Rash employee exits: a genuine departure or mistaken resignation?

31 July 2018

Where an employee freely and willingly resigns from a job, the unfair dismissal provisions of the Fair Work Act 2009 (Cth) will not be available to them. But what happens when the resignation is not a genuine departure, and rather, is a termination at the initiative of the employer? The circumstances surrounding an employee’s decision to leave a job can impact whether an employer is at risk of action for unfair dismissal, and whether the employee in question may be able to seek to return to their role.

This question was considered in the matter of Bupa Aged Care Australia Pty Ltd T/A BUPA v Shahin Tavassoli [2018] FWCFB 2607 in an appeal decision before the Fair Work Commission (Commission) in May. The case involved a question as to whether Mrs T’s employment was terminated by her employer (Bupa) under section 386(1)(a) of the Fair Work Act 2009 (Cth) (Act), rather than by the employee’s resignation.

In this case, Bupa deemed Mrs T to have resigned from her employment in November 2016. Therefore, her employment could not have been terminated on Bupa’s initiative. However, Mrs T argued that her resignation was not given freely, and that she had been unfairly dismissed by her employer. When she had provided the resignation to her supervisors in a meeting, she had been overwhelmed by allegations of misconduct, did not understand that parameters of a proposed workplace investigation, and was distressed and upset. Additionally, during the meeting her supervisor had requested that she amend her resignation to be effective from that day, instead of providing four weeks’ notice.

After calming down, Mrs T attempted to withdraw her resignation, however her supervisor rejected this and confirmed she was no longer an employee.

Mrs T made an unfair dismissal application, claiming that she was constructively dismissed due to false accusations made about her conduct, and because she had been subjected to indignant treatment at her disciplinary meeting, and encouraged to resign from Bupa with immediate effect. Bupa claimed that Mrs T was not eligible to make an unfair dismissal application, because her employment had not been terminated by Bupa.

The Commission found that Mrs T’s termination was not made freely, due to factors including her misunderstanding of a workplace investigation (and intention to resign in order to avoid it), her difficulty with the English language and highly emotional and irrational state during the meeting. Where there are special circumstances, such as emotional stress, external pressure, or the employee resigns in a temper, then the words of a resignation may not be unequivocal, and the employer may not be entitled to accept it as such1. Therefore, those “special circumstances” ought have been taken into consideration by Bupa, in dismissing the genuine nature of her resignation letter. Additionally, because Mrs T’s supervisor had suggested the amendment to her resignation letter, there was implied encouragement of termination and therefore the termination was at the initiative of Bupa.

Deputy President Coleman, in his dissent, took issue with the Commission finding that Mrs T’s resignation was not given “freely, deliberately and as a result of any reasoned deliberation,” making the following points:

  1. Mrs T persisted with her resignation and was never forced to resign. Therefore it was given “freely”;
  2. If Mrs T was acting “irrationally” in a clinical sense, then this may have meant she had no capacity to form a deliberate intention to resign. But, there was never any suggestion Mrs T was clinically incapable of decision-making;
  3. The fact that Mrs T was behaving irrationally and against her own interest is not the responsibility of an employer. Mrs T made a poor decision, but an employer cannot evaluate what might be a good or poor decision for an employee because it’s subjective; and
  4. Special circumstances may provide a basis to conclude that, objectively considered, there is no real intention of an employee to resign. However, those special circumstances do not automatically provide the conclusion that a resignation is legally ineffective.
Lessons for employers

Employers should be mindful that where an employee’s resignation has been given hastily due to misunderstanding or distress, the employee may have grounds to argue that it was not given freely or with due consideration.

An employer may be held accountable for such a resignation where it is deemed to have encouraged or recommended the resignation in a way that could indicate the employee’s dismissal was “at the employer’s initiative” for the purposes of section 386(1)(a) of the Act.

More importantly, where the employer is deemed to have provoked the resignation through its actions, the employer may be found to have constructively dismissed the employee, under section 386(1)(b) of the Act.

This ruling places an undue burden on employers to effectively “double check” with employees who make the rash decision to resign. Employers do not owe employees a “cooling off” period, however employers will be more capable of protecting themselves if:

  • At disciplinary meetings, employees are afforded due process and feel assured of any predetermined decisions (so they do not resign in order to avoid investigations);
  • Where an employee resigns in what the employer views as a hasty or irrational manner, the employer ensures all circumstances and consequences are explained to the employee at the time of resignation;
  • If the employee has cultural, ethnic, or language differences, that these are seen to be acknowledged and accounted for in such resignation meetings;
  • The employer can show that the employee is not pressured or encouraged in any capacity (or seen to be pressured or encouraged);
  • The employer can show that no adverse action or behaviour of the employer may have prompted the resignation so as to incur a constructive dismissal;
  • If possible and only where appropriate, the employer provides the employee with the opportunity or time to consider their options (such as allowing an employee a day to reconsider); and
  • The employer can show that at the time of resignation, the employer has “double checked” with the employee and notes down any confirmation that was given.

While some of these preventative steps are onerous, they will stand an employer in better stead when faced with unfair dismissal claims such as Mrs Travassoli’s.

Allegations of misconduct, workplace investigations, and stressful work environments can prompt hasty and irrational decisions. Regardless of how we may like to perceive it, the nature of employment law is personal, and therefore changes or processes that affect employment have a personal effect on employees. This can give rise to a multitude of issues if things don’t go to plan. If you have any questions about decisions in the workplace or ensuring smooth transitions after resignations, contact HWL Ebsworth and speak to one of our employment law specialists.

This article was written by Heinz Lepahe, Partner and Charlotte Glab, Solicitor.

1Barclay v City of Glasgow District Council [1983] IRLR 313 at 315; Nohra v Target Australia Pty Ltd [2010] FWA 6857; Kelly Simpson v Mohammed Shahid Akram t/a Mad about Price [2013] FWC 5110.

Heinz Lepahe

P: +61 7 3169 4854

E: hlepahe@hwle.com.au 

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