Does a failed contract extension equal dismissal?

The Fair Work Commission (FWC) recently dealt with a dismissal claim from a worker who alleged that she was forced to resign after her employer failed to extend her contract. She also alleged that conflicts among colleagues also turned the workplace into a “hostile environment,” which aggravated her situation.

The worker, Jennifer Murray, filed an application before the FWC, alleging that she was fired from her position at EACH. Murray started her employment with EACH on 21 September 2021, assuming the role of Team Leader – Partners in Wellbeing. She had a fixed-term contract slated to conclude on 31 August 2023.

During the early to mid-period of 2023, Murray became worried and apprehensive about EACH's management practices, particularly the support she received from her immediate supervisor. Citing concerns for her health and safety due to unaddressed issues, Murray felt compelled to resign.

As developments unfolded in August 2023 concerning the renewal of her contract, disputes arose. EACH claimed that she requested a pay rate review on 11 August, later disclosing an external job offer with a higher salary on 15 August. On 17 August, her manager reportedly deemed a pay increase inappropriate.

Simultaneously, Murray received a proposal to extend her contract, which she criticised for lack of timely discussion. On 18 August, she communicated her decision not to renew the contract but offered to stay during the transition period.

Proposed contract extension

This marked the start of negotiations between the parties, leading to a proposed contract extension until 28 June 2024. Murray rejected this offer on 18 August, prompting further discussions with one of the employer's managers, who initially accepted her resignation for the end of September 2023.

Amidst these deliberations, a second contract extension proposal until 29 September 2023 was presented, and Murray's rejection was expressed through various channels.

According to records, tensions escalated during a Teams meeting on 25 August, leading to a strained interaction between Murray and the said manager.

The final exchange occurred on 28 August when EACH confirmed the termination of Murray's employment, aligning with her initial decision not to accept any further contract extension.

The worker argued that a hostile workplace, coupled with the employer’s refusal to review her pay rate, led to “forced resignation” after she didn’t accept the terms of her contract extension proposals.

Was it forced resignation?

The FWC said that “termination at the initiative of the employer involves the conduct (or course of conduct) engaged in by the employer as the principal constituting factor leading to the termination.”

“There must be a sufficient causal connection between the conduct and the resignation such that it ‘forced’ the resignation,” it added.

“In mid-August, Murray sought a pay-rise which implies that such wrinkles as there may be in the employment relationship could be assuaged with a higher rate of pay. [She] wanted a contract extension, was anxious when it was not provided, and had to prompt EACH to provide one.”

“She actively considered the First Contract Extension Proposal and turned it down only after her pay-rise request was refused,” the FWC said.

Employer ‘wanted her to stay’

“Managerial and other leadership positions require development and maintenance of sustainable relationships as well as resilience for withstanding not only the difficulties of dealing with subordinates but peers and superiors any of whom may have difficulties or disabilities with one, some or all of their colleagues.”

“The absence of workplace harmony or the presence of workplace conflict are not in and of themselves always so significant that an employee is left with no option other than to resign. Those matters of themselves are not unusual or untenable and on their own do not ordain a forced resignation,” the FWC said.

Ultimately, the FWC said that “EACH did not at that time want her gone: it wanted her to remain.” Such was evident after it consistently tried to accommodate the worker’s requests.

Although the matter was unsuccessful, the FWC said that the employer’s failure to extend the worker’s contract did not amount to forced resignation.