Worker Claims Forced Resignation Due to Payroll Issues

 The Fair Work Commission (FWC) recently handled an unfair dismissal claim by a software designer against a technology company. The worker alleged he was forced to resign due to non-payment of wages, while the employer argued he voluntarily resigned after refusing to transfer to their UK payroll. This case underscores the complexities of managing international employees and highlights the need for clear communication and careful consideration of tax and compliance issues when staff work remotely from overseas locations.

The worker, a British national residing in Australia, began his employment with the technology company in April 2021 as a software designer. His contract stated he would work from within Australia. However, in August 2021, he was authorized to work outside Australia “until further notice” and subsequently relocated to the UK with his children. While working from the UK, he continued to be paid through the Australian payroll system, with Australian taxes deducted. This arrangement lasted nearly two years, during which time he spent most of his time in the UK and Japan, with occasional visits to Australia. In September 2022, the worker initially resigned and proposed becoming a contractor. However, after discussions with his manager, he remained an employee and continued working from the UK.

In June 2023, the company’s financial controller raised concerns about the tax risks associated with having an Australian employee working long-term in the UK. This led to discussions about transferring the worker to the UK payroll. The head of people for the company informed him in July 2023 that he needed to move to the UK payroll if he intended to continue living there. The worker initially agreed but later raised concerns about his tax residency status, stating that according to his tax advisor, he had not been an Australian resident for tax purposes for the past two years.

Over the following months, the company made numerous attempts to have the worker sign documentation for the payroll transfer and provide UK bank account details. He consistently refused, insisting that the company first address his concerns about Australian tax reporting and amend its payroll reporting for the previous two years. Due to this impasse, the company removed him from the Australian payroll in November 2023, effectively ceasing his salary payments. Despite this, he continued to work for the company without pay for several months. The head of human resources explained that by mid-March 2024, she had concluded that he was not prepared to engage with her. Although she wanted to make sure that he was paid his salary and backpay, she needed his UK bank account details.

In March 2024, the worker returned to Australia. He informed the company of his return and requested immediate payment of his outstanding salary and superannuation. The company advised that due to payroll processing timelines, he would receive his backpay in the May pay period. The head of human resources stated that unfortunately, by the time he had advised her on 4 April 2024 of his return to Australia, the cutoff for the April pay period had already passed. Dissatisfied with this response, the worker submitted his resignation on 26 April 2024, claiming he was forced to resign due to financial distress caused by the non-payment of his salary.

The FWC ultimately ruled in favour of the employer, finding that the worker was not forced to resign and therefore had not been dismissed within the meaning of the Fair Work Act. The Commission emphasised that the non-payment of wages was a consequence of the worker’s own decisions, stating that “the reason the worker was not paid for five months was because he refused to do what the company reasonably required of him, namely that he transfer to the UK payroll.” This underscores the Commission’s view that the worker’s actions, rather than the employer’s conduct, led to the non-payment of wages.

The Commission also noted that the worker had other reasonable options available to him before resigning, stating that “there were reasonable options open to the worker other than resigning. He chose not to take them.” In its conclusion, the Commission stated that it “rejects the worker’s contentions that other factors forced him to resign, whether individually or collectively. Many of these additional matters were first raised in the submission document that he filed the day before the hearing. It is simply not credible that bonus arrangements, the absence of pay rises, and the other matters to which the worker referred compelled his resignation.” This quote emphasises the Commission’s scepticism towards the worker’s additional claims and the importance of raising all relevant issues in a timely manner during unfair dismissal proceedings.

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