The Case

Mr Cerin, an employee of ACI Operations Pty Ltd (ACI), sustained a workplace injury. After providing Mr Cerin with modified duties for a period of time, ACI terminated his employment when he could not return to his pre-injury position.

The HR manager of ACI wrote to Mr Cerin advising him of his dismissal, providing him with a notice period of 4 weeks and 3 days. The HR manager had relied on the Workers Rehabilitation and Compensation Act 1986 (SA), which stated that “at least 28 days' notice of the proposed termination” needed to be given.

However, ACI and the HR manager ignored the Fair Work Act 2009 (Cth) (FW Act) requirement that Mr Cerin receive 5 weeks’ notice, given his age and length of service.

Mr Cerin commenced proceedings against ACI and the HR manager for the 2-day shortfall in notice of approximately $180. He also sought penalties against ACI and its HR manager. He claimed, pursuant to section 550 of the FW Act, that the HR manager had been involved with the contravention by ACI.

ACI argued that Mr Cerin’s contract had come to an end under the doctrine of frustration because he could no longer perform the role due to his injury (if an employee cannot perform their role, e.g. due to an injury or illness, the employment contract may come to an end under the doctrine of frustration and not at the initiative of the employer or employee). ACI tried to argue it had not terminated Mr Cerin’s employment and, as such, it did not need to pay notice under the FW Act.

The Verdict

The Federal Circuit Court found that ACI, which had entered into a new employment contract with Mr Cerin in 2011 recognising his modified duties, had terminated the employment contract.

The Court held that if the employment had been terminated by the doctrine of frustration, there would have been no need for ACI to write to Mr Cerin to advise him that his employment would be terminated at some time in the future. As such, Mr Cerin was entitled to 5 weeks’ notice of termination under the FW Act.

The Court found that the seriousness of the breach was in the mid-range due to the fact that:

• neither ACI nor the HR manager could give any satisfactory explanation for failing to provide the required notice; and
• ACI was a large business, and had been previously penalised for breaching the FW Act.

The Court ordered that:

• ACI pay $20,400 in penalties to Mr Cerin; and
• the HR manager pay $1,020 in penalties to Mr Cerin.

The Lesson

This case shows the serious implications of failing to pay employees correctly. The Court was prepared to impose significant penalties despite the loss to the employee only being $180.

The case also shows a willingness by the courts to find individuals personally liable for being involved in contraventions of the FW Act.

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.