A recent case in the Federal Court of Australia (the Court) involved a review of twin proceedings relating to the termination of teacher employment by the NSW Catholic Education Office (CEO). In its decision, the Court found that any conscious act by an employer to end employment will constitute a ‘dismissal’ - such that remedies for wrongful dismissal may be sought.

The broader implications of the decision for schools, however, remain unclear.

The Facts: Case 1: M

Mr M began working with the CEO in 1986. Over the years he worked as a teacher, then a religious education coordinator, in a number of secondary schools. On 23 September 2012, he was arrested and charged with a number of offences under the Crimes Act 1900 (NSW) concerning sexual assault but pleaded not guilty and was released on bail.

In a meeting on 4 October 2012, M was informed he would be suspended without pay until his criminal proceedings were resolved. By both telephone call and letter, M was later instructed to not engage in tutoring while suspended.

Correspondence passed between M and the CEO in early May 2013, with the CEO proposing that his suspension be converted to one without pay. Further charges were brought against M on the 28^th of May, and by November he complained to the CEO that they had discontinued his salary sacrifice arrangements without permission.

The CEO again proposed he be suspended without pay until the case was resolved, offering that if he was acquitted and deemed suitable to teach following internal review, they would repay him. M refused to take leave and on 20 December 2013 the CEO wrote to M terminating his employment.

The Facts: Case 2: OC

Mr OC commenced employment in 1979, and was employed by the CEO until 20 February 2015, mostly working as a secondary school classroom teacher. On 11 December 2014, he was placed on leave pending investigation into allegations of inappropriate conduct with a child, confirmed by letter to him on the 15^th.

On 17 February of the following year, OC was charged under the Crimes Act 1900 (NSW) with indecent assault on a person under 16 years of age. The following day, the CEO requested he attend a meeting to justify why his employment shouldn’t be terminated, and at the meeting on the 20^th OC denied the allegations and his intention to enter a 'not guilty' plea.

Despite this assertion, OC's employment was immediately terminated, confirmed in writing by a letter dated 24 February 2015.

The Issue and Conclusion

In both proceedings, the issue was whether the relevant circumstances were, within the meaning of the Fair Work Act 2009 (Cth) (FWA), tantamount to a ‘dismissal’. If they were, then both M and OC were eligible to apply to the Fair Work Commission (FWC) for an order granting a remedy for unfair dismissal.

According to section 386 of the FWA, a person has been dismissed if:

• the person’s employment has been terminated on the employer’s initiative; or
• the person has resigned from their employment, but was forced to do so because of conduct, or a course thereof, engaged in by the employer.

The Court said that in circumstances where the employer decides to terminate employment, given effect by notice of termination, then the employee has been ‘terminated on the employer’s initiative’, regardless of the employer's motivations.

Drawing upon the earlier case of Mohazab v Dick Smith Electronics Pty Ltd (No 2), the Court said that a foundation of the act of 'termination' is that it resulted in termination of employment, rather than voluntary departure by the employee. It was clear in this case, based on the rejections by both OC and M of the CEO’s proposals, that if CEO had not taken the action it did, then both parties would have continued as employees. As a result, termination was “the deliberate, considered, act of the CEO”.

Uncertain Implications of Child Protection Legislation

While the Court’s determination of these cases is straightforward, its refusal to decide a conflict between the decisions of the Full Bench of the FWC leaves employers, including schools, in doubt as to the extent of their child protection obligations.

Case 1: M

In both cases, the CEO had submitted that employment was not terminated on their initiative, due to the introduction of the Child Protection (Working with Children) Act 2012 (NSW) (CPA) in June 2013.

In the case of M, the CEO argued that, by making it unlawful for M to continue working without working with children clearance, the contract of employment had been ended due to the doctrine of frustration. In contract law, frustration occurs where a contract cannot be performed due to unforeseen events outside the control of the contractual parties, which have resulted in the obligations under the contract becoming radically different to those originally contemplated.

At first instance, the Fair Work Commissioner held that the circumstances did amount to a dismissal but this was reversed by the Full Bench of the FWC, who found that the continuation of employment would have amounted to illegality due to inconsistency with the CPA.

Case 2: OC

In the case of OC, the CEO did not focus on contractual frustration, but merely highlighted that it would be unlawful to continue employing OC due to the provisions of the CPA. This was rejected by the Full Bench at first instance, who held that the Act did not require a teacher’s employment to be terminated in these circumstances.

While the CEO knew OC did not have a current working with children check clearance, on the appropriate construction of the section, the CEO was not required to sever the employment relationship merely because OC became a disqualified person by the Act coming into force. In so doing, it defined employment under the CPA to mean ‘make use of’ or ‘to utilise’ and not the employment relationship more broadly.

The Full Bench noted, in making this determination, that it directly conflicted with the decision of the appeal bench in M, who had given an expansive definition to the term. The Court did not propose to decide the connotation of the words ‘employing’ and ‘employ’ in the CPA and thus glossed over the conflicting decisions by the FWC without commentary.

What Does This Mean For Schools?

The findings of the Court do not introduce new obligations for schools but merely clarify that enacting any termination of employment, regardless of the justifications or intent behind it, amounts to a ‘dismissal’ under the FWA and thus may be subject to a claim for wrongful dismissal. A successful claim, however, will clearly still depend on the dismissal being ‘unfair’.

However, the lack of clarity surrounding the definition of ‘employ’ under the CPA introduces uncertainty for schools.

While the more recent decision of the FWC in OC suggests that a school will not be ‘employing’ a person in child-related work if they do not continue utilising them – such as by suspending them from work – the Court’s refusal to consider the definition leaves open the possibility that a school will be breaching its child protection obligations by continuing the employment relationship in any capacity.