Andrew Douglas: And this is when is the resignation or the resignation. Now this was the CEO of Tabcorp. So this huge publicly listed organisation, he was alleged to have said something and can I say what he was alleged to have said to the extent that it’s available was a fairly low level. But it was inappropriate comment in respect to a woman who is part of the regulator, the gambling regulator.

Tabcorp undertook an investigation and satisfied itself that he said these things. At no stage was he part of that investigation. He received an email requiring to attend a meeting, which he attended and found three directors sitting in front of him. At the same time, the lawyers for the business were sitting in another room. He was told that.

It was made clear to him that he had a very limited period of time, only hours to make a decision as to what he was going to do. He inquired in the possibility of apologies, he said he didn’t think he said it, it doesn’t sound like him. He inquired about resignation and they said, well, if you don’t do it by three o’clock, we’re going to terminate you by four o’clock. So he resigned.

Now that’s a very shortened version of everything that occurred. But the argument here again, is a jurisdictional argument, which is did he resign and therefore it was a termination of his will and therefore not covered by the Fair Work Act or was this a termination that he had no other choice whatsoever to resign and therefore was a termination by the company. And what the court held in these circumstances was a termination by the company.

And it said that because the description of why Tabcorp did it, that it was protecting its values and had reporting obligations and required urgency was held to be the nonsense that it absolutely was. This was a deliberate ploy of placing pressure to get a particular outcome leading to termination of this employee. And therefore it was unquestionably constructive dismissal.

But for the main topic, what we’re talking about is, well, when does somebody resign is it a resignation? We’ve already had one case today, haven’t we? We’ve already had the case. The person who resigned and they resigned because their contract didn’t actually resign. That’s not quite right, they terminated, they accepted their termination of employment and left their employment. Okay, ’cause that was repudiation.

They accepted repudiation. Here’s a different thing. So it’s not a repudiation, but people are placed in a choice where there is no other reasonable choice available to them. And this happens more often than you’d understand, but it particularly happens in flawed investigative processes like this or where a predetermination is being made about getting someone out of the business.

And there’s that informal discussion that says, look, you know, we’ve reached the view that this is the misconduct or these are the performance issues. They’re very serious issues to us. We’re left with very little choice where to go. But there is a face saving choice for you. There’s one that protects your reputation and also the organisation. If you do that, willing to read a non-disclosure document and everything would be rosy and your pay paid out or your entitlements.

And even in this case, they weren’t clear, deliberately unclear about what would happen if his employment was terminated in relation to a whole series of entitlements. There was enormous pressure sitting on this CEO to make a decision that protected his financial future and his personal brand. Again, why am I raising these cases with you? Because it’s so common for us to have these conversations.

I’m unhappy with your conduct. I’m unhappy with your performance. I don’t want to take you down the hard route. I don’t want to manage your performance. You know, at the end of the day on the evidence that we hold, it’s likely we’re going to terminate your employment. Please don’t force me to do that. There’s choices that you can make that is constructed dismissal any day of the week.

So interesting case, isn’t it strange that such a large organisation who actually engaged two sets of lawyers to actually achieve this flawed outcome and didn’t even speak their in-house counsel would muck it up so badly. But it is a good lesson for us all because what they did was a level above the usual constructive dismissal. It was, well it wasn’t any basis. And if you read what the commissioner says, outrageous and done for a very clear purpose, but less than that is still constructive dismissal. Okay, why don’t we now look at the case study for the day.

Nancy was an operation manager and was well regarded within her company StackPak cardboard and paper manufacturer. Over the last 12 years, Nancy, like other senior managers, received a short term incentive for production and waste control. Each time it was paid, it was made clear that it was entirely discretionary and not included in her contract. The formula for the STI was essentially the same each year and was discussed at the quarterly budget meetings to encourage performance. In other words, throughout a year they kept benchmarking how a person was going to let ‘them know. Hmm, you’re on track for your STI. Let’s have the next part.

Operations managers relied on the STI to earn a significant portion of their income. It was often over a hundred thousand dollars, which made their poultry take on wage of $165,000 more attractive, competitors paid low $200,000 rate. So above that, so Nancy’s high performance over the last 12 years had kept her ahead of the competition. When she was considering to leave and to work at Opal in New Zealand, at the end of the financial year, Gorin, the CEO called her and said that 24-25 would be a big year and she could easily earn a total remuneration of $300,000.

The conversation took place in May, 2024 and Nancy decided decline the offer from Opal relying on what Gorin had said. In the 2023 24 financial year based on previous years, she would’ve been entitled to 120,000 STI. The STI was typically awarded two clear months after the sign off for the June 30 accounts. That was usually in mid-October. On October 2nd, 2024, the CEO held a town hall meeting of all senior managers across Australia via Teams.

He explained that orders had been down over the last six months, interest rates had risen, and to prevent lines closing, there would need to be some budget cuts. He identified the STIs as an issue that was under consideration for review. Nancy was a single mother with two children in private school. She had relied on the bonus and knew what she could expect to get based on her last quarterly review. She wrote to Gorin asking him to guarantee her STI. He responded studying there will be no special treatment.

Nancy began to get stressed. Her hair started to fall out, she couldn’t sleep, and she required medication for anxiety. She wrote again to Gorin explaining the impact on her, but he sent a brief sharp note telling her that it was entirely discretionary and that she couldn’t, she should stop being so melodramatic. Two days later the national head of operations visited Nancy for a health check and suggested she stepped down to a lower role until she felt more comfortable. He also informed her there would be no STI. Nancy sent a letter from her lawyer late that night accepting the refusal of the STI and suggestion demotion as a repudiation and stated that she would not be returning to work.

So the questions are, is there a safety issue and who could be liable and what for? Well, were there any psychological hazards? While there was certainly a lack of clarity and uncertainty, there was a change in the reward and recognition. There was some conduct of Gorin that was unhelpful and destructive and there was the final behaviour around the demotion and the refusal. So unquestionably there were psychological hazards. They are aggregational, they all come together. They were quite profound. And although it is unlikely that a regulator like WorkSafe would prosecute, they could and if they did they could prosecute Gorin and the company for it the like of prosecution less than 5%.

The second question is could she have successfully brought a worker’s compensation claim, particularly prior to the termination? And the answer is it would be a lay down for her. She could not fail it. None of this was good performance management of any sort. The test is her subjective experience of the stresses that were placed upon her, the claim would’ve been accepted.

Number three, is there a discrimination claim? Well, what do you think she’s put on notice that it’s affecting her and it’s damaging her, and their action was to seek to step her down to a lower role. So a substantial part of the decision that was made related to the protected attribute of her psychological health. So I think, yeah, there’s a good discrimination claim.

Next question. Was the STI an implied term or contract or based on an estoppel, an actual fact? Was it an actual term through conduct? The answer sort of doesn’t matter. An implied term is, goes without saying. The fact is that over a 12 year period it’d regularly be paid, it had a method of calculation people had been taught to rely upon it. So it is more likely an actual term of the contract. It certainly could be an implied term. And if all else fails, he would be unjust to deny that entitlement under estoppel. So yes, it is something that’s actionable and it is something that would entitle you to say, my claim is my employment has been repudiated. I accept it.

Let’s go to the next one. Did she resign or was she right to allege they repudiated contract. And we’ve answered that, haven’t we? The action that they did, the demotion that related to a protected attribute and the failure of pay the STI, irrespective being called discretionary based on the conduct and the manner in which it was relied upon throughout the year and over many years means it was an expressed term of the contract, I believe, but if not sufficiently a term of the contract that it goes very hard of it therefore is repudiatory in nature and yes, she was safe in accepting it.

Where would she bring her claim and what would it be? Well, in the Fair Work Commission should have a general protections claim, wouldn’t she? And it’d be very, very easy to prove the general protections claim. So there’s a tick there. There’s a workplace, right? There’s safety, there is her state of health. So that’s good. Common law courts for repudiation. Yeah, I mean there’s a breach of claim. The repudiation has a different damages element because it has not only the actual damage suffered. So what is the lost earning now? What loss has been suffered as a result of it? It has general damages, which is for pain, suffering, and loss of momentum. A claim like this would be well over a hundred thousand dollars. But it also has special damages which look towards medical expenses and future financial loss.

This is a claim that the common law courts could easily tick over a million dollars. I think that’s sort of worth knowing, isn’t it? And the other part is of course they can bring claims and discrimination and discrimination tribunal once again in discrimination, not a hard claim to amount. It was brought under the federal legislation as opportunities to get costs and leveraging it as well. Again, probably a claim of close to four to 500,000 bucks. So if you are a gambling person, you’d do Commonwealth Court.

If you just wanted safety, you’d go through the Fair Work Commission and federal court and general protections, you’d probably end up with three to $400,000 discrimination, about 500 but up to a million for repudiation. Do you see how big this issue is? So why are we talking about this? How often do people regularly pay Christmas bonuses or are the bonus and say purely discretionary. But every year people budget for it and every year there’s discussions about, yeah look we’re having not a bad year, no problems this year, and people keep saying and doing it. Can you just understand what is the impact?

Now last part of this is Gorin said in 2024 when she was thinking of going to April in New Zealand, look we’re having a great year, you could earn more than $300,000. So was that a representation made by Gorin? Absolutely, at the time of making that representation, was the representation untrue? Well, based on what he subsequently said about the problems in the business, it would be deemed to be untrue. Did she rely upon that? Yes she did. You seeing where we’re going now, did she rely upon it to a detriment? In other words, has she suffered loss as a result of it? Yes she has so under competition law, she’s got a misleading inceptive conduct claim.

Now what sort of damages would be in that? Well this is a really interesting case because competition cases, particularly when they look at losses, again, look at predictive loss going forward in the future. So you mightn’t have the same general damages benefit you have, but the loss of the role at Opal, you may be able to demonstrate that there is a loss of opportunity for future roles at the same level by her loss of job and mental health issues that happened, failure to be reemployed, all those things means not only would she have the lost earnings she had at a current level, but with the expectation that over time that would go up. She’s missed that opportunity.

So again, that risk is very real and again is at least as much in damages as a discrimination claim. And if you rolled that into the Commonwealth claim, it would broaden and deepen that Commonwealth claim. So your claim may go well over a million dollars. So interesting, interesting set of facts to note.

I’m really pleased the young guys all got together and the team put this all together for me ’cause I’ve been out studying, actually, I’ve been out doing work learning new tricks so that we can do much more facilitation media work as a business for businesses. And I’m quite excited by what I’ve been doing over the last four to five weeks.

But to my team, thank you very much. And to all of you, I think we just move on to our last slide now, which is to say thank you very much and can you give me a bit of a thumbs up and we’ll see you next week.

Cheers.