The Case

On 22 October 2014, Mr Jeff Parkes commenced employment with Fat Prophet’s Pty Ltd (Fat Prophet) in the financial services industry. Mr Parkes was employed as a Senior Client Advisor in the Sydney office. In September 2016, his wife obtained employment in Byron Bay. Mr Parkes requested a working from home arrangement in Byron Bay. Fat Prophet agreed to this arrangement. Fat Prophet later argued this arrangement was only agreed to on a temporary basis, as there were plans for it to open an office on the Gold Coast. Fat Prophet contended when the Gold Coast office opened in 2017, Mr Parkes would work at the Gold Coast office.

There was no formal written agreement entered into between Mr Parkes and Fat Prophet about the terms of the working from home arrangement.

In early 2017, the working from home arrangement was reviewed. Fat Prophet had decided not to open a Gold Coast office and decided Mr Parkes’ working from home arrangement could not continue.

On 30 March 2017, Fat Prophet alleged they advised Mr Parkes he would need to relocate back to Sydney and work in the Sydney office. Mr Parkes refused to return to Sydney and resigned that day.

Mr Parkes contended he was not directed to return to Sydney; rather, he was dismissed that day without any discussion on alternative options. On 31 March 2017, Mr Parkes received a ‘Letter of Termination of Employment’ from Fat Prophets, which said, among other things, “We refer to notice issued to you on the 30th March and effective today the 31st March for the termination of your employment with Fat Prophets Pty Ltd”.

Mr Parkes commenced unfair dismissal proceedings in the Fair Work Commission (FWC).

The Verdict

The FWC held:

• that the working from home arrangement between Mr Parkes and Fat Prophet was a temporary arrangement;
• Mr Parkes had not resigned, rather, he was given an ultimatum to relocate or lose his job;
• that Fat Prophet had terminated Mr Parkes’ employment, which was confirmed by the letter of termination;
• there was not a valid reason for the termination of Mr Parkes’ employment;
• that the direction to relocate from Byron Bay to Sydney was a lawful direction, however, it was not a reasonable direction;
• the direction was not reasonable because Mr Parkes was given little or no notice to relocate back to Sydney; and
• the dismissal of Mr Parkes without notice or warning was “harsh, unjust and unreasonable”.

The FWC ordered Fat Prophet to pay Mr Parkes compensation in the amount of 6 weeks’ salary, equating to $8,350.38.

The Lessons

Employees have an implied duty as part of their employment contracts to obey their employer’s lawful and reasonable directions. This case demonstrates that a direction can be lawful but the factual circumstances of the individual employee may make the direction unreasonable. On the facts of this case, Fat Prophet should have provided Mr Parkes with a reasonable period of time to consider and decide whether he was willing to relocate back to Sydney. If he was willing to relocate, then Fat Prophet should have provided him with reasonable time to do so and pay for his relocation expenses.

This case also serves as a reminder that employers should record their individual working arrangement with employees in writing.

The FWC stated at [74] of the judgement: “[I]t is … extraordinary that a change of such significant import and effect, was not committed to writing, in any form at all. Given what has transpired, the absence of a document, recording the discussion at the time – let alone a written agreement or exchange of letters – is regrettable. Relying on recollection or indirect language in conversations, about such a significant matter, is to be very much discouraged as poor industrial relations practice.”

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.