Paid late six times in 2021, he quit, and it counted as a dismissal

What happened

Astro Aero Pty Ltd was set up for one project: to design and build a prototype single-engine freight aircraft. It earned no revenue of its own. All its money came from one overseas benefactor, who sold and leased aircraft across Asia.

James McKay told the Commission that he and his wife had moved their children to Australia to work on the project. Both started as CAD design draftsmen in January 2020. Staff were due to be paid monthly, on the last day of each month.

From February 2021 the money stopped arriving in advance. That year Mr McKay's wages were paid 24 days late in February, 7 days late in April, 10 in May, 53 in June, 31 in July and 2 in August. Each month management emailed staff with a new expected pay date, and often that date was missed too.

Mr McKay raised the problem in writing, consulted the Fair Work Ombudsman, and told his manager the anxiety was affecting morale. Senior staff wrote that colleagues were taking out loans to cover living costs, missing school fee payments and redrawing on their mortgages. In July 2021 everyone received a $1000 goodwill payment, and staff were later offered time at home on full pay until the overdue wages came through on 24 August.

The resignation

By 2 September 2021 all wages had been paid. On 10 September Mr McKay and his wife both resigned, effective immediately. His letter listed the six late payments and said the repeated failure to pay on time, poor communication and no sign of measures to stop it happening again had left him with no choice.

The company replied that it did not agree he had no other option, invited him to reconsider, and reminded him he had to give notice under his contract. He did not respond, and the company accepted the resignation on 17 September.

Mr McKay then applied to the Fair Work Commission under s 365 of the Fair Work Act 2009 (Cth), the general protections provision for disputes involving a dismissal. The company objected that he had not been dismissed at all: he had resigned voluntarily.

Why: the legal test

Under s 386(1) a person is dismissed if the employer ends the job, or if the person resigns but was "forced to do so" because of the employer's conduct or course of conduct. The second limb is what people call constructive dismissal.

Deputy President Lake applied the Full Bench test from Bupa Aged Care Australia Pty Ltd v Tavassoli [2017] FWCFB 3941. The question is whether the employer acted with the intention of ending the employment, or whether ending the employment was the probable result of its conduct, so the employee had no effective or real choice but to resign.

It is not enough that the employee did not really want to leave. But the employer need not have intended the result. The tribunal looks objectively at the employer's conduct and asks whether, had the employer not acted as it did, the employee would have stayed.

What the Commission decided

The Deputy President described being paid on time as a basic requirement under the Act and fundamental to the employment relationship. One or two short delays met with "deep apologies and quick rectification" might be forgiven at a start-up, but this was "an egregious non-compliance" over a significant period, accompanied by "platitudes".

The Deputy President accepted that local managers had little control and that the funding problem lay with the benefactor and the company's CEO, who were based in Canada and China. But wherever in the enterprise the problem arose, the staff bore its impact. The company sought "to utilise the pandemic as a shield" against responsible financial management, with no transparency about the problem.

The goodwill payment and offers of help showed some awareness, but did not lessen the duty to pay. And while staying on was technically possible, working on without knowing if or when pay would arrive was "hardly a realistic option", because the company gave no firm commitment that the funding issue was fixed.

The company had never meant to push staff out. But its conduct would, on any reasonable view, have that result. Mr McKay was dismissed, the jurisdictional objection was dismissed, and the matter was to be listed for a conference.

What this means for you

If your pay keeps arriving late, an apology and a later catch-up do not necessarily put things right. What matters is the pattern, how late, how often, and whether your employer can credibly say it will not happen again. Keep a record of each due date, each date you were actually paid, and every message about it, and raise it in writing.

Resigning is a serious step, and the Commission looks at the whole picture, so it is worth getting advice before you do. If you resign and believe you were forced out, a general protections claim involving dismissal must be lodged within 21 days of the dismissal taking effect.