Software designer says he didn't want to transfer to UK payroll
The Fair Work Commission (FWC) recently dealt with a case involving an unfair dismissal claim by a software designer against a technology company.
The worker alleged he was forced to resign due to non-payment of wages, while the employer argued the worker voluntarily resigned after refusing to transfer to their UK payroll.
This case highlights the complexities of managing international employees and the importance of clear communication in employment relationships.
It also underscores the need for employers to carefully consider tax and compliance issues when staff work remotely from overseas locations.
Background of the case
The worker, a British national residing in Australia, began employment with the technology company in April 2021 as a software designer.
His contract stated he would work from within Australia. However, in August 2021, he received authorisation to work from outside Australia "until further notice" and subsequently relocated to the UK with his children.
While working from the UK, the worker continued to be paid through the Australian payroll system, with Australian taxes deducted. This arrangement continued for nearly two years, during which time the worker spent most of his time in the UK and Japan, with occasional visits to Australia.
In September 2022, the worker initially resigned and proposed becoming a contractor. However, after discussions with his manager, he remained an employee and continued working from the UK.
The payroll transfer dispute
In June 2023, the company's financial controller raised concerns about the tax risks associated with having an Australian employee working long-term in the UK. This led to discussions about transferring the worker to the UK payroll.
The head of people for the company informed the worker in July 2023 that he needed to move to the UK payroll if he intended to continue living there. The worker initially agreed but later raised concerns about his tax residency status, stating that according to his tax advisor, he had not been an Australian resident for tax purposes for the past two years.
Over the following months, there were numerous attempts by the company to have the worker sign documentation for the payroll transfer and provide UK bank account details.
The worker consistently refused, insisting that the company first address his concerns about Australian tax reporting and amend its payroll reporting for the previous two years.
As a result of this impasse, the company removed the worker from the Australian payroll in November 2023, effectively ceasing his salary payments. Despite this, the worker continued to work for the company without pay for several months.
The head of human resources explained:
"By mid-March 2024, she had concluded that [the worker] was not prepared to engage with her. Although she wanted to make sure that he was paid his salary and backpay, she needed his UK bank account details."
This quote highlights the ongoing challenges faced by the company in resolving the payroll issue.
Return to Australia and resignation
In March 2024, the worker returned to Australia. He informed the company of his return and requested immediate payment of his outstanding salary and superannuation. The company advised that due to payroll processing timelines, he would receive his backpay in the May pay period.
The head of human resources stated:
"Unfortunately, by the time he had advised her on 4 April 2024 of his return to Australia, the cut off for the April pay period had already passed."
Dissatisfied with this response, the worker submitted his resignation on 26 April 2024, claiming he was forced to resign due to financial distress caused by the non-payment of his salary.
The Commission's decision
The FWC ultimately ruled in favour of the employer, finding that the worker was not forced to resign and therefore had not been dismissed within the meaning of the Fair Work Act.
The Commission emphasised that the non-payment of wages was a consequence of the worker's own decisions:
"The reason [the worker] was not paid for five months was because he refused to do what the company reasonably required of him, namely that he transfer to the UK payroll."
This quote underscores the Commission's view that the worker's actions, rather than the employer's conduct, led to the non-payment of wages.
The Commission also noted that the worker had other reasonable options available to him before resigning:
"Again, there were reasonable options open to [the worker] other than resigning. He chose not to take them."
In its conclusion, the Commission stated:
"I reject [the worker's] contentions that other factors forced him to resign, whether individually or collectively. Many of these additional matters were first raised in the submission document that he filed the day before the hearing. It is simply not credible that bonus arrangements, the absence of pay rises and the other matters to which [the worker] referred compelled his resignation."
This quote emphasises the Commission's skepticism towards the worker's additional claims and the importance of raising all relevant issues in a timely manner during unfair dismissal proceedings.
