Hours cut after a harassment complaint: resignation or dismissal?

What happened

Mr Wood had made and delivered cleaning chemicals for Delshine Pty Ltd, a small Perth family business, since 1997. He had been married to the owners' daughter, and stayed on after the marriage broke down in 2015.

Sales fell, and his hours shrank. By the end of 2018 he was working 9am to 4pm, and he had started a lawn mowing and garden business on the side. Over the Christmas break he met privately with his former father-in-law, who ran the business, and raised allegations about his former mother-in-law. The owner's evidence was that Mr Wood said he no longer wanted to work with her because she was sexually harassing him.

At the end of his shift on Friday 11 January 2019, the owner told him to sign a note in the wages book: "As discussed due to sexual harassment claim and reduction in sales the new working hours will be 9am – 2pm each day with no lunch break commencing immediately". Mr Wood refused. It became heated. The owner said Mr Wood told him to "stick" his job and stormed out. Mr Wood denied saying that, and said he left because his shift had finished.

On Monday morning Mr Wood turned up at his normal start time. The owner told him he could not come in because he had quit on Friday, and when Mr Wood would not leave, he called the police.

The claim

Mr Wood, representing himself, applied to the Fair Work Commission for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Cth). The business objected that he had resigned, not been dismissed. Only a person who has been dismissed can claim, so that had to be decided first.

Why: the legal test

Section 386(1) of the Act says a person is dismissed in two situations: the employment is ended on the employer's initiative, or the person resigned but "was forced to do so" because of the employer's conduct. The second is usually called a constructive dismissal, or a forced resignation.

Deputy President Binet applied the test set out by a Full Bench of the Commission in Bupa Aged Care Australia Pty Ltd v Tavassoli [2017] FWCFB 3941. First, a resignation said "in the heat of the moment", or under emotional stress, may not be a real resignation at all. If the employer simply accepts it, rather than checking after a reasonable time whether the employee really meant it, the employment may be treated as ended by the employer. Second, a resignation is forced if the employer acted intending to end the job, or if ending the job was the probable result of its conduct, so the employee had no real choice but to resign.

What the Commission decided

The Deputy President was not satisfied that Mr Wood said he resigned at all. She found his son, who said his father never told him he had resigned, the most credible witness. If Mr Wood did say it, she found, it was said in the heat of the moment and was a consequence of the employer's conduct.

She found he was dismissed under either part of the test. The owner said a resignation was unexpected, and after more than 20 years' service he should have checked with Mr Wood after a reasonable time whether he really meant to resign. Separately, the Deputy President found it likely, on corroborating evidence, that Mr Wood had been treated inappropriately by his former mother-in-law. The owner's only answer was a significant cut to his hours and pay. "A reduction in hours of work is not an appropriate response to a complaint by an employee that they are the subject of sexual harassment," she said. Offering a harassment-free workplace only at the cost of much of his income left him no real choice.

The owner conceded there were no problems with Mr Wood's performance or conduct, so there was no valid reason, and the dismissal could not be consistent with the Small Business Fair Dismissal Code (which protects employers with fewer than 15 employees when followed). The dismissal was unfair.

How much was awarded

Mr Wood asked for six months' pay. Neither side wanted reinstatement, and the Deputy President agreed it was inappropriate. She ordered compensation of four weeks' pay at his 9am to 4pm hours.

The amount was modest for two reasons. She thought it unlikely Mr Wood would have stayed long anyway, given falling sales, his garden business and his unhappiness at work. And she was not satisfied he had made reasonable efforts to find other work: most of his job applications were for roles he was not qualified for, and she doubted his evidence that he had earned nothing from his own business.

What this means for you

If you have walked out after an argument, it may not be the end of the matter. Turning up for your next shift, as Mr Wood did, can help show that you did not mean to resign. Employers should not seize on words said in anger; a calm check a day or two later is safer.

If you complain about harassment and are punished with fewer hours, a pay cut or a worse roster, that response can itself push you out, and the law may treat your resignation as a dismissal. Keep a record, and consider getting advice early: an unfair dismissal application to the Fair Work Commission must be made within 21 days of the dismissal taking effect.