When does a demotion amount to dismissal?

In Taylor v Department of Justice and Community Safety (2026), a Victorian public sector employee successfully argued his demotion and transfer following a disciplinary process was not authorised by the VPS Agreement 2020. The Fair Work Commission (FWC) then argued the demotion and transfer constituted a repudiation of his contract of employment.

A repudiation of a contract of employment by an employer will occur if the employer, by words or conduct, displays (in an objective sense) an intention to no longer to be bound by the employment contract or to fulfil it only in a manner substantially inconsistent with the contractual obligations. If a repudiation is accepted by an employee, and this brings the employment relationship to an end (i.e. the employee leaves), the employee will be dismissed for the purposes of Fair Work Act 2009 (Cth) dismissal remedies.

In this case, the FWC ruled it was a fundamental term of the contract of employment that the employee be employed as a Prison Supervisor; therefore, his demotion from Prison Supervisor to Senior Prison Officer constituted a repudiation by the employer of the employment contract. The FWC also found that by making the demotion effective on the day the employee was notified was also repudiatory conduct.

The employer argued that, when informed of the demotion, the employee had the choice of either accepting the repudiation and bringing the contract to an end or availing himself of the dispute procedures in the enterprise agreement to dispute the disciplinary outcome. By electing the latter, the employee affirmed the employment contract and lost the right to later accept the repudiation. The FWC rejected the argument, observing that an employment contract and an enterprise agreement are different instruments, and the enterprise agreement is not incorporated in the contract of employment.

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