Voluntary and Forced Resignations - reinforcing the distinction
In a recent unfair dismissal case that we were involved in, the Fair Work Commission upheld an employer's jurisdictional objection to an employee's claim to have been dismissed by way of a 'forced' resignation, and it was held that the employee could therefore not pursue an unfair dismissal claim.
The Facts
In Ampuero -v- H's Menswear Pty Ltd (2015 / 15184), the employee had worked as a menswear salesman for 6 years on an annual salary of $55,000, when his sales began to decline, despite two performance meetings being held with his employer.
His employer then reduced the employee's salary to the minimum under the applicable Modern Award (approximately $40,000), and placed him on a commission structure that would require the employee to achieve his average sales over the past two years to earn $55,000 a year, and that he would also potentially receive additional commission on any excess sales achieved (it was demonstrated that the employee could realistically earn up to 60% more than his previous salary).
The employee appeared to have initially identified a real opportunity to earn greater remuneration under this new structure, so he asked his employer to document the new remuneration structure.
However, after three weeks of working under the new remuneration structure, the employee appeared to have 'changed his mind' and resigned from his employment, claiming to have been forced to resign because of 'conduct' engaged in by his employer. It is important to note that even though the employee claimed that his pay had been reduced under the new remuneration structure, in the three week period that he worked under that new structure, he earned slightly more than he would have earned under his previous annual salary.
The Law
The Fair Work Act 2009 (Cth) provides as follows:
A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
However, a person has not been dismissed if the person was demoted in employment but:
(a) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(b) he or she remains employed with the employer that effected the demotion.
Case law in this area has established the following principles:
1. A termination is at the employer's initiative when the employer's action 'directly and consequentially' results in the termination of employment, and had the employer not taken this action, the employee would have remained employed.
2. There must be action by the employer that either intends to bring the relationship to an end or has that probable result.
3. A forced resignation is when an employee has no real choice but to resign, and the onus is on the employee to prove that they did not resign voluntarily, and he or she must prove that the employer forced their resignation.
4. The line distinguishing conduct that leaves an employee no real choice but to resign, from an employee resigning at their own initiative is a narrow one. The line, however, must be 'closely drawn and rigorously observed'.
The Commission's Decision
The Commission in this matter asks itself two main questions:
What was the conduct and did the conduct actually happen?
The 'conduct' in this matter was simply the implementation of the new remuneration structure, and it was clear that the conduct did occur.
Could that conduct be reasonably considered to be action on the part of the employer which either intended to bring the employment to an end, or had that probable result?
The Commission found that the reasons given by the employer for the new remuneration structure were genuine, and not intended to force the employee to resign, but rather, to motivate him to improve his sales.
The Commission also found that the new remuneration structure did not have the probable result of bringing the employment relationship to an end, because although the employee later claimed that he was unhappy with the new remuneration structure, he did work under that new structure for three weeks and his total pay did not suffer during that time.
The Commission ultimately found that the employee had voluntarily resigned from his employment, and that he was not forced to do so because of the employer's conduct. Accordingly, the employee had not been "dismissed" within the meaning of the law, and his unfair dismissal application was unsuccessful.
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