A resignation becomes a termination – FWC Appeal Decision

One Minute Summary

An employee emails their employer making it clear they wish to resign.
Shortly after the employer accepts the resignation the employee retracts the resignation claiming they had a mental health episode and cannot recall writing the email.
The Commission at first instance finds that at the time of accepting the resignation the employer was not aware of special circumstances to question whether the resignation was legitimate.
The Full Bench stated that the employer became aware of such special circumstances after the resignation had been accepted. They should have taken that new information into account in the decision to reject the retraction of the resignation by the employee.

Your employee sends you their resignation (effective immediately) by email after an absence from work of 10 weeks due to health issues. You respond accepting the resignation and forward it to your payroll office for processing. A short time later the employee sends a further email stating they were not in a good state of mind when sending the resignation email and wish to withdraw their resignation. Other employees then inform you that the employee’s resignation should not be accepted because the employee had mental health concerns.

The employee had lots of absences and performance issues.

What should you do?

The above happened to Hutchinson Ports when Mr Gourlay, a stevedore, sent a short resignation email at 4.30am. At 11am Hutchinson accepted the resignation by return email and then rejected the employee’s retraction which was received about 20 minutes later.

During unfair dismissal proceedings Mr Gourlay indicated he had informed the employer that he could not recall sending the resignation email and that he had not been in a rational state of mind suffering from paranoid delusions. Several of his coworkers had approached the company after it had rejected his retraction supporting Mr Gourlay’s assertion about his mental health. The employer stated they had acted on Mr Gourlay’s initial communication that he wished to resign and they did not see any reason to allow a retraction.

In proceedings it was argued that the employer should have clarified with Mr Gourlay that he had intended to resign and not simply processed his resignation.

It was established that during his employment Mr Gourlay had been the subject of six absence management plans which are initiated once an employee exceeds their personal leave entitlements. Mr Gourlay had been absent from work for 10 weeks and had returned for one day before emailing his resignation at 4.30am. In discussions with Mr Gourlay’s union the company representative stated that Mr Gourlay had not been a reliable employee, having had many absences and that the company would not therefore agree to reinstate him.

The company argued that in his email Mr Gourlay was very clear and that they should be allowed to accept that resignation and act on it. No medical evidence about his mental health had been submitted after the resignation.

The Commissioner examined the relevant case law which required that there be circumstances that required the employer to question whether the employee actually intended to resign and whether the employer should have been aware of those circumstances.

In the initial decision the Commissioner was satisfied that Mr Gourlay suffered from stress, anxiety and paranoia and that at the time the resignation was in a state of mental confusion. This was based on evidence provided during by Mr Gourlay during the hearing. However, the Commissioner stated he was not persuaded that the employer ought to have been aware of this at the time it accepted and processed his resignation. The employer was therefore able to conclude that Mr Gourlay had freely submitted his resignation.

On that basis the Commissioner dismissed Mr Gourlay’s unfair dismissal application.

The Appeal

On appeal the Full Bench examined the circumstances of the termination in relation to the initial decision. It was submitted by Mr Gourlay that the Commissioner had misinterpreted the relevant case law in respect to his circumstances.

Mr Gourlay stated to the Full Bench that the employer had previously been aware that that he had suffered from mental health conditions, that he had not expressed any interest in resigning, that he had previously had multiple absences due to health issues exhausting his leave entitlements, that the employer ought to have been aware of ‘special circumstances’ being that he was in a state of emotional distress or mental confusion such that he could not reasonably had an intention to resign.

The Appeal Bench allowed the appeal stating:

‘There is no reason why events occurring after an ostensible resignation cannot be relied upon to establish that a resignation was not voluntary because it was attended by special circumstances. An employer put on notice of the existence of special circumstances after accepting a resignation shortly after the resignation is given, is not immune from those circumstances being found to objectively establish that the resignation was not effective.’

The matter was sent back to the original Commissioner for re-hearing.

Commentary

When the matter is re-heard, based on the Full Bench’s opinion above, it is likely that the resignation will become a termination by the employer. The union is likely to seek reinstatement for Mr Gourlay. This could well include the payment of wages from his resignation/termination date of 26 September 2024 until the date of reinstatement – less any earnings.

The Appeal decision essentially states that if an employer becomes aware of special circumstances following an employee’s resignation, they may need to allow the employee to retract their resignation if they attempt to do so. However…..

Two important questions result from this:

What are ‘special circumstances’?
How long after a resignation can an employee resign?

There is no clear guidance on these two points and they will need to be based on the circumstances at the time.

What should employers do when an employee resigns?

Firstly, accept the resignation – unless there are particular reasons the employer wants to change the employee’s mind.

Secondly, where an employee seeks to retract their resignation, and the employer does not want to allow the traction based on the employee’s attitude or work performance, seek professional assistance to determine how the circumstances of the resignation fit into the case law outlined in the decision above.

If you require assistance with resignations or terminations please do not hesitate to contact Michael.

Kind Regards
Michael Schmidt
M 0438 129 728
[email protected]
www.hunteremployeerelations.com.au

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