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Employees can repudiate their contract – and for employers, it’s not dismissal

A recent ruling by the Fair Work Commission has brought the issue of repudiation into the spotlight.

The ruling serves as a useful reminder that employers have the option to accept an employee’s repudiation when an employee abandons employment, as opposed to proceeding with dismissal.

The case that brought this issue to attention was Muhammad Ali Quereshi v Spotless Services Australia Ltd 2023 (FWC 2411). The applicant worked as a full-time security guard for Spotless when he was, unbeknownst to his employer, arrested by South Australian Police and remanded in custody for 23 days before the charges were dropped and he was released.

While in custody, he was not allowed to access the internet or his mobile phone and was only permitted to speak with ‘nominated’ people. Because of this situation, he was unable to contact his employer to make them aware of what was going on.

Respondent asks employee to ‘show cause’

Spotless attempted to contact the staff member each time he didn’t show up for a shift, and after failing to attend five rostered shifts, a show cause letter was sent. This letter advised that his failure to report for work or explain his absence may be considered abandonment of employment and would lead to termination. 

After missing a sixth shift, Spotless let him know his conduct was considered a repudiation of his employment contract and, as such, Spotless accepted the repudiation.

When he was released from custody, the employee made multiple attempts to contact his former employer to explain his absence and ask for reinstatement, but this was met with an unsympathetic response from Spotless, which simply resent the letter stating he had repudiated his employment.

Repudiation of a contract is determined objectively

The former employee brought an unfair dismissal claim against Spotless, but the Fair Work Commission found Spotless had discharged the onus of establishing the former employee was not ‘dismissed’ within the meaning of section 386(1)(a) of the Fair Work Act 2009 (Cth).

While the FWC accepted the former employee did not mean to miss work and made reasonable attempts when in remand to notify his employer of the situation, the FWC also found the question of whether there has been a repudiation of employment contract is determined objectively.

At the heart of the FWC’s ruling is the fact it’s unnecessary to show a subjective intention to repudiate. Simply failing to attend multiple shifts without approval, prior warning or a timely explanation showed the former employee’s inability – although unintentional – to uphold substantial performance of the employment contract.

A ‘regrettable’ situation

The FWC described the case as both regrettable and fortuitously rare, as neither the employer nor the former employee was at fault. Spotless’ response of reissuing correspondence was found by the FWC to be ‘harsh’, however as it happened after employment had ceased, it was irrelevant to the case.

The FWC also stated it would be consistent with public policy for corrective services to find out if a person taken into custody needed assistance to inform their employer about their situation. The importance of employers making decisions about ending employment with “as accurate and timely information as possible” was also highlighted.

The key steps for employers when an employee has repeatedly failed to attend work without explanation include:

Alerting the employee to their obligation to attend work 

Taking reasonable steps to find out why the employee has not attended work

Providing an opportunity, otherwise known as ‘show cause,’ to explain their absence.

Having taken those steps, if the employer reasonably forms the view that the employee has abandoned their employment and elects to accept the repudiation, the employer should notify the employee of the acceptance of the repudiation.

It’s also important for employers to know that acceptance of repudiation does not constitute ‘dismissal’ at the initiative of the employer for the purposes of the unfair dismissal protections under the Fair Work Act.

Finally, it’s unnecessary to prove, as the Spotless case demonstrates, that an employee subjectively intended to abandon their employment.

Disclaimer

The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Lara Hues, Special Counsel, and James Sofianos, Graduate, Holding Redlich

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