Samantha Gurrier–Jones v OSM Australia Pty Ltd [2024 FWC 3154] (14 November 2024) is another example of when an employer’s decision to change an employee’s position almost landed it in hot water. Unfortunately for the employer, its decision not to pay a substantial “discretionary” bonus was the critical factor for the FWC to find it repudiated the employee’s Employment Contract.
Facts
Samantha Gurrier-Jones alleged that she was dismissed by her employer, OSM Australia Pty Ltd (OSM) because OSM – (a) did not return her to her pre maternity leave role after she returned from parental leave; and (b) failed to pay a discretionary bonus stated in her Employment Contract.
Ms Gurrier-Jones argued that OSM repudiated her Employment Agreement including because OSM had presented her with a different role from that she undertook prior to taking maternity leave. Ms Gurrier-Jones also argued that OSM repudiated her Employment Contract by not paying her a bonus. OSM contended that the new role “was only proposed” to be undertaken by Ms Gurrier-Jones (and did not come into effect) and in any event was not materially different to her usual role.
Deputy President O’Keeffe accepted OSM’s argument that any change to the new role would not amount to a repudiation (there had not been any change in reporting lines, seniority and remuneration was essentially the same). There was no significant change in duties. Also, there had only been a proposal that the employee undertake a new role which had not come into effect.
As to the bonus claim however, the Commissioner accepted Ms Gurrier-Jones’ argument that OSM was obliged to consider her bonus even if it had been termed as “discretionary” in her Employment Agreement, finding that the employer must generally not act capriciously, arbitrarily or unreasonably when considering whether a bonus is paid. The Commissioner followed previous authority that their discretion must be “exercised honestly and comfortably with the purposes of the contract ……” and that “what is not permitted is an unreasonable, arbitrary refusal to pay anything come what may”.[1]
OSM’s failure to call the relevant decision maker whose job was to assess whether the bonus was payable, was critical. OSM could not rebut Ms Gurrier-Jones’ argument that it had properly considered the bonus against her performance.
The failure to pay the bonus represented an intention by the employer to no longer be bound by their Employment Contract with the employee, or to perform a substantial part of it, which amounted to a repudiation and therefore a dismissal.
Ms Garrier-Jones was entitled to accept the dismissal and commence a General Protection claim alleging a dismissal took place.
Take outs
It is important that when alleging repudiation, careful consideration of the facts needs to be undertaken by an employee or employer. In this case, the employee’s lawyers received some criticism that they engaged in and “all or nothing case” about whether the employee had a right to accept the repudiation based on a view of the Employment Agreement. If their view of what amounted to a repudiation was wrong, that is, for example that the Commission ultimately found there was not a substantial change in the employment arrangements, then effectively, an Applicant would have been left resigning without any recourse. Fortunately for Ms Gurrier-Jones, she was able to rely on OSM’s failure to consider and pay her bonus which amounted to the repudiation.
An employer should not simply hide behind what may be terms as “discretionary bonuses” in Employment Agreements and should assess bonuses against performance criteria before rejecting them. Careful advice should be obtained about this matter before any decision is made not to pay any bonus.
Significant changes in job positions may amount to a repudiation of an Employment Contract entitling an employee to accept such conduct as amounting to a dismissal and therefore a recourse to rights such as unfair dismissal or general protection claims.[2]
[1] See Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357
[2] See also the meaning of “dismissed” under s.386(2)(c) of the Fair Work Act 2009 (Cth).