Employer says employee could 'seek clarification… but did not do so'
The Fair Work Commission recently decided on the case of a manager who was confused about his true dismissal date, a crucial period determining the allowable time to file an unfair dismissal application.
The employee worked as a general manager in the employer’s business of operating airport passenger shuttles to and from major airports on the east coast of Australia.
The manager said that he was “instrumental” in the growth of the business over 11 years of service and was offered a share incentive scheme which allowed him to accrue 1% of the employer’s shareholding per annum for five years.
In November 2021, the company agreed to allow the employee to call on the option to purchase an accrued 5% shareholding.
According to records, the employer’s director said that due to the COVID-19 pandemic, the business was “significantly impacted, and most of its staff members,” including the general manager, were stood down in March 2020.
He began receiving JobKeeper payments through the employer from March 2020 until the scheme ended in March 2021. However, he remained stood down.
The director said the manager approached the employer to discuss “alternate options for receiving a consistent income.” The former said that it was “at that point that the option of making the manager’s position “redundant” and giving him a redundancy payment.
Email about redundancy
However, due to an extreme downturn in the business in the previous 12 months, the employer reportedly did not have sufficient capital to pay the manager’s full redundancy pay entitlements. Ultimately, the employer came to an arrangement where there would be a calculation of half of the manager’s redundancy payment entitlement which was converted into an equivalent annual leave entitlement that was then paid progressively to him at a reduced rate of earnings.
On 15 August 2022, the director emailed the manager advising him of the redundancy of his “role” and said:
“Hi, we wish to inform you [that] your role has been made redundant due to the Covid Downturn and the affect (sic) that it has had on our business.
We have calculated your redundancy and the final figure will be adjusted when finalised.
I’m sorry that we are in this position, and we appreciate the work you have put in over the years, we wish you all the best with your future endeavours. Please feel free to reach out for a chat anytime I’m always available on the phone.”
The employer said they dismissed the manager on the day they sent this email.
Later, on 22 August 2022, they met to discuss several issues, including the buyback of the 5% shareholding from the manager and the “redundancy package.” After the meeting, they collected the company vehicle given to him as part of his role.
Meanwhile, the manager said that he was still employed from the day he received the email until the meeting.
“I knew I was dismissed, but the question is when,” the manager said, adding that “until such time they pay me, I believe I was still ‘on the clock’.”
When the manager questioned his dismissal, there was a dispute about his true dismissal date. Consequently, if his employment ended on the date of the email, then it would be filed out of time.
‘Did not stipulate the exact date’
During the hearing before the commission, the manager explained that when he said he was still “on the clock,” he meant that he considered himself to remain employed and that he “was accruing wages and sick leave and leave pay as per the law.”
On 29 August 2022, the director reportedly texted him, confirming that the redundancy payment had been made and apologised for the delay.
The manager replied, “I’d like to place on the record as at to date I have not received my redundancy offered the 15th of August, again I am on the clock until payment is made.”
He argued that the employer “did not stipulate in the email of 15 August 2022, or any subsequent communication, the exact date upon which his dismissal or redundancy was to take effect.”
Meanwhile, the employer said the manager “had an opportunity in the 22 August meeting to raise an objection to the termination of his employment, or at the very least, seek clarification as to the character of the 15 August 2022 email if he was under any sort of false impression but he did not do so.”
It also said that when they “asked him to return the company vehicle,” it should have been “a clear indication” that the manager “must have known his employment relationship had ended.”
The commission’s decision
The commission turned to case law and said, “to effect the termination of a contract of employment, an employer must, subject to any express provision in the contract, communicate to the employee by plain or unambiguous words or conduct that the contract is terminated.”
“Where the communication is in writing, the communication must at least have been received by the employee in order for the termination to be effective. Where notice is given of the termination of the employment contract, then the contract will terminate at the end of the period of notice specified in the communication to the employee,” it added.
As for an extension to file the unfair dismissal application, the commission found that the “reason for the delay is that he believed he remained in employment until 29 August 2022, when he was paid redundancy payments.”
“For a dismissal to be effective, plain and unambiguous communication of the dismissal is required,” it said in its decision.
“His dismissal was not communicated to him in a plain and unambiguous manner. The email of 15 August 2022, sent to the Applicant does not state that his employment has been terminated with effect from that date,” the commission said.
“This lack of clarity is compounded by the fact that the payments said to be due to him on the termination of his employment [were still] subject to further adjustments ‘when finalised’.”
Thus, the commission saw that there was an exceptional circumstance that could allow the extension of the manager’s unfair dismissal application.
“The delay is that the dismissal was not communicated in a plain and unambiguous manner, and the employee was not aware that he had been dismissed until some weeks after the employer purported to dismiss him.”
“This is an exceptional circumstance in the sense it is out of the ordinary or unusual, that a dismissal is not communicated in plain and unambiguous terms,” the commission said. And so, it ruled that the period should be extended.
