Employer says it had 'lost confidence' and gave resignation as 'one option'
HR professionals are familiar with the practice of offering exit options to employees. This can include things like voluntary redundancy packages or early retirement incentives.
In a recent Fair Work Commission (FWC) case, an employer defended its position that it merely offered resignation as “one option” to an employee.
The employer is a pharmaceutical manufacturer headquartered in New South Wales. The employee held a Ph.D. in analytical chemistry and was the company’s chief of quality.
Performance issues
In mid-2022, the employer’s chief executive officer was concerned about the employee’s performance. Around this time, the CEO became aware that the latter “at some future time, require leave for planned surgery.”
The employee then confirmed that she would require six weeks’ leave. Shortly after, the CEO sent her an email concerning a backlog in product codes, asking for the problem to be “urgently addressed.”
Her performance issues continued until the CEO said he “lost confidence in her ability to perform her role” by September 2022.
They had a meeting to discuss her future in the company, and according to the employee, the CEO said:
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“This is difficult for me to say but your employment will not be continuing with [the company.] There is no need for you to undertake any more work. Leave your computer and I will be in touch with you regarding your exit arrangement.”
“I appreciate that the timing of this discussion given your personal circumstances is difficult, but the role that you perform is critical to the business. It’s just not working for the business. I feel that we are at a stage where the right decision must be made for the business due to my ongoing performance concerns. This discussion has absolutely nothing to do with your upcoming surgery,” the CEO allegedly said.
“Let’s work together on how we best position you leaving the business. One option is to say that due to your upcoming surgery you have decided to resign, and you wish to focus on your health. This however would be your decision and I will respect whichever way you wish to do this. I can draft an announcement about your resignation for you to consider if you wish”.
“If you wish to resign, we won’t need you to work out your 3 month-notice period which we will pay together with your accrued leave,” the CEO added.
After the meeting, the parties had further discussions, but the employee said the employer had “approval to offer four months of pay,” which represented her 3 month-notice in lieu and one additional month.
The employee said the CEO also asked her to sign a deed of release (DOR), “which protects both parties from any further claims.”
‘Forced resignation’
The employee refused to sign the DOR but asked for the payment of her entitlements. She said she did not resign, and if she did, it was “forced.”
Meanwhile, the employer argued that “raising exit options with an employee after having lost confidence in the employee does not constitute a termination at its initiative.”
The CEO said he presented resignation as “one option,” giving her “a number of days to consider her position and options.”
He said he “did not place her in the position where she had no effective or real choice but to resign.”
Commission’s decision
The commission considered that the resignation option was “raised and initiated unilaterally by the CEO, and not the employee.”
It noted that she “did not plan or wish to leave her employment. She was simply seeking leave for surgery.”
“The resignation option was raised by the CEO in circumstances where he had already made a decision that her continuing employment was untenable and that her exit was his intention,” the decision said.
It also said the employer “drafted the resignation announcement, reference letter, and the deed of release which asserted the fact of resignation.”
“The choice of the employee… was a choice to agree to the employer’s resignation announcement and reference letter. It was not an expression of any desire on her part to end her employment,” the commission said.
“The employer not only had the intention to procure her resignation, but that was the CEO’s objective. He was the sole instigator of that discussion and did so because he had lost confidence in her. He had decided that her exit was necessary, and he had told her that. All negotiations were directed to her exit as the outcome,” it added.
Thus, the commission ruled the employee was “forced to resign” due to the employer’s conduct.