Dispute centers on whether employee had choice but to quit when wages stopped completely
The Fair Work Commission (FWC) recently dealt with a general protections dispute involving a worker who claimed he was dismissed when forced to resign after his employer failed to pay his salary for eight months.
The worker argued that he had no choice but to resign due to the company's conduct, while the employer maintained that the resignation was voluntary.
The case turned on whether the worker was genuinely forced to resign because of his employer's actions, or whether he simply chose to leave of his own accord.
The worker claimed that prolonged non-payment of wages left him with no realistic alternative but to end his employment, while the company argued there was an agreement in place that justified the delayed payments.
Salary payment disputes and employment background
The worker was employed as global head of sales from February 2021 until March 2025, working for an Australian start-up company.
The employment contract required payment of a base annual salary of CHF130,000 plus commission, with salary to be paid monthly by the 15th of the following month. However, the worker experienced regular delays in payment throughout his employment.
The employer had difficulty meeting its debts, with both the chief financial officer and CEO deferring their own salaries in early 2024. The most significant issue arose when the worker was not paid any salary for approximately eight months immediately preceding his resignation.
The employer argued there was a salary deferral agreement in place, claiming the worker had agreed not to be paid until they received anticipated revenue of approximately $750,000.
The worker strongly denied entering into any such agreement. The FWC found no evidence supporting the employer's claim of a salary deferral arrangement for the period after 1 July 2024.
Alleged salary deferral agreement at work
The FWC examined extensive evidence about whether any salary deferral agreement existed. On 9 July 2024, the worker wrote asking for "an answer on when the first payments will be made" and stating he was "in a very uncomfortable situation now."
By September 2024, the worker advised that "the situation is no longer sustainable and we need to find a solution," describing his request for payment as "an ongoing request since months."
The CEO's responses did not assert any agreement on salary deferral but instead offered alternatives like convertible notes, which the worker declined.
By December 2024, the worker described how his "tension went to the roof and was putting my health at risk. I lost 12kg."
The FWC found that even if there had been an agreement for salary deferral, it would not have been lawful. Section 323 of the Fair Work Act 2009 requires employers to pay employees "in full... in money... and at least monthly."
The FWC noted: "There is no evidence of any agreement in writing to vary this term of the contract."
Salary payment demands and forced resignation
On 19 February 2025, the worker sent formal demand letters claiming over $253,000 in outstanding payments with an ultimatum:
"If I do not receive payment by March 6th, 2025 I will have no choice but terminate my work contract with immediate effect and to consider additional actions."
When the worker met with the CEO, he explained: "I had no choice, the situation is no longer sustainable. You know it. I asked you and [the chief financial officer] numerous times to come back to me. I have no money, I have been working for over 6 months not being paid." When asked for feedback, the CEO replied: "But [the worker], what do you want exactly? Do you want to take leave?"
The FWC applied legal principles for determining forced resignation, examining whether termination was the probable result of the employer's conduct such that the employee had no effective choice but to resign.
The FWC found it was "comfortably satisfied that termination of the employment relationship was the probable result of [the employer's] failure to pay [the worker's] salary for such a prolonged period, such that he had no effective or real choice but to resign."
Salary underpayments and employer’s dismissal
The FWC distinguished this from ordinary underpayment cases, noting:
"This was no underpayment of the ordinary kind... It was the wholesale failure to pay any wages for an 8-month period, with no certainty as to when, how, or to what extent, the failure would be remedied."
The FWC rejected the employer's argument that the resignation was an attempt to "cut and [run]" after alleged misconduct.
The FWC dismissed the employer's reliance on start-up status, stating: "The responsibility for meeting its contractual obligations ultimately lay with [the employer], including in relation to payment of employee salaries." On 5 March 2025, the worker resigned, stating:
"Since no resolution has been reached nor was attempted, my final working day with [the employer] will be tomorrow, March 6 2025, due to non-payment of my wages and entitlements."
The FWC concluded the worker "was dismissed by [the employer] for the purposes of s.386(1)(b) of the Act" and dismissed the jurisdictional objection. The matter will proceed to conference for resolution of the substantive dispute.
