How a simple mediation agreement turned into an unfair dismissal claim
The Fair Work Commission (FWC) recently dealt with a case concerning alleged forced resignation, workers' compensation, and return-to-work obligations. The matter involved a public affairs manager who claimed she was forced to resign following a prolonged absence on workers' compensation.
The worker argued that her employer's conduct, particularly regarding a mediation agreement and later requirements, left her with no real choice but to resign.
She maintained that the employer failed to provide a promised return-to-work plan and later added new conditions to a financial settlement that wasn't part of their original agreement.
At issue was whether the worker's resignation could be legally considered a dismissal under the Fair Work Act.
The worker began as a public affairs manager at the Institute of Internal Auditors-Australia (IIA) in June 2022, initially working three days a week before increasing to full-time by January 2024. Problems arose when a new CEO joined the IIA in November 2023.
The worker "immediately perceived that [the CEO] was seeking to reduce her hours of work and change her duties." This tension escalated at a meeting on 31 January 2024, where the CEO informed the worker about changes to her role.
During this meeting, the worker expressed concern that her "work output would be severely diminished" and suggested such changes might require board approval. The CEO abruptly ended the meeting, stating: "This meeting stops now. We will reconvene tomorrow with Lynette, and you are welcome to bring a support person."
Following this confrontation, the worker became extremely anxious and requested a medical certificate, beginning what would become an extended period on workers' compensation from mid-February 2024.
During her absence, in August 2024, the worker's legal representatives requested an investigation into the CEO's behaviour. An internal review concluded that all complaints were "unsubstantiated," but the worker remained on workers' compensation.
After eight months away, the worker met with the CEO and a mediator on 3 October 2024 to discuss a return-to-work plan. They signed an agreement offering the worker two options: return to work or resign with financial compensation.
The agreement stated: "Both parties agreed that if a resignation of employment was handed over before 1 November 2024, the organisation agreed to compensate party A with a 4-week notice + 6 weeks redundancy + leave accumulated and with the role evaluated at 1 FTE."
From mid-October 2024, the worker was certified for part-time duties and found work at a hotel, showing she could work but perhaps wasn't ready to return to her original workplace.
On 25 October 2024, the worker resigned, asking in her email: "Please advise when the payment will be remitted to my account."
The CEO responded: "Payment will be made in line with the terms set out in the attached Deed of Release upon your execution and return."
This deed, not mentioned in the original mediation agreement, contained extensive terms including confidentiality provisions, non-disparagement clauses, and release of claims. The worker refused to sign without payment details, asking: "Could you kindly provide the breakdown for me of the dollar figure of what will be paid and the tax rate you will apply?"
When she continued refusing to sign, the CEO wrote on 6 November: "At all times, the offer of financial support and assistance to assist in your return to the workforce, was contingent upon the execution of a Deed of Release. As such, the offer of support is withdrawn."
The IIA maintained that the worker voluntarily resigned and was not dismissed, arguing the agreement provided two clear options and she chose to resign rather than return.
The FWC found that the employer had failed to provide a return-to-work plan within the promised timeframe and had added new conditions after the resignation was tendered.
"I find that [the employer] engaged in conduct with the intention of bringing the employment to an end," the Commissioner stated, pointing to: the employer's agreement to financial terms for resignation while the worker was on workers' compensation, the failure to provide return-to-work details, and not advising that a deed would be required for payment.
The Commissioner was particularly critical: "I do not consider the execution of the Deed was a term of the Agreement, and further consider [the employer's] conduct requiring execution of the Deed, and subsequently withdrawing from payment of settlement monies, as nothing short of duplicitous."
Applying the test from previous case law (Bupa Aged Care Australia Pty Ltd v Shahin Tavassoli), the Commissioner considered whether "the employer engaged in the conduct with the intention of bringing the employment to an end or whether termination of the employment was the probable result of the employer's conduct such that the employee had no effective or real choice but to resign."
The FWC concluded: "Based on the evidence, I find that [the employer's] conduct, specifically the enticement of the Agreement, failure to fulfill the Agreement and the withdrawal of the compensation offer, resulted in or confirmed [the worker's] resignation. Therefore, [the worker] was effectively dismissed within the meaning of section 386(1)(b) of the Fair Work Act 2009."
The employer's jurisdictional objection was dismissed, allowing the unfair dismissal application to proceed to the next stage.
