Philip Moyle v MSS Security Pty Ltd  FWC 8330 (U2015/12036). O’CALLAGHAN, SDP 8 DECEMBER 2015
The applicant, Mr Moyle alleged he was unfairly dismissed when his employer when he was relocated to a different site and advised of a reduction in his salary and classification.
MSS advised Mr Moyle that he would be transferred to either the Royal Adelaide Hospital or James Nash House. These transfer arrangements involved differing shifts. MSS stated that the transfer arrangements reflected an ordinary and customary practice within its business and involved a number of its personnel.
Mr Moyle’s position was that the decision to reduce his classification from Level 5 to Level 3 and to allocate him to a roster which did not involve the same level of night shift work constituted a dismissal and that his current position represents substantially different and reduced duties…and that he had only continued to undertake the diminished duties under protest.
S.386 defines a dismissal (in part) as:
“(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.”
The SDP considered:
- The plain words of s.386 (2)(c) must be construed such that a demotion in employment can only constitute dismissal if the employee does not remain employed by that employer and the demotion involves either a significant reduction in the employee’s remuneration or duties.
- This section of the FW Act does not provide that a reduction in either duties or remuneration is sufficient, of itself, to constitute a dismissal. A mandatory requirement is that the employee no longer remains employed (per Full Bench decision in Barkla v G4S Custodial Services Pty Ltd).
- Also, the Full Bench decision in Charlton v Eastern Australian Airlines Pty Ltd provides some further insight:
“…a termination of employment occurs when a contract of employment is terminated. This necessarily occurs when the employment relationship comes to an end. However, it can also occur even though the employment relationship continues. Where a contract of employment has been terminated, but the employment relationship continues, this will be because a new contract of employment has come into existence. Therefore, whether the … demotion involved his employment being “terminated by the employer”…turns on whether his contract of employment was terminated notwithstanding the continuing employment relationship. This question is answered by reference to general law principles relating to the termination of contracts of employment…
“The question of when a demotion constitutes a termination of employment within general law principles relating to termination of contracts of employment…was given careful consideration by the Full Court of the Supreme Court of South Australia in Advertiser Newspapers Pty Ltd v IRC & Grivell.
“Unless the contract of employment or an applicable award or certified/workplace agreement authorises an employer to demote an employee, a demotion, not agreed to by the employee, that involves a significant reduction in remuneration will amount to a repudiation of the contract of employment. If that repudiation is accepted, either expressly or by conduct, then the contract of employment is terminated. If, in such circumstances, the demoted employee then remains in employment with the employer, this occurs pursuant to a new contract of employment in respect of the demoted position. It may be noted that where the employment continues with the employee allegedly acquiescing in a reduction in salary or other terms of employment, difficult questions may arise as to whether the continued employment involves the continuation of the original contract of employment (but with the employer breaching that contract by paying the reduced salary), a consensual variation of the terms of the original contract or the termination of the original contract and a substitution of a new contract of employment.”
The SDP consequently that the applicant was not dismissed because:
- The loss of shift premiums was irrelevant as the applicant was aware that this would be a result of the transfer.
- The reduction to his base wage rate was about $1.00 per hour less… [And] this reduction cannot be regarded as significant…amounts to less than 5%.
- There is nothing in the employment arrangements which determined that he was specifically engaged at a given classification level.
- The Award did not require he must be paid as a Level 5.
- There were “Standing Instructions” (which Moyle signed) in place which allowed for the employees to be transferred and classified according to where they were transferred.
- In Whittaker v Unisys Australia Pty Ltd where the Court considered whether the employer’s conduct represented a repudiation of the employment contract. In that matter, Ross J stated:
“Whether there has been a repudiation in a particular case is a question of fact.
“Not every breach of contract is a repudiation and repudiatory conduct is not to be inferred lightly. Repudiation may be evidenced by a single act or by an accumulation of conduct in circumstances where no individual act on its own constitutes a repudiation.
“A repudiatory breach does not automatically terminate the contract but confers an elective right of termination on the innocent party.”
- Mr Moyle may have remained employed with MSS reluctantly, but there is nothing unique or extraordinary about that.
- And in conclusion: Mr Moyle cannot be unfairly dismissed if his circumstances do not meet the definition of “dismissed”.
Be very wary when demoting an employee. There may be various reasons for this occurring, mostly to retain the employee’s services as opposed to terminating their services.
In this matter, the employer had both the Award and their “standing orders” (which would have had the effect of contract) in its favour.
How do your contracts stand in relation to similar approaches?
Greg Reiffel Industrial Relations & Human Resources Consulting has been providing the following services to businesses for over 30 years:
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- People Audits (are you at risk of prosecution?).
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