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July 2019

A cautious approach should be taken when negotiating exits

Grundy v Brister and Co (2019)

The Case

Brister and Co (Brister) employed Mr Grundy as a boilermaker and welder. After a number of incidents in which Mr Grundy was verbally cautioned, Brister informed Mr Grundy at a meeting he could resign or be dismissed for serious misconduct. Brister offered to provide a positive reference if Mr Grundy resigned. Mr Grundy agreed to resign. However, thereafter he filed an unfair dismissal claim alleging constructive dismissal. Brister defended the claim and lodged a jurisdictional objection on the basis that Mr Grundy had voluntarily resigned.

The Verdict

The Fair Work Commission (FWC) found that Brister had forced Mr Grundy to resign given the resignation was an idea conceived of, and advanced by, Brister. Furthermore, if the resignation was not accepted, dismissal would have resulted.

Despite this, the FWC recognised why Brister had offered the resignation and reference, namely to ameliorate some of the harsh consequences of an employment termination.

The FWC found the dismissal was not unfair given Mr Grundy’s pattern of insubordination, which included abuse, swearing at management and colleagues, threatening others and being indifferent as to the consequences of his behaviour on others.

Despite the procedural failings in Brister’s approach, the FWC found they did not outweigh the seriousness of Mr Grundy’s conduct. As such, the FWC dismissed the unfair dismissal application.

The Lessons

Employers can have without prejudice discussions with employees to negotiate an exit. However, for those employees who come within the unfair dismissal jurisdiction, a procedurally fair approach should ideally be followed. If you are able to negotiate an exit with an employee, consider documenting the agreement in a deed of release to reduce the risk of later claims.

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