Employer argues it ‘acted in good faith, manager 'agreed to demotion'
The Fair Work Commission (FWC) dealt with a dispute involving a worker who said she had been dismissed from her employment after she was demoted.
The employer, Knowmore Legal Service Limited, objected to the worker's application, arguing she was not dismissed from her employment.
The worker held the position of Support and Trauma Informed Practice Manager, and she was demoted to the position of Social Worker/Counsellor on 12 April 2023. The Commission noted that she "did not consent to the demotion" and "it was not authorised by her employment contract or an instrument governing it."
Background of the case
The worker started working for the employer in 2014 as a counsellor. In 2019, she was promoted to the position of Regional Client Service Manager.
From March 2021 until April 12, 2023, she held the role of Support and Trauma Informed Practice Manager. This role was offered to her on a permanent basis from July 1, 2021. According to company records, her annual salary was around $112,000.
In March 2023, she got a letter from the company’s Director of Client Services which “laid out some accusations of misconduct” and informed her that the employer “had formed an initial opinion that there were valid reasons to demote her to the position of Social Worker/Counsellor.”
She responded verbally to the allegations on March 28, 2023, and provided a written response on March 29, 2023. On April 5, 2023, she received a Final Outcome Decision letter, informing her that she would be demoted to the position of Social Worker/Counsellor from April 12, 2023, for a period of six months.
It stated “a possibility” of progressing to a senior practitioner role in the team at the end of the six-month period. The salary for the Social Worker/Counsellor position is $96,131.58. Both parties agree that the salary reduction is significant. Since April 5, the worker did not come to work.
The parties’ arguments
The employer relied on the worker’s written response to the allegations on 29 March 2023 and said that she “implicitly acknowledged [the employer’s] right to demote her.”
It said that it “acted in good faith, in reliance on the oral and written submissions [of the worker] that, while she would have preferred to not be demoted, she wished to continue her employment in whatever role [that the employer] saw fit to provide her.”
It also claimed that the demotion was an “amendment of duties authorised by [their employment contract].”
Meanwhile, the worker said the demotion was “significant in terms of role and financial reduction, and it was potentially permanent.”
“These three factors separately and collectively strongly point to a demotion, amounting to a repudiation, and therefore, a dismissal,” the worker said.
HRD previously reported a case of an employee whose employment grade and salary were reduced while he was still working with the employer. The employee then filed an unfair dismissal claim.
The Commission’s decision
In its decision, the Commission noted that the worker’s demotion “involved both a transfer to a lower graded position and a significant reduction in pay.”
“Given the different classifications of these roles, [there are] significant doubts about whether the new position of Social Worker/Counsellor would be regarded as ‘broadly consistent’ with her role.”
“In any event, there is no reference in the contract being able to significantly reduce her pay. In the absence of the contract providing [the employer] with the authority to vary [the worker’s] pay, [the] employment contract does not permit the demotion.”
As to whether the worker agreed to the demotion, the Commission highlighted the fact that the worker “has not attended work since 5 April 2023 or applied for leave.”
“On 1 May 2023, [she also] filed the application. Based upon these actions undertaken by the worker, [she] made it clear to [the employer] that she objected to the demotion and did not affirm her employment contract.”
Thus, the FWC concluded that the employer dismissed the worker. It then listed the case for conference, so that it could deal with the matter later.
