Worker claims forced resignation over Ponzi scheme

A worker who made an unfair dismissal claim with the Fair Work Commission has argued that he was allegedly forced to resign due to his employer allegedly taking part in a Ponzi scheme. The worker claimed that his employer had hired a compromised replacement for him so it could continue profiting from the Ponzi scheme. And that he was forced to resign as he was being bullied by his manager and his replacement.

In this article, we’ll take a look at the events of this interesting unfair dismissal case – Mr Oliver Reeve v Pkf (Gold Coast) Hr Services Pty Ltd [2023]. But first, we’ll outline how the law regards cases where employees are forced to resign, which is otherwise known as a constructive dismissal.

What is a constructive dismissal?

Constructive dismissal refers to a situation in which a worker is compelled to resign because their employer fails to provide a safe and reasonable workplace environment. Despite the employee formally resigning, it is considered as if they were dismissed against their will. Hence, they can be eligible to make an unfair dismissal claim with the Fair Work Commission.

In order to prove constructive dismissal, the burden of proof lies with the employee. They must demonstrate that the employer breached a fundamental part of the employment contract, leaving them with no other option but to resign. The employer’s actions must be the primary contributing factor, and leaving the job must be a last resort. That is, resigning was the only reasonable choice available. The employee must have genuinely lacked alternative options.

Section 386(1)(b)) of the Fair Work Act 2009 contains a provision relating to this type of situation. It states that an employee will be considered to have been unfairly dismissed by the employer if “the person resigned from his or her employment but was forced to do so because of the conduct or course of conduct, engaged in by his or her employer.”

Director forced to resign due to employer’s alleged unethical practices

Oliver Reeve was employed as Director Audit and Assurance for renowned accountancy and business advisory firm PKF HR Services Pty Ltd. He joined the firm on 14 March 2022. The key event of this unfair dismissal case took place on 31 October 2022, when Mr Reeve tendered his letter of resignation.

Mr Reeve told PKF HR Services that he had been forced to resign for multiple reasons. One of the chief reasons was that the Managing Director of PKF HR Services, Matthew Butler, was allegedly involved in “wrongdoing with a client,” Walter Doyle Group.

This company was allegedly operating an international Ponzi scheme. The fee for the Ponzi scheme was allegedly 50 per cent of PKF HR Services’ annual revenue. Mr Reeve claimed that PKF HR Services continued providing services to Walter Doyle Group and turned a “blind eye” to their impropriety.

Mr Reeve says he was forced to resign due to Ponzi scheme

At his unfair dismissal hearing, Mr Reeve argued to the Fair Work Commission that Mr Butler recruited a compromised replacement for him, Mr Green. He was allegedly hired at three quarters of Mr Reeve’s salary. Hiring the compromised replacement was allegedly part of Mr Butler’s plan to cover up his wrongdoing.

Mr Reeve told the Fair Work Commission that Mr Butler then began excluding, bullying and discriminating against him with the help of Mr Green. He had been assigned an “unfair and unreasonably stressful amount of work.” And he had been excluded from the Audit & Assurance Division. This was intended to make Mr Reeve leave the company so that Mr Butler could continue profiting from the Ponzi scheme.

From these actions, Mr Reeve said he could not arrive at any other conclusion than that he was wanted out of PKF HR Services. And that if he remained at the company, it would pose a serious risk to his mental health career and accomplishments. Therefore, he was forced to resign.

Mr Reeve details other unethical practices that forced him to resign

In his unfair dismissal application, Mr Reeve outlined several other reasons for his forced resignation. He claimed that he was asked to perform audits where there was a conflict of interest. Mr Reeve also claimed that he was asked to “rush through” an audit.

Mr Reeve also told the Fair Work Commission that PKF HR Services had requested that he perform audits for two Walter Doyle Group entities that he felt were unethical. He felt this way as he was aware of the Ponzi scheme.

PKF HR Services refutes Mr Reeve’s claims and challenges his credibility

PKF HR Services categorically denied all the allegations Mr Reeve made in his unfair dismissal application. The company told the Fair Work Commission that they were not only “deliberately dishonest” and “vexatious.” But the allegations were also “vaguely articulated” and “wholly unsupported by any probative evidence.”

It was the contention of PKF HR Services that Mr Reeve’s had made these allegations for the “purpose of damaging [the company’s] business. It also questioned Mr Reeve’s credibility and the lack of formal reports or complaints he made through appropriate channels regarding the alleged criminal activities of Walter Doyle Group.

PKF HR Services argued that Mr Reeve had other options available to him other than being forced to resign. As Director Audit and Assurance, PKF HR Services argued that Mr Reeve was obligated to raise any concerns “promptly in accordance with applicable policies and procedures.” However, he had “failed to do this.” The company stated that there were “clear avenues” for Mr Reeve’s to raise any concerns he had so that the company could deal with them.

PKF HR Services denies Mr Reeve was bullied and forced to resign

In regards to the alleged bullying Mr Reeve suffered, PKF HR Services told the Fair Work Commission that there was “no probative” evidence to support the claim. The company also rubbished the idea that Mr Green was hired to replace Mr Reeve and forced him to resign, stating it was “untrue.” It also highlighted that there was “no evidence” to support the claim that Mr Reeve was excluded from the Audit & Assurance Division.

In response to Mr Reeve’s unfair dismissal claim, PKF HR Services also stated that he was not required to undertake any audit work that posed a conflict of interest or compromised independence. The company argued that any instances where independence concerns arose were a result of Mr Reeve’s failure to properly assess the risks at the commencement of the audit.

Was he forced to resign? Fair Work Commission rules on the unfair dismissal case

At Mr Reeve’s unfair dismissal hearing, the Fair Work Commission carefully considered legal precedents concerning unfair dismissal cases where employees were forced to resign. It emphasised that the termination of an individual’s employment must be at the initiative of the employer for it to be considered a dismissal. It noted that there must be some action on the part of the employer that either intends to end the employment or has the probable result of doing so.

Considering the evidence presented, the Fair Work Commission found that Mr Reeve’s resignation was not a dismissal at the initiative of PKF HR Services. But rather, that he had voluntarily resigned. It found that while the allegations Mr Reeve made against the company were serious, he never laid out in detail these allegations. And there was no basis to support his claim that PKF HR Services was taking part in a Ponzi scheme or other fraudulent activities.

“It was my impression that he appears to genuinely hold to the views he has expressed, despite my conclusions above that the allegations appear to be simply without any foundation,” said the Fair Work Commission.

“Detached from the reality of the situation:” Fair Work Commission says Mr Reeve had alternatives to resigning

The Fair Work Commission found that Mr Reeve had several options he could have taken instead of resigning from his employment. He could have raised concerns about unethical practices through PKF HR Services’ established avenues.

“Ultimately, [PKF HR Services] submitted that [Mr Reeve] chose not to utilise those avenues,” the Fair Work Commission said. “Instead, he raised many of his concerns with [PKF HR Services] for the first time on the morning of 31 October 2022, and then resigned later that afternoon.”

The Fair Work Commission stated that while it did not know why Mr Reeve’s made the allegations without material evidence, it believed that his mental health played a part. During his unfair dismissal hearing, Mr Reeve’s had stated that he had been diagnosed with several mental health conditions.

It was the view of the Fair Work Commission that Mr Reeve’s “judgement may have been significantly impaired” due to his mental health conditions. And that this would offer some explanation why he held views about PKF HR Services that “appear detached from the reality of the situation.”

Ultimately, the Fair Work Commission ruled that no dismissal had occurred. Therefore, it did not have the jurisdiction to determine an unfair dismissal application. Mr Reeve’s unfair dismissal claim was therefore dismissed.

Proving a constructive dismissal is difficult

In this unfair dismissal case, the Fair Work Commission found that Mr Reeve had alternative options available other than resigning. That, in addition to the fact that many of his allegations made against his employer lacked evidence.

With regard to constructive dismissals, the Fair Work Act 2009 states that “where a person resigned, ‘but was forced to do so because of conduct, or a course of conduct’ by their employer, they will be deemed to have been dismissed. This might seem easy to prove for an employee. However, the Fair Work Commission has historically applied a very narrow interpretation of constructive dismissal in unfair dismissal cases.

It is therefore very challenging for an employee to prove that they had no other alternative available but to resign. Rather than that they simply resigned on their own initiative. Another challenge is that the onus is on the employee to prove that they experienced a constructive dismissal. They have to prove that their resignation was not voluntary. And that all other options to ameliorate their situation were exhausted prior to resigning.

In the case of Mr Reeve, this clearly was not the case as he had failed to raise concerns about his employer’s alleged unethical acts through its established avenues.

Have you been unfairly dismissed? Call A Whole New Approach today.

If you believe you have been unfairly dismissed, reach out to A Whole New Approach now. Whether you were forced to resign or feel you were unjustly dismissed for another reason, our team can provide expert representation for your unfair dismissal case. With over 30 years of experience and a dedicated team of professionals, we have assisted more than 16,000 employees across all states in the country.

When you consult with us, you can expect a completely free initial consultation where we will attentively listen to your case and offer upfront guidance. It’s important to act swiftly in unfair dismissal cases, as you have only 21 days to lodge your claim with the Fair Work Commission. Our team can assist you throughout the process, ensuring that you maximize your chances of receiving the compensation you deserve.

While we are not lawyers or affiliated with the Fair Work Commission or any government agency, we possess extensive expertise in the legal complexities surrounding unfair dismissals. Employers recognise and fear our reputation, built upon our vast knowledge and understanding of the field. We take pride in being available to all clients seven days a week, providing prompt services, settlements and nationwide coverage across Australia.

A Whole New Approach is here to offer you the information, advice and representation necessary to protect your workplace rights. Don’t allow unfair treatment to go unchallenged. Contact us today at 1800 333 666 for a free and confidential conversation.