Article Summary
A recent Fair Work Commission decision highlights that not all apparent resignations are legally valid resignations. Where an employee’s intention is unclear or influenced by confusion, distress, or communication issues, an employer may be found to have effectively terminated employment instead. The case reinforces the importance of confirming resignation intentions clearly before treating employment as ended.
Why the distinction matters?
Employment relationships typically end in one of two ways, either by resignation or by dismissal.
For an employer, resignation of an employee usually comes with significantly less liability or potential repercussions.
By comparison, dismissals, especially where the reasoning is ambiguous or disputable, can expose an employer to claims under the Fair Work Act 2009 (Cth).
When is a resignation a dismissal?
So, what distinguishes a resignation from a dismissal? Common sense would suggest that a resignation occurs where an employee decides that they no longer wish to continue their employment and communicates that decision to their employer. On that basis, if an employee is asked, “do you want to continue working here?” and the response is “no”, then that would be a resignation, right? Not always.
In the recent decision of Jung Hong v Green Drake Pty Ltd as Trustee for the Grey Unit Trust t/as Grey Farming, the Fair Work Commission considered factors that may influence whether an employee had intended to resign or not.
The factual background
Mr Hong was employed as a farm hand by Grey Farming. He had worked with Mr Grey, the owner of the farm, for around 15 years. Shortly before the employment came to an end, Mr Hong had been speaking with Mr Grey about his wife’s plan to move her pop-up jewellery business into a permanent shop in Toowoomba, approximately 150 km away. Mr Grey was concerned about how this would affect Mr Hong’s availability for work, particularly because Mr Hong was Grey Farming’s only employee.
In one of their discussions, Mr Hong told Mr Grey that he was taking medication for depression and anger management. Mr Grey became concerned about whether the medication could affect Mr Hong’s ability to safely perform farm work and asked him to obtain a medical certificate before returning. Mr Hong saw his doctor, but no medical certificate was provided. He returned to the farm to explain the position in person. The conversation again turned to the permanent shop. Mr Grey made it clear that he could not accommodate Mr Hong’s dealings with the permanent shop and asked “where does this leave us? Do you want to continue working for us? [meaning ‘at all’]”. Mr Hong said “no” [‘thinking not today’]. The question was then rephrased by Mr Grey as, “so you don’t want to work here anymore?”, to which Mr Hong again answered “no”.
Mr Grey, with the understanding that Mr Hong had resigned, then asked Mr Hong to leave the work vehicle behind (as no medical certificate was provided), collect his belongings and arrange to be picked up. Grey Farming processed Mr Hong’s final pay the next day.
What did the Fair Work Commission decide?
The Commission accepted that Mr Grey genuinely believed Mr Hong had resigned and that this was not an unreasonable understanding. However, it was appropriate for the Commission to consider what a reasonable person in the position of the parties would have understood from the words used, the conduct of the parties and the surrounding circumstances.
Mr Hong was distressed and emotional and had been dealing with personal issues. His doctor had changed his medication and he had not yet provided a medical certificate. There was also a language barrier, with Mr Hong’s English considered not quite ‘100%’. The conversation itself was also unclear. There were no words used that have historically suggested the end of employment; for example ‘resign’, ‘quit’, ‘dismissed’, ‘fired’ or sacked’. There was also no discussion about notice or final pay.
The Commission found that a reasonable person in Mr Grey’s position would have wondered whether Mr Hong truly intended to resign, or whether there had been a misunderstanding. By treating the employment as ended without clarifying Mr Hong’s intention after a reasonable time had passed, it was held that Grey Farming had terminated the employment, rather than Mr Hong resigning.
Key takeaway for employers
This decision serves as an important reminder that employers should be careful before treating an unclear statement, in emotional circumstances, as a resignation. If the employee appears distressed, angry, unwell, confused, or where there are language or communication issues, you should confirm any resignation in writing before processing final pay or taking other final steps to accept the resignation.
Seeking advice?
If you are unsure whether an employee has resigned, or how to manage a difficult employment situation, please contact our Workplace Team for assistance.
For further information on this alert, contact Director Danny Clifford.
The assistance of Legal Assistant Hugh Jubb in the research for this article is gratefully acknowledged.
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