A misstep in the misconduct rulebook just turned a demotion into a dismissal
A Victorian prison supervisor's demotion and forced transfer was so flawed it amounted to a sacking, the Fair Work Commission's Full Bench has ruled.
The decision, handed down in Sydney on 13 May 2026 in Graeme Taylor v Department of Justice and Community Safety, is the kind of ruling that should land on every employee relations manager's desk. It is a reminder that the fine print of an enterprise agreement is not a suggestion — and that getting creative with disciplinary outcomes can quietly tip an employer into repudiating the very contract it is trying to enforce.
Graeme Taylor was a Prison Supervisor at Langi Kal Kal Prison in regional Victoria, classified at COG3 and earning $99,375. After a misconduct finding, the Department of Justice and Community Safety told him in writing that, "to avoid a more severe discipline outcome such as termination of your employment," it was bumping him down to Senior Prison Officer at the lower COG2B level and shifting him to Hopkins Correctional Centre. The department leaned on clause 25.12(c) of the Victorian Public Service Agreement 2020, which lets an employer combine certain disciplinary outcomes into a single sanction.
Taylor's view was simpler. The agreement, he argued, did not actually allow the department to do both at once in his circumstances. So when the department made the demotion and transfer effective on 17 September 2024 — and dropped his salary the same day — he treated it as the department walking away from his contract. He filed an unfair dismissal application on 3 October 2024.
The Full Bench agreed with him. Clause 25.12(c), the bench said, lets an employer combine listed outcomes, but each outcome still carries its own built-in limits. A demotion plus a transfer to a different work location is only available where no suitable position exists at the employee's current location — and the department had never claimed that was the case at Langi Kal Kal. The combination power, in other words, is not a workaround.
That breach, the bench found, was serious enough to be a repudiation of Taylor's employment contract. The department's earlier assurance that it would hold off "pending resolution of the dispute" — before pressing ahead anyway — did not help its cause. Nor did its argument that Taylor had affirmed the contract by going through the agreement's dispute process. Raising a dispute, the bench said, is not the same as accepting the demotion.
Because the bench held that Taylor's dismissal took effect on 3 October 2024 — the day he accepted the repudiation by filing — the timing objection fell away too. His unfair dismissal claim will now be heard on its merits.
For HR practitioners, the takeaways are uncomfortably practical. Combination clauses in enterprise agreements are not blank cheques; the conditions attached to each individual outcome do not disappear when outcomes are bundled. A demotion that strays outside the four corners of the governing instrument can still amount to a dismissal, even when the employee keeps turning up to work. And promises made during a dispute resolution process — especially promises to pause — will be held against an employer that decides to move anyway.
