An employer has failed to prove it had a legal right to demote a manager accused of misconduct, with the Fair Work Commission finding this disciplinary action repudiated her employment contract.
Knowmore Legal Service demoted the support and trauma informed practice manager to social worker/counsellor in April this year, after receiving misconduct allegations against her.
The employer informed her that her demotion would last for six months and her salary would drop from $113k to $96k. She has not attended work since.
The employee’s lawyer subsequently wrote to the employer alleging the demotion was a dismissal, and later sought payment of her annual and long-service leave entitlements, as well as her employment records. She then made a general protections claim.
The employer objected on the basis the employee wasn’t dismissed; it considered she was still employed and on leave without pay.
Alternatively, it said that she had consented to the demotion, which had varied her employment contract, as she had wanted to continue her employment in “whatever role [it] saw fit”.
As such, it argued, the employee had “implicitly acknowledged” its right to demote her.
And it said that if her contract hadn’t been varied, it was nonetheless entitled to direct her to perform other duties from time to time to suit organisational requirements.
But the employee denied agreeing to the demotion, and argued that it was “significant in terms of role and financial reduction” and was “potentially permanent”, which “strongly” pointed to a conclusion that the employer had repudiated her contract.
No evidence employee consented to pay cut
Deputy President Judith Wright said the employment contract permitted the employer to direct the employee to perform other duties that were “broadly consistent” with her management role from time to time, but it did not allow it to vary her pay without her written consent.
And she found no evidence the employee had “explicitly or implicitly” agreed to a pay reduction.
She acknowledged that the employer’s ‘managing misconduct’ policy allowed it to change or add to an employee’s role following a disciplinary process, however it had to do so in accordance with its legal obligations.
In this case, she said, the employer sought to both amend the employee’s duties and reduce her pay, yet there was no reference to the latter in either its enterprise agreement or the misconduct policy. If a pay reduction as a disciplinary outcome was authorised by these instruments, “I would expect this to be explicitly stated”, she said.
Finding the employee’s demotion was not authorised by her employment contract or a governing instrument, Deputy President Wright ruled that the employer had repudiated her contract, and the employee had accepted this repudiation.
The employee was therefore dismissed, and was cleared to pursue her general protections claim, she concluded.