Australia: Termination of employment - not so mutual?

Last Updated: 14 May 2015
Article by Tim Trezise

In a recent general protections' case (Heriot v Sayfa Systems), an employee's dismissal by way of a mutual termination was held to be adverse action against the employee.


The employee fell ill at work, due to an undisclosed heart condition. He was absent from his workplace for nine days whilst he received medical treatment. On his immediate return to work, two managers of the employer met with the employee and terminated the employee's employment by way of a letter offering a payment and an opportunity to resign. It was described as a mutual termination of the employment relationship.

The employee signed his acceptance of the proposal put to him in the letter and subsequently commenced a general protection's claim against the employer.

The employee argued that he had no choice other than to accept this proposal. He was handed a letter confirming the terms during the meeting to sign. He believed that if he did not sign the letter, he would receive no payment.

The employer argued that the employment came to an end by mutual agreement and therefore no adverse action took place against the employee.

The findings

The Judge found that the conclusion of the employee's employment was in fact a fait accompli. He accepted that the employee believed that if he did not sign the already prepared letter, he would receive nothing by way of payment from the employer.

The content of the letter makes it clear that the employer had formed a view to terminate the employment prior to the employee finding out from a medical specialist the nature and possible impact of his heart condition upon his ability to fulfil the inherent requirements of his job.

The crucial part of the Judge's decision was that "terminating an employee's employment, whether by mutual agreement or not, is the taking of adverse action against the employee". Having decided this, the Judge found that the termination of employment was in fact a dismissal at the employer's initiative for the purposes of a general protection's claim.

The employee then argued that the basis of the adverse action taken against him was his physical disability. The Judge found that the termination of his employment was directly as a result of his physical disability, namely, the heart condition that led to his hospitalisation and the content of the letter supported this finding.

What lessons can be learned?

The way the termination was conducted was poor. Moreover, the appropriate medical evidence on which to base such a decision had not been obtained and consequently no reasonable adjustments to either the position or the way the work is performed could be considered without this information.

When seeking to terminate employment great care should be taken to ensure you are not exposing your company inadvertently to expensive court proceedings. Your employment lawyers should be consulted prior to any termination of employment. The old adage of prevention being better than cure is never truer than in a termination of employment situation.

In this instance, simply attempting to mask a dismissal as a mutual termination did nothing to insulate the company concerned from a general protection's claim. Getting the process right is critical.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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