Reputational Harm is Not Always a Reason for Immediate Termination

Conduct that creates potential reputational harm can place employers in a difficult position. However, a recent Fair Work Commission decision shows that the way an employer responds can be just as important as the employee’s conduct.  

 The Resignation Email  

An employee resigned from her role as a specialist ICT technician and copied several client contacts into an email to her employer, explaining why she was leaving.1 In that email, the employee stated that she had “spent yet another month with no money” and that the role was “no longer sustainable for either [her] mental health or physical health”. The employee also offered to work through her notice period to limit the impact on the clients.  

 The Employer’s Response  

The employer took issue with both the content of the email and the fact that it had been sent to client contacts. In response, the employer stated that the email was “extremely disappointing” and that the employee’s conduct was “completely unacceptable”, leaving it with “no choice but to stand [her] down effective immediately”. The employer also alleged that the employee had attempted to defame the business “directly to its clients with information that simply is not true and not accurate”. 

The employer relied on a clause in the employment agreement which required the employee not to communicate with any person in relation to the services she was performing without the employer’s prior written consent. The employer argued that the employee’s email was unauthorised, inappropriate and outside the scope of what should have been communicated to clients.  

 Reputational Concern was not Enough 

However, the Commission did not accept that the clause gave the employer a complete answer. The Commission decided that the prohibition was “potentially very broad if it is to apply to all communications” and concluded that the clause had to be considered in its totality and in context. On that basis, the Commission did not accept that every communication required prior written consent.  

That did not mean the employee’s conduct was appropriate. The Commission accepted that the employee’s wide circulation of the reasons for her resignation was unnecessary and could have caused embarrassment to the employer and its commercial interests. It also accepted that it was the employer’s prerogative to notify clients of the resignation and reassure them that services would continue. 

 Why the “Stand Down” was Treated as a Dismissal 

Although the resignation email was inappropriate, the Commission found that it was not sufficiently serious to constitute a valid reason for dismissal related to the employee’s capacity or conduct, and rejected the employer’s characterization as a mere “stand down”. The Commission found that the employee had been dismissed as the employer no longer wished to have the employee represent the business, directed her to return company assets and later recorded that the employee’s notice period had been “waived” due to her actions”.  

 Unfair Dismissal Finding  

In considering whether the dismissal was harsh, unjust or unreasonable, the Commission had regard to the absence of a valid reason for dismissal and an opportunity to respond before the employer made his decision. The Commission also took into account that the employee had worked for the employer for 5 years and there was no suggestion of performance, conduct or disciplinary issues.  

Ultimately, the Commission found that the dismissal was unfair – the employee had been prepared to serve out a notice period, but the employer brought forward the end of the employment relationship. 

 Key Takeaways  

This decision is a useful reminder that potential reputational harm does not necessarily justify an immediate exit. Even where an employee’s conduct is inappropriate, embarrassing or commercially concerning, employers should ensure that any response is legally sound, procedurally fair and appropriate.  

Be Careful before Bringing Forward a Resignation Date  

If an employee has resigned and offered to work out their notice period, ending their employment earlier may amount to a dismissal at the employer’s initiative.  

Do Not Rely Heavily on Broad Communication Clauses  

A broad contractual clause restricting employee communications may not be interpreted as prohibiting every communication with a client or stakeholder. Employers should assess the clause in context before relying on it.  

Procedural Fairness Still Matters after Resignation  

If an employer is considering ending employment early because of alleged misconduct, the employee should usually be told the concern and given an opportunity to respond. A resignation does not remove the need for a fair process.  

This article is general in nature and is not legal advice. If you need help dealing with unfair dismissal matters or require assistance with updating your workplace contracts, procedures and policies, or other employment law matters, Voice Lawyers can assist you.  

We help people and businesses navigate the complexities of the Fair Work Act and workplace laws with confident and practical advice. You can contact us at office@voicelawyers, give us a call at 02 9261 1954 or use the link on our website to book a consultation to speak with one of our lawyers.  

By Kayte Lewis and Ee-Shuen Goh