A former labourer and construction worker who resigned after being told of a significant reduction in his salary upon returning from injury leave has won his unfair dismissal case.
Kevin Fields, a former worker at Perth glass and construction company Penguin International, will receive $37,500 in compensation after the Fair Work Commission ruled last week he was effectively unfairly dismissed.
Fields resigned from his job in September after returning to work in August from a period of injury and discovering his pay had been reduced from $75,000 to $60,000.
Fields was employed with the business as a project administrator and had been on extended period of leave following an injury which occurred outside the workplace more than a year prior.
Fields told the commission on the day he returned to work, Fields received an email from Penguin International director Mark Moscou indicating “things have changed” and his salary would be based on a $60,000 package until further notice.
He had previously been paid an annual salary of $75,000.
“Your salary was negotiated on an escalating scale and I expect you to be back on top of all your work and more before you will be taking home your full package,” the email read, according to Fields’ evidence.
In September Fields resigned, explaining to the commission he felt forced to accept the $15,000 drop in wages or quit.
Fields said on receiving notice of his resignation, Moscou responded in an email by saying the outcome was “disappointing” and “reducing your salary was purely a business decision to level your income to your output following a prolonged period of absence from work”.
Penguin International told the commission the reduction in Fields’ salary was not harsh or unreasonable given Fields had been on a substantial amount of leave and “had to get back into the swing of the job”.
The company also argued Fields had not been unfairly dismissed but had resigned from his position.
Fields, who was in Australia on a 457 visa at the time, has since returned to the UK.
Fair Work Commission senior deputy vice president Lea Drake found Fields’ salary was reduced by 20% and this constituted termination of Fields’ employment without valid reason.
“I am satisfied that this was a significant reduction (in pay),” she said.
“Mr Fields had been unwell following a serious injury. There was no issue as to the bona fides of his application for paid and unpaid sick leave.
“He returned to work as soon as he had recovered. There was no matter of alleged misconduct. He was not provided with an opportunity to return to his pre-injury duties and have his capacity assessed.
“An assumption was made about his capacity to return to pre-injury duties and his salary was reduced in anticipation of reduced performance before any trial could be attempted.”
Will Snow, senior associate at law firm Finlaysons, told SmartCompany this morning the compensation awarded to Fields is the equivalent of a full six months of pay.
“That is the maximum compensation that he could have been awarded,” he says.
Snow says despite the fact that Fields resigned, the commission found that the 20% was in effect a dismissal.
“The commission found that it was a dismissal in that he had no other choice but to resign,” he says.
“You can demote someone lawfully by reducing duties and pay but if that reduction is found to be ‘significant’, then a dismissal will be found to have occurred.
“Here it is a drop of 20% – which is absolutely significant.”
Snow says it is also likely Fields would have had to have left the country following his resignation.
“There’ve been cases where the commission has found that employers need to be careful in managing the employment of visa holders because the consequence of termination can be so severe and disruptive to their lives,” he says.
“They in all likelihood will need to the leave country.”
Snow says while in some situations it can be appropriate for an employee to accept a new position – especially in the case of a difficult economic environment for the employer and if the worker is willing to accept less pay to stay employed – he doesn’t believe this was the reason in this case.
“(It was) because [the employee] had taken sick leave and his output had dropped that the employer decided there should be corresponding drop in pay,” he says.
Snow says the small businesses must be careful about proposing demotions to employees.
“You can reduce pay or duties but you need to be careful it’s not going to be significant,” he says.
“The other thing that it shouldn’t have been directly linked back to injury and sick leave.”
SmartCompany contacted Penguin International but did not receive a response prior to publication.