In its simplest form, an employment contract is a legally enforceable document between two parties where there is an offer and acceptance to be bound by its terms and conditions. Where an employment contract has been signed, it cannot be unilaterally changed by one of the parties – there must be agreement by both parties.
In Dupre v Excell Protective Group Pty Ltd [2024] FWC 2313, the Fair Work Commission (FWC) found that an employee was dismissed from his employment when he refused to sign a new employment contract.
The employee was employed as a Business Development Manager. In November 2023, the employer presented a proposed new employment contract to the employee. This new employment contract contained a new higher sales target and new restraint clauses. The employee did not sign the employment contract and expressed concerns with the employer about the restraint clauses. There was no resolution of the employee’s concerns.
In March 2024, the employer advised the employee that his employment would be transferred to another company and sent the employee a new employment contract, which contained the same restraint clauses and a non-disclosure agreement. The contract was sent with a covering email which ended with “If an agreement cannot be reached this week then a decision must be made upon your role in the business.”
The employee did not sign the employment contract and sent through a document which outlined matters he sought clarification on in relation to the document – including in relation to the commission arrangements, confidentiality clause and restraint clause.
The employee claimed that on 3 April 2024, the CEO attended an office management meeting and advised him and his colleagues that if the employment contracts were not signed, he would consider it to be a resignation which would be accepted.
On 11 April 2024, the employee met with the CEO and HR Manager. It was the employee’s evidence that the employer demanded that he sign the employment contract but he maintained that he would not be signing the contract and repeated multiple times that he was not resigning. The employee claimed that he was told to “finish up”, that he would be paid his entitlements and was directed to return his keys and collect his belongings and leave the workplace.
The employee later sent an email to the employer requesting a letter confirming the termination of this employment. The employer responded by email relying on an automatic email set up by the employee which stated that he no longer worked for the employer as notification that he had resigned from his employment and that it was accepting this resignation.
In the FWC, the employee submitted that he was dismissed at the initiative of the employer within the meaning of section 386(1) of the Fair Work Act 2009 (Cth) (FW Act) or in the alternative, that if it was found that he resigned, then he was forced to do so because of the conduct of his employer.
The employer denied that it had dismissed the employee or that it had forced the employee to resign. The employer submitted that in the meeting the contract was discussed and that the employee was told that the restraint clauses would be changed per his request. The employer submitted that the employee was told to take paid time off to seek advice and that a meeting for the following week was to be arranged.
The FWC preferred the evidence of the employee in relation to what occurred in the meeting on 11 April 2024. In relation to the meeting, the FWC found that:
Having made these findings, the FWC held that the employee was dismissed from his employment by the employer and dismissed the jurisdictional objection.
With the jurisdictional objection dismissed, the FWC went on to find that the employee’s dismissal was harsh, unjust and unreasonable. The employer was ordered to pay to the employee $42,552.06 (gross) plus superannuation.
This is a helpful reminder to employers when rolling out new employment contracts or seeking to update or change terms of an employment. In this case, the employee made it clear that he had concerns with the terms of the contract and that he would not be signing the new employment contract.
If there is to be a change in contract terms, this should be discussed with the employee including the reasons for the change. There may also be negotiation for agreement to be reached. A party cannot unilaterally vary or remove employment contract terms and to do so may result in a breach of contract.
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