The recent Fair Work Commission decision of Tanasak Supsingcra v White Rabbit Kiaora Lane Pty Ltd demonstrates the risks faced by employers where they seek to punish a casual employee by reducing their hours.

Facts

The employer, ‘White Rabbit’, operate cafés in Sydney. The aggrieved employee, Mr Supsingcra, was engaged by White Rabbit on a casual basis from 6 June 2022 to 12 September 2023.

Between 31 August 2023 and 11 September 2023, an associate of the employee, Mr Paull engaged in correspondence with the Director of the employer on behalf of the employee.  The correspondence which was ultimately the catalyst for this matter was correspondence sent on 31 August 2023 which advised the employer that the employee would be taking sick leave for 7 days, for stress related health issues linked to alleged workplace mistreatment (including underpayment).

On 11 September 2023, the Director sent an email to Mr Paull which included the following key statements:

Please note that we have now had to hire someone to get us through this period as there has been no inclination of (the employee’s) return to work/if he will return to work. We still have a position for his (SIC) however the hours will be reduced as we now had to hire 2 new staff members in order to keep the store operating.

…

We are also wanting to note  that  we  are  committed  to  getting  this  matter  resolved  as  we  do  value (the employee) as an employee and do wish to see him back at work.

Also to note, any payment resolution will also take 7 days to be completed once an agreement has been reached.

On 12 September 2023, the employee resigned by sending a text message to a senior staff member citing, ‘health reasons and difficulties in finding a solution’.

The employee subsequently lodged a general protections claim in the Fair Work Commission, where he alleged the employer was in contravention of Part 3-1 of the Fair Work Act 2009 (Cth). The employer subsequently raised a jurisdictional objection on that basis that the employee was not ‘dismissed’.

Relevant law

An employee can make a general protections claim involving dismissal (or an unfair dismissal claim) against an employee if, amongst other requirements, the employee has been ‘dismissed’ in accordance with section 386(1) of the Fair Work Act 2009 (Cth). Section 386(1) provides for two possible methods for ‘dismissal’:

• Section 386(1)(a): The person’s employment with his or her employer has been terminated on the employer’s initiative; or
• Section 386(1)(b): The person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer. This type of dismissal is often referred to as a ‘constructive dismissal’ or ‘forced resignation’.

The threshold for establishing a constructive dismissal is a difficult one to establish, as the case law demonstrates that the employee will need to prove that they had ‘no effective or real choice but to resign’.

Decision

In this case, Commissioner Crawford ultimately rejected the employer’s jurisdictional objection, and found that the employee was ‘dismissed’ for the purposes of section 386(1)(b).

In forming his decision, the Commissioner noted that there was no dispute that the employer had underpaid the employee. It was also not in dispute that the employer had also issued the employee with pay slips that contained a number of blatant errors and omissions.

The Commissioner acknowledged that the employee had the option to have the underpayment contention resolved by a complaint to the Fair Work Ombudsman, and that he could have done this whilst remaining employed. However, the Commissioner held that the employee’s failure to wait on a resolution through the FWO was not detrimental to his case. The Commissioner found that the blatant errors and omissions on payslips deprived the employee of the opportunity to determine whether he was being paid correctly, and to properly calculate the extent of any underpayment.

The Commissioner then found that there was a direct and clear link between the underpayment issue being raised (and the employee’s absence from work due to health reasons related to the underpayment) and the employer’s response to those concerns.

Specifically, the employee, through Mr Paull, alleged that the employer had underpaid the employee, and that the employee had suffered a mental health issue associated with the underpayment dispute.  The direct response of the employer to those allegations was to reduce the employee’s hours of work going forward. The Commissioner considered that, on an objective assessment of the correspondence, the employer’s response to the allegations made by the employee, (being to reduce the employee’s hours) was one of ‘punishment’.

Given the above factors, the Commissioner did not accept that the employee’s return to work was an effective or real choice available to him. The Commissioner found that the punitive approach of the employer was conduct of such a nature that the employee’s resignation was the probable result.

Key takeaways for employers

We quite often get asked whether, as an alternative to managing issues in a casual employment relationship, an employer can simply reduce the hours being offered to the casual employee in question.  This case serves as a timely reminder that casual employees can be considered ‘dismissed’ where their usual casual hours are significantly reduced for improper reasons.  That risk is significantly increased if the decision to reduce their hours is taken as a response to a valid employee complaint or grievance.

It is important to remember that casual employees have most of the same rights as permanent employees, and in particular, they have access to the same employment claims as their permanent counterparts, including unfair dismissal and general protections claims.  Accordingly, casual employees should typically be managed in the same way as permanent employees, especially when it comes to managing their complaints, or dealing with performance or conduct related issues.

This case is also a timely reminder that using conciliatory language in communications with an aggrieved employee, for example, that they are ‘valuable’ or that you ‘wish to see them back at work’, will not alone be sufficient to counter arguments of constructive dismissal (particularly if such comments are perceived as artificial). The assessment of whether there is conduct that amounts to constructive dismissal occurs on objective analysis of facts, and not an assessment of how conciliatory the employer is in its correspondence with the employee.

When you need assistance with dealing with a complaint from an employee, or you need advice about how to manage an employee who has made a complaint, please contact one of our experienced employment lawyers.