Unfair dismissal ruling upheld, but compo slashed


Unfair dismissal ruling upheld, but compo slashed

An employer that appealed against an order to pay almost $23,000 to an unfairly dismissed employee has succeeded in having the payout slashed. However, its appeal against the decision the employee was unfairly dismissed was unsuccessful.

An employer that appealed against an order to pay almost $23,000 to an unfairly dismissed employee has succeeded in having the payout slashed. However, its appeal against the decision the employee was unfairly dismissed was unsuccessful.

Facts of case

Nicole Knutson had been employed for about three years when her employer sent her a new employment contract which had some more specific provisions than her previous one. There were unsuccessful negotiations between the parties and Knutson said she would not sign the new contract.

Her employer then emailed her to say her employment would be terminated and she would now be working out her notice period. A few days later, she advised that she would not be returning to work for two weeks on medical advice. The employer challenged the medical certificate and requested further evidence of incapacity. 

Lawyers for both sides then became involved. Ms Knutson claimed she had not received proper notice of termination and was therefore still employed. The employer again disputed the medical evidence and threatened possible disciplinary action against her. The employer had told other staff she would not be returning to work, closed her access to work emails and social media and demanded she return her work keys. The employer claimed that Ms Knutson was avoiding making a response to its concerns. 

Ms Knutson then claimed she had been forced to resign, which her employer disputed, claiming she had resigned to avoid a possible finding of serious misconduct. The employer claimed that it had not terminated her employment.
Ms Knutson then provided further medical evidence, which her employer again claimed was inadequate. Eventually, Ms Knutson was paid termination pay but not paid for her claim of personal leave of three weeks.

Ms Knutson made a claim of unfair dismissal.

The Fair Work Commission found that she had been dismissed, but her employer then attempted to withdraw the dismissal when it was challenged. However, other evidence indicated that dismissal had already occurred, with the employer’s reason being her refusal to sign a new contract. 
Other findings were that Ms Knutson did not have an opportunity to respond to the prospect that not signing the contract could result in dismissal, and she was not paid all her due entitlements. There was no evidence of misconduct and the termination was a summary dismissal. Therefore, her dismissal was unfair and compensation of $22,882 was awarded. 

The employer sought leave to appeal against this decision.

Grounds of appeal: the arguments

The appeal was on six grounds, which can be summarised as follows:
  • The notice given to Ms Knutson did not specify a date of termination of employment, therefore it was wrong to conclude this was a notice of termination and wrong to conclude she was dismissed. Ms Knutson had taken personal leave and resigned later.
  • The finding that she was entitled to personal leave was wrong, as the FWC had paid insufficient attention to checking the veracity of the medical evidence. A summary dismissal could not be inferred from refusal to grant personal leave because of the employer’s doubts about the medical evidence.
  • If the date of dismissal was pre-dated to before personal leave commenced, the claim of unfair dismissal was lodged outside the 21-day time period.
  • The amount of compensation had included payment of pre-approved annual leave for an overseas trip, which would have been taken if she had continued in employment and payment for the three weeks' personal leave (whether the leave applied was still subject to separate dispute). The amount of compensation should be reduced by these two amounts.
  • Ms Knutson claimed that the pre-leave date of termination applied because she had requested details of the notice period and final day of work and not received them. She claimed that she was entitled to paid personal leave and had provided adequate medical evidence, therefore this payment should be included in the payout. 


A FWC full bench found as follows:
  • A notice that did not specify a date could still terminate an employment relationship, although not an employment contract. On an overall basis, there was no doubt dismissal occurred.
  • The matters raised by the employer were insufficient to change the conclusion that the dismissal was unfair – there was no valid reason for it and procedural fairness was lacking. This defeated most of the grounds of the application to appeal.
  • The only remaining contentious issue was how the date of dismissal was determined, and the impact it had on calculation of compensation. 
  • The FWC had not properly calculated the anticipated period of further employment. Nor did it properly identify the basis on which the award of 24 weeks’ pay was calculated, although it appeared to cover the period up to when Ms Knutson obtained other employment. Had it determined that the date of termination was the date on which personal leave commenced, the claim of unfair dismissal would have been out of time. A dispute over non-payment of three weeks’ personal leave did not have the effect of turning dismissal with notice into summary dismissal three weeks earlier. 
  • The non-payment of personal leave had to be separated from the issue of dismissal, but the FWC had included its payment in the compensation award. This was an error, as was payment covering the period of the pre-arranged overseas holiday. Therefore, the full bench reduced the compensation payment from $22,882 to $14,806.
The bottom line: When terminating employment, it is essential to specify the date of termination when notifying an employee.
Disputes over non-payment of entitlements such as leave relate to the National Employment Standards or leave legislation, and will be handled separately from claims of unfair dismissal.

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