Ms Amy Martin v Novita Children's Services T/A Novita Children's Services

[2018] FWC 7706

[2018] FWC 7706

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Ms Amy Martin
v
Novita Children's Services T/A Novita Children's Services
(U2018/8154)

COMMISSIONER PLATT ADELAIDE, 19 DECEMBER 2018

Application for an unfair dismissal remedy – jurisdictional objection – resignation or dismissal – no dismissal – application dismissed.

Summary

[1] On 7 August 2018, Ms Amy Martin lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) seeking a remedy for an alleged unfair dismissal by her former employer Novita Children’s Services T/A Novita Children’s Services (Novita) which took effect on 18 July 2018.

[2] On 27 August 2018 Novita filed a Form F3 Employer Response which disputed the claim that the dismissal was unfair and raised the jurisdictional objection that Ms Martin was not dismissed.

[3] Novita contends that it had commenced a restructure and was engaged in discussions with Ms Martin regarding changes to her duties, and that prior to concluding those discussions, Ms Martin voluntarily resigned.

[4] Ms Martin contends her resignation was not voluntary, and in the alternative, Novita by its conduct sought to unilaterally vary the terms of her contract of employment, which had the result of bringing the employment to an end.

[5] Novita rejects the contention that it repudiated the contract or dismissed Ms Martin.

[6] At a Directions Hearing conducted on 21 September 2018, I determined that it was appropriate to hear the jurisdictional objection and the merits together as a result of the overlap of the evidence.

[7] The parties each filed a written outline of their submissions and statements in support of their respective positions.

[8] The matter was arbitrated on 5 and 6 November 2018. Mr McGrath (of Counsel) represented Ms Martin and Mr Stirling (of Counsel) represented Novita. Permission was granted pursuant to s.596(2) of the Act.

[9] The following facts are not in dispute:

•  Ms Martin commenced employment with Novita in October 2005.

•  After her commencement Ms Martin was promoted to the position of Senior Speech Pathologist, then Team Leader Assistive Technology Services and then Acting Manager.

•  In November 2017 Ms Martin was appointed Manager – Therapy Services and executed a written contract dated 10 November 2017¹.

•  A Position Description for the role of Manager Novitatech – Therapy Services was documented.²

•  On 25 May 2018 Ms Martin commenced annual leave and travelled overseas.

•  On 8 June 2018 Ms Martin received an email from Mr Stewart (General Manager) advising of “significant changes to the Novitatech Therapy Team model”³.

•  Ms Martin corresponded with Mr Stewart and Mr Brown (Chief Operating Officer) by email over the next few days.

•  Ms Martin returned from annual leave on 25 June 2018.

•  On 25 June 2018 Ms Martin received a letter attached to an email from Mr Brown dated 22 June 2018 which had been sent to all staff.⁴

•  Ms Martin met with Mr Brown at about 3:00pm on 25 June 2018.

•  On 26 June 2018 Ms Martin met with Mr Stewart.

•  On 26 June 2018 Ms Martin received an email from Mr Stewart⁵.

•  At 1:00pm on 26 June 2018 Ms Martin attended a staff meeting where she and other employees were advised by Mr Ward (Chief Executive Office), Mr Brown and Mr Stewart that the financial performance of the Respondent was an issue and further changes to the business would be necessary.

•  Ms Martin commenced personal leave on 27 June 2018 but continued to correspond with Mr Stewart by email expressing her views on the model.

•  On 27 June 2018 Ms Martin received an email from Mr Brown.⁶

•  On 2 July 2018 Ms Martin received a revised Position Description from Mr Brown.⁷

•  On 3 July 2018 Ms Martin emailed Mr Brown with her response to the Position Description and advised that it was not acceptable.⁸

•  On 5 July 2018 Mr Thompson emailed Ms Martin advising that he would now be the contact point for communications.⁹

•  On 9 July 2018 Ms Martin emailed Mr Thompson repeating her views that the new Position Description was not acceptable.¹⁰

•  On 13 July 2018 Ms Martin received an email from Mr Thompson in response.¹¹

•  On Sunday 15 July 2018 Ms Martin emailed Mr Ian Thompson advising that her last day of employment would be 29 July 2018¹².

[10] All of the relevant correspondence was tendered to the Commission (much of it attached to Ms Martin’s statement).

Jurisdictional Issue

[11] Section 386 of the Act details the meaning of the term “dismissed” as follows:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”

[12] The provisions of s.386(2) which detail when a person has not been dismissed are not relevant to this application.

[13] Ms Martin submits that both limbs of s.386(1) are satisfied (noting that only one must be satisfied).

[14] The leading authority on the phrase “termination on the employer’s initiative” is Mohazab v Dick Smith Electronics Pty Ltd (No2)¹³ and O’Meara v Stanley Works Pty Ltd.¹⁴

[15] In Barkla v G4S Custodial Services Pty Ltd¹⁵ the Full Bench stated that the authorities required “that there be some action on the part of the employer which is either intended to bring the employment to the end or has the probable result of bringing the employment to an end”. The process required “an objective analysis of the employers conduct…to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign”.

The Witness Evidence

Amy Martin

[16] Ms Martin provided a witness statement (including attachments)¹⁶ and gave oral evidence at the Hearing.

[17] Ms Martin’s evidence (principally in relation to the matters which were not agreed) is relevantly summarised as follows:

•  Ms Martin had been consulted prior to the restructure about financial reporting issues and expressed concerns about the data under reporting her team’s income.

•  Ms Martin was advised of the restructure by an email from Mr Stewart whilst on leave overseas, this adversely impacted the enjoyment of her holiday.

•  Ms Martin was concerned that the restructure had not been raised with her before she took leave.

•  Ms Martin was able to correspond with Novita about the restructure during her leave.

•  Ms Martin continued to consult with Novita upon her return from leave.

•  The discussions were escalated to Mr Brown and further consultation occurred. Mr Brown committed to drafting a new Position Description and provided some information about the proposal.

•  Ms Martin grew more concerned about her position and employment. Ms Martin was confused about the reasons for the restructure.

•  Ms Martin became aware of conversations between Ms Kevan and her team members which she found to be humiliating.

•  Ms Martin took personal leave on 27 June 2018, communications between Ms Martin and Novita continued.

•  Ms Martin believed she was being excluded from communications with her direct reports.

•  On 27 June 2018, Ms Martin complained to Mr Brown that there was a lack of clarity about her position moving forward.

•  Ms Martin considered Mr Brown’s response as inappropriate.

•  On 2 July 2018 a new Position Description was provided by Mr Brown.

•  Ms Martin asserted the view that the new position would result in a lower status level and did not involve the line management of staff.

•  On 3 July 2018 Ms Martin emailed her views on the proposal to Mr Brown and concluded that it was unacceptable.

•  Ms Martin did not receive a response from Mr Brown.

•  On 5 July 2018 Mr Thompson took over communications with Ms Martin. Ms Martin advised Mr Thompson that the proposed role was not acceptable.

•  A revised Position Description was provided by Mr Thompson.

•  Mr Thompson sent an email to Ms Martin on 13 July 2018. Ms Martin was concerned that the communications were not progressing the matter.

•  On Sunday 15 July 2018 Ms Martin emailed Mr Thompson and advised inter alia that her last day of employment would be on 29 July 2018.

[18] Novita provided witness statements and led evidence from:

•  Mr Ian Thompson (Chief People Officer and Company Secretary)¹⁷;

•  Mr Mark Stewart (General Manager)¹⁸; and

•  Mr Jeremy Brown (Chief Operating Officer)¹⁹.

Mark Stewart

[19] Mr Stewart provided a witness statement (including attachments) and a supplementary statement ²⁰ and gave oral evidence at the Hearing.

[20] Mr Stewart’s evidence is relevantly summarised as follows:

•  Mr Stewart contended that Ms Martin’s duties were as per her Position Description and that she led a small team of therapists and coordinated the delivery of assistive technology solutions and had 12 direct reports, 2 of who worked at a different locations.

•  Mr Stewart contended that Ms Martin was an expert in her field and was highly valued by Novita.

•  Mr Stewart gave evidence of Novita’s poor financial performance as it struggle to adapt to the new NDIS funding arrangements. In April or May 2018 he had discussions with Mr Brown about the potential to restructure to decentralise Ms Martin’s direct reports such that they would be geographically distributed over a wider area which aligned with the location of the client base. This topic along with other options was discussed with Ms Martin prior to her taking annual leave on 25 May 2018. There was a dispute over the evidence concerning the level of billable work required to be undertaken by Ms Martin.²¹

•  On 8 June 2018 Novita determined to restructure its operations with effect from 1 July 2018.

•  Mr Stewart emailed Ms Martin on 8 June 2018.²²

•  Ms Martin responded on 11 June 2018.²³

•  Mr Stewart provided further information about Novita’s performance on 12 June 2018.²⁴ After that communication, Ms Martin began to direct further communications to Mr Brown.

•  Mr Stewart consulted with Ms Martin’s team members about the restructure.

•  Mr Stewart took annual leave from 3 July 2018.

Jeremy Brown

[21] Mr Brown provided a witness statement (including attachments) and a supplementary statement ²⁵ and gave evidence.

[22] Mr Brown’s evidence is relevantly summarised as follows:

•  In the 2017/18 financial year Novita recorded an operating loss of $5.6M.

•  The combined loss for the years of 2016/17 and 2017/18 was in excess of $10M.

•  Novita was not structured to operate under the market driven model which had resulted from the NDIS reforms.

•  Between November 2017 and June 2018 Novita had reduced is headcount by 21.7 FTE roles.

•  The average utilisation rate within the Novita Therapy teams was less than 30%, compared to a cost recovery level of 65%. No blame was apportioned to Ms Martin for this result. It was believed that the central location of the therapists (as opposed to being located near their client base) was the major factor.

•  Ms Martin was well regarded and it was thought better utilisation of her talents could be achieved.

•  It was proposed to restructure Ms Martin’s position.

•  Mr Stewart commenced the consultation processes with Ms Martin, however as a result of the escalation of Ms Martin’s concerns to Mr Brown, he became responsible for communications with Ms Martin.²⁶

•  Much of the communication was by email other than a meeting on 25 June 2018.

•  The correspondence included a draft proposal position for her role.²⁷

•  Mr Brown’s evidence was largely unchallenged.

Ian Thompson

[23] Mr Thompson provided a witness statement (including attachments)²⁸ and gave evidence. Mr Thompson’s evidence is relevantly summarised as follows:

•  Mr Thompson is Novita’s Chief People Officer and Company Secretary, and is legally qualified.

•  Mr Thompson became involved in this matter as a result of it being escalated to him on or about 3 July 2018. Mr Thompson had minimal interactions with Ms Martin previously.

•  Mr Brown supplied Mr Thompson with Ms Martin’s email dated 3 July 2018. At that time the draft proposal had not been implemented.

•  On 4 July 2018 Ms Martin advised Novita that she would take personal leave for the rest of that week.

•  On 5 July 2018 Mr Thompson replied to Ms Martin’s email of 3 and 4 July 2018²⁹.

•  On 9 July 2018 Ms Martin responded.³⁰ Mr Thompson was disappointed that Ms Martin had refused to meet face to face. Mr Thompson was concerned that Ms Martin had misunderstood the nature of the proposed changes.

•  Mr Thompson emailed Ms Martin on 13 July 2018 and sought to highlight the management element of the position.³¹

•  On 15 July 2018 Ms Martin sent an email to Mr Thompson which he understood to be a voluntary resignation.³²

•  Mr Thompson accepted the resignation on 17 July 2018.

•  Mr Thompson expressed his disappointment that Ms Martin had adopted a hostile and adversarial approach rather than a constructive and collaborative one. Mr Thompson believed Ms Martin’s departure was Novita’s loss.

•  Mr Thompson rejected the contention that Novita has repudiated her contract of employment or that Ms Martin was forced to resign. Mr Thompson contended that Ms Martin could have remained in Novita’s employ without loss of pay or status.

[24] Mr Thompson’s evidence was largely unchallenged.

Consideration

[25] Novita’s evidence of its parlous financial situation and the challenges imposed by the introduction of the NDIS was not challenged. Novita’s witnesses provided a compelling case that required Novita to make structural changes to its business.

[26] There is no dispute over the current role of Ms Martin and the terms of her contract of employment.

[27] Whilst it is regrettable that the changes were announced whilst Ms Martin was on annual leave, Novita had a responsibility to advise it staff as soon as a decision had been made to restructure the business, including those persons on leave.

[28] It appears that Ms Martin was able to obtain information about the restructure and respond despite her being overseas. I accept that the process would have been stressful and would have adversely impacted on the enjoyment of her leave.

[29] It is clear to me that upon being notified of the restructure and becoming aware of the impact on other members of her team, Ms Martin formed the view that the status and responsibilities of her role were being diminished. It appears that this was the lens through which Ms Martin interpreted further communications received from Novita.

[30] Ms Martin met with Novita’s representatives upon her return from leave. I accept that at this time little clarity existed as to the future role of Ms Martin.

[31] Whilst I accept that the communications between Mr Stewart (and to a lesser extent Mr Ward) are important to gain context, in my view the key evidence in respect of the jurisdictional objection is the interaction between Ms Martin with Mr Brown and Mr Thompson.

[32] Ms Martin contends that the change in location of her direct reports and the removal of direct supervision had in effect removed her managerial responsibilities and together with other mooted changes had resulted in the unilateral change in her contract of employment to the level that resulted in its repudiation.

[33] Novita’s position was that Mr Brown’s evidence showed Novita valued Ms Martin’s talents, that they felt her talents could be better utilised and that they wanted to retain her in the business. Mr Brown’s goal was to agree on a role for Ms Martin that met the needs of both parties. He prepared a Position Description to facilitate a conversation as dialogue with Ms Martin had stalled. Mr Thompson then engaged with Ms Martin. Ms Martin voluntarily resigned prior to the conclusion of those discussions.

[34] Mr Brown was an impressive, articulate witness, who was clearly across the detail. Ms Martin was also a detail person but I formed the impression that she read more into the communications than was contained in the words.

[35] In my view Ms Martin has misinterpreted some of the communications received.

[36] Ms Martin appeared to have formed a fixed view about the outcome of the restructure early on, which may have closed her mind to alternative outcomes.

Forced resignation

[37] Ms Martin contends that Novita’s conduct forced her to resign.

[38] I have preferred the evidence of Mr Brown and Mr Thompson where there is conflict with the evidence of Ms Martin.

[39] I do not accept that Ms Martin’s contract was subject to a unilateral change or that she was presented with a “take it or leave it” offer. I find that Novita sought to engage with Ms Martin to determine a mutually acceptable outcome which retained her in their employ; this is established by the evidence of Mr Brown and Mr Thompson.

[40] When the matter was escalated to Mr Thompson, he sought by email dated 5 July 2018, to meet with Ms Martin to discuss the matter, but this offer was rejected and Ms Martin instructed her lawyers would take carriage of the matter.

[41] Mr Thompson wrote to Ms Martin on Friday 13 July 2018. The letter appears to be seeking to rebut the concerns held by Ms Martin of the diminution in her status and responsibility. The letter does not present as an ultimatum.

[42] On Sunday 15 July 2018, Ms Martin wrote to Mr Thompson expressing her view that Novita was making a unilateral change that would result in the removal of her direct management of her team, reduce her power and impose clinical targets. Ms Martin believed that her employment would be completely changed. Ms Martin rejected Mr Thompson’s suggestion that her contract of employment allowed for changes to me made. Ms Martin suggested that Novita’s conduct had shown a clear intention not to be bound by the employment contract and that she was being forced to resign.

[43] When the evidence is considered as a whole I accept Mr Thompson’s description that Ms Martin had adopted a hostile and adversarial attitude rather than a constructive and collaborative one.³³

[44] I do not consider that the conduct of Novita forced Ms Martin to resign.

[45] The evidence does not support Ms Martin’s contention that she was forced to resign.

[46] It appears to me that Ms Martin became exasperated with the restructure process, and having convinced herself that her role was going be fundamentally changed in a manner which was not acceptable to her, freely chose to resign by email on 15 July 2018.

Repudiation

[47] In the alternative Ms Martin contended that her contract of employment was repudiated and this was a termination at the employer’s initiative. I was referred to Macken’s Law of Employment and a number of authorities.³⁴

[48] Ms Martin contended that the repudiation could be found as Novita’s conduct showed an intention not to be bound by the express terms of the agreement struck, and that Novita had by its conduct imposed a significant diminution in status and responsibilities which ended the contract.

[49] When I review the facts I have found in this case against the indicators described by Beach J in Cameron v Asciano Services Pty Ltd,³⁵ I do not believe the case for repudiation is made out. I do not accept that the proposals advanced and discussed between Ms Martin and Novita were of such finality that they were imposed on Ms Martin. Some of the changes advanced were allowable as a result of clause 8 of her contract of employment. I am not satisfied that Novita conduct expressed an intention not to be bound by the contract of employment.

[50] There was no suggestion that Ms Martin’s remuneration would be impacted, and whilst Ms Martin may disagree, I am not convinced that her status or responsibility would have been reduced. In addition Novita remained open to vary the proposal. Unfortunately on 15 July 2018 Ms Martin advised that she would not continue to work for Novita. This communication was reinforced on 17 July 2018.

[51] I am not convinced that the proposal would have resulted in the repudiation of Ms Martin’s contract of employment by Novita. The proposals put were simply options, and subject to change. It was Ms Martin that closed the door on her continued employment by failing to engage further in those discussions, not Novita.

Decision

[52] I find that Ms Martin was not dismissed within the meaning of s.386 of the Act and accordingly the application must be dismissed.

[53] An Order³⁶ reflecting this decision will be issued.

COMMISSIONER

S McGrath of Counsel, with permission for the Applicant.

M Stirling of Counsel, with permissionfor the Respondent.

Hearing details:

2018.

Adelaide.

November 5 & 6.

Printed by authority of the Commonwealth Government Printer

<PR703312>

1 Exhibit A1, attachment AKM1.

2 Exhibit A1, attachment AKM2.

3 Exhibit A1, attachment AKM5.

4 Exhibit A1, attachment AKM11.

5 Exhibit A1, attachments AKM13,14.

6 Exhibit A1, attachment AKM20.

7 Exhibit A1, attachment AKM21, AKM22.

8 Exhibit A1, attachment AKM24.

9 Exhibit A1, attachment AKM26.

10 Exhibit A1, attachment AKM27.

11 Exhibit A1, attachment AKM31.

12 Exhibit A1, attachment AKM32.

13 [1995] IRCA 645.

14 [2006] AIRC 496.

15 [2011] FWCFB 3769.

16 Exhibit A1.

17 Exhibit R5.

18 Exhibit R1 (statement dated 11/10/2018) and Exhibit R2 (supplementary statement dated 18/10/2018) .

19 Exhibit R3.

20 Exhibit R1 (statement dated 11/10/2018) and Exhibit R2 (supplementary statement dated 18/10/2018) .

21 PN694-701.

22 Exhibit R1, attachment MS3.

23 Exhibit R1, attachment MS4.

24 Exhibit R1, attachment MS5.

25 Exhibit R3.

26 PN1029.

27 Exhibit R3, attachment JB-5.

28 Exhibit R5.

29 Exhibit R5, attachment IT3.

30 Exhibit R5, attachment IT4.

31 Exhibit R5, attachment IT5.

32 Exhibit R5, attachment IT6.

33 PN1198.

34 Stephen Geoffrey Fitzgerald v Woolworths Limited[2017] FWC 1730; Roxana Balgowan v City of Sydney RSL & Community Club Ltd[2017] FWC 3798; Victorian Association for the Teaching of English Inc v Debra de Laps[2014] FWCFB 613.

35 [2011] VSC 36.

36 PR703313.