THE Fair Work Commission has warned that mutually agreed termination can still constitute unfair dismissal, after ruling in favour of an applicant who agreed to his employer’s severance package offered after suffering a heart condition.

Nine days after suffering a heart condition while at work, the former employee of safety product group Sayfa Systems was provided with a letter stipulating the award of a $25,000 severance package conditional on his agreement that the termination was mutual.

The letter said the company had ‘given careful consideration to [the employee’s] heart condition’s symptoms and felt that ‘it would be in their mutual interest for [the employee] to get work that is less strenuous and not likely to cause a repeat of the problem’.

The employer also sought conditions that the employee was not to work for a competitor for a period of two years and that signing the letter indicated the termination to have occurred by mutual agreement.

The former employee went on to file an unfair dismissal claim on grounds that termination occurred as a result of physical disability, contravening section 351 of the Fair Work Act 2009.

Heard in the Federal Circuit Court, Judge Jarrett dismissed the employer’s argument that it had no case to answer for due to the mutual nature of the termination. Instead, Judge Jarrett said:

“It is clear to me from the evidence of the applicant that the termination of his employment was seen by him as a fait accompli. He had no choice. He was presented with a letter in the course of the meeting which he was asked to sign. It is certainly the case that he may have refused to sign the letter, but his evidence was that if he did so, he thought he would get nothing.”

Additionally, Judge Jarrett described the employer as taking adverse action against the worker due to physical disability.

“At the time when the termination took place, no final information about the nature or extent of the worker’s heart condition, but the letter makes it entirely clear that that was the reason that the applicant was no longer to be working for the respondent,” he said.

Judge Jarrett ordered the employer to pay the former an additional $5,500 in compensation to the employee for his dismissal.

Click here to read the decision in full.

Implications for Employers

This case is an important decision for resource employers as it outlines a component of dismissal infrequently broached by the Fair Work system.

The key outcome AMMA members should take is that ‘termination by mutual agreement’ still constitutes termination, and thus, is subject to potential disputation associated with dismissal procedures.

An added layer of complexity in this case comes from the influence of employee illness or physical disability. Though Judge Jarrett agreed the employer acted in good faith by providing personal leave for recovery as required by the worker, he also added that it was clear the risk of continued illness underpinned the employer’s decision to terminate the employee’s contract.

This, he said, constituted discrimination against a physical disability, and AMMA members are encouraged to be aware of the link that can exist between illnesses and disabilities.

To get advice and information about dismissal in your organisation, contact your local AMMA office and speak to one of our workplace relations experts. AMMA’s Training & Development team can also provide your leaders with the training they need to minimise workplace conflict and oversee termination processes.

Call 1800 891 662 for more information.