Employers who terminate an employee’s employment usually expect that will be the end of the matter and their decision will not be challenged. In reality, many dismissals can be challenged and be the subject of scrutiny by a court or the Fair Work Commission (“FWC”). You may be aware that the FWC can reinstate an employee as an unfair dismissal remedy, but you might not be aware that if an employee makes an adverse action claim they may be able to seek reinstatement pending a final decision. That’s what happened in a recent urgent reinstatement application before the Federal Court.
Background
The employee founded the business of the employer, but in 2022 sold the business to the employer with various payments required to be made over the following years. As part of the sale agreement the employee would stay involved in the company and was appointed the CEO.
The employer dismissed the employee for serious misconduct in April 2025, just two months before the end of an “earn out” period.
The employee made a claim alleging adverse action under the Fair Work Act 2009 (Cth) (“FW Act”) and claimed whistleblower victimisation. The employee also made an interlocutory application for his urgent reinstatement and sought an order from the Court that the employer be restrained from terminating his employment before 30 June 2025.
In considering this application the Court had to consider a number of questions, including:
Does the employee have a prima facie case?
Does the balance of convenience favour the grant of an injunction?
A prima facie case
In seeking reinstatement, the employee had to show that there was the possibility that one of the substantive claims for adverse action or whistleblower victimisation would be successful.
In relation to the adverse action claim the employee pointed to complaints he raised about senior management bullying him in events leading up to the termination of his employment as well as the timing of the termination being close to his “earn out” period. The Court found that it was possible for the employee to make out these claims and accordingly there was a prima facie adverse action case.
The employee also claimed his contract was terminated because he was a whistleblower, yet the Court was unsatisfied that the employee made out this claim.
The balance of convenience
The Court also needed to weigh up how convenient granting an injunction would be to both parties. This required consideration of the injury which the employer would be likely to suffer if the injunction was granted against the injury which the employee would suffer if the injunction was not granted.
The employee argued that reinstatement would preserve business continuity and maximise business performance in the critical period leading up to his earn out period which was in both parties’ fiscal interests.
The employer argued that the relationship between the employer and employee had fundamentally and irreparably broken down. This was not just the employer’s account, but also the position of the employee. The Court had to consider whether reinstatement should be ordered given it would be disruptive, since the employee had not worked in the role for three weeks, and that the serious allegations of bullying, abuse and harassment was evidence of a relationship breakdown.
What the Court decided
The Court commented that it had not been an “easy decision” and that there was a lack of trust and confidence in the employee by the employer. However, given the harm which might be caused to either the employee or his financial interests the Court decided to reinstate the employee.
The case is significant given the acknowledged breakdown in relationship not being a barrier to the Court ordering the urgent reinstatement application.
