Can an Employer reduce an employee’s resignation notice period without it becoming a dismissal?
The Full Bench of the Fair Work Commission says no.
In Terex Australia Pty Ltd v Cameron, an employee resigned and gave three weeks’ notice. The employer immediately ended the employment and paid two weeks’ pay in lieu of the notice period.
So, what was the problem?
The employee had not agreed to end the employment relationship early.
That was enough for the Commission to find the employment ended on the employer’s initiative, converting the resignation to a dismissal under the Fair Work Act 2009 (Cth).
The key takeaway for employers is that resignation with notice does not automatically give an employer the right to bring the employment end date forward.
In these circumstances, unless the employee clearly agrees to an earlier termination date, the employer may be exposing itself to:
- unfair dismissal claims;
- general protections involving dismissal claims; and
- costly litigation.
Importantly, the Commission said it did not matter that the employee suffered no financial loss or appeared “happy” with the arrangement, but rather, what mattered was the absence of mutual agreement regarding the end date.
The decision has already been followed in subsequent cases, reinforcing the growing risk for employers who mishandle resignations.
Practical steps for employers:
- Do not assume payment in lieu solves the problem.
- Get clear written agreement if ending employment earlier than the employee proposed.
- Train HR and managers on how to handle resignations.
- Review employment contracts carefully because many contracts only permit payment in lieu where the employer terminates employment, not where the employee resigns.
This is a timely reminder that even administrative decisions made at the end of employment can create significant risk.
Get in touch to discuss your options with our team.
Disclosure statement: This information is general in nature and does not take into account any individual’s or business’ specific circumstances. You should obtain independent legal advice before making any decisions based on this information. Liability limited by a scheme approved under Professional Standards Legislation.