Unfair dismissal: the doctrine of repudiation explained

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The common law doctrine of repudiation of contract is alive and well in the statutory fair work system. Where an employer fundamentally breaches an employment contract, it is open to the affected employee to treat the employer’s actions as constituting a repudiation of the employment contract (if the breach is sufficiently serious…..for example a persistent failure to pay remuneration) by accepting the repudiation, in which event the employee can treat the events as constituting a dismissal.

“There was no action on the respondent’s part that was either intended to bring the employment to an end or had the probable result of bringing the employment relationship to an end. The applicant effectively threatened to resign if he did not get what he wanted. The respondent did not give him what he wanted, and accepted his resignation. The relevant action was that of the applicant.

[17] With regard to the common law concept of constructive dismissal, this involves action on the part of the employer which brings the contract of employment to an end by taking action that amounts to a ‘repudiatory breach’ of that contract. The High Court in Koompahtoo said:

‘The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it… Secondly, it may refer to any breach of contract which justifies termination by the other party…

… there are two relevant circumstances in which a breach of contract by one party may entitle the other to terminate. The first is where the obligation with which there has been failure to comply has been agreed by the contracting parties to be essential… The second is where there has been a sufficiently serious breach of a non-essential term.’ 9

[18] The Full Bench in Balgowan stated that:

‘The question whether there has been a repudiation of the contract of employment is determined objectively, it is unnecessary to show a subjective intention to repudiate and is a question of fact not law. Relevantly, for present purposes, repudiation may exist where an employer reduces the wages of an employee without the employee’s consent or where there is a serious non-consensual intrusion on the nature of the employee’s status and responsibilities in a way which is not permitted by the contract. Similarly, if an employer seeks to bring about a change in the employee’s duties or place of work which is not within the scope of the express or implied terms of the contract of employment, the conduct may evince an intention to no longer be bound by those terms. Therefore, in these circumstances if an employee does not agree to the change, which if agreed would amount to a variation of the contract, the employee may claim to have been constructively dismissed.

Conduct of an employer which repudiates the contract of employment does not by that act alone bring the contract of employment to an end. A repudiation of the contract by the employer gives the employee who is not in breach the option to decide whether to continue, that is to affirm the contract, or to treat the contract as at an end by accepting the repudiation.

As repudiation in the second sense referred to by the High Court in Koompahtoo involves conduct in breach of the contract of employment it is plainly necessary to identify the term or terms of the contract said to exist and which it is said has or have been breached…’ 10

[19] The applicant said that the respondent had breached the fundamental terms of his contract of employment. 11 When asked how, the applicant responded:

‘I was taken advantage of and placed in a position of employment that I wasn’t recruited to.’ 12

[20] There are two problems with this assertion. First, the evidence suggests that the applicant acquiesced at the time to his relocation. Secondly, and more fundamentally, his written contract of employment explicitly allowed the respondent to change the applicant’s position, duties, responsibilities and reporting lines and work location. When this was put to the applicant, he agreed that the relocation could be viewed as the respondent acting under the terms of the contract…

‘… but the major problem here is not the fact that I was moved, it was the fact that there was a total lack of support for me as an individual, and for me, as a business manager or as a sales representative. The big one here is the fact that the support just wasn’t given. There was, under no circumstances, at any point in time, did I feel that I was given adequate opportunity to be successful.’ 13

[21] I am satisfied, objectively, that there was no repudiation of the contract of employment. It is hard to square the applicant’s complaint that he felt unsupported with the first paragraph of his letter of 29 October 2017 to Mr Basha. What is clear from that letter and the associated text messages exchanged with Mr Sarkis is that the applicant genuinely felt that the respondent should have given greater weight to his views on how the business should operate – to the point where its failure to do so led him to resign. However, that failure did not amount to a breach of the applicant’s employment contract and did not constitute constructive dismissal.”

Niven v Dash Digital Media Pty Ltd T/A Tiger Nutrition (2018) FWC 1610 delivered 28 March 2018 per Hamberger SDP