The recent decision of Whitfield v Master Tree Ninja (Whitfield) is a prime example of how an employee’s demotion can amount to a dismissal.
Master Tree Ninja (Respondent) is a small business in Adelaide providing tree lopping and clearing services. Mr Whitfield (Applicant) was employed from December 2016 on a casual basis, and from March 2018 as a full-time Leading Hand.
As a Leading Hand, Mr Whitfield was responsible for “organising the day’s crew, overseeing the day’s job (or jobs), ensuring all necessary vehicles and equipment were available and in good condition and attending to the refueling, servicing and repair of vehicles and equipment in-between jobs”.
Mr Currie, the owner of Master Tree Ninja, became concerned with Mr Whitfield’s performance as Leading Hand. In particular, he felt that Mr Whitfield was not adequately maintaining and servicing company equipment, and that he was irresponsibly using fuel despite increasing fuel costs (among other things).
Was he dismissed?
On 26 July 2018, Mr Currie and Mr Whitfield had a heated conversation in Mr Currie’s office. As expected, both versions of the conversation were very different, and the Fair Work Commission was required to determine what actually occurred.
The Commission found that Mr Currie told Mr Whitfield that his leadership duties would be removed, however he would remain employed full-time. Mr Whitfield then stood up and placed his credit card and mobile phone on the table. He then left the premises abruptly, believing that he had just been dismissed.
The meeting appears to have created misunderstanding for both gentlemen. Mr Whitfield believed that he had been dismissed. On the other hand, Mr Currie believed that Mr Whitfield had not been dismissed from employment, but had instead his duties had been reduced by removing leadership responsibility.
Ultimately, the Commission found that Mr Whitfield was dismissed. Section 386 of the Fair Work Act indicates when a person has been dismissed. In effect, it clarifies that a person may be dismissed if the person was demoted, the demotion involves a significant reduction in remuneration or duties, and the person remains employed. On that basis, the Commission found that the demotion was a significant reduction in Mr Whitfield’s duties and he was dismissed.
The Commission found that “unilaterally removing a contractual right to be employed as a leading hand was the removal of a fundamental right under [Mr Whitfield’s] contract of employment. A leading hand, even in a small crew, has a materially enhanced status, role and responsibility. It had been, since March 2018, the new description of Mr Whitfield’s employment not just in title but in substance.
What remedy did Mr Whitfield receive?
Master Tree Ninja was ordered to pay Mr Whitfield 4 weeks’ salary, however this was reduced to 2 weeks for reasons including the following:
- Master Tree Ninja’s business was not growing sustainably and Mr Whitfield’s employment might have become redundant if not for his dismissal;
- There was a possibility that Mr Whitfield could have resigned during that 4-week period; and
- Although there was a reduction in his duties, Mr Whitfield could have continued to work without any loss of pay. This means he would not have incurred any loss as a result of the dismissal (other than the demotion from leadership duties).
What lessons should employers take from Whitfield?
Employers should seek advice if considering demoting an employee. A unilateral decision to vary the employment contract can result in that employee’s dismissal, as was the case in Whitfield. It is also clear that importance is placed on the specific duties the employee performs, not just the amount of remuneration. If a demotion occurs and even if the remuneration stays the same, it can still be a dismissal, depending on the change to the employee’s job. Lastly, employers should confirm decisions in writing to an employee so that there is no room for misunderstanding.
If you have any employment-related issues or queries, contact the experienced employment lawyers at Atkinson Vinden Lawyers.