A recent decision by the Fair Work Commission (“FWC”) has found that an employee’s continuous service was not broken by her resignation in circumstances where the employee was subsequently offered and accepted alternative employment with the same employer.

The decision demonstrates how an employer’s actions in response to a resignation can impact the efficacy of the resignation. The decision also confirms the distinction between the termination of the contract of employment and the termination of the employment relationship (something we commented on in a recent article which can be accessed here).

Background

The employee had worked for the Aboriginal Sobriety Group Indigenous Corporation for more than two years before resigning over her frustration with the introduction of a new roster. However, the employer did not accept the resignation and instead a manager spoke to the employee in question on the day of the resignation and agreed with the employee that she would take some time off before starting as a casual employee.

After a five-day break, the employee started working for the employer as a casual employee and continued working on that basis for three months before she accepted an offer of full-time employment. Roughly two months later she was dismissed.

The employee challenged the dismissal and sought reinstatement or compensation. The employer challenged the FWC’s jurisdictional capacity to hear the employee’s claim, on the basis that the employee had not completed the minimum employment period of six months and that the period of employment prior to the employee’s resignation should not be counted as it broke continuous employment.

Decision

The FWC framed the legal question as follows: whether the employee’s resignation, and the subsequent five days during which the employee did not work and was not paid, had the effect of “breaking” her service such that there was no continuity between the periods of employment before and after the resignation.

The FWC considered other situations where courts had found “continuous service” in circumstances where, at least on their face, there was a clear break in employment.  The FWC noted that the Supreme Court of South Australia had observed that continuously rostered casual employees had been found to remain in service notwithstanding that each engagement had been a separate casual contract. The Supreme Court had found that gaps in time between such contracts did not have the effect of breaking service “because it is the employment relationship and not the contract that is assessed for continuity.”

Ultimately, the FWC found that although the employment contract had been terminated by the resignation, the employment relationship continued during the hiatus between the resignation and the reengagement. Other factors relevant to the FWC’s finding included:

• that the employer had not immediately moved to pay out the employee’s entitlements on her resignation;
• that while there is no need for an employer to accept an employee’s resignation for that resignation to be effective, the employer had instructed its HR Manager not to accept the resignation; and
• that the employer was offered and accepted new casual employment with the employer on the same day she resigned.

In the FWC’s view, these factors gave rise to a “strong inference” that the employer considered the employment relationship to be continuous. On that basis, the FWC rejected the employer’s jurisdictional challenge, concluding that the employee had been employed by the employer in “continuous service” for at least six months before the dismissal.

Key takeaway

In the majority of cases a resignation will end the employment relationship and there is no legal requirement to accept a resignation for it to take effect. However, where an employee resigns and the employer intends to allow that resignation to bring the employment to an end, the employer should take care not to act in a manner that implies any intention for the employment relationship to continue (for example, withholding any payments owed to the former employee and/or making any representations to the employee that could be interpreted as an offer of employment or otherwise implying that the resignation is not accepted).

See the full decision here.

People + Culture Strategies