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New employment contract may amount to a dismissal

Excerpts from this article first published in ‘Human Resources’ Magazine, Issue 74, 22 February 2005

In a recent unfair dismissal matter, the NSW Industrial Relations Commission determined that it was unfair to summarily dismiss a property manager who worked in a real estate agent business, for refusing to sign a new employment contract.

This sorry tale commenced with the employer presenting the property manager with a new employment agreement that contained additional responsibilities. It was presented as part of the employer’s plan to “toughen up” the office. The property manager was told to sign the document.

The property manager considered the document contained two extra duties that were beyond the scope of her original duties. The two extra duties were: (1) being accountable for the inspection of properties to determine whether repairs were needed (for which a more junior employee was responsible); and (2) ensuring proper filing of all tenant and landlord paperwork (for which the receptionist was responsible).

The Commission accepted the property manager’s evidence that she refused to sign the document as she did not want to be held accountable for the duties of two other people over whom she had no supervision or responsibility. If they fell short of their own duties, the property manager did not wish to face disciplinary action herself. The employer required her to sign the document, or “clear [her] desk and get out of [his] office…” The property manager became distressed, continued to refuse to sign the document and she asserts that her employer told her: “don’t make a scene … just get out of my office … just get out.” That is what she did.

The Commission ordered the employer to pay the property manager $2,500 compensation and $700 in legal costs. The low compensation took into account the property manager’s relatively short period of employment, being six months.

HR tips:

• If you wish to update an employee’s contract of employment, carefully consider in advance what you will do if the employee is not prepared to sign the new contract. Generally, the requirement to sign a new employment contract will be a variation to the employee’s contract that requires the employee’s consent.
• If wishing to implement new contracts, consider doing it at salary review time when consideration can be provided to encourage consent.
• Ensure the position description provided as part of an employee’s contract of employment, is accurate and contains duties and responsibilities that you expect the employee is truly responsible for.
  

Lucinda Smithers

Senior Associate

Australian Business Lawyers