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Fireside chat gone wrong

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FWC finds that employee was given no choice but to resign

It is not unusual for employers to want to have a frank discussion with an employee when the relationship is not working out, seeking to agree to an exit strategy. This is often referred to as a “fire side chat”. However, these discussions must be carefully considered and planned because if the employee is not receptive, the employee can claim that the discussion created a situation forcing them to resign.

It is not unusual for employers to want to have a frank discussion with an employee when the relationship is not working out, seeking to agree to an exit strategy. This is often referred to as a “fire side chat”.  However, these discussions must be carefully considered and planned because if the employee is not receptive, the employee can claim that the discussion created a situation forcing them to resign.

In Jarouche v Lipa Pharmaceuticals Ltd [2023] FWC 493, the employer was unsuccessful in its jurisdictional objection that the employee had resigned from her employment.

The employee was employed in the position of Chief of Quality. The employer held concerns in relation to the employee’s performance and the Chief Executive Officer (CEO) met with her in June and July 2022. By September 2022, the CEO had lost confidence in the employee’s ability to perform her role.

The CEO met with the employee on 29 September 2022 and there was a discussion about the performance concerns. The CEO sought to discuss with the employee about how to position her exit from the business and one option proposed that the employee resign to coincide with her upcoming surgery. The discussion ended with the CEO inviting the employee to “work through the detail of your resignation over the coming days.”

The CEO and the employee thereafter engaged in discussions over phone and email and events transpired as follows:

  • The employee advised the CEO that she was “okay” with resignation, but that she would need more money and a Statement of Service.
  • The CEO sent the employee a draft announcement which would be sent to all employees in relation to her resignation. The CEO offered the employee an additional month’s pay and told her that she would be required to sign a Deed of Release.
  • The employee requested a reference letter and said she would sign the release.
  • The CEO sent the reference letter and then later a Deed of Release for the employee’s review.
  • The employee confirmed receipt of the reference letter and that she would “wait on the next steps”.
  • The CEO arranged for the announcement to be sent to employees and he also signed and sent the employee the reference letter.
  • The employee did not return the Deed of Release and later advised the CEO that she would not sign and requested payment of her three month notice period in lieu, together with her accrued leave entitlements.
  • The CEO responded to the employee that it would proceed on the basis that she resigned from her employment and would therefore pay her entitlements. The final payment was subsequently made to the employee.

The employee initiated general protections proceedings in the Fair Work Commission. The employer lodged a jurisdictional objection, maintaining that the employee resigned from her employment and was not dismissed.

The employee submitted that her employment was terminated at the employer’s initiative based on the CEO’s conduct. In the alternative, she submitted that if she resigned, she was forced to do so because of the conduct or course of conduct engaged in by the employer and was therefore “dismissed” per section 386(1)(b) of the Fair Work Act 2009 (Cth) (FW Act).

The FWC found that the employee’s employment was not terminated by the employer – the employer’s action did not terminate the employment contract. In relation to the CEO’s discussion with the employee, the FWC stated that this was blunt and unwelcome, but was not of itself, termination of the employee’s employment. The FWC considered the CEO’s discussion was with a senior employee about a proposed parting of the ways and noted that the employee continued to be employed.

The FWC also found that it was the employee’s resignation which brought about the end of the employment, however, it was satisfied that the employee was forced to resign as she had no effective or real choice but to resign.

The FWC reached this conclusion based on the conduct of the employer:

  • The CEO instigated the discussion of the employee’s exit because he lost confidence in the employee. This was communicated to the employee and the discussions had not changed the CEO’s view.  
  • The employer’s objective was to exit the employee from the business and all negotiations were directed to this outcome.
  • The employee’s choice was a choice to agree to the resignation and reference letter.
  • There was nothing that the employee could have done which could have resulted in her employment continuing.

The FWC dismissed the jurisdictional objection, allowing the employee to proceed with her application.

Lessons for employers

It is important that any “fireside chat” is conducted on the basis that the employee has options - for example resignation or commencement of a disciplinary process.

Further, it is also important to ensure that where there are negotiations, all terms are agreed and finalised (whether in a Deed of Release or otherwise) before any action is taken such as announcements to the business, provision of Statement of Service or payment of termination payments.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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