Careful changing an employee’s role – it could cost you

An employer should be careful when unilaterally changing an employee’s role. If there is a consequent diminution to an employee’s role then an employer may have repudiated the contract of employment and be liable to pay compensation.

When considering whether or not there is a diminution to the role an employer needs to take a “holistic” approach when comparing the old role and the new role. Diminution to the any of the following aspects of a role could amount to repudiation:

• remuneration; or
• employee’s status in the organization; or
• number and/or status of people reporting to the employee; or
• status of the person or people to whom the employee reports; or
• the number or type of tasks that the employee performs.

The Supreme Court of Victoria recently found that such a diminution had occurred in the role of a senior Unisys Australia Pty Ltd (Unisys) employee. The employee’s manager had directed the employee to a new specialist position that was focused on negotiating “mega deals”. The employee never expressly agreed to change his duties. Several weeks after the employee started in his new role he claimed that his new role was inferior to his old role as he:

• performed less tasks;
• had less people reporting to him; and
• had less responsibility.

Unisys rejected the position taken by the employee and consequently employment was terminated with payment of leave entitlements only. The employee took action seeking payments including payment in lieu of notice.

The Court found for the employee and awarded him six months’ pay in lieu of notice after ruling that Unisys had repudiated his employment contract by moving him to a specialist role. The payment was considerable as it was calculated on annual remuneration in excess of $550,000.

For further information please contact on of our Workplace Relations lawyers.

Whittaker v Unisys Australia Pty Ltd [2010] VSC 9 29/01/2010

Author: James Hooper