DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Scott Carter
v
MSS Security Pty Ltd
(U2016/2216)

Application for relief from unfair dismissal.

Introduction

[1] On 11 May 2016 Mr Scott Carter (the Applicant) lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) for a remedy for unfair dismissal against his former employer MSS Security Pty Ltd (the Respondent).

[2] The Applicant says that he commenced employment with the Respondent on 2 February 1995.

[3] The Applicant received an email from the Respondent on 2 May 2016 demoting him from the position of “Site Manager” at the Commonwealth Bank Branch at Olympic Park in Sydney. The demotion followed a complaint from another employee. The Applicant was accused of failure to follow company policies, failure to communicate and inability to fulfil the requirements of site manager.

[4] The Applicant refused to accept the demotion on 4 May by letter. He therefore says that the dismissal took effect on 2 May as a constructive dismissal.

[5] The Applicant says that he had also been “acting up” in the position of Acting Regional Manager on a trial basis.

[6] The alleged dismissal arises from an incident on 24 March 2016 between two guards under the Applicant’s supervision, Karl and Milanka. The Applicant says that Milanka asked the Applicant to “talk” to Karl about some inappropriate language and jokes. She then complained about some physical harassment. The Applicant says that he counselled Karl as requested. Milanka said that she was “happy” with that.

[7] Following Easter, the Applicant returned to work on Tuesday 29 March. It became apparent that Milanka had been speaking to other guards about what had happened. The Applicant says that he then spoke to Sara Lock, the Human Resources Manager. It would appear that Milanka had separately contacted Head Office.

[8] On 30 March Karl was stood down from his shift.

[9] On 6 April, the Applicant attended a meeting with Ms Lock and Mr Sarkis Baaini, the State Operations Manager for the Respondent. The Applicant says that he did not appreciate that this was the start of a disciplinary process. He says that it was a lengthy and intimidating interrogation. Ms Lock, in particular, was unnecessarily aggressive towards him.

[10] At a further meeting with Ms Lock and Mr Baaini on 11 April, the Applicant was given a letter which stood him aside pending further investigation. The allegation was that the Applicant had not followed appropriate procedures in dealing with the incident on 24 March because he failed to report it to senior management and directed the alleged victim to “keep it on site”. As well, he was alleged to have named two witnesses to another employee on 29 March, thus breaching their privacy.

[11] On 13 April the Applicant responded in writing setting out his version of events in detail. He says that he took Milanka’s allegations seriously and dealt with them promptly in accordance with her wishes. He says that Karl was responsive and denied that there had been any physical contact. It appeared at the end of the day, on 24 March, that the matter had been resolved. He denied that he told Milanka not to escalate the matter. The second allegation appeared to relate to the Applicant’s conversation on 29 March with Lincoln Nock, who reported to the Applicant what he had heard about the events between Milanka and Karl. The Applicant denied any wrongdoing, especially as it had been initiated by Mr Nock.

[12] The next meeting took place between the Applicant and the Respondent on 18 April. The Applicant had a support person, Ms Karin Carter. The Applicant says that the Respondent’s representatives, Ms Lock and Mr Baaini were dismissive of his response letter and hostile to him.

[13] A final meeting took place on 20 April. The Applicant was advised of the Respondent’s decision to demote him to Class 4 Security Guard. There was also some mention of previous problems with the Applicant’s management style. The Applicant was then advised on 29 April that he would be working as a Class 1 Security Guard for two weeks. The Applicant was off work, with a medical certificate, on 2 May.

[14] The Respondent’s email of 2 May attached a letter demoting the Applicant, dated 22 April, and a purported new contract of employment dated 29 April. The Applicant was accused of failure to implement the Respondent’s policies, in particular, the failure to report the “alleged act of inappropriate touching”. The Applicant was also accused of “ongoing negligence” in his role over the last 12 months. He was transferred to the UTS site at Broadway. He was also given a “final warning”. His salary was to be maintained until 20 May 2016. The employment contract is drafted as if for a new employee even though it is headed “Change of Status”.

[15] The Applicant says that the effect of the 2 May email was to terminate his employment. When he refused to accept the new role, the dismissal took effect.

[16] The Respondent, in a letter signed by Geoff Alcock, the Executive General Manager New South Wales, on 5 May took the view that the Applicant had resigned. The Respondent said that it had terminated the Applicant’s contract of employment but not the employment relationship. There was therefore no dismissal. The Applicant was given until 9 May to re-consider his resignation.

[17] The Applicant sought reinstatement and compensation for loss of earnings.

[18] The Respondent says that the Applicant was not dismissed and that his resignation took effect from the date of his resignation letter of 4 May 2016.

[19] The Applicant, by signing the clearance form to the new site at the 20 April meeting, had accepted the demotion.

[20] The Respondent submits that the Applicant’s original contract of employment dated 4 November 2014, provided for demotion without termination. Therefore, there was no dismissal, nor was the Applicant forced into a situation where he had no choice but to resign. The contract provided for demotion through performance or client request.

[21] The Respondent maintains that it carried out a full, fair and appropriate investigation of all matters. It says that the Applicant was evasive and contradictory in his explanations during the meetings.

[22] The Respondent states that the Applicant had been in the Olympic Park managerial role since 27 October 2014. The temporary Precinct Manager role was not a promotion but rather a change in title.

Commission Proceedings

[23] Conciliation took place on 10 June 2016 but no settlement was reached.

[24] I conducted a telephone programming conference on 2 September 2016.

[25] The hearing took place on 10 and 11 October 2016 in Sydney.

[26] The Applicant was represented by Ms K. Jones, of counsel, together with Mr B. Powles, solicitor. The Respondent was represented by Ms S. Lock. Ms Jones and Mr Powles were granted permission to appear pursuant to s.596 of the Act.

[27] The Applicant relied on written submissions and three witness statements from the Applicant (Exhibits J1 – J3) and a witness statement of Ms K. Carter (Exhibit J4), the Applicant’s sister and support person.

[28] The Respondent relied on written submissions and two witness statements from Sarkis Baaini (Exhibits L1 and L2) and two witness statements from Geoff Alcock (Exhibits L3 and L4).

[29] After the hearing, further written submissions were lodged as follows:

● The Applicant 18 October 2016;
● The Respondent 7 November 2016.

Protection from unfair Dismissal

[30] An order for reinstatement or compensation may only be issued where I am satisfied the applicant was protected from unfair dismissal at the time of the dismissal.

[31] Section 382 sets out the circumstances that must exist for the applicant to be protected from unfair dismissal:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[32] The Applicant was employed under a contract of employment as he was in a management /staff position. There may be an argument that he was covered by the Security Services Industry Award 2010 [MA000016]. In any event, his salary of $73,165 puts him well below the high income threshold. Consequently, I am satisfied that the Applicant was protected from unfair dismissal.

[33] Section 396 provides that certain matters must be determined by the Commission before proceeding to deal with the merits of a matter. It provides:

“396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c) Whether the dismissal was consistent with the Small Business Fair Dismissal Code;
(d) whether the dismissal was a case of genuine redundancy.”

[34] The Respondent says it had some 5,500 employees. Therefore, subsection (c) has no application. Subsection (d) also has no application.

Was the dismissal unfair

[35] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal

Code; and

(d) the dismissal was not a case of genuine redundancy.”

Was the Applicant dismissed?

[36] A person has been unfairly dismissed if the termination of their employment comes within the definition of “dismissed” for the purposes of Part 3-2 of the Act. Section 386 of the Act provides that:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) The person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) The person has resigned from his or her employment, but was forced to do because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.”

[37] There was a dispute in this case as to whether the Applicant was dismissed or resigned. It was also argued that the demotion constituted a dismissal. In the event I am satisfied that the Applicant was forced to resign, I must consider the matters contained in s.387. I note also that s.385(d) has no application.

Harsh Unjust or Unreasonable

[38] I must consider whether I am satisfied the dismissal was harsh, unjust or unreasonable. The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person-whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

Approach of the Commission

[39] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 465 by McHugh and Gummow JJ as follows:

“... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

[40] Vice President Ross, as he then was, in B Rose v Telstra Corporation Limited (1998) Q9292 (Rose) restated the above proposition and also stated:

“In my view whether there has been a `fair go all round’ is a matter which I think is relevant and hence I am to have regard to it determining whether the termination was harsh, unjust or unreasonable. It is not necessarily determinative but it is a factor to be taken into account.”

The Applicant’s case

[41] The Applicant says that he acted appropriately in dealing with Milanka’s complaint. She had told him that she wanted Karl spoken to and told the Applicant that she was happy with his action. Contrary to her own instruction, Milanka had chosen not to keep the compliant confidential over the Easter weekend. The Applicant immediately notified human resources.

[42] It is submitted that the demotion represents a termination of the Applicant’s contract of employment because there is a substantial change to his remuneration (from $75,000 to $41,797 per annum), duties and location of work. In the alternative, the Applicant was forced to resign by the conduct of the Respondent.

[43] The main accusation against the Applicant was that he failed to escalate the complaint he received on 24 March. However, it is submitted that his reporting of it on 29 March, the day after the Easter break, was reasonable. He acted in accordance with the complainant’s request and certainly did not attempt to suppress the matter. Even if there was a delay by the Applicant, dismissal is too harsh a penalty.

[44] The Applicant also denies that the Respondent raised issues about his “negligence” as a manager previously.

[45] It is also submitted that the Applicant did not have a proper opportunity to respond to the allegations because Milanka’s version of events was not put to him and the Respondent’s representatives were overly aggressive during the meetings. Neither Ms Lock nor Mr Baaini were impartial, it is submitted.

[46] The Applicant’s 21 years’ service with the Respondent and the impact of the dismissal on him as a 46 year old with a young family should be taken into account.

[47] The Applicant gave evidence about Mr Baaini talking to him about the way “he spoke to people” in March. However, notwithstanding this, he was given the Regional manager role on a trial basis. This involved an increase of $250 per week.

[48] The Applicant testified that he was never shown Milanka’s statement and therefore did not have a proper opportunity to respond to the allegations against him.

[49] The Applicant’s letter of 4 May was not specifically couched as a resignation letter. He stated that he was unable to accept the proposed change of status or the new employment contract. The effect of the Respondent’s letter was to terminate his employment contract as from 2 May, he said. He set out in detail the alleged procedural difficulties with the investigation process and the reasons why there was no breach of policy. He also denied that broader issues of lack of performance had been properly put to him. Finally, he says that he will make an unfair dismissal application to the Fair Work Commission and demands that his termination pay be forwarded to him.

[50] Ms Carter gave evidence in support of the biased and intimidatory nature of the disciplinary meetings.

[51] The Applicant, in Exhibit J3, gave details of the 14 job interviews he had had, in the security industry, since the alleged dismissal without success.

[52] The Applicant, in its written submissions, argues that this case is different from others where a demotion is expressly allowed under a contract of employment because the Applicant did not accept the new role. As well, there was a significant reduction in duties and remuneration. The actions of the employer were so unreasonable that the Applicant was entitled to reject the new contract. The non-acceptance of the new contract of employment meant that the employment relationship was terminated.

[53] Given that the new contract involved a 40% reduction in salary and a return to basic security guard duties, it was objectively probable that the offer would be rejected. The process adopted by the Respondent and the resultant demotion could not be considered to be reasonable. It is submitted that the demotion is significant under any interpretation of what position the Applicant might have ended up with in the employ of the Respondent. It was made clear that he would not be considered for a managerial position again.

The Respondent’s case

[54] The Respondent submits that the demotion of the Applicant did not result in a dismissal primarily because the Applicant’s contract of employment permitted demotion. In any event it is submitted that the demotion did not involve a significant reduction in duties or remuneration. The Respondent intended that the employment relationship would continue.

[55] The Respondent does concede that the effect of the Applicant’s 4 May letter was a resignation but says that this was voluntary and therefore not a constructive dismissal. The Respondent emailed acceptance of the resignation and pay-out amount. He was finally paid out on 18 May

[56] Mr Baaini’s evidence was that there were difficulties with the Applicant’s inter-personal skills which detracted from his ability to be an effective manager. He says that this was communicated to the Applicant when he was given the temporary Regional Manager role and on other occasions in late 2015 / early 2016. He further says that the Applicant failed to give a reason for his failure to escalate the incident as required by the Respondent’s policy. He showed a lack of appreciation of the Respondent’s EEO policy.

[57] Geoff Alcock’s evidence was that he was made aware of concerns about the Applicant’s communication skills in about December 2015. He had not followed appropriate policies and procedures, notwithstanding being trained in them. The demotion is in accordance with the Applicant’s contract of employment and the Award.

[58] The Respondent submits that, viewed objectively, the actions of the Respondent were not intended to force or otherwise result in a resignation. The Applicant effectively accepted his demotion by returning the completed paperwork for the position at the Reserve Bank at Baulkham Hills. That client refused to have the Applicant back. He was then offered the UTS position at Ultimo. It was only then that the Applicant objected to the demotion.

[59] The Respondent points out that the Applicant had only been in a managerial position since October 2014.

[60] Mr Baaini’s evidence was that the 24 March incident came to his attention as a result of an email to him from Milanka on 29 March. This was shortly before the Applicant attempted contact with Ms Lock. Milanka states that the Applicant had “refused” to put Karl on another team.

[61] The Applicant did not comprehend the implications of leaving the alleged victim and the alleged harasser working together over the Easter weekend. He could not also establish that he had carried out an appropriate investigation.

[62] In the event that the Commission finds that there was a dismissal, the Respondent submits that there was a valid reason for the dismissal and it was not harsh, unjust or unreasonable.

Approach of the Commission to Resignations

[63] Cases such as Mohazab v Dick Smith Electronics Pty Ltd (No. 2) (1995) 62 IR 200 (Mohazab) and O’Meara v Stanley Works Pty Ltd [2006] AIRC 496 (O’Meara) deal with s.386(1)(a). A termination is at the employer’s initiative when its action “directly and consequentially” results in the termination of employment, and the employee would have still been employed but for that action. An analysis of all the circumstances is required. The Full Bench states in O’Meara:

“[23] In our view the full statement of reasons in Mohazab which we have set out together with the further explanation by Moore J in Rheinberger and the decisions of Full Benches of this Commission in Pawel and ABB Engineering require that there to be some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment.” Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.”

[64] Where an Applicant claims they were forced to resign they must show they had no real choice, Mohazab. The onus is on the employee to prove that they did not resign voluntarily and that the employer forced them to do it, Australian Hearing v Peary (2009) 185 IR 359. An employer is generally able to treat a clear and unambiguous resignation as such, Ngo v Link Printing Pty Ltd (1999) 94 IR 375 (Ngo).

[65] Deputy President Wells in Dawes v Presbyterian Care [2014] FWC 4067 provides the following useful summaries of the approach to be taken:

“[4] The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) said in respect of now s.386(1) that:

“Clause 386 – Meaning of dismissed

1528. This clause sets out the circumstances in which a person is taken to be dismissed. A person is dismissed if the person’s employment with his or her employer was terminated on the employer’s initiative. This is intended to capture case law relating to the meaning of ‘termination at the initiative of the employer’ (see, e.g., Mohazab v Dick Smith Electronics Pty Ltd (1995) 62 IR 200).

1529. Paragraph 386(1)(b) provides that a person has been dismissed if they resigned from their employment but were forced to do so because of conduct, or a course of conduct, engaged in by their employer. Conduct includes both an act and a failure to act (see the definition in clause 12).

1530. Paragraph 386(1)(b) is intended to reflect the common law concept of constructive dismissal, and allow for a finding that an employee was dismissed in the following situations:

● where the employee is effectively instructed to resign by the employer in the face of a threatened or impending dismissal; or

● where the employee quits their job in response to conduct by the employer which gives them no reasonable choice but to resign.”

. . .

[59] In order for there to be access to a remedy to unfair dismissal, the employee must have been dismissed in accordance with s.386 of the Act. Accordingly, I am required to determine on the evidence whether Ms Dawes was dismissed at the initiative of PCT or whether she was forced to resign due to the conduct engaged in by PCT.

Approach of the Commission to Demotions

[66] The preliminary issue to be considered in this case is whether the demotion of the Applicant, in itself, resulted in his dismissal by the Respondent.

[67] The Respondent relied on a range of decisions which, it submitted, established that if a contract of employment or award or agreement allowed for demotion without termination, then any demotion will not amount to a dismissal. I have considered the following decisions: Elizabeth Gorzyca v RMIT University (PR922414) Full Bench AIRC 12 September 2002; Hermann v Qantas Airways Ltd (PR90396) 3 April 2001; Boo Haw Chan v Christmas Island Administration Print S1443; Charlton v Eastern Australia Airlines Pty Ltd [2006] 54 IR 239; Michelle Holland v Qantas Airways Limited [2011] FWA 3778; Teece Lollback v University of Southern Queensland [2014] FWC 2011.

[68] Each of these cases had different facts, of course. However, it is clear that where a contract or industrial instrument has a provision allowing demotion, such a demotion is not a dismissal by the employer or a repudiation of the existing contract of employment. I note that, in these cases, the Applicant appears to have remained in employment. They did not retaliate by refusing to accept a proposed new contract of employment or resign.

[69] Most recently, and relevantly, I was referred to two cases involving MSS Security Pty Ltd.

[70] In Philip Moyle v MSS Security Pty Ltd [2015] FWC 8330 (Moyle) Senior Deputy President O’Callaghan considered s.386(2)(c) in the context of a demotion in salary and duties of Mr Moyle who still remained employed by MSS Security Pty Ltd performing the new duties. He concluded that there had not been a significant reduction in salary or duties. He decided that there had not been a repudiation of employment contract by MSS and therefore, there had been no dismissal.

[71] On appeal the Full Bench (2016) FWCFB 372 decided that the Senior Deputy President’s interpretation of s.386(2) was incorrect. They stated:

“[8] It was submitted on behalf of Mr Moyle before us that the construction of s.386(2)(c) upon which the Senior Deputy President proceeded was erroneous. The Senior Deputy President interpreted s.386(2)(c) as requiring that there be both a significant reduction in the applicant’s remuneration or duties and that the applicant no longer be employed by the relevant employer in order for a demotion to constitute a dismissal. This was incorrect, it was submitted, because s.386(2)(c) was an exclusion from the general definition of “dismissed” in which the party invoking the operation of the exclusion (that is, the employer) had to demonstrate that there had in fact been no significant reduction in the applicant’s remuneration or duties and that the applicant remained employed by the relevant employer.

[9] We accept Mr Moyle’s submission to this effect. Section 386(1) sets out a general definition of what constitutes a dismissal. Section 386(2) then sets out three sets of circumstances which, even if they fall within the general definition, are deemed not to be dismissals. These are, in effect, exceptions to s.386(1). The third of these exceptions, in s.386(2)(c), relates to demotions in employment. In order to fall within this exception - that is, for a demotion that otherwise constitutes a dismissal under s.386(1) to be deemed not to be a dismissal, both limbs of the exception must be satisfied, as Mr Moyle submitted. The construction adopted by the Senior Deputy President was, with respect, in error because it inverted the exception by making it necessary for an applicant to negative both limbs of the exception in order for the demotion to be a dismissal. This would have the perverse result that a demotion in employment could never constitute a dismissal, even where it is plain that the existing contract of employment has been terminated and replaced by a new and inferior contract, because the employee will necessarily have remained in employment with the employer and thus could not negative s.386(2)(c)(ii).

[10] The Full Bench decision in Barkla v G4S Custodial Services Pty Ltd 6 does not support the construction adopted by the Senior Deputy President. That decision was concerned with what constituted a termination at the initiative of the employer for the purposes of s.386(1)(a), not with the construction of the exception in s.386(2)(c).

[11] The approach taken by the Senior Deputy President to s.386(2)(c) involved an appealable error of law. We consider that it would be in the public interest to grant permission to appeal because the identified error is one that relates to a provision of general application to unfair dismissal cases. Permission to appeal will therefore be granted in accordance with s.400(1) and s.604(2) of the FW Act.”

[72] The Full Bench, however, decided that Mr Moyle had not been dismissed. It held:

“[13] The approach taken by the Senior Deputy President to s.386(2)(c) involved an appealable error of law. We consider that it would be in the public interest to grant permission to appeal because the identified error is one that relates to a provision of general application to unfair dismissal cases. Permission to appeal will therefore be granted in accordance with s.400(1) and s.604(2) of the FW Act.”

[73] The combination of the MSS contract of employment, Standard Conditions of Employment and the Security Services Industry Award 2010 led the Full Bench to conclude in paragraph [21]:

“In summary we consider that under the contract of employment MSS was entitled to require Mr Moyle to work in a security guard role at any site at which it held a security services contract (subject we think to an implied requirement of reasonableness as to the distance of the transfer), that he could be required to perform any security guard duties for which he was qualified and trained, and that he would be paid for that role and the required duties in accordance with the Award or any other applicable industrial instrument.”
. . .
[23] We do not consider that there was any repudiation of Mr Moyle’s contract of employment by MSS, and that it continued to operate in accordance with its terms after Mr Moyle’s transfer took effect. Therefore, there was no termination at the initiative of the employer under s.386(1)(a) and no dismissal.”

[74] Commissioner Williams in Navdeep Singh v MSS Security Pty Ltd (2016) FWC 1857 (Singh) dealt with a demotion from a supervisory position in very similar terms to the current matter. Indeed, the contractual terms were exactly the same as in this matter, namely:

“Should you no longer be required to fulfil this role due to performance or client request, the terms of this contract will cease and you will transition to the conditions of the Security Industry Award 2010 or other agreement as applicable to the new site/position to which you are appointed.”

[75] The Commission considered the decisions that I have referred to above and concluded:

“[37] The respondent’s objection is that Mr Singh’s employment contract contains a term allowing demotion without termination and consequently his demotion did not involve termination of Mr Singh’s employment and so Mr Singh has not been dismissed within the meaning of section 386(1) (a) of the Act. Consequently Mr Singh is not a person who is able to make an unfair dismissal remedy application.

[38] It is clear from the evidence that the respondent employer did not express any intention to terminate Mr Singh’s employment. Nothing was put in writing to him that he was dismissed or that his employment was terminated. Mr Singh concedes in his evidence that he was never told he was dismissed or that he was terminated. The respondent’s actions throughout have been consistent with not intending to terminate or dismiss Mr Singh. Nothing the respondent has done amounts to an express termination of his employment.

[39] Mr Singh has not resigned from his employment. Mr Singh simply has not returned to do any work for the respondent since the meeting on 9 June 2015. He has not advised his employer verbally or in writing that he is resigning from his employment. This then is not a case of constructive dismissal under section 386(1) (b) of the Act.

[40] What Mr Singh argues is that the respondent has repudiated his employment contract. Whether there has been a repudiation is a question of fact. Not every breach of contract is a repudiation. A repudiatory breach does not automatically terminate the contract but confers an elective right of termination on the innocent party.”

[76] He further summarised the Commission’s approach as:

“[46] The broader statement of principle identified by the Full Bench above is that a demotion of an employee by an employer which involves a significant reduction in remuneration that is not agreed to by an employee will not amount to a repudiation of the employment contract if it is authorised by a contract of employment, an applicable award or a certified/workplace agreement.”

[77] Accordingly, it was decided that the action of the Respondent in changing the remuneration and duties of the Applicant was expressly authorised by the contract of employment and so did not constitute a dismissal under s.386(1) of the Act.

Was the Applicant dismissed?

[78] In its written submission, following the hearing, the Applicant sought to distinguish the decision in Moyle because the Applicant accepted the demotion and performed the new role and the employment relationship continued. The Applicant in this case, however, refused the new role. It is also submitted that the demotion was more significant in this case. This ignores the fact that the Full Bench would have found the demotion significant if it had needed to.

[79] The Applicant further submits that the decision in Singh should not be followed. Again, Mr Singh did not take action to refuse the new role. It is further submitted that what is lacking is “a discernible moment in which the employment relationship ended”.

[80] There is no dispute that the employment relationship between Mr Carter and the Respondent ended. The Applicant says that this arose from a combination of the Respondent’s 2 May email, the Applicant’s email of 4 May refusing to accept the new role and the Respondent’s email of 6 May.

[81] The Respondent relies on the decision in Singh. It says that the Respondent was entitled to come to the view that the Applicant had resigned. In both cases, there was no evidence to indicate any intention to terminate the Applicant’s employment. The change to the remuneration and duties was authorised within the contract of employment.

[82] I am satisfied that the decisions referred to above, especially the recent decisions in Moyle and Singh establish that demotion of an employee, where that demotion is provided for in the contract of employment or industrial instrument, cannot constitute, by itself, a dismissal.

[83] The contract of employment was agreed to by the Applicant on 4 November 2014. It is obviously a standard form used by the Respondent and was the same, substantially as in Singh. It provides for demotion from the specific position and location named in the contract, namely “Site Security Manager – Commonwealth Bank Australia Olympic Park”. The demotion can be because of “performance” or client request. In this case it was because of performance. The Applicant was accused of not following the Respondent’s policies and procedures and appropriate management practices in dealing with the complaint of a female employee about the conduct of a male employee. Both were under the supervision of the Applicant.

[84] I accept that the demotion involved a significant reduction in the remuneration or duties of the Applicant, as specified in s.386(2)(c)(i). It would involve a reduction of more than $30,000 per annum in salary and the return of the Applicant to an award based position. However, as the Moyle decision makes clear, that section is an exception to the general definition of a dismissal. It will not apply if the demotion is provided for in the contract of employment. The general provisions relating to dismissals in s.386(1) need to be considered.

[85] The Applicant submits that the 2 May email from the Respondent terminated the employment relationship. I do not accept this. No intention to dismiss was expressed. The Applicant was demoted pursuant to the Demotion Clause. This did not end the employment relationship because the contract of employment provided for demotion.

[86] In the alternative, the Applicant submits that the utilisation of the Demotion Clause was an unlawful exercise of contractual power which was limited to location and client request. This is not so. The contract provides for demotion in relation to “performance”. This was not a repudiation of the contract. To hold otherwise would be contrary to Moyle and Singh.

[87] The Applicant also submits that a repudiation of the contract arises from the Respondent acting unreasonably. Again, I think this submission is contrary to Moyle and Singh. The Applicant says that an employee would have no protection under the Act if they could not rely on unreasonableness to establish a repudiation of contract, and therefore a dismissal. I do not agree. An employee, who remains in employment, can challenge the reasonableness or fairness of a demotion using the dispute settling provisions of the Act. If the dispute settlement clause so provides, this might involve arbitration. In any event, the issue is whether the Applicant can be brought within the unfair dismissal provisions of the Act by this avenue. I am satisfied that he cannot.

[88] I find that the Applicant, by his email of 4 May resigned. Ultimately, both the Applicant and the Respondent accepted that this was the case. It was the final “fall back” position for the Applicant. It was not expressed as a resignation but rather a refusal to accept the demotion and the proposed new contract of employment. It had the effect of a resignation. The Respondent accepted it on 5 May in Mr Alcock’s response. The Applicant was then paid out his entitlements, including a payment in lieu of notice.

[89] The question becomes, therefore, whether the Applicant’s resignation was voluntary as the Respondent submits or whether it was “forced” in accordance with s.386(1)(b).

[90] This question needs to be answered based on the established principles of the Commission which I have summarised in paragraphs [63] – [65] above.

[91] I have come to the view, after some hesitation, that the Applicant’s resignation was not one which was forced by the Respondent’s conduct as required by s.386(1). An objective analysis of all the circumstances, especially the Respondent’s conduct, needs to be undertaken to determine whether the resignation was the probable result of the Respondent’s actions or the Applicant had no effective choice but to resign. Inevitably, this involves a consideration of the allegations against the Applicant to see if they were substantiated and of the fairness of the investigation.

[92] The Act’s requirement that employees be given a “fair go all round” contained in s.381(2), requires a consideration of the fairness to the Applicant of the Respondent’s demotion sanction, given his alleged breach of policy and inappropriate action as a Manager.

[93] There is no argument that the Respondent took specific action to dismiss the Applicant. The Respondent’s sanction was always expressed as demotion in accordance with the contract of employment.

[94] The accusation against the Applicant was that he had failed to follow company policy by immediately on 24 March reporting the incidents between Milanka and Karl to his superiors, to properly investigate the complaint and to separate the workers over the Easter weekend in accordance with appropriate management practice. I am satisfied that the evidence establishes these allegations.

[95] I found the Applicant’s written witness statements more detailed and convincing than his oral evidence but I do not think he was a dishonest witness. He seemed not to appreciate his supervisory responsibilities, however.

[96] Of course, we do not have the evidence of Milanka. Her email to Mr Baaini on 29 March suggests that the Applicant had decided to only talk to Karl against her wishes. The Respondent submits that the Applicant had deliberately decided to keep the matter in-house. I do not think the evidence establishes this on the balance of probabilities.

[97] The Applicant says that he spoke to Karl at Milanka’s request. He made genuine attempts to understand the nature of the allegations. He acted in accordance with the Applicant’s wishes. He attempted to contact Human Resources on 29 March, as soon as he realised that the issue remained unresolved.

[98] Even if the Applicant’s version is accepted, he breached the Respondent’s policies and procedures and his responsibility as a supervisor. He did not act in accordance with the Respondent’s EEO, Discrimination, Harassment and Bullying Policy. He had a responsibility to formally investigate the complaint by taking statements from Milanka, Karl and other employees which he did not do (see Transcript PN750 – 754). Most importantly he was required to refer the issue to a senior manager or HR Manager, in accordance with the “Step-by-step procedure”. This he should have done on 24 March. Instead he left Milanka and Karl on the job for at least some of the Easter weekend.

[99] The allegations against the Applicant were appropriately summarised by Mr Alcock in his evidence at Transcript PN921 – 923.

[100] I am satisfied therefore that the allegations against the Applicant are substantiated. If the Respondent had taken positive action to terminate, therefore dismissing the Applicant, I would have found that there was a valid reason for the dismissal pursuant to s.387(b). Accordingly, it would be difficult to come to the view, based on the objective circumstances, that the Applicant was forced to resign.

[101] I also note that whilst the Applicant had been an employee of the Respondent for 21 years he had only been in the Site Manager position since October/November 2014. Demotion does not seem a disproportionate sanction when viewed from this perspective.

[102] I also find that, overall, the investigation process conducted by the Respondent was satisfactory. The Applicant was clearly notified of the allegations against him and had an opportunity to respond. He had a support person with him. There were accusations that Ms Lock was biased and intimidatory but this was balanced by the allegation of hostile behaviour by the Applicant’s support person, his sister.

[103] There was an issue about the Applicant’s proposed new level, which changed on 29 April, from Class 4 to Class 1, because of the refusal of the client to have the Applicant on site. However, there is no reason to believe that the Applicant would not have continued at Class 4 with the Applicant in the future.

[104] The Applicant was accused of “ongoing negligence” and the Respondent’s witnesses, especially Mr Baaini, gave evidence about ongoing counselling of the Applicant about his management style and way of communicating with people. This was disputed by the Applicant but he did admit that Mr Baaini had discussed such matters with him (see Transcript PN453 – 457 and PN633 – 649). In the end, the evidence is not conclusive and is not a determining factor in my decision.

Conclusion

[105] Accordingly, I find that the Applicant’s resignation does not satisfy the requirements of s.386(1)(b). The Applicant was not dismissed pursuant to s.385(e).

[106] It follows that the Applicant’s claim for a remedy for unfair dismissal must fail and it is therefore dismissed. An Order to that effect will accompany this decision.

DEPUTY PRESIDENT

Appearances:

K. Jones of counsel with B. Powles, solicitor for the Applicant;

S. Lock, for the Respondent.

Hearing details:

2016

Sydney:

September 2 (telephone conference);

October 10 and 11.

Final written submissions:

2016

Applicant 18 October;

Respondent 7 November.

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