The demotion of an employee may not in all circumstances meet
the meaning of dismissed in section 385 of the Fair Work Act
2009 (Cth) (the Act). Consideration must be given to the
continuation of employment, the whether the demotion imposed a
significant reduction in status and payment.
The recent case of Phillip Moyle v MSS Security Pty Ltd
 FWC 8330 sheds light on the indicative criterion when
determining if a demotion results in a dismissal.
Mr. Phillip Moyle (the Applicant) was employed
with MSS Pty Ltd (MSS) in 2013, and was classified
as a Level 5 Security Officer under the Security Industry Award
2010 (the Award).
Following two and a half years of service the Applicant was
informed by his employer that he would be transferred either Royal
Adelaide Hospital or James Nash House to complete his duties. The
Applicant was given seven days to decide on his preferred
As a consequence of the transfer, the Applicant's shifts
differed, resulting in a loss of night shift loadings, a change in
his grade of employment to a Level 3 and a corresponding reduction
in his base rate of pay.
As part of the "Security Officer Standing
Instructions", the Applicant had agreed to the following as
part of his conditions of employment. Namely, the Applicant had
agreed to perform his duties and those in the Award classifications
levels below his at any site at which MSS held a contract for
services (Clause 7.5.2(b)). Furthermore, the Applicant had also
consented to his pay and conditions as an employee varying
according to the new assignments (Clause 7.5.2(c)).
The Employee's Contentions
Despite such relocations being ordinary and customary practice
within MSS and its industry competitors, and following the
Applicant's acceptance of the alternative position at the James
Nash House site, the Applicant contended that the Respondent had
unfairly dismissed him.
Following accepting the James Nash House role, the Applicant
raised his concerns as to pay with his employer who offered
transitional compensatory payments for one month and confirmed that
the Applicant had the choice to continue working on a day/night
shift roster to receive late night penalties.
The financial detriment suffered by the employee was a $1.01
base hourly reduction in pay and fewer night shifts that attracted
additional penalties under the Award.
As part of his submissions, the Applicant contended that he had
only continued to undertake diminished duties under protest, and
that "he had done nothing wrong".
Consideration of Case Law and Statute
Senior Deputy President O'Callaghan's (SDP Callaghan)
focus at the outset was the jurisdictional issue of whether the
Applicant had actually been dismissed by the Respondent.
MSS submitted that the reduction in remuneration and changing
classifications could not be regarded as significant enough to
attract the jurisdiction to make an unfair dismissal complaint.
SDP Callaghan took the plain meaning approach to the
interpretation of section 386(2)(c), namely that a demotion in
employment can only constitute a dismissal for the purposes of
Division 3 of Part 3-2 of the Act if the employee does not remain
employed by that employer and the demotion involves either a
significant reduction in the employee's remuneration or
SDP Callaghan relied on Barkla v G4S Custodial Services Pty
Ltd  FWAFB 3769 as authority for this point. Commentary
of the Full Bench in Charlton v Eastern Australian
Airlines (2006) 154 IR 239 was also relied on:
"...a termination of employment
occurs when a contract of employment is terminated. This
necessarily occurs when the employment relationship comes to an
end, However it can also occur even though the employment
relationship continues. Where a contract of employment has been
terminated, but the employment relationship continues, this will be
because a new contract of employment has come into
Unless the contract of employment or
an applicable award or certified agreement authorises and employer
to demote an employee, a demotion, not agreed by the employee, that
involves a significant reduction in remuneration will amount to a
repudiation of the contract of employment. If that repudiation is
accepted, either expressly or by conduct, then the contract of
employment is terminated. If, in such circumstances, the demoted
employee then remains in employment with the employer, this occurs
pursuant to a new contract of employment in respect of the demoted
position. It may be noted that where the employment continues with
the employee allegedly acquiescing in a reduction in salary or
other terms of employment, difficult questions may arise as to
whether the continued employment involves the continuation of the
original contract of employment..."
In reliance on these cases and a 'plain meaning' reading
of section 386(2)(c) of the Act, the allocation of Level 3 duties
could not be properly described as a significant reduction in his
duties, nor did the demotion severe the employment
The transfer to a new location and adjustment in duties and
remuneration were consistent with the employment contract, and
there was no identified repudiation of the employment contract.
Rather, SDP Callaghan considered the Applicant had standing to
pursue a dispute resolution process through the Award dispute
resolution provisions (Clause 9).
This decision has been confirmed by the Full Bench of the Fair
Work Commission, but qualified that the Respondent does not bear
the responsibility to negative both limbs of exception under
section 286(2)(c) of the Act.
This decision identifies the important considerations for
employers when demoting an employee, including continuity of
employment and relative reduction in status and pay. Despite
acceptance of the alternative role, these factors should be
considered alongside the contract of employment and in light of any
potential risks of unfair dismissal.
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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An employee that refused a reasonable offer of settlement was ordered by the FWC to pay his ex-employer's legal costs.
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