Employer had disabled the worker's access to information systems and advised other staff members that the worker had resigned before the partner sent a response
An account manager challenged her dismissal, arguing that the employer terminated her employment when negotiations about her departure broke down and her proposed exit terms were rejected.
The worker contended she was dismissed when the employer disabled her system access, notified staff she had resigned, and sent an email purporting to accept her resignation on different terms than she proposed.
The employer maintained that the worker voluntarily resigned, was actively seeking alternative employment with a client, and initiated the termination rather than seeking to continue negotiations.
Performance concerns and exit discussions
The worker was engaged as an account manager and team leader of a team of bookkeepers that serviced a group of clients of the employer. The worker claimed that following the acquisition of another company by the employer, the number of clients that the team was required to service increased substantially.
The worker complained about the increased volume of work and the capacity of the bookkeepers assigned to her team. The employer raised concerns with the worker about what they said was the worker's declining performance.
By March 2025, the employer had commenced formal processes to deal with what they regarded as issues with the worker's performance. A meeting was held between the worker and two partners of the employer, and a letter was sent to the worker setting out key performance indicators that the worker was expected to meet.
On 14 May 2025, the worker was issued with a letter headed 'first formal warning'. The letter said that a review of her performance was to be undertaken and completed by 20 June 2025.
The worker was distressed by the letter. She took sick leave in the afternoon, but then subsequently met with one of the employer's partners. The two spoke for approximately three hours on the evening of 14 May 2025. The terms upon which the worker might leave the business were discussed.
Discussions with the client about employment
Prior to the meeting between the worker and the partner on 14 May 2025, the worker had been in discussions with another business about the worker becoming employed by them.
This other business was a client of the employer. The worker had applied for a position with the client and had been sent a copy of a proposed contract of employment between herself and the client on 14 May 2025.
The worker told the partner in the meeting on 14 May that the client was hiring a finance manager and that she was thinking about applying for the position.
On 15 May 2025 at 12:54 pm the worker sent the partner an email accusing the employer of unfair treatment and unreasonable workplace expectations.
The email went on to say: "That said, I am prepared to proceed with a handover under the following conditions: 1. My employment is considered terminated effective today, with 4 weeks' notice paid in lieu. The final payment will be made within 7 days. 2. The restraints clause in my contract is formally waived and removed."
At 1:54 pm on 15 May 2025, the worker emailed the client saying: "I'm very excited about this opportunity. I'm currently in discussions with [employer] regarding my termination date, as they are reluctant to see me go. I expect to have a resolution this afternoon and will keep you updated as soon as I have more clarity."
Employer's response and system access removal
It was accepted by the employer that at 2:45 pm on 15 May 2025, the worker's access to the employer's information technology system was removed by the employer, and at 2:50 pm on that day, the other employees of the employer were notified by the employer that the worker had resigned from her employment.
At 3:08 pm on 15 May 2025, the partner responded to the worker's email by further email disputing the claims of unfair treatment and stating:
"In saying that, I am prepared to accept your resignation effective immediately and also agree to paying out your 4 weeks' notice as time in lieu, which will be paid within 7 days. Any accrued leave entitlements will also be paid out at the same time.
As for your second request, in relation to removing your employment restraints being waived, I have spoken to our Head Office in Perth, and they have advised that we are unable to remove any restraints from our employment agreements.
These restraints are in place to protect our business, and therefore, I have been directed to decline this request."
At 4:43 pm on the same day, the client emailed the worker to say that the offer of employment had been withdrawn.
At 5:27 pm that day, the worker emailed the partner as follows: "I have never given you my resignation. We are still in negotiation. Since you have already initiated it. I will take it and seek further legal advice. I will be returning keys and the laptop in 15 min."
Commissioner finds dismissal occurred
The employer submitted that when the circumstances were considered in their entirety, the worker initiated the termination of employment and that a reasonable person would understand from the conduct of the parties and the surrounding circumstances that this was the case.
The employer pointed to the evidence showing that the worker was actively seeking alternative employment and her 'persistent and proactive' attempts to end her employment despite the employer's wishes that the worker remain employed by them, but improve her performance.
The employer said that the worker's acceptance of the partner's email on the afternoon of 15 May was the point at which the worker initiated the termination.
The employer also submitted that the evidence showed that had the employer not taken the action that it did, the worker would clearly not have remained employed with the employer because the worker had arranged alternative employment and pointed to the evidence showing that the worker commenced working for another business on 19 May 2025.
The employer's submissions on this point must be rejected. It is true that the worker was seeking to negotiate an exit from the employer. The discussions about that exit commenced on the evening of 14 May 2025.
The worker put forward the proposed terms of the exit in writing on 15 May. The terms were not agreed to by the employer.
Instead, the employer rejected the proposed terms and purported to treat the worker's correspondence as a resignation, which it itself then 'accepted'.
The correspondence in reply from the partner on 15 May 2025 was, in the Commissioner's view, an action that directly and consequently resulted in the termination of the worker's employment.
The relationship was not left voluntarily by the worker at that point, particularly given the terms of the departure were not agreed. It was brought to an end by the employer.
It is speculative to suggest that the worker would not have remained employed by the employer in any event because she had been negotiating alternative employment.
Had the employer not taken the action that it did but simply rejected the worker's claim for a release from the restraints clause in the contract, the worker may have concluded that she was constrained by that clause and was unable to take up an alternative offer.
Her employment in that case may well have continued in spite of the issue that had prompted her to seek a position elsewhere.
System access disabled before response sent
It must also be noted that even before the partner sent this response, the employer had taken steps to bring the employment relationship to an end.
The employer had disabled the worker's access to the employer's information systems and advised other staff members that the worker had resigned.
The employer's actions were either intended to bring the worker's employment to an end or had the probable result of bringing the employment to an end.
Having regard to the circumstances as a whole, a reasonable person in the position of the worker would have understood from the employer's conduct that the employment relationship had been brought to an end by the employer.
The worker was entitled to treat the employer's correspondence and other actions as a termination of her employment. The Commissioner concluded that the worker was dismissed from her employment on the employer's initiative.
Valid reason found despite breach
The employer did not rely on the worker's alleged poor performance prior to termination as a reason for the dismissal.
However, the employer contended that there was a valid reason for the worker's dismissal and that the worker was dismissed for serious misconduct, namely, covertly negotiating to work for an existing client of the employer.
The employer referred to and relied on the restraints clause in the worker's contract of employment.
The employer also contended that the worker acted in breach of the implied duty of good faith and fidelity in that she intentionally and secretively acted in direct conflict with her employer's interests in circumstances which would and did cause a significant loss of revenue to the employer.
In this latter respect, the employer relied on the evidence that showed that on 19 May 2025, shortly after the worker's departure, the client cancelled their contract with the employer.
The worker's contract of employment with the employer includes a restraint clause.
On its face, the clause prohibits the worker from doing certain things such as canvassing, enticing away or dealing with a client of the employer or to be involved in a business that is the same or similar to the business of the employer.
The clause restrains the worker from conduct during the 'restraint period', which is defined as being from the date of termination of the agreement until certain specified periods depending on the nature of the conduct.
It does not, by its terms, purport to cover conduct prior to the termination of the contract. In those circumstances and assuming the validity of the clause, the Commissioner did not consider that the employer was able to rely on a breach of the express terms of the restraints clause as a valid reason for the termination.
Breach of duty of good faith found
However, the evidence showed that the worker was not entirely honest with the partner in the discussion that occurred between them on 14 May 2025.
In this respect, the Commissioner was satisfied that the worker told the partner that she was 'thinking of applying' for a position with the client at a time when she had already applied some nine days before the conversation and had been told that an employment contract would be emailed to her for her acceptance at the time of the conversation.
The worker also took active steps while still employed by the employer to ensure that the employer was not aware that she was proposing to move to the client and that an employment contract had been drafted to give effect to this.
The Commissioner also accepted the partner's evidence that in early May 2025, the client had requested additional on-site services from the employer and that a proposal including costings had been drafted by the partner and sent to the employer.
The worker was aware that this was the case and, in fact, expressed interest to the partner in being the person from the employer who provided those additional services, a proposal that the partner rejected.
Armed with the knowledge obtained in the course of her employment, that the client was seeking additional services, that it was in the employer's commercial interests to supply those services and that the worker would not be permitted to provide the services as an employee of the employer, the worker applied directly for a position with the client.
According to the FWC, subject to any valid restraint clause, employees are generally free to engage in work in competition with their former employer after their employment with that employer has ended.
The duty of fidelity and good faith applying during an employment relationship is not so strict as to prevent employees from pursuing their own interests or require them to subordinate their interests entirely to those of their employer.
Whether those steps cross the line and involve a breach of a duty of good faith and fidelity will involve a close assessment of all the circumstances, including the employee's position and responsibilities, the nature of the employer's business, the steps taken by the employee and the actual or potential impact of the employee's actions on the interests of the employer.
Senior position increases the duty owed
The FWC said that the extent of the duty owed is likely to be greater in the case of more senior employees. Previous decisions have held that for employees who do professional work or highly skilled work in circumstances where the employer's interests are in the employee's hands and a high degree of loyalty to the employer's interests is necessary, the duty of good faith and fidelity can operate to limit what the employee does out of ordinary working hours, and to prevent or limit competitive behaviour.
It has also been held that an employee contravened the implied term when seeking to be released from a post-employment restraint clause where they failed to disclose a proposal to join a competitor of their employer immediately after termination.
It is not usually the case that there is a breach of duty in simply not reporting a job offer from a client or resigning to take up a position.
However, in the Commissioner's view, the conduct of the worker in the present circumstances was inconsistent with her implied obligation of fidelity and good faith. The worker knew that the client required additional services from the employer.
The worker obtained that knowledge because she held a senior position within the employer's company that involved direct engagement with the employer's clients.
She knew she was in a position to supply those services herself and that the employer was not prepared to allow her to do that as an employee of theirs.
The worker could reasonably have inferred that if she were to become directly engaged by the client, the services would likely no longer be required of the employer and that this would result in lost earnings for the employer.
The worker also misled the employer as to her status with the client, telling them that she might apply for a position when she had already applied over one week earlier.
The worker did not tell the employer that the reason she was seeking a release from the restraints clause was that she was very likely to accept an offer of employment that had already been made to her by the employer's client.
Had the employer been aware of those matters, it is likely that their approach to the separation proposal would have been different.
The Commissioner concluded that the worker's conduct amounted to a breach of the implied duty and that the employer therefore had a valid reason for the termination of the worker's employment.
Dismissal not harsh, unjust or unreasonable
The worker was not notified of the reason because the employer only became aware of the reason after the dismissal took effect. The worker, therefore, did not have an opportunity to respond to the reason before the dismissal took effect.
These are ordinarily factors that weigh in favour of a finding that the dismissal was harsh, unjust or unreasonable. The lack of knowledge by the employer of the reason for the dismissal at the time it occurred is attributable, for the most part, to the conduct of the worker in this case.
The lack of notice or an opportunity to respond followed from those circumstances.
The Commissioner took into account all of the evidence in relation to the surrounding circumstances, including the evidence relating to the situation in the worker's workplace leading up to and at the time of the termination, and the manner of the worker's termination.
The Commissioner noted the worker's length of service with the employer and the evidence regarding the worker's performance.
The Commissioner also stated that although the worker was dismissed by the employer, she was actively seeking to leave her employment with the business, albeit on her own terms and had initiated the discussions about her departure.
The employer was not pressing for the worker's departure but merely an improvement in her performance.
On balance, and taking all of these matters into account, the Commissioner was not satisfied that the dismissal was harsh, unjust or unreasonable. In that event, the Commissioner concluded that the worker was not unfairly dismissed and that no remedy was available to the worker
