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A recent decision by the Fair Work Commission (FWC) has determined that provisions concerning abandonment of employment should be removed from the six modern awards where such provisions still exist.[1]

The decision was handed down as part of the four-yearly review of modern awards, with FWC president Iain Ross (in February 2017) referring the task of reviewing abandonment clauses to the same Full Bench which decided the case of Bienias v Iplex Pipelines Australia Pty Limited [2017] FWCFB 38 (Iplex) one month earlier.[2]

The Full Bench in Iplex held that the entirety of cl.21 (Abandonment of Employment) of the Manufacturing and Associated Industries and Occupations Award 2010 (the award) was not a term that was either permitted or required to be in a modern award and consequently had no effect under the Fair Work Act 2009 (Cth) (FW Act).

In its review, the Full Bench concluded that the relevant provisions of each of the six awards should be deleted, however, that this would not happen until a standard replacement provision was determined. To this end, interested parties were invited to file proposals for a replacement provision, having regard to the reasons for the decision.

Background

An employee is said to have abandoned their employment when it is reasonable for the employer to conclude that the employee no longer wishes to return to work. This may arise when an employee fails to turn up to work for an extended period without providing a valid excuse.

The FW Act does not expressly deal with abandonment of employment and confusion generally arises when an employer seeks to claim that an employment contract is automatically terminated in such instances.

While it may be said that an employee who abandons their employment has effectively repudiated the employment contract, at common law termination will not occur without the employer accepting the repudiation by electing to terminate the employment contract.

The facts of Iplex

Although abandonment is a form of termination by agreement, it was previously thought that modern awards containing an abandonment provision operated such that, when the employee failed to attend work for a specified period, the employment was ended without the employer having to act.

Indeed, senior deputy president O'Callaghan came to this conclusion at first instance in Iplex.[3] In this case the employee, Mr Bienias, had been employed by Iplex for more than 20 years and was covered by the award. In May 2016, Mr Bienias failed to show up to work for two weeks and failed to provide his employer with the reason for his absence.

Mr Bienias received a letter from Iplex stating "...we have determined that you have abandoned your employment with Iplex Pipelines and, consequently, your employment with the company is terminated with effect on 13 May 2016, being the last shift you worked for the company". Mr Bienias subsequently filed an unfair dismissal claim against Iplex.

The first issue to be considered by the FWC was whether the employee had been dismissed within the meaning of s386(1)(a) of the FW Act – that is, whether the employee's employment had been terminated at the initiative of the employer. To determine this, the senior deputy president found it necessary to consider the specific provisions of cl.21 of the award and its effect. The senior deputy president found that:[4]

"Clause 21.1 of the Award must be read on the basis that an absence, without the consent of the employer and without notification to the employer, for a continuous period exceeding three working days, creates a presumption that the employee has abandoned his or her employment..."

Further, concerning cl.21.2 of the award, it was held that:[5]

"... this provision must be read in the context that it specifies that a failure to notify the employer, or obtain the employer's consent to an absence within 14 days of the employee's last attendance at work means that the employee is regarded or judged as having abandoned their employment. That abandonment must be regarded as an employment termination on the basis that it ends the employment relationship."

The senior deputy president concluded – despite having reservations about the potential ramifications created by such a strict interpretation of the provision, such as in instances in which an individual is incapacitated and unable to communicate with the employer for more than 14 days – that he was unable to apply the clause in any other manner.

Mr Bienias appealed the decision on three grounds. Firstly, he contended that the senior deputy president misconstrued or misapplied cl.21 of the award by concluding that the clause operated to automatically terminate the employment. Apart from this construction point, Mr Bienias advanced two further grounds of appeal:

  • cl.21 of the award is neither a permitted nor required term of a modern award and that by reason of s137 of the FW Act, the term has no effect, and
  • cl.21 of the award is an objectionable term because it has the effect of requiring or permitting a dismissal in contravention of the general protections provisions, specifically s352 of the FW Act, which prohibits an employer for dismissing an employee because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the Fair Work Regulations 2009 (Cth).

The abandonment clause

The Full Bench upheld the first ground of appeal, finding that textual and contextual considerations inferred the award did not have the effect of automatically terminating the employment.

On cl.21.1 of the award, the Full Bench considered that the provision did not refer to termination of employment, only that there was evidence of abandonment when a worker had been absent for a continuous period exceeding three working days. Clause 21.2 was found to be no more than a deeming provision that the employee had abandoned their employment.

Importantly, it was determined that the employer must take the positive step of terminating the employment and a failure to do so will mean the employment continues. The Full Bench considered it would be "extraordinary" for the clause to operate such that the wishes of the employer were not taken into account.

Therefore, it was held the abandonment clause did not automatically terminate the employment, but rather the onus was on Iplex to terminate the employment on their own initiative. The Full Bench noted that the conduct of Iplex, in its correspondence to Mr Bienias and the payment to him of five weeks' pay in lieu of notice, was consistent with this conclusion.

The Full Bench found that the entirety of the abandonment clause was not a term that may be included in modern awards under the FW Act. In particular, the clause could not be said to be about any of the subject matters identified in s139(1). Further, the clause was not a term that must be included in modern awards as per s136 of the Act.

Conclusion

There is often confusion for employers surrounding abandonment of employment and the various factors that must be considered before action should be taken.

Given the significant legal risks surrounding this form of termination, including potential unfair dismissal or general protections claims, it is no surprise the Full Bench considered that it would be helpful to include a provision identifying procedures to be followed in the event an employee is absent from duty for an unexplained extended period.

While a standard provision to replace the current abandonment provisions is yet to be determined, it is likely that such a provision will primarily concern the steps employers might take to consult with employees before taking action.


This article was originally published in the April 2018 issue of Proctor and is republished here with their kind permission. Click here to read the article.

Notes

[1]               Abandonment of Employment [2018] FWCFB 139.

[2]               4 yearly review of modern awards – Abandonment of employment [2017] FWC 669.

[3]              Bienias v Iplex Pipelines Australia Pty Limited T/A Iplex Pipelines Australia [2016] FWC 6624.

[4]              Ibid [73].

[5]              Ibid [74].

 

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