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Introduction

This is an appeal to the full court of the Federal Court of Australia by a former employer (the “company”) against a decision by a primary judge of the same court that awarded $75,000 (being six months’ pay) to the company’s former employee for reasons that amounted to the company dismissing the former employee because he refused to sign a new contract of employment.

The former employee also lodged a “cross appeal” stating that he should have been awarded 12 months’ pay of $150,000.

Both the appeal and cross appeal were dismissed, reinforcing the primary judge’s decision that the former employee was dismissed because he wished to seek legal advice prior to signing (a reduced) contract of employment and in the words of the court:

“In addition or in the alternative, [the former employee] alleged that [the company] repudiated or breached his contract by failing to give him reasonable notice of termination”.

Background

The company is a family-owned investment services firm.

The former employee is a martial arts champion who worked as a bodyguard since about 1989 and has held senior security positions in the Philippines and Australia. Between 2009 and 2015 he operated his own business providing security services. He holds an Advanced Diploma in Security Risk Management and a Diploma in Business Management.

The company employed the former employee from May 2016 until November 2016, under an oral contract. His annual salary was $150,000, plus superannuation, and he was provided with a company car, first a Mercedes S-Class, then a 2015 Maserati. Part of his job involved driving the vehicle to pick up and drop off his manager. Between May and October 2016, the former employee was given wide-ranging additional responsibility; fundamentality all administration of the business that did not involve financial trading. He was given the title “Chief Operations Officer”.

The dismissal

In the period leading up to that fateful event, the former employee had a discussion with his employer about implementing new employment contracts for all of the company’s employees. To this end, he engaged lawyers from a top tier law firm to prepare two types of employment contracts, one for award employees and the other for non-award employees.

Late in the afternoon of 11 November 2016, with no prior notice, Mr Tran was told that that his presence was required in the boardroom.

In the boardroom the former employee was presented with a new contract. The former employee recognised it as a contract in the same form he had issued to staff during the week. He told the company it was “for normal staff, not for me”. The former employee was not happy, either with the terms of the contract or, as the primary judge put it, “its applicability to him and the position he had occupied”. Although the former employee’s salary would not change, his status was reduced. He would no longer be employed as Chief Operations Officer, reporting directly to the owner. Rather, his new title would be “Risk Manager” and he would be reporting to the owner’s son. His duties were reduced and there was no mention of a company vehicle. The contract also included a 12-month probationary period.

According to the former employee’s affidavid:

“I was feeling very nervous and uncomfortable about the contract, especially considering how I was recently being treated. It was also clear that there were lots of details in there that I couldn’t be across on such short notice. Although I had been handing these out earlier in the week to other employees (since this was a contract designed for normal employees), I wasn’t across all the details of the contents and would not be comfortable signing it without having at least an opportunity to read it through. I was also conscious this version was probably tweaked by Justin Le Blond who had recently promised, when winking, to make it a lot stronger. I said:

Me: “I will take it to a lawyer to review.”

[The owner son’s] face changed, his voice became angry and he raised his voice when he said:

[OS]: “It’s your contract!”

[OS] was yelling at me at this point:

“I will not pay you if you don’t sign it now. If you don’t sign now, it shows you are not loyal”.

At some point, [the OS] said to me:

“What value do you bring to the company when we pay you $150,000, car, no fringe benefits tax, nearly $200,000?”

Soon afterwards, the owner entered the boardroom and at some point, the former employee signed the contract “under enormous pressure” from the company. He later regretted his action and tore the contract in half.

The former employee then left the building in the company Maserati.

This led to the company calling the police to retrieve the company vehicle and three mobile phones belonging to the company, having determined that the former employee had resigned (a point which the former employee denied). These issues were the subject of text messages.

The primary judge finding

The primary judge found that the former employee did not resign from his employment at the meeting. Rather, his Honour found that his employment was terminated after he left the meeting because he had sought to exercise his workplace right to seek legal advice about the new contract. The effect of his Honour’s findings is that, by arranging for the police to contact the former employee after he had sent the text message reasserting his workplace right to obtain legal advice about the new contract and retrieve its property, the company “had repudiated his contract of employment” and, by returning the Maserati with its keys and three mobile phone handsets, the former employee “had accepted the repudiation”.