When does an employee abandon their employment – and what happens then?

Employees are sometimes accused of abandoning their employment.  The employee may have simply disappeared.  Other times, the employee remains in contact but, perhaps because of an (alleged) injury or illness, refuses or fails to attend at work.  Where is the line drawn between temporary absence and abandonment and, in any case, how should an employer deal with it?

When does an employee abandon their employment?

For an abandonment of employment to arise, the employee must have shown a clear intention to no longer be bound by the terms of the contract of employment.

The most obvious way in which this can occur is by a walk-out, so long as it is made clear – for example, by the employee’s parting words – that he or she is leaving permanently.  This is distinct from resigning in accordance with the terms of the contract, which would usually include the giving of notice.  A resignation brings the employment contract to an end but does not involve a breach of the employment contract.  Abandonment of employment represents a serious breach of the employment contract.

If an employee fails, without explanation, to attend at work, the point at which the employee will be considered to have abandoned their employment will depend on how long the absence extends and the context in which it occurred.  Where there is no evidence to explain a long-term employee’s disappearance, a significant period of time would need to elapse before an employer could reasonably conclude that the employee had evinced an intention to no longer be bound by the terms of the contract.  On the other hand, where a short-term employee (of only a few months) vocally indicates their dissatisfaction with their employer, the conclusion could be reached much sooner.  In either case, genuine attempts should be made by the employer to contact the employee and make it clear that, if the employee does not explain their absence or return to work, they will be considered to have abandoned their employment.

A common, and difficult, situation arises where an employee is absent and remains in contact, but does not provide the employer with an acceptable explanation for their absence – for example, by not providing acceptable medical certificates.  In these cases, the employer must be even more careful to clearly identify the contractual obligations that it says the employee is breaching and give the employee every opportunity to comply with them.  It must be remembered that a single breach of the employee’s obligations is not necessarily sufficient to give rise to the right to terminate – the breaches must be so serious or of such a nature that they evince an intention to no longer be bound by the terms of the contract.

What is the legal effect of abandoning employment?

It has been argued that when an employee abandons their employment, the contract of employment immediately comes to an end.  This is not usually the case.

If an employee walks out, this may immediately bring the employment relationship to an end, in that the employee no longer provides their services and the employer no longer pays the employee.  However, this does not necessarily mean that the employment contract has come to an end.

By the employee abandoning their employment, they have repudiated the employment contract.  The employer may then elect to either accept the repudiation and terminate the employment contract, or to affirm the employment contract so that it remains on foot.  The latter option may be preferable if, for example, the employer does not want to relieve the employee of contractual and/or fiduciary obligations that only exist whilst the contract remains on foot.  Affirming the contract does not however mean that the employer needs to pay the employee (unless the contract, unusually, requires it to pay the employee despite work not being done).

If the employer affirms the contract, it remains at least theoretically possible for the employment relationship to recommence despite the employee having previously abandoned their employment.

The election to either terminate or affirm should be clearly communicated to the employee although it can be implied by conduct.  In either case, the words or conduct required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other.

How does it affect unfair dismissal?

There have been attempts by employers to have unfair dismissal claims struck out on the basis that the employment was abandoned and, therefore, the employment was not “terminated on the employer’s initiative”.  If such an argument were successful, the circumstances surrounding the claim would be irrelevant – if the employment was not terminated on the employer’s initiative then the employee was not dismissed and, therefore, there cannot be an unfair dismissal.

It follows from the analysis set out above that this argument will usually be unsuccessful.  The act of abandoning the employment does not terminate the employment.  The abandonment gives the employer the right to elect to terminate the employment and, by electing to do so, the employer has chosen to terminate the employee.  It follows that an unfair dismissal claim is available.

That does not of course mean that the dismissal is unfair.  In these circumstances, the fact of the abandonment will usually be the reason which the employer relies upon to justify the dismissal.  The Fair Work Commission will then look at all the circumstances of the case, including but not limited to the employee’s acts that are said to constitute abandonment, and make a decision as to whether the dismissal was harsh, unjust or unreasonable.  It is therefore crucial that the employer reasonably satisfies itself that the employee has in fact abandoned their employment, exercises procedural fairness in dismissing the employee and considers whether the dismissal may be considered harsh.

An example

The case of Lazar v Ingham Enterprises Pty Ltd [2013] FWC 3447 provides a neat example of many of the issues described above.

Mr Lazar was employed by Ingham Enterprises Pty Ltd (“Ingham”) in 1996.  A clause of the relevant enterprise agreement stated:

“An employee who is absent from work for 3 consecutive working days without notifying the employer shall be assumed to have abandoned their employment.  If within a further period of 7 days the employee has not satisfied the employer that there was a reasonable excuse for their absence, then the employee shall be deemed to have abandoned their employment from the first day of absence.”

Mr Lazar suffered injuries in 2009 and December 2011.  In February 2012, Ingham informed him that there were no alternate duties available and he was consequently stood down.  He did send some medical certificates after this date but did not send any since 9 March 2012.  On 23 May 2012, Ingham sent Mr Lazar a letter stating, amongst other things:

“If within 7 days you are unable to provide adequate reasons for your absence, adequate reasons for not keeping in contacting (sic) with the Company and evidence supporting those reasons, or if you fail to contact me at all, you will be presumed to have abandoned your employment.”

Mr Lazar did provide a medical certificate on 28 May 2012 but it did not provide any period of incapacity or partial incapacity.  On 30 May 2012, Mr Lazar was called into a meeting, which he attended, where he was dismissed.

The Commissioner found that there was a valid reason for the termination.  Notwithstanding that the employee was deemed to have abandoned his employment, which did not mean that the employment contract immediately came to an end.  Rather, the employer had the option of accepting the repudiation and bringing the employment relationship to an end, or considering the reasons for the absence and allowing the employment relationship to remain on foot.  In this case, the meeting on 30 May 2012 was to consider whether the employment relationship should come to an end and, not being satisfied with Mr Lazar’s explanations as to why it should not, Ingham accepted the repudiation and terminated the employment.

The Commissioner considered the process that Ingham had applied and found that it was procedurally fair.

Finally, the Commissioner considered whether the dismissal was harsh and found that it was, stating:

“It is my finding that while the Company had a valid reason to terminate Mr Lazar’s employment, it could have granted him more latitude given the long period of his employment, his obvious medical problems and his agreement to meet with Inghams on 30 May 2012.”

…

“I further find that the termination of Mr Lazar’s employment was harsh, based on his length of service, medical condition, financial situation and future job prospects.”

Ingham was not ordered to reinstate Mr Lazar but was ordered to pay 8 weeks’ compensation.

Terms of the contract and any industrial instruments

These principles must be considered in the context of the terms of the employment contract and any applicable industrial agreement – ie. award, enterprise agreement, individual flexibility agreement.  For example, as with Mr Lazar, it will usually be easier to prove abandonment of employment if the contract or industrial instrument expressly sets out the circumstances in which an employee will be deemed to have abandoned their employment.

Similarly, an employment contract that specifically provides that the contract will automatically come to an end in certain circumstances may remove the need – and the option – to elect to terminate the contract.

Finally, as with any unfair dismissal claim, it is important to ensure that any procedures set out in the contract or industrial instrument are followed to ensure that the dismissal is not considered “unreasonable”.

Summary

An employee who appears to evince an intention not to be bound by the terms of the employment contract can give rise to some delicate issues which need to be carefully addressed by employers.  Care should be taken to ensure that the employee is given every chance to return to their employment or, alternatively, to confirm that they are not returning.  If a conclusion is reached that the employee has abandoned their employment, this may be a reason to dismiss that employee, but it does not mean that procedural fairness and consideration of the harshness or otherwise of the decision can be ignored.

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About Tim Lethbridge:

Tim is Director at Croftbridge. Tim has been a lawyer since 2001, having worked for five years for a small firm and then for just under ten years at a medium-size firm.He has acted in litigation in most jurisdictions, including trials/hearings in the Supreme Court, Court of Appeal, Federal Court, Federal Circuit Court, District Court, Magistrates Court, State Administrative Tribunal, Fair Work Commission and Western Australian Industrial Relations Commission.

Tim strives to turn what can be a complicated, impenetrable and frustrating legal system into something which can be both understood and utilised to achieve the best possible result for the client. Sometimes that means taking a subtle approach – other times, quite the opposite. Tim provides clear, practical, definitive advice and focused, effective representation.