Terminated at the employer's initiative

See Fair Work Act 2009 s.386(1)(a)

The expression ‘termination at the initiative of the employer’ is a reference to a termination that is brought about by an employer and which is not agreed to by the employee.[1]

The analysis of whether there has been a termination at the initiative of the employer for the purpose of s.386(1)(a) is to be conducted by reference to termination of the employment relationship, not by reference to the termination of the contract of employment operative immediately before the cessation of the employment.[2]

The termination of a contract of employment does not necessarily result in the termination of the employment relationship between the parties to that contract of employment: if the parties enter, or are taken to have entered, a new contract of employment, the employment relationship continues notwithstanding the termination of a prior contract of employment.[3]

Termination of employment may be ‘at the initiative of’ the employer even though it occurs in circumstances where the parties have agreed to a time-limited contract expiring on a specified date. The facts of a particular case may establish some decision or act on the part of the employer that brought about the end of the employment relationship (as distinct from the employment ending by effluxion of time).[4]

Related information

• Forced resignation
• Demotion
• Contract for a specified period of time
• Contract for a specified task
• Contract for a specified season
• Employment limited to the duration of a training arrangement

A termination is at the employer's initiative when:

• the employer's action 'directly and consequentially' results in the termination of employment, and
• had the employer not taken this action, the employee would have remained employed.[5]

There must be action by the employer that either intends to bring the relationship to an end or has that probable result.[6]

The question of whether the act of an employer results 'directly or consequentially' in the termination of employment is an important consideration but it is not the only consideration.[7] It is important to examine all of the circumstances including the conduct of the employer and the employee.[8]

The test for repudiation by the employer is whether the conduct of the employer, when judged objectively, showed an intention to no longer be bound by a contract.[9] The employer's actual or subjective intention is not relevant.[10]

A repudiation of the contract does not bring the contract to an automatic end but gives the affected party the right to terminate the contract.[11] If the affected party accepts the repudiation the contract will end. [12]

Where an employer has repudiated the contract, and an employee accepts the repudiation and exercises their right to terminate the contract, this will amount to a termination at the employer's initiative.

An employee may engage in conduct amounting to a repudiation by seriously breaching the contract of employment.

The question of whether there has been a repudiation of the contract of employment is determined objectively. It is unnecessary to show a subjective intention to repudiate and is a question of fact not law.[13]

Repudiation may exist where an employer reduces the wages of an employee without the employee’s consent or where there is a serious non-consensual intrusion on the nature of the employee’s status and responsibilities in a way which is not permitted by the contract. Similarly, if an employer seeks to bring about a change in the employee’s duties or place of work which is not within the scope of the express or implied terms of the contract of employment, the conduct may evince an intention to no longer be bound by those terms. Therefore, in these circumstances if an employee does not agree to the change, which if agreed would amount to a variation of the contract, the employee may claim to have been constructively dismissed.[14]

‘Abandonment of employment’ is an expression sometimes used to describe a situation where an employee ceases to attend his or her place of employment, without proper excuse or explanation, and as a result shows an unwillingness or inability to substantially perform his or her obligations under the employment contract.[15]

This may be termed a ‘renunciation’ of the employment contract.

The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.[17]

Renunciation is a species of repudiation which entitles the employer to terminate the employment contract. Although it is the action of the employer in that situation which terminates the employment contract, the employment relationship is ended by the employee’s renunciation of the employment obligations.

Termination at the employer's initiative requires the termination of the employment relationship, not the contract of employment.[18]

Terminated at the employer's initiative

Employer claimed employee resigned her employment

Nohra v Target Australia Pty Ltd [2010] FWA 6857 (Roberts C, 22 October 2010), [(2010) 204 IR 389].

The applicant employee had submitted a letter of resignation which effectively gave 7 months’ notice. Her employer purported to accept the resignation but make it effective immediately. It was found that the termination of employment occurred at the employer's initiative.

Employer argued abandonment of employment

Sharpe v MCG Group Pty Ltd [2010] FWA 2357 (Asbury C, 22 March 2010).

An employee who had notified her employer that she would be unable to attend work due to medical reasons, and was then terminated, was found to have been terminated at the initiative of the employer. An argument that the employee had abandoned her employment by not attending for work as directed was rejected. It was held that the employer had terminated the employment.

Employer proposed changed working conditions to accommodate employee's pregnancy

Owens v Allied Express Transport Pty Ltd [2011] FWA 1058 (Hampton C, 28 February 2011).

Permission to appeal refused [2011] FWAFB 2929 (Boulton J, Kaufman SDP, Bisset C, 10 June 2011), [(2011) 210 IR 17].

The employer and employee agreed that the employee work in a less difficult role as the employee was pregnant. However, when the employer informed the employee that there would be significant reduction in salary for the new role, the employee refused to agree, and regarded herself as having been dismissed. This was found to constitute a termination of employment at the initiative of the employer.

Employer claimed applicant left voluntarily and refused to return

Le Plastrier v Brons (Northern Belle Pty Ltd) [2012] FWA 4672 (Spencer C, 31 May 2012), [(2012) 222 IR 360].

The applicant disagreed with the employer regarding an allegedly non-compliant certificate for one of the workers. The applicant was concerned with her statutory obligations to the licensing authority. The employer over-ruled her saying the certificate was acceptable. When the applicant refused to work on the same shift as the worker she was told that her position would no longer be available as the day shift was finishing. The applicant was offered some work by another employee, however at no stage did the employer confirm the offer. This was found to constitute a termination of employment at the initiative of the employer.

Employee absent for more than 3 days

Thompson v Zadlea Pty Ltd T/A Atlas Steel [2019] FWC 1687 (Gregory C, 15 March 2019).

This application was lodged by a Canadian national who had been employed as a welder/metal fabricator. The applicant originally came to Australia on a temporary working holiday visa, which expired in April 2018. He then entered into an employment contract with Atlas Steel whereby it agreed to be his approved nominee for a Temporary Skill Shortage Visa.

On 21 June 2018 the applicant had an altercation with another employee. The following day the applicant left the workplace after encountering the same employee. The applicant went to his doctor who provided him with a certificate of capacity regarding a work-related injury/condition, which indicated that it was necessary for him to be off work until 5 July 2018. During this period the respondent concluded that the applicant had abandoned his employment, given his absence from work for a continuous period of more than three days, and consequently decided to withdraw its visa nomination.

The Fair Work Commission was not satisfied that the applicant abandoned his employment on the basis he ceased to attend his place of employment without a proper excuse or explanation. The Commission was satisfied that by withdrawing its visa nomination the respondent effectively acted to terminate applicant’s employment, and that its actions in doing so were harsh and unreasonable. The respondent made no attempt to contact the applicant after he left the workplace on 22 June 2018. The Commission found that the applicant was unfairly dismissed and ordered $7,022.40 compensation, less deduction of tax as required by law.

Contract NOT for specified period

Khayam v Navitas English Pty Ltd t/a Navitas English [2017] FWCFB 5162 (Hatcher VP, Colman DP, Saunders C, 8 December 2017).

The applicant was employed by Navitas as a casual employee to perform teaching services from 2005 to 2012. In April 2012 he was offered employment as a 'fixed-term teacher' until 30 June 2013. The letter of offer provided that either party could terminate the employment by giving four weeks' written notice. The applicant accepted that offer. After the completion of that period of employment, he was offered and accepted employment on substantially the same terms for the period from 1 July 2013 to 30 June 2014. In June 2014, the employee was initially told his contract would not be 'renewed' because his administrative work had been unsatisfactory. However after further discussions he was then offered, and accepted, another employment contract for the period 1 July 2014 to 30 June 2016.

At the end of the term of the last contract on 30 June 2016 the applicant was not offered a further contract. On 31 May 2016 the employee had been informed that he would not be offered a further fixed-term contract based on an assessment of his performance and disciplinary record. His employment consequently ended on 30 June 2016. The employee contended this constituted a dismissal within the meaning of s.386(1)(a) of the Fair Work Act and that his employment was terminated at the initiative of the employer. The respondent contended that there was no dismissal, and that the employment had terminated through the effluxion of time.

At first instance, the Commission considered itself bound by Lunn and held there was no dismissal at the initiative of the employer. The applicant appealed on grounds including that the Commission erred in relying on Lunn. Permission to appeal was granted and the Full Bench considered whether the interpretation and application of s.386(1)(a) should continue to be guided by Lunn. The Full Bench majority ruled that Lunn did not correctly or completely state the proper approach to the interpretation of the expression 'termination of employment at the initiative of the employer' in s.170CD(1) of the Workplace Relations Act 1996 (Cth) and its application to the circumstances of a person employed on a time-limited contract(s). The Full Bench majority held that because the Commission in first instance considered itself bound to follow Lunn, despite reservations about its correctness, its consideration of whether the employee was dismissed within meaning of s.386(1)(a) was 'artificially constrained', which constituted an appealable error.

The Full Bench majority then considered whether the exclusion in s.386(2)(a) applied in this case. They found that as the final contract of employment provided an unqualified right for either party to terminate contract on four weeks' written notice, or four weeks' pay in lieu of notice, the contract was not for specified period and so the exclusion in s.386(2)(a) did not apply.

The Full Bench majority upheld the appeal and quashed the decision at first instance. The matter was referred back to the Commission to determine whether the employee was dismissed by Navitas within the meaning of s.386(1)(a).

Note: The matter was settled prior to the hearing taking place.

NOT terminated at the employer's initiative

Apprenticeship contracts

Qantas Airways Limited v Fetz and others, Print Q1482 (AIRCFB, Giudice J, Harrison SDP, Lawson C, 9 June 1998), [(1998) 84 IR 52].

On appeal, apprentices who were placed on apprenticeship contracts with a duration of four years but with an expectation that there would be an offer of permanent employment after that subject to performance and operational requirements were held to be subject to contracts for a specified period of time. Therefore when the apprenticeship contracts expired and the apprentices were not offered further employment, this was not a termination of employment at the initiative of the employer.