'Termination was a mistake': Case discusses meaning of 'ostensible authority'
The Fair Work Commission (FWC) recently dealt with a case involving a retail worker who claimed she was dismissed from her job at a discount store, while the employer argued that the termination was a mistake made by a store manager who lacked the authority to dismiss employees.
This case highlights the issues that can arise in employment relationships, particularly when it comes to the authority of managers and the definition of dismissal under the Fair Work Act.
It serves as a reminder for employers to ensure clear lines of communication and well-defined roles within their organisation.
Dismissal or miscommunication?
The worker began her employment as a part-time retail sales assistant on 2 November 2024. The employment contract, signed by both the worker and the store manager, set out the terms of employment, including notice periods for termination.
Over the Christmas period of 2023, the worker took holidays. Upon her return, she experienced several changes to her working conditions. The store manager reportedly reduced the worker's part-time hours from 25 hours per week to 16 hours per week without prior discussion or consultation.
In February 2024, the store manager advertised a part-time position on the employer's Facebook page, but the worker was not offered any additional hours.
In April 2024, the worker's hours were further reduced from 16 hours per week to 12 hours per week, again without prior discussion or consultation. The worker observed that the store manager's communication style had become abrupt and condescending.
On 1 May 2024, during a team meeting, the store manager allegedly addressed the worker in an abrupt and condescending manner, pointing her finger at the worker about wrong tickets. Following this incident, the worker's hours were reduced from 12 hours per week to four hours per week.
Power to dismiss
On 3 May 2024, the worker submitted a written complaint to the operations manager detailing the store manager's conduct and the reduction in working hours. The operations manager contacted the worker on 8 May 2024 to gather more information.
On 15 May 2024, the worker received an email from the store manager stating:
"Good afternoon, due to hours and wages being cut we no longer have a position her [sic] for you at [the employer] effective immediately. Sorry for any inconvenience and if you need a reference any time, please feel free to use me as one."
This email was the crux of the dispute, with the worker claiming it constituted her dismissal.
The day after receiving the termination email, the worker contacted the operations manager for clarification. The latter responded, apologising for the confusion and stating that the worker remained a valued employee. The employer committed to conducting an internal investigation into the matter.
On 22 May 2024, the Operations Manager informed the worker that she was welcome to return to work at the store, providing a roster starting from 29 May 2024.
However, the worker declined this offer, citing concerns about her wellbeing and the handling of her previous bullying complaint.
Legal considerations: Defining ‘dismissal’
The FWC's decision hinged on the definition of dismissal under section 386(1) of the Fair Work Act. The Commission considered whether the store manager had the ostensible authority to act on behalf of the employer in terminating the worker's employment.
Despite the employer's claim that the store manager lacked this authority, the FWC found that the latter had been entrusted with apparent authority to act on behalf of the employer in managing employees at the store.
The Commission noted:
"It is an incontrovertible fact that [the worker]'s employment contract was signed by [the manager]. Further, [the manager] had, on more than one occasion, notified [the worker] of a reduction in her hours and, when [the worker] questioned [the Operations Manager] on one occasion as to whether the reduction of her hours had come from head office, [the Operations Manager] confirmed that to be the case."
The Commission ultimately determined that the worker had been dismissed. It found that the store manager had ostensible authority to act on behalf of the employer, and therefore, the termination of the worker's employment was at the employer's initiative.
The FWC stated:
"I find that [the manager] had ostensible authority to act on behalf of [the employer] and accordingly the termination of [the worker]'s employment was at [the employer]'s initiative, with [the worker]'s dismissal having taken effect on 15 May 2024."
Furthermore, the Commission noted that even if this finding was incorrect, the subsequent actions of the employer left the worker with no real choice but to resign. The FWC emphasised:
"Given the aforementioned circumstances, it can only be concluded that [the worker] had no effective or real choice but to resign."
The Commission concluded:
"I am satisfied [the worker]'s employment was terminated on the initiative of [the employer] and if I am wrong on this point, I am nevertheless satisfied that [the worker] was left with no choice but to resign given the course of conduct engaged in by [the employer] – hence s 386(1)(b) of the Act, having been met."
This decision underscores the importance of clear communication and well-defined authority within organisations. It also highlights the broad interpretation of dismissal under the Fair Work Act, which can include situations where an employee feels forced to resign due to the employer's conduct.
