When the employment relationship ends before the resignation letter arrives
Not paying wages can terminate an employment contract and expose employers to unfair dismissal claims, a Fair Work Commission decision has confirmed.
In a ruling handed down on 13 March 2026, Deputy President Roberts of the Fair Work Commission dismissed an unfair dismissal application brought by Mr. Timothy Ayres against his former employer, Reed Mining Services Pty Ltd. While the application did not ultimately succeed, the legal reasoning carries clear implications for HR and payroll professionals.
Ayres alleged he was constructively dismissed on 1 September 2025, claiming he was forced to resign after the company persistently failed to pay his wages, with a formal resignation submitted on 3 September 2025. He filed his unfair dismissal application on 17 September 2025. Weeks later, Reed Mining Services was ordered by the Federal Court to be wound up in insolvency on 1 October 2025, following proceedings brought by the Deputy Commissioner for Taxation. The liquidators advised the Commission that no dividend was expected for employee creditors and that outstanding superannuation contributions exceeded $800,000.
The wage dispute covered the period from September 2024 to 29 January 2025. Ayres issued two formal letters of demand, the first dated 25 February 2025 claiming $15,448.15 in unpaid wages, and a second on 17 July 2025 covering the same period.
On the central legal question, the Commission found the employer's conduct amounted to more than a payroll oversight. Drawing on established authority from White v. Superior Facilities Pty Ltd, the decision reaffirmed that "a persistent and unjustified failure by an employer to pay salary is a repudiation of the contract of employment." In plain terms: sustained non-payment of wages can break the employment contract and constitute a dismissal on the employer's initiative.
The more decisive issue was timing. Ayres contended the dismissal occurred on 1 September 2025 — the date he said he was forced to resign — with the formal resignation letter following two days later on 3 September 2025. The Commission did not accept that account of when the dismissal took effect. Based on Ayres' own Statement of Claim filed in the Local Court of New South Wales on 9 September 2025, he had described his employment as running from approximately May 2024 to 29 January 2025. Payslips confirmed the last pay period ended on 12 January 2025, and there was no evidence of any work performed, or wages paid, beyond that date.
Deputy President Roberts found the dismissal had in fact taken effect on or about 29 January 2025, not in September 2025 as the applicant claimed. That finding meant the unfair dismissal application was lodged well outside the 21-day time limit required by law. Despite multiple opportunities to provide supporting evidence and submissions, Ayres filed no witness statement, and the written submissions provided fell short of addressing the issues raised.
Ayres sought compensation rather than reinstatement. While the Commission acknowledged he had a prima facie case on the merits, given the termination arose from the respondent's failure to pay wages, it found no exceptional circumstances to justify an extension of time, and went further, stating that even if exceptional circumstances had been established, it would not have exercised its discretion to extend time in any event. With the respondent in liquidation and no assets available to meet any compensation order, the Deputy President concluded there was "no utility in the matter proceeding any further." The application was dismissed.
The case is a reminder that payroll failures can carry legal consequences beyond underpayment liability. When wages go unpaid over a sustained period, the law may treat the employment relationship as having ended on the employer's initiative, whether or not a formal dismissal was ever communicated. Critically, the effective end date of the employment relationship may not align with when a resignation letter is submitted. Both distinctions matter when managing disputes, employment records, and responding to any legal claim that follows.
