1
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Miss Carol Morley
v
Intelitec Pacific Pty Ltd T/A Inerva
(U2014/14157)
DEPUTY PRESIDENT ABEY HOBART, 7 MAY 2015
Decision Application for relief from unfair dismissal - constructive dismissal - application not
granted
[1] Ms Carol Morley (applicant) has lodged an application for an unfair dismissal remedy
under s394 of the Fair Work Act 2009 (the Act). The applicant contends that circumstances of
her employment termination from Intelitec Pacific Pty Ltd T/A Inerva (respondent) amounted
to a constructive dismissal.
[2] The respondent has raised a jurisdictional issue contending that the applicant resigned
from her employment.
[3] The applicant relies on s396(1) of the Act which relevantly reads:
“(1) A person has been dismissed if :
...
(b) the person has resigned from his or her employment, but was forced to do
so because of conduct, or a course of conduct, engaged in by his or her
employer.”
Evidence
[4] During the hearing sworn evidence was taken from the following witnesses:
Carol Jane Morley, applicant
Sean Williams, Managing Director, Inerva
Penelope Williams, Executive Manager, Inerva.
David Loiterton, Sales Manager, Inerva.
(2015) FWC 3168
DECISION
AUSTRALIA FairWork Commission
[2015] FWC 3168
2
[5] In addition a number of documents were tendered into evidence.
Background
[6] From the evidence I am satisfied that the essential facts are either largely uncontested
or in the alternative, capable of being resolved on the balance of probabilities. On this basis
the background to this dispute is summarised as follows.
[7] Inerva is a software vendor exclusively serving the Australian aged care market. In
November 2014 the company employed a total of 13 staff in management, support, sales and
software development roles. Ten of the staff are based in Tasmania.1
[8] Ms Morley commenced employment with Inerva in April 2011 as a Support Officer.
In May 2012 she was promoted to National Support Manager.
[9] In October 2013 Ms Morley was asked and agreed to take on additional sales duties.
This was a consequence of Mr Williams withdrawing from the sales role and placing the
business on the market.
[10] In February 2014 two sales related staff were appointed, reporting to Ms Morley. The
business was taken off the market. One of these appointments came to an end shortly
thereafter.
[11] In May 2014 Ms Morley was appointed General Manager.
[12] From the evidence it seems that the corporate plan at the time was to seek a full-time
sales executive from within the aged care industry. In the meantime Ms Morley continued
with some sales activity although it seems clear that she was anxious to bring this to an end as
soon as possible in order to concentrate on development and support work.
[13] Despite some concerns relating to company operations and management, Ms Morley
was relatively satisfied with her role. She said:2
“However, that aside, the day to day situation in the Launceston office was very
positive and overall I was very happy to be working at Inerva. With each promotion I
received a pay rise and, superannuation and sustainability aside, I was content.”
[14] The matters of concern to Ms Morley are summarised below.
Superannuation
[15] Ms Morley stated that the Company regularly failed to make superannuation
payments. The respondent acknowledged the obligation to pay superannuation, and attributed
the late or non-payment to cash flow issues. At the time of termination, significant
superannuation contributions were owed to Ms Morley and presumably other staff. In the case
of the applicant, the matter had been referred to the Australian Taxation Office (ATO).
Company credit card
[16] Ms Morley said she was authorised to use the company credit card for travel related
expenses. On occasions the card had been declined due to insufficient credit. This, Ms Morley
[2015] FWC 3168
3
said, led to considerable embarrassment and occurred despite requests in advance to
management to ensure sufficient credit was available. The respondent said that management
made every effort to ensure credit was available but acknowledged that on occasions it did not
work. This situation was not limited to Ms Morley.
Investment in software and hardware.
[17] On a number of occasions Ms Morley had expressed concern as to the respondent’s
reluctance to invest in software and hardware she considered essential to meet client
commitments and the wellbeing and motivation of staff. The respondent’s evidence is that a
moratorium on spending was necessary due to cash flow shortages and that it would be
“reckless to spend on new computer equipment while basic employee entitlements were
outstanding.”3
[18] The applicant said that her relationship with her employer dramatically changed for
the worse in October 2014.
Events Post October 2014
[19] In October 2014 Mr David Loiterton was appointed as Sales Manager. A key
difference was that Mr Loiterton was to report to Mr Williams, rather than Ms Morley. I am
satisfied on the evidence that this appointment was genuinely welcomed by Ms Morley, even
though she had some apprehension as to the financial capacity of the business to carry both a
full-time Sales Manager and a General Manager.
[20] It was generally accepted that with the appointment of Mr Loiterton, the applicant
would exit all sales activity, subject to an appropriate handover. The precise nature of this
handover is not entirely clear, with Mr Loiterton stating he would welcome support and
assistance for a period of time, including the applicant arranging ‘introductions’ in appropriate
circumstances.
[21] On 30 October 2014 Ms Morley declined an opportunity to attend a conference in
Tamworth due to work pressures. Her evidence is:4
“Sean phoned me following my email, was quite sarcastic and said I think we say this
is the end of your time in sales, thanks for what you have done but you can go back to
doing what you are good at. Again I had no argument with this proposition but was
concerned by the tone. I also wanted to ensure there was a proper handover and that no
leads “fell between the cracks”. As I had been involved in sales for over 12 months
there were inevitably a number of ongoing potential opportunities that were likely to
either make contact with me or expect that I would make contact with them. I stated
this to both Sean in this conversation and later in a handover session with David and
both said that was fine and I received communication from Sean reiterating the
importance of keeping the CRM upto date and of keeping David apprised with any
sales activity. I had absolutely no problem with doing this and had every intention of
doing so. David also asked me to follow up on a potential lead on his behalf as he felt
it inappropriate that he should do so and reiterated that any assistance I could give him
over the initial few months while he was getting up to speed would be gratefully
received. “
[2015] FWC 3168
4
[22] According to Mr Williams, the following telephone conversation (also) occurred on 30
October:5
“Sean Williams: This is a good time to hand over all sales activity to David”
Carol Morley: I’m due to catch up with him tonight, we can make that a handover
meeting.
Sean Williams: Yes please, you need to concentrate on operations now, no more sales
work.”
[23] On 31 October Ms Morley had a “handover” meeting with Mr Loiterton. Later that
day Ms Morley confirmed with Mr Williams that the handover meeting had occurred.
[24] On 18 November an incident occurred described by the applicant as follows:6
“Our phone system went down and was up and down for a couple of hours. During
that time we lost a number of calls and I was unable to conduct a pre- arranged
training session. When the phones were working again we received a number of
support messages and received a sales enquiry, presumably because I was still
included in the email “sales group”. I did not know if David and Carolyn had received
the sales call, I suspected not as we hadn’t. I was also aware that they were in transit to
Tamworth and might not have a chance to return the call anyway even if they did get
the voice message in an email. When I listened to the recorded message I noted that it
wasn’t clear who it was. I didn’t want to get involved in a long call with anyone at that
time because I had rearranged the training session for later that day and I wanted to
make sure I was free for the session. So I chose to call back the sales enquiry and
glean some more detail, which I could then pass onto David, while other members of
the support team dealt with the more lengthy support calls. I expected the sales
enquiry to be a quick 5-10 minute call and if I had thought it would take longer I
would not have made the call. As it turned out it took a little while to find out who the
company was and in that time I realized that in fact I had met the lady before at a
conference earlier in the year and as a result it wasn’t easy to finish the conversation
quickly besides she asked a lot of detailed questions about implementation and Home
Care functionality which David would not have been able to answer. During the call
she asked for a rough cost and because the facility was a small 50 bed facility which
fell into our standard pricing band I was comfortable with giving her the standard
price. After speaking with the lady I recorded all the information in the CRM and
emailed both David and Carolyn with the details. I subsequently responded to a further
email from the lady but having received an acknowledgement from David I didn’t
expect to have any further involvement because I expected he would shortly make
contact himself. I gave the call no more consideration. “
[25] It turns out that the sales inquiry did go through to Mr Loiterton’s message bank
service although Ms Morley was unaware of this at the time and suspected that it had not.
[26] Later that day Ms Morley received an automated message stating that her access to the
CRM (sales data base) had been terminated.
[27] On 19 November 2014 the applicant received an email from Mr Williams concerning
a proposal Ms Morley had put forward concerning development work for a client.7 Ms
Morley said:8
[2015] FWC 3168
5
“Sean’s response was curt, ignored the request for a commitment to purchase the
software and insisted that he see the documentation and the quotation before it went to
the client. The implication in the email was that he didn’t think I was capable of doing
the work even though it was routine and something I am well used to and more than
capable of doing.”
[28] Later that day the applicant received a formal written warning from Mr Williams
expressed as follows:9
“RE: Disciplinary Warning
This letter is to serve as an official reprimand for your failure to comply with recent
instructions to refrain from engaging in sales activity relating to the acquisition of new
clients. I refer your handling of a sales enquiry from KOPWA yesterday.
It is a breach of your expected and entrusted managerial role.
I am also reminding you, it is of critical importance that you exercise dependable good
judgment as an employee entrusted with management responsibilities. Because of
your position, further diligence in carrying out your responsibilities is required in
future.
Another breach in our confidence in your ability to carry out any of your expected
managerial roles will result in additional disciplinary action up to and including the
possibility of employment termination.
We have invested much into ensuring the rapid growth of this company including the
appointment of experienced sales personnel. To be clear, your responsibility, as every
employee, is to pass on sales enquiries directly to the Sales Manager, without further
intervention.
If you are not comfortable with the growth of this company or your area, I encourage
you to raise your concerns with me immediately.”
[29] Ms Morley’s evidence as to what followed is:10
“November 19th 2014 I received a formal written disciplinary warning in relation to my
alleged breach of my employment condition in making the sales call and a clear threat
that should l make a breach in the future my employment would be terminated. I was
shocked to receive such a warning. I have never in my entire working life of 37 years
received any such thing. As far I was concerned I had acted correctly, in accordance
with what was expected of me and in the best interests of the company at all times. I
took some legal advice the following day during my lunch hour and based on that
advice thought seriously about my future at Inerva.
November 21st 2014 was pay day and I did not receive my salary. There was no
explanation as to why I had not been paid. In the 40 odd pays I had received prior to
this pay day my salary was, without fail, paid either early or on the due date so this
was a highly unusual and worrying development. I was at this stage completely
[2015] FWC 3168
6
convinced that Sean was trying to force me to resign. I suspected that the company
was not in a financial position to support both a Sales Strategy Manager and a General
Manager and that Sean planned to get rid of me and take on the operational duties
himself now that David could run the sales side. “
[30] It transpires that Ms Morley’s salary transfer was actioned at the bank on Saturday 22
November and would have appeared in her bank account on Monday 24 November. Mr
Williams explained that because of daily transfer limits, staff pays were on occasions
“batched” and paid on different days. On this occasion Ms Morley was one of three staff who
were subject to the 22 November transfer. Nonetheless I am satisfied on the evidence that this
was the first occasion that Ms Morley’s salary was late.
[31] On Saturday 22 November Ms Morley attended the office, removed her personal
effects and sent the following email to Mr Williams.11
“I write in response to your letter dated 19th November 2014 and the official
reprimand contained therein.
I have not received specific instructions to not speak with any potential clients and I
am not aware of any company policy or procedure which outlines such a requirement.
I have followed your instructions to document any conversation or correspondence
with a potential client and to pass those details to the sales team. In doing so I believe I
followed the guidelines I have been given. You have not given me an opportunity to
explain the circumstances of the sales enquiry to which you refer or why I took the
steps that I did.
By issuing a written official reprimand without any prior discussion, and without
giving me an opportunity to explain my actions, you have breached the trust and
confidence necessary for my employment to exist. In addition I note that I have not
received payment for wages for the period ending November 20th 2014. Payment was
due by 21st November 2014. As a result of this situation I consider myself to be the
subject of a constructive dismissal and hereby give notice to leave the company with
immediate effect.
I request immediate payment to be made in full for the outstanding wages.
I also request that, within 7 days of the date of this letter: you forward, to me, payslips
relating to all pay periods since June 21st 2014 (despite repeated requests I have not
received any payslips in the current financial year); make payment in full in respect of
my outstanding Annual Leave entitlement; and make payment in full of the
outstanding Superannuation guarantee contribution owed to me, together with interest
(as you are aware I have received only one month’s contribution since July 1st 2013).
I have taken legal advice on this matter and I am advised that the next step will be to
make a complaint to the Fair Work Commission Ombudsman. As you are no doubt
aware a complaint to the Ombudsman may result in a full audit of Company records. I
am also advised to lodge a claim with the Australian Taxation Office in relation to the
unpaid superannuation in the event I do not receive full payment, with interest, within
7 days.”
[2015] FWC 3168
7
Submissions
The Applicant
[32] The applicant contends that she was forced into tendering her resignation as a result of
her employer’s actions, which taken together, amount to a constructive dismissal consistent
with s386(1)(b) of the Act.
[33] The applicant submits that these actions were a deliberate campaign to force her to
resign, and/or in the alternative, an attempt to build up a justifiable case to dismiss her. Ms
Morley contends that she was being set up and damage limitation activities were being taken
in anticipation of dismissal. These actions include:
The issuing of a written warning without justification and without giving the
applicant an opportunity to explain her conduct;
Placing the applicant in a very awkward position in relation to payment of
expenses;
Undermining the applicant’s ability to effectively manage the staff by refusing to
purchase essential equipment and not paying superannuation;
Restricting Ms Morley’s discretion and ability to manage ad hoc development
projects, and
Late payment of salary only two days after the formal disciplinary warning.
[34] Ms Morley contends that the combined actions of the employer were aimed at forcing
a resignation and together were the principal contributing factors leading to the termination of
the employment relationship.
The respondent
[35] Mr Williams submitted that he had always maintained an excellent, open and close
working relationship with Ms Morley and he had never, at any time, entertained an intention
to dismiss or demote the applicant by any means. His evidence is:12
“Look, I'd like to say that Ms Morley was a first class operational manager and had
been for years; well respected by the management and by our clients. We valued her
contribution in her primary role as general manager. Yes, there was certainly no
intention in November or any time before to see her leave the company in any way.
Any suggestion that that was our intention is false. This company, in its 22 years, has
never fired a long-standing employee. It never dismissed anyone that has made it
through their probationary period. Ms Morley's resignation certainly came as a shock
to us. It was certainly not our intention to cause any anxiety or grief or in any way
discomfort to Ms Morley or anyone else. We were very, very surprised to hear that
she resigned. Very saddened, in fact, by her resignation because we lost a real asset
then and it's very unfortunate. The nature of her resignation without any warning was
also quite damaging for the company given Ms Morley's senior position in the
company; as a primary contact for most of our clients that we deal with. We were,
yes, just surprised. That's really all I would like to say.”
[2015] FWC 3168
8
[36] Mr Williams referred to a major tender submission dated 13 November 2014 in which
Ms Morley is identified as one of the ‘Key Personnel’ to support the project.13
[37] Mr Williams acknowledged that Ms Morley had reasons to be concerned and
frustrated with aspects of the business operations (eg superannuation, software investment,
project risk control), but these issues were not isolated to M s Morley, and there was certainly
no conspiracy to push her out of a job.
[38] Mr Williams said:14
“Yes, look, I agree it has been stressful and I also agree that Ms Morley was a valued
and trusted employee. Not up until the end of October, but in fact until 22 November,
until the day she clearly resigned. Yes, this is sad because it highlights the need for
more open communication, I suppose. If the reprimand was jumping the gun or was
too premature, then I think a resignation was doubly so.”
[39] Mr Williams submitted that Ms Morley had a number of other choices in the days
following the reprimand, but none were taken up.
Conclusion
[40] The leading authorities in relation to constructive dismissal are Mohazab v Dick Smith
Electronics Pty Ltd 15and O’Meara v Stanley Works Pty Ltd.16 The ‘elemental principle’ that
emerges from these authorities is “whether the employer’s conduct intended or had the
probable effect or result of bringing the employment of the relevant employee to an end, such
that the employee effectively had no choice but to resign.”17 I now apply these tests to the
evidence in the instant matter.
[41] There is no doubt that the applicant had good reason to be disappointed, disillusioned
and perhaps even angry as to certain aspects of the Company management. I refer in
particular to the repeated non-payment of superannuation and embarrassment encountered
through insufficient credit on the corporate credit card. However these shortcomings were not
directed specifically at the applicant, and to a greater or lesser extent, applied to some or all of
the Inerva staff.
[42] Ms Morley was understandably disappointed as to the lack of investment in what she
saw as essential software and hardware upgrades. However these are decisions clearly open to
management, and whilst it might be a factor the applicant took into account in considering her
future employment with Inerva, it is not in the category of leaving Ms Morley with no option
but to resign.
[43] The email from Mr Williams dated 19 November 2014 concerning proposed
development work was certainly abrupt and failed to answer the question concerning software
investment. However in my view the email was otherwise unremarkable, although I
understand why Ms Morley may have been offended by its tone. Again, taken alone, it is not a
factor which left the applicant with no option but to resign
[44] The late payment of salary would normally be placed in the category of an irritation.
Because of the timing, the late payment assumed an importance in the mind of the applicant
[2015] FWC 3168
9
which was disproportionate to its true significance. I note Mr William’s evidence as to
‘batching’ and that other employees were similarly affected. On the evidence I am unable to
accept that the late payment was a deliberate component of a plan to drive Ms Morley from
the business. I would however observe that if an error of this nature had to occur, the timing
could not have been worse.
[45] This leaves the telephone incident on 18 November 2014 and the subsequent letter of
reprimand.
[46] I am satisfied on the evidence that the only motivation of Ms Morley was to act in the
best interests of the Company. She could not reasonably anticipate that the call would take
longer than a few minutes or that the caller was someone she had previously met at a
conference. At no stage did she try and hide the call or mislead Mr Loiterton or management,
indeed, to the contrary. The very worst that Ms Morley could be accused of was an over
enthusiastic response, and even that in my view would be unfair.
[47] It follows that in my view the written letter of reprimand was without justification and
an entirely disproportionate response on the part of Mr Williams. It would seem from the
evidence that Mr Williams was motivated more by a fear of losing Mr Loiterton rather than
the behavior of Ms Morley. That said, was it an action that left Ms Morley with no option but
to resign?
[48] I think not. The obvious response was for Ms Morley to push back and seek a
discussion with Mr Williams, something that was effectively offered in the cover email to the
letter of reprimand. Whilst I understand the applicant’s reluctance to pursue this course, it
clearly was an option that was open, and if pursued, may have resulted in a different outcome.
[49] The resignation of Ms Morley in the circumstances was a most regrettable outcome.
Whilst there were a number of events in close proximity between 18 and 22 November 2014,
I am unable to accept on the evidence that this amounted to a course of conduct on the part of
the employer that was calculated to force the resignation of Ms Morley. The evidence of the
tender submission document dated 13 November 201418was persuasive in reaching this
conclusion.
[50] I conclude that Ms Morley resigned from her employment by correspondence dated 22
November 2014.
[51] I uphold the respondent’s jurisdictional objection and dismiss the application for an
unfair dismissal remedy.
DEPUTY PRESIDENT
[2015] FWC 3168
10
Appearances:
Ms Carol Morley in person
Mr Sean Williams for the respondent
Hearing details:
2015
15 April
Launceston
Printed by authority of the Commonwealth Government Printer
Price code C, PR567148
1 Exhibit R1
2 F2 application, Accompanying notes
3 Exhibit R4 p3
4 Exhibit A2 para 5
5 Exhibit R4 p8
6 Exhibit A2 para 9
7 Exhibit R15
8 Exhibit A2 para 7
9 Exhibit A7
10 Exhibit A2 paras 10 & 11
11 Exhibit A8
12 Transcript p181
13 Exhibit R1
14 Transcript para 552
15 [1995] 62 IR 200
16 [2006] AIRC 100
17 Mendicino v Tour-Dex Pty Ltd [2010] FWA 9114 at [9]
18 Exhibit R1
