Date of dismissal isn’t affected by late notice payment

The Fair Work Commission has confirmed that an employer’s delay in making payment in lieu of a notice will not extend the termination date for the purposes of an unfair dismissal claim.

In the matter of a 2024 unfair dismissal case, the employee argued that his dismissal took effect on the date he received his payment in lieu of notice, being two months after he was notified that he was summarily dismissed. The key question for the Commission was whether the employment ended on 8 November 2023, as the company claims, or if it extended to either 7 December or 16 January, as the employee argued. The dismissal date is crucial in unfair dismissal claims because it marks the start of the strict 21-day time limit an employee has to file their claim.

Background

The employee brought an unfair dismissal application against the employer, which objected on the basis that the application was outside the 21-day limit set by the Fair Work Act 2009.

The catalyst for the dismissal was the employer’s concerns that the employee had engaged in misconduct including falling asleep at work, being uncontactable for hours during work time, and misusing the company credit card.

At a disciplinary meeting on 8 November 2023, the employer gave the employee the option to resign or be dismissed. At the end of the meeting, he was directed to return all company property and escorted from the premises. The employee later confirmed that he would not resign and told the employer to ‘proceed as you will’. He collected his personal belongings and did not reattend the office or do any work after this day.

On that same day, the employer sent a letter to the employee informing him that he had been dismissed, effective immediately with four weeks’ pay in lieu of notice. On 15 December 2023, he received a payment, but not the in lieu of notice amount due to a payroll error. The correct payment was made on 16 January 2024.

On 28 December 2023, the employee filed an unfair dismissal application. He initially argued his dismissal took effect on 7 December 2023, later changing it to 16 January 2024 which was the date he received his final payment. The employer maintained the dismissal was effective 8 November 2023.

Decision

The Deputy President found that the employer had notified the employee of his dismissal on 8 November 2023. The intention to terminate was clearly communicated both orally at the meeting, and in the termination letter. The actions on 8 November 2023, including the return of company property, supported the finding of an immediate termination. An email sent by the employee to the employer indicated that he “understood that his employment had been terminated”. Based on the evidence, the Deputy President determined that a reasonable person in the employee’s position would have understood that the employment had ended.

As such, the Deputy President found that the application was lodged out of time.

The employee then made an application for an extension of time to file the claim. He argued that the reason for the delay was confusion about the termination date as well as concerns over payment disputes.

The Deputy President determined that there were no exceptional circumstances warranting an extension of time. The employee was aware of his dismissal on the effective date and had a full 21 days to file the application. Further, “his reluctance to file an application for fear of having payments permanently withheld, whilst understandable, did not ultimately prevent him from making the application before those issues were resolved”.

Key takeaways

The key takeaways for employers are:

• Clear communication – Ensure that the termination of employment is communicated clearly and unambiguously to the employee, both orally and in writing.

  To minimise the risk of misguided unfair dismissal applications, employers should:

  • clearly state the date the termination takes effect (i.e ‘your employment is terminated effective from 8 May 2024. This will be your final day of work’); and
  • clearly state whether wages will be paid in lieu of notice.
• Timeliness of payments – While delays in payments do not extend the termination date, they should be avoided to prevent potential disputes and additional claims. Ensure that final pay (unpaid wages up to date of termination; unused annual leave and long service leave; and payment in lieu of notice) is paid as soon as possible and within seven days of the dismissal.
• Pay in lieu of notice should be made immediately – National Employment Standards under Fair Work Act require that the final pay be paid prior to the termination taking effect. Failure to comply with a National Employment Standard can also attract substantial civil penalties.
• Maintain records – Maintain proper records of performance issues and ensure that employees are given fair warning and opportunities to respond before termination.