It is not unusual for employers to want to have a frank discussion with an employee when the relationship is not working out, seeking to agree to an exit strategy. This is often referred to as a “fire side chat”. However, these discussions must be carefully considered and planned because if the employee is not receptive, the employee can claim that the discussion created a situation forcing them to resign.
In Jarouche v Lipa Pharmaceuticals Ltd [2023] FWC 493, the employer was unsuccessful in its jurisdictional objection that the employee had resigned from her employment.
The employee was employed in the position of Chief of Quality. The employer held concerns in relation to the employee’s performance and the Chief Executive Officer (CEO) met with her in June and July 2022. By September 2022, the CEO had lost confidence in the employee’s ability to perform her role.
The CEO met with the employee on 29 September 2022 and there was a discussion about the performance concerns. The CEO sought to discuss with the employee about how to position her exit from the business and one option proposed that the employee resign to coincide with her upcoming surgery. The discussion ended with the CEO inviting the employee to “work through the detail of your resignation over the coming days.”
The CEO and the employee thereafter engaged in discussions over phone and email and events transpired as follows:
The employee initiated general protections proceedings in the Fair Work Commission. The employer lodged a jurisdictional objection, maintaining that the employee resigned from her employment and was not dismissed.
The employee submitted that her employment was terminated at the employer’s initiative based on the CEO’s conduct. In the alternative, she submitted that if she resigned, she was forced to do so because of the conduct or course of conduct engaged in by the employer and was therefore “dismissed” per section 386(1)(b) of the Fair Work Act 2009 (Cth) (FW Act).
The FWC found that the employee’s employment was not terminated by the employer – the employer’s action did not terminate the employment contract. In relation to the CEO’s discussion with the employee, the FWC stated that this was blunt and unwelcome, but was not of itself, termination of the employee’s employment. The FWC considered the CEO’s discussion was with a senior employee about a proposed parting of the ways and noted that the employee continued to be employed.
The FWC also found that it was the employee’s resignation which brought about the end of the employment, however, it was satisfied that the employee was forced to resign as she had no effective or real choice but to resign.
The FWC reached this conclusion based on the conduct of the employer:
The FWC dismissed the jurisdictional objection, allowing the employee to proceed with her application.
It is important that any “fireside chat” is conducted on the basis that the employee has options - for example resignation or commencement of a disciplinary process.
Further, it is also important to ensure that where there are negotiations, all terms are agreed and finalised (whether in a Deed of Release or otherwise) before any action is taken such as announcements to the business, provision of Statement of Service or payment of termination payments.
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