In a recent Fair Work Commission decision, the question of whether an employer may accept a resignation tendered during a claimed mental health episode was squarely addressed.

The Commission considered the jurisdictional issue of whether an employer’s acceptance of a late-night resignation email constituted an unfair dismissal, in circumstances where the employee later alleged the resignation had not been genuinely intended.

The employee sent a resignation email at 4.31am stating he resigned effective immediately.  The employer formally accepted the resignation. The employee later sent a follow-up email requesting his resignation be disregarded, citing stress. He later submitted he had been suffering from paranoid delusions and did not intend to resign. Despite efforts by several co-workers and a union representative to intervene, the employer declined to allow the employee to withdraw the resignation, citing that it had already been processed.

The legal framework

Under section 386 of the Fair Work Act 2009, a person is dismissed if their employment is terminated at the initiative of the employer. However, this does not apply where the employment ends due to a voluntary resignation. The Commission has recognised that in some instances, a resignation, although apparently voluntary, may be invalid. The Full Bench has held that an expression of resignation which cannot reasonably be regarded as voluntary may not operate as an effective resignation capable of acceptance by the employer.

Commission findings

In this recent decision, the Commissioner confirmed that:

1. An employer is generally entitled to treat a clearly worded resignation as effective.
2. Where a resignation is given in the ‘heat of the moment’ or under emotional distress, it may not be valid.
3. However, for the resignation to be set aside, it must be shown that a reasonable person in the employer’s position would have understood the employee did not intend to resign, and that the employer knew or ought to have known that.

In dismissing the unfair dismissal application, the Commissioner was satisfied that at the time it was sent, the employee was in a state of ‘mental confusion’. However, the Commissioner was not satisfied that at the time it received and acted on the resignation, the employer was aware of circumstances that would have caused a reasonable person in its position to question whether the employee truly intended to resign.

Although colleagues and a union representative raised concerns later that same day, the Commission drew a clear distinction between the acceptance of the resignation and the subsequent refusal to allow its retraction. That distinction proved critical. The Commission stated the decision was a tough call, if not a harsh one, but the fairness or otherwise of the employee’s decision was not the subject of these proceedings. By the time he sought to retract his resignation, the employment had come to an end.

Although expressing sympathy for the employee, the Commissioner concluded the employer’s conduct did not constitute a dismissal as it was not at their initiative. The Commissioner also reiterated that there is no statutory resignation ‘cooling off’ period in Australian law and the Commission cannot impose one.

Implications for employers

This decision offers important guidance for employers dealing with resignations, particularly in emotionally charged or uncertain circumstances:

• If a resignation is clearly expressed and there are no immediate signs of impaired decision-making, it may be valid even if the employee later asserts it was made in error or under duress.
• The key consideration is what the employer knew, or ought reasonably to have known, at the time of acceptance.
• While employers may choose to allow retraction of a resignation, they are not legally obliged to do so unless exceptional circumstances are evident at the time.

While sympathy may lie with employees facing mental health challenges, this decision confirms that the legal test remains an objective one. Ultimately, this decision reinforces the importance of maintaining clear internal processes for handling resignations and ensuring any doubts about an employee’s capacity or intention are explored before acceptance and not after the fact.

This article is of a general nature and guidance only and does not constitute legal advice.

Charles Watson is GM – IR, policy and governance at the Visual Media Association (VMA)

This article was first published in the June issue of ProPrint magazine. Read the original article here.

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