Claims he was pressured to accept 'significantly altered' terms
The Fair Work Commission (FWC) recently dealt with a case involving an unfair dismissal claim by a business development manager against his employer, a protective services company. The case revolved around the worker's refusal to sign a new employment contract and the subsequent termination of his employment.
The worker, who had been with the company for over nine years, argued that he was unfairly dismissed after refusing to sign a new contract that significantly altered his sales targets, commission structure, and post-employment restraints.
He claimed that despite his attempts to negotiate and seek amendments to the contract, the employer pressured him to sign it without addressing his concerns. The worker argued that his dismissal was not only unjust but also procedurally unfair, as he was not given a valid reason for termination or an opportunity to respond.
The employer, on the other hand, maintained that the worker had resigned voluntarily. This case raised important questions about the balance between an employer's right to modify employment terms and an employee's right to fair treatment in the workplace.
Parties’ dispute over a new contract
The worker had been with the company since March 2015, starting as an operations manager. In November 2023, he was presented with a new employment contract. The proposed contract included changes to his sales targets, commission structure, and post-employment restraints.
At the time of dismissal, the worker's remuneration package included a salary of $95,000 per annum plus superannuation, car lease payments, car insurance, a fuel card, car servicing, and a phone allowance, totaling $112,320.16 per annum plus $9,975 in superannuation.
Concerned about the changes in the new contract, particularly the sales targets and restraint clauses, the worker sought clarification and amendments. He met with the CEO and the manager of capability and culture on 4 January 2024 to discuss his concerns.
Over the next few months, tensions rose as the employer pressured the worker to sign the new contract. On 6 March 2024, the worker received an email from the manager stating:
"We have been looking at this contract content for some time and you are aware of the matters raised. I believe we have got to the point of resolution so we should be able to close this matter asap. Still, you should read the documents thoroughly and quickly as this is a very important step in the business moving forward."
The email also included a deadline for signing the contract, adding to the pressure on the worker.
Dismissed for refusing to sign?
The situation came to a head in a meeting on 11 April 2024. The worker claimed he was dismissed for refusing to sign the unamended contract, while the employer contended that the worker had resigned. The FWC's task was to determine whether a dismissal had occurred and, if so, whether it was harsh, unjust, or unreasonable.
The Commission focused on several key issues:
1. Whether the worker was dismissed or had resigned
2. The validity of the reason for termination
3. The procedural fairness of the dismissal
4. The impact of the dismissal on the worker
After examining the evidence, including conflicting accounts of the 11 April meeting, the FWC found the worker's account of events more credible than that of the employer's witnesses. It determined that the worker had indeed been dismissed and had not resigned.
Lack of valid reason for dismissal
The FWC emphasised that refusing to sign a new contract with unfavourable terms is not a valid reason for dismissal. The Commission stated:
"[The worker] was dismissed for declining to sign a proposed new contract of employment due to terms contained within it which he found to be unreasonable. It is also plainly apparent he sought to remain in the employ of [the employer]. The elements of the contract he found unreasonable were the proposed new commissions structure and the post-termination restraints."
This finding underscores the importance of negotiation and mutual agreement in employment contract changes.
Procedural fairness and communication
The Commission also found significant procedural failures in the dismissal process. The employer failed to provide clear reasons for the dismissal or give the worker an opportunity to respond.
The FWC noted:
"[The worker] was clearly not provided with an opportunity to respond to any conduct or performance issues before the decision to dismiss him was made."
This highlights the need for employers to follow proper procedures, even in situations where they believe an employee has resigned.
Following his dismissal, the worker struggled to find new employment, providing evidence of seventeen unsuccessful job applications made between 28 April and 15 July 2024. He eventually secured new employment starting on 27 August 2024.
The FWC ordered the employer to pay compensation to the worker. In calculating the compensation, the Commission considered:
1. The worker's length of service
2. The remuneration he would have likely received if not dismissed
3. The worker's efforts to mitigate his loss
4. The impact of the dismissal on the worker
The final compensation amount was set at $42,552.06 plus superannuation, reflecting the worker's lost earnings from the date of dismissal to the start of his new employment.
The FWC's decision emphasises these points:
"Having considered each of the matters specified in s.387 of the Act, all the factors described above are either neutral or tell strongly in favour of a finding that the dismissal was unfair. Most tellingly there was an absence of a valid reason for dismissal."
This statement underlines the importance of having a valid reason for dismissal and following proper procedures.
The Commission also noted:
"I am satisfied that the dismissal was unreasonable, unjust and harsh because of the absence of a valid reason, the procedural failures and delayed leave entitlement payments, and was thereby unfair."
This finding highlights the multiple factors that can contribute to a dismissal being deemed unfair.
Finally, the FWC emphasised the need for employers to be cautious when interpreting an employee's actions as resignation:
"It follows from the foregoing that the clear documentary and other evidence of events that occurred prior to and following the 11 April 2024 meeting cannot be reconciled with [the employer's] version of events in the 11 April 2024 meeting."
