on[email protected]
WHEN A RESIGNATION IS NOT A RESIGNATION – DON’T BE GUILTY OF CONSTRUCTIVE DISMISSAL
Constructive dismissal occurs when the conduct of an employer causes an employee to resign. The employer may expressly ask the employee to resign or the employer’s conduct may leave the employee feeling there is no other choice but to resign. An employer may believe that the resignation is mutual however if an employee is able to demonstrate that the employer’s behavior was unfair or unlawful in procuring a resignation, a constructive dismissal claim may pursue as highlighted in the recent decision of Mr John Steven Little v Petfood Processors (WA) Pty Ltd  FWA 5753 (5August 2010).
John Steven little v Petfood Processors (WA) Pty Ltd
In this case, an employee maintenance manager has worked for his employer for 16 months when a new factory manager started with the company.
On his first day on the job after a discussion about parts ordering, the factory manager asked the maintenance manager why he was “negative” and said: Ï am not going to let someone like you f–k this job up for me. I have waited to long for this job ….” Within two weeks the new factory manager had provided the employee with an ultimatum: resign or undertake a performance management program including formal warnings.
The employee felt that staying and proceeding with a formal performance management program would eventually have led to termination of his employment, so he tendered his resignation the following day. He then brought a claim against his employer for unfair dismissal.
Commissioner Cloghan of Fair Work Australia (FWA) accepted that the maintenance manager had been constructively dismissed. He found that the employee’s dismissal was unfair because he was effectively forced to “fall on his own sword” and resign. In other words, the decision to resign was not made freely by the employee but was brought about by the conduct of the manager.
Fair Work Act 2009 Protections
Constructive dismissal is an argument made in the context of a dismissal based claim where an employee is able to establish that the end of his or her employment was harsh, unjust or unreasonable, was unlawful or, in breach of the general protection provisions of the Fair Work Act 2009.
However, not every employee who leaves his or her employment because of their employer’s conduct will be able to successfully argue that a constructive dismissal occurred.
An employee must be able to prove that the action of the employer was the principal contributing factor which led to termination of the employment relationship. The employee must show that something the employer did, or failed to do, left him or her with no option but to resign their employment.
Types of Constructive Dismissal
Constructive dismissal may occur in circumstances of forced resignation or seemingly mutual resignation.
1. Forced Resignation
Forced resignation occurs when an employer expressly insists that an employee resign as in the Little case where an ultimatum was given.
In these circumstances an employee can argue that his or her resignation was not voluntary. It will be irrelevant that the employer’s insistence on the employee’s resignation was based on good intentions, such as saving the employee from embarrassment or making it easier for the employee to find future employment.
2. Legitimate Reason for Resignation
Constructive dismissal may also occur where an employee has chosen to resign due to the unacceptable conduct of the employer. Such may be an unauthorised variation to employment conditions, such as a pay-cut, demotion, change of working hours or relocation. It may also be unacceptable personal treatment of the employee (such as sexual harassment) that the employer has unreasonably failed to prevent or address.
Examples of Constructive Dismissal
Whether a principal contributing factor in the termination of the employment was an act or failure to act on the part of the employer will depend on the circumstances of the employment relationship.
However, employer’s should be mindful of the following conduct that may constitute grounds for a constructive dismissal claim:
– where an employee is given a choice to resign or be dismissed;
– where an employee is threatened with a particular course of action if they do not resign such as undertaking an unpleasant formal performance management program as in Little;
– where an employee resigns in the “heat of the moment” and the resignation is immediately accepted without the employee having an opportunity to reconsider;
– where an employee is subject to ongoing harassment or discrimination;
– where an employee is subjected to systematic humiliation or verbal abuse in the conduct of their employment;
– where there is a serious and ongoing failure to provide a safe and healthy workplace, the employee has notified the employer of the problem and there is no improvement;
– where an employer actively campaigns to force an employ out of work by acting is such a way as to make it impossible for the employee to continue to do his or her job; and
– where an employee has been demoted and the demotion involves a significant reduction of the remuneration or responsibilities of the employee.
The Decision in Little highlights the importance of taking care when offering resignation or accepting an employee resignation in circumstances of managing employee performance. Acting or failing to act in a manner that is unfair or unlawful which ultimately leads to a termination of an employment relationship may amount to constructive dismissal despite good intentions or otherwise.
For more information about this article please contact Kenneth Law on[email protected]