Termination of Employment: Key Lessons from Recent Fair Work Commission Decisions

Recent decisions of the Fair Work Commission (Commission) offer timely and practical guidance for employers navigating one of the most sensitive aspects of the employment relationship — termination.

Ultimately, each case turns on its own facts. However, several important lessons emerge. Employers should be mindful that:

1. employees may be deemed to have been constructively dismissed where they resign in response to an unsafe working environment — for example, where an employer fails to adequately address substantiated sexual harassment;
2. medical evidence can be critical in determining whether an employee had the capacity to resign; and
3. they must have a valid reason for dismissal but also ensure the process is procedurally fair.

We unpack these decisions and outline the practical steps employers should take to minimise risk when ending employment.

1. Fair Work Commission: Resignation After Sexual Harassment Was A Dismissal

Madison Snow v WA Mirning People Aboriginal Corporation RNTBC [2026] FWC 1363 concerned an application under s 365 of the Fair Work Act 2009 (Cth) (Fair Work Act) concerning alleged general protections contraventions involving dismissal. The Commission  found that an employee had no real option but to resign after her employer failed to remove the director who had sexually harassed her which left her workplace unsafe.

Facts

In May 2025, Ms Snow was told by a colleague that they had witnessed a director, Mr Schultz, filming her buttocks.

Two internal investigations subsequently substantiated multiple allegations (which included inappropriate touching, sexual comments, and repeated remarks about her appearance) of sexual harassment against Mr Schultz.

On 19 September 2025, the CEO advised that:

1. Mr Schultz would receive a final warning, attend meetings remotely, and be restricted from attending the office without notice; and
2. the CEO would take steps to ensure that appropriate systems and processes would be put in place to deal with any similar incidents in the future and would consider Ms Snow’s input on these steps.

Ms Snow resigned on 27 October 2025.

Ms Snow claimed she was forced to resign due to an unsafe work environment arising from a sexual harassment incident involving a director, deficiencies in the investigation, and the Board’s decision to retain the director.

The Respondent raised a jurisdictional objection, claiming Ms Snow voluntarily resigned and was therefore not dismissed under s 386.

Decision

The Commission rejected the jurisdictional objection and found Ms Snow was forced to resign. The matter was listed for conference in the usual course. Key findings:

1. inadequate response: the Commission accepted that Mr Schultz’s conduct amounted to serious misconduct and Ms Snow’s workplace was unsafe. The Board’s actions were insufficient. The Board should have taken all possible steps to remove Mr Schultz as a director.
2. no real alternative but to resign: it was unreasonable to expect Ms Snow to remain in the workplace while Mr Schultz remained a director. Ms Snow discharged her onus to demonstrate that she had “no real, effective or meaningful option but to resign“. Accordingly, Ms Snow was dismissed within the meaning of s 386.
3. payment in lieu: a subsequent payment in lieu of notice did not change the involuntary nature of the resignation.

Key Takeaways

1. where serious misconduct is proven, particularly sexual harassment, inadequate responses may be legally insufficient.
2. employers must provide safe workplaces by, among other things, reducing the risk of sexual harassment. If the risk remains, a resignation by an employee who was sexually harassed may be treated as a dismissal.

2. Fair Work Commission Full Bench: Employee had the capacity to resign

Commonwealth of Australia (as represented by Services Australia) v Luke Wilson [2026] FWCFB 82 concerned an application for an unfair dismissal remedy under s 394(1) of the Fair Work Act. The Full Bench found the employee was not “dismissed” because the Respondent Employer did not force the resignation nor act unreasonably upon it.

Facts

Mr Wilson’s employment issues began in May 2024, when he was transferred to the Maryborough Smart Centre. He developed a respiratory illness due to mould exposure and commenced working from home at his request.

Mr Wilson alleged bullying and mistreatment during the latter half of 2024.

From 10 February 2025, Mr Wilson was assessed as having no capacity for work due to an adjustment disorder, anxiety and depression.

In March 2025, while medically unfit, he resigned. He later claimed the resignation was forced by workplace issues affecting his health.

At first instance, the Deputy President found Mr Wilson had been dismissed and awarded $33,348.62 in compensation in lieu of reinstatement.

The employer appealed, alleging errors of fact and law, particularly in finding the resignation was forced.

Decision

The Full Bench upheld the appeal and found Mr Wilson was not dismissed. Key findings included:

2. test under s 386 of the Fair Work Act 2009: the question is whether a reasonable employer would understand the employee to be truly intending to resign. The Full Bench held at [30] that: … the issues raised touch upon the circumstances in which it is not reasonable for an employer to act upon a resignation received in circumstances in which the employee is in a state of emotional distress for the purposes of s 386(1)(a) and what might constitute conduct “by his or her employer” when assessing whether an employer was forced to resign for the purposes of s 386(1)(b)…
3. errors at first instance: the Deputy President erred by attributing Comcare’s conduct to the employer, including delays in workers’ compensation payments from 11 February 2025. While financial pressure and uncertainty influenced Mr Wilson’s decision, these arose because he had exhausted his leave entitlements and the separate handling of worker’s compensation by Comcare.
4. capacity to resign: the Full Bench found error in discounting medical evidence that Mr Wilson had the “sound mind” to understand the consequences of resigning. This evidence was the “most critical feature” that would have satisfied a reasonable person that Mr Wilson “genuinely and rationally” wished to resign.

Key Takeaways

1. Employers should exercise caution where resignations are given under stress, but a resignation will not be a dismissal if it is genuine, voluntary, and rational.

3. FWC: “inappropriate” interaction alone not enough to justify dismissal

In Bryan A Davies v The Trustee For Safety Xpress Unit Trust [2026] FWC 1352, an employee  was awarded $10,849.61 as a remedy for unfair dismissal where their employer lacked a valid reason and failed to procedural fairness obligations.

Facts

This case concerned an application by Mr Davies for an unfair dismissal remedy pursuant to s 394. Mr Davies was a warehouse assistant when he was dismissed by Respondent Employer following a series of incidents.

On 7 October 2025, Mr Davies received a letter of termination. The letter gave the following reasons:

1. fraudulent safety reporting – completing safety forms without required information and signing them in the names of senior management without consent.
2. use of recording devices – using, or attempting to use, audio or video recording devices in the warehouse and during meetings contrary to express instructions.
3. CCTV footage requests – repeatedly pressuring staff for access to CCTV footage despite being advised of the proper process.
4. staff concerns – employees reporting concerns that they were being covertly recorded on multiple occasions.
5. failure to follow directions – providing argumentative responses instead of the required structured reply and continuing to raise matters that had already been resolved, contrary to instructions.

A director at the Respondent Employer told the Commission that further “major” reason (mistakenly left off the termination letter) was Mr Davies turning up unannounced at the HR manager’s office to provide a written response to a second warning letter, having previously been warned he needed an appointment.

Decision

The Commission accepted Mr Davies had been unfairly dismissed and awarded him $10,849.61 in compensation.

Key findings included: 

1. no valid reason for dismissal – the Commission rejected there was any valid reason to dismiss Mr Davies. Although Mr Davies engaged in misconduct towards the HR manager this was not sufficiently serious as to establish a valid reason for dismissal, particularly in the absence of direct evidence from HR manager.
2. procedurally unfair – In the alternative, even if there was a valid reason, the Respondent Employer did not observe procedural fairness obligations. Ms Davies was not notified of a valid reason for his dismissal prior to a decision being made to terminate his employment nor given a reasonable opportunity to respond to the allegations.

Key Takeaways

1. Employers must ensure reasons for dismissal are valid and clearly documented.
2. Employers must follow procedural fairness when terminating the employment of an employee.

Contributors

Angus Dowey, Lawyer