Hope v Select Events [2015] FWC 120 (7 January 2015) [2015] FWC 120 FAIR WORK COMMISSION REASONS FOR DECISION Fair Work Act 2009 s.394 —Unfair dismissal Evan Hope v Select Events (U2014/11865) COMMISSIONER LEWIN MELBOURNE, 7 JANUARY 2015 Unfair dismissal - jurisdiction - termination at initiative of employer repudiation/renunciation - intention to no longer be bound by contract of employment - employee anticipated dismissal - accepted repudiation - employee told they would be replaced because of making complaint in relation to the employment. [1] In this matter Mr Evan Hope has applied to the Fair Work Commission for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (the Act). Mr Hope was an employee of a private trust trading as Select Events until early August 2014. Select Events furnishes and manages events, such as field days in regional Victoria. Mr Hope was employed to install and remove event infrastructure. [2] Select Events objected to the Commission dealing with the application on the ground that Mr Hope was not dismissed, because Mr Hope’s employment was not terminated on the initiative of Select Events. The Commission determined the jurisdictional objection summarily ex tempore at Mildura on 16 December 2014. The jurisdictional objection was dismissed. The Commission indicated reasons for the decision to dismiss the jurisdictional objection would be made available. These are those reasons. [3] The relevant statutory provisions which define when an employee is dismissed are as follows: Section 386 of the Act states “Meaning of dismissed (1) 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. (2) However, a person has not been dismissed if: (a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or (b) the person was an employee: (i) to whom a training arrangement applied; and (ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement; and the employment has terminated at the end of the training arrangement; or (c) the person was demoted in employment but: (i) the demotion does not involve a significant reduction in his or her remuneration or duties; and (ii) he or she remains employed with the employer that effected the demotion. (3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.” [4] It is appropriate to determine whether the termination of Mr Hope’s employment was a dismissal within the meaning of the Act before considering the merits of the application. This is because for Mr Hope’s application to be a valid Mr Hope must be a person who was dismissed accordingly. [5] As indentified by the Full Commission of the Australian Industrial Relations Commission the test of termination at the initiative of the employer is whether there is “some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end.” 1 In that case an employee had resigned their employment in writing. The Commission therefore had to determine whether the employee was in those circumstances forced to resign. As noted elsewhere below there was no such instrument of resignation by Mr Hope in this case, which would give rise to such consideration. [6] In the case of Mohazab 2 the Full Court of the Industrial Relations Court considered the ordinary meaning of the word initiative when determining an appeal against a single judge in relation to an application under the Industrial Relations Act 1988 concerning the termination of an employee’s employment as follows: “It is necessary to consider the ordinary meaning of the expression “termination at the initiative of the employer” in context in the Convention having regard to its object and purpose. The word “initiative” is relevantly defined in the New Shorter Oxford Dictionary in the following way: “initiative 1. The action of initiating something or of taking the first step or the lead; an act setting a process or chain of events in motion; an independent or enterprising act.” and in the Concise Macquarie Dictionary in the following way: “initiative 1. an introductory act or step; leading action; to take the initiative. 2. Readiness and ability in initiating action; enterprise: to lack initiative.” “ [7] Mr Hope submits that Mr Darren Wheeler, the operations manager of Select Events, terminated the employment relationship between himself and Select Events in a telephone conversation on 8 August 2014. [8] Mr Wheeler and Mr Hope have given evidence of the conversation. That evidence in certain respects is in conflict. I make no adverse finding that either Mr Wheeler or Mr Hope were untruthful when giving evidence of their recollection of the conversation. The task of determining which of the two accounts is preferable, is not easy. On balance, I have decided to accept Mr Hope’s evidence where it conflicts with that of Mr Wheeler. [9] Mr Hope filed a witness statement which provides what I consider to be a full account of the conversation. [10] The relevant content of the witness statement is set out below. “…if you don’t like it just go because I’m going to get someone else to do your job and pay them half the amount I’m paying you and they won’t be winging all the time like you either, where else is going to pay you $75,000 a year just to put up tents?” “I’m just sick of you bitching about this shit, I’ll just get someone else to do your job then!” [11] I am satisfied both from this statement, its affirmation and Mr Hope’s consistency under cross-examination, that when compared with the evidence of Mr Wheeler, Mr Hope’s evidence provides a fuller, better, more detailed recollection of the conversation than that of Mr Wheeler. [12] Having accepted Mr Hope’s evidence, I find that Mr Wheeler was extremely frustrated, if not angry, with Mr Hope at the time of the conversation and stated an intention on two occasions during the conversation to replace Mr Hope in the employment with another person. This was done in response to a complaint or enquiry by Mr Hope about having to work continuously for an extended period and requesting a day off work. I am satisfied that Mr Wheeler, among other things, unequivocally stated that he would find a person who would be paid less than Mr Hope to replace Mr Hope and to do Mr Hope’s job. [13] Mr Hope returned to the Mildura base of Select Events later in the day of the conversation. He had a brief discussion with Miss Dahlitz, the proprietor of the business. Miss Dahlitz gave evidence that she discerned that Mr Hope would not be returning to work the following day. Miss Dahlitz gave evidence that she said to Mr Hope that: “We should have got rid of you months ago when we were thinking about it.” This evidence of Miss Dahlitz is probative of previous consideration of the termination of Mr Hope’s employment by Miss Dahlitz and Mr Wheeler. Mr Wheeler and Miss Dahlitz, in addition to their roles in the business of Select Events, are spousal partners. [14] Mr Hope departed the employment with Miss Dahlitz’s gratuitous farewell. On what is before me, I am unable to be satisfied that any attempt to disavow Mr Wheeler’s declared intention was subsequently made by Select Events, which might reflect the opposite of a response to a resignation by an employee, made in the heat of the moment and withdrawn. [15] It is of note that in the months leading up to 8 August 2014 there had been discussions and some issues between Miss Dahlitz, Mr Wheeler and Mr Hope about remuneration and hours of work required of Mr Hope and issues of payment therefore. It was this subject matter which became the focus of the conversation between Mr Wheeler and Mr Hope on 8 August 2014. [16] On the evidence of the conversation between Mr Wheeler and Mr Hope on 8 August 2014, as I have found it, I judge that Mr Wheeler expressed an intention to no longer employ Mr Hope but rather to find someone who would replace him, at a lower cost. This was said in response to Mr Hope’s expression of dissatisfaction with the need to continue working into the Sunday of the week ending 10 August, after having worked continuously since the Tuesday of the previous week. In my objective judgment, the action and initiative of evincing this intention would and did have the probable effect of bringing the employment relationship to an end. [17] It was submitted by Select Events that, in fact, Mr Hope resigned his employment. I reject this submission. There is no evidence of Mr Hope uttering or writing anything which could be construed as an act of resignation. Rather, in my judgement Mr Hope responded to Mr Wheeler’s declared intention to no longer be bound to act in good faith so as to continue the employment relationship on the terms agreed upon. [18] Mr Wheeler repudiated a fundamental condition of the employment relationship and the underlying contractual duties of good faith and mutuality, being the continued engagement of Mr Hope in accordance with the agreed salary of $75,000 per annum, which had evolved consensually during the employment. Mr Hope accepted this repudiation, by departing from the employment. 3 [19] The anticipated repudiation of a party’s obligations under a contract of employment should not be lightly inferred and will require evidence of an intention which goes to the heart of the contract. Mr Hope’s case may be distinguished from situations whereby repudiation is threatened but is provisional or contingent and may or may not crystallise 4 . Likewise, it has been considered that where disputed claims for underpayment of wages may be subject to resolution by available means repudiation may not arise, or at least constructive dismissal will not occur. 5 [20] Neither of these circumstances obtain in the facts of this case. There was no uncertainty or confusion in Mr Wheeler’s statement of intent to bring the employment relationship to an end and no longer be bound by the contract of employment. Mr Wheeler’s statement was fundamental to the continuation of the employment relationship, did not go to what might of considered contractual warranties and did not depend upon disputed application of the details of particular terms of the contract. [21] In my view, Mr Hope was not required to patiently await Mr Wheeler’s successful search for a replacement for Mr Hope at a lesser cost to Select Events or to live indefinitely in optimistic expectation that Mr Wheeler’s intention could not or would not be accomplished. [22] While I am here concerned with the termination of the employment relationship, nevertheless, the employment relationship encompasses intrinsic contractual dimensions. Consideration of both the employment relationship and the contract of employment has often intersected in the decisions of courts and tribunals concerned with unfair dismissal laws. In that respect, while each case of the kind before me will turn on its own facts, the concept of repudiation has a long history in the law of contract. In The Mersey Steel and Iron Co. v. Naylor, Benzon & Co. (1884) 9 App. Cas 434 , Lord Blackburn (at 442) stated:- `... where there is a contract which is to be performed in future, if one of the parties has said to the other in effect, “If you go on and perform your side of the contract I will not perform mine” that in effect amounts to saying, “I will not perform the contract”. In that case the other party may say, “You have given me distinct notice that you will not perform the contract. I will not wait until you have broken it, but I will treat you as having put an end to the contract, and if necessary I will sue you for damages, but at all events I will not go on with the contract.’ Moreover, there is authority for the proposition that anticipatory breach is well settled 6 and forms part of Australian law in relation to employment. 7 [23] Mr Hope anticipated the intention of Mr Wheeler to end the employment relationship and accepted the renunciation of the contract of employment arising from the declaration of Mr Wheeler that Select Events would no longer employ Mr Hope and a replacement would be found for payment of a lesser salary. The anticipated breach was of a serious, essential and fundamental condition of the contract of employment between Mr Hope and Select Events. [24] Subject only to the inherent right of direction and control of the performance of work by the employer, the parties to an employment relationship should be considered as equals, although their rights, duties and obligations will be various and complementary. [25] When an employee voluntarily announces by words that they will no longer fulfil their obligations and thus evince a clear intention to leave the employment an employer is entitled to treat that as a resignation or renunciation and the termination of the relationship, forthwith, (subject to any right, duty or obligation of a period of notice or payment in lieu thereof), without having to await the accomplishment by the employee’s deeds of that statement of intent. [26] As observed by Muphy JR 8 the legal position in this respect is stated by May LJ 9 as follows: “In my opinion, generally speaking, where unambiguous words of resignation are used by an employee to the employer direct or by an intermediary, and are so understood by the employer, the proper conclusion of fact is that the employee has in truth resigned. In my view tribunals should not be astute to find otherwise .... However, in some cases there may be something in the context of the exchange between the employer and the employee or, in the circumstances of the employee him or herself, to entitle the tribunal of fact to conclude that notwithstanding the appearances there was no real resignation despite what it might appear to be at first sight.” [27] Likewise an employee may conversely act on an unambiguous and autonomous statement by an employer of an intention to act to terminate the employment. [28] To hold otherwise would be to impose an inequality on the employment relationship which privileges the employer without good reason. If one were to do so employers would be entitled to verbally abuse the relationship of good faith with impunity and threaten dismissal without an employee having a commensurate right to treat the evinced intention to bring the employment to an end as repudiation or renunciation of the relationship and its contractual elements. [29] As recognised in the decision of Murphy JR above, the possibility of special circumstances where an employee is “jostled” into resignation is recognised in employment law. However, where there are no such special circumstances an employer may act consistently with an employee’s verbal resignation and such action will be legally effective. The circumstances before me constitute the counterfactual situation. Mr Hope was conversely entitled to act on Mr Wheeler’s expressed intention for the employment to end. Mr Hope did nothing to prompt or jostle Mr Wheeler into doing so. What Mr Hope did was to seek to have Sunday 10 August as a day off work. There was no suggestion of or by Mr Hope of bringing the employment to an end. [30] Even if the characterisation of resignation submitted by Select Events were considered correct (which I do not), given the findings I have made, on my objective evaluation of Mr Wheeler’s conduct in the telephone conversation, the course of conduct of Mr Wheeler was sufficiently forceful to cause a resignation. 10 A resignation for my purposes must be a voluntary act of an employee free of ungrounded prejudicial influence by the employer. [31] It cannot be said in the circumstances that Mr Hope left the employment voluntarily. To characterise Mr Hope’s acceptance of the intended replacement of his employment by another person as a voluntary action, entirely of his own volition, would be to artificially ignore the determinative element in the context of the facts which gave rise to the termination of the employment, which was the direct and consequential result of Mr Wheeler’s actions. [32] Mr Hope did not leave the employment on his initiative, that is to say he did not, take the “first step” or take “the lead”. It was not Mr Hope’s autonomous action which set “the process and chain of events” which lead to the termination of the employment relationship in train. Neither was Mr Hope the party who introduced the termination of the employment relationship as an intention. Rather in each of the above respects it was Mr Wheeler who did so. [33] I therefore find that the termination of Mr Hope’s employment was at the initiative of Select Events in accordance with s 386(1)(a) of the Act. If I am wrong in this I consider Mr Hope’s employment was terminated within the meaning of s 386(1)(b) of the Act for the reasons given above. Accordingly, the application is within jurisdiction and the merits of the application may be dealt with. COMMISSIONER Appearances : Mr Hope on his own behalf. Mr Davies on behalf of Hai Chuan Corporation Pty Ltd ATF Kaldi A Trust trading as Select Events. Hearing details: 16 December 2014, Mildura 1 P O’Meara v Stanley Works Pty Ltd [2006] AIRC 496 at paragraph 23. 2 Mohebatullah Mohazab v Dick Smith Electronics Pty Ltd [1995] IRCA 645 (29 November 1995). 3 Whittaker v Unisys Australia Pty Ltd (2010)26 VR 688. 4 Greg Little (t v as Milk Plus) v Sparrow [2000] SAIRC 17 (19 April 2000) at paragraph 27. 5 Bruce v Fingal Glen Pty Ltd T/A Comfort Inn Adelaid Riviera (Fingal Glen) [2013] FWC 3941 . 6 Greg Little (t v as Milk Plus) v Sparrow (No. 2) [1998] SAIRC 58 (29 October 1998) see also Hochster v De La Tour [1843-1860] All E R Rep 12 , 2E and B 678. 7 Koompahtoo Local Aboriginal Council v Sanpine Pty Ltd (2007) HCA61. 8 Bernadette Minato v Palmer Corporation Ltd [1995] Irca 316 (30 June 1995). 9 Sovereign House Security Services Ltd v Savage [1989] IRLR 115 at paragraph 116. 10 O’Meara v Stanley Works Pty Ltd [2006] AIRC 496. Printed by authority of the Commonwealth Government Printer <Price code C, PR559773>