Is it still a dismissal if everyone agrees to part ways? The short answer is no.
What if you (allegedly) said your employee would be free from their non-competes and then tried to enforce those restraints? Still not a dismissal.
The Fair Work Commission has confirmed that if employment ends by mutual agreement, it is not a dismissal, even where the employer initially intended to terminate the employee. This means that any failure by the employer to follow through on a promise to release the employee from post-employment restraints (such as non-compete clauses), as part of that mutual agreement, does not affect whether a dismissal occurred.
The Aitken Real Estate case
Felipe Martin was a real estate agent at Aitken Real Estate. In early 2025, a disagreement over commission payments escalated. Martin was called a “troublemaker” and “a cancer to the business” and was told that he should resign. Martin refused to resign, ending the call by saying “Make me”. Shortly after, his access to essential software was cut off.
At a “proposed termination meeting,” Aitken Real Estate presented allegations of misconduct and poor performance. Martin denied the allegations but agreed that the relationship had broken down beyond repair.
Martin said he wanted termination with ‘no bad blood, no repercussions’ and a ‘fair resolution’. Both sides agreed that Martin would be terminated by mutual agreement, with four weeks’ pay in lieu of notice and all his entitlements.
Martin then accepted new employment with a competitor, Chapman Real Estate.
Mutual separation = no dismissal
When Aitken Real Estate learned that Martin was now working for a competitor, it threatened legal action to enforce his post-employment restraint obligations.
Martin responded by lodging an unfair dismissal application, claiming he had been constructively dismissed under false pretences, including that he was released from his non-competes which forced him to resign.
The Fair Work Commission determined that:
- Martin had not been dismissed under the Fair Work Act 2009 (Cth).
- Although Aitken Real Estate intended to dismiss him, they ultimately reached a mutual agreement, not resignation or dismissal.
Once Martin accepted the outcome and confirmed there were “no other solutions,” the end of his employment was a mutual decision, not a dismissal nor a resignation.
Non-competes are a separate issue
Martin claimed that Aitken Real Estate “misrepresented that he was released from his post-employment obligations” and that this misrepresentation induced him to agree to the mutual separation.
The Commissioner accepted that Martin may have assumed he was released of his non-compete obligations. However, it confirmed that any dispute about the non-compete promise was irrelevant to whether a dismissal occurred.
Any failure by an employer to comply with their promise to release an employee of their non-competes as part of a mutual separation agreement, does not change the fact that there was a mutual agreement, which means the employee could not have been dismissed.
In the Commission’s view, if Aitken Real Estate breached the agreement by not waiving restraints, that is a separate legal issue and a “matter for the courts”. It does not change the fact that the employment ended by mutual agreement.
Key takeaways
- Whether an employee was dismissed depends on how the employment ended — not the employer’s intentions at the start of the process.
- Where employment ends by mutual agreement, the employee cannot bring an unfair dismissal claim.
- Disputes about post-employment restraints (such as non-compete or non-solicitation clauses) are contractual matters. Whether restraints are enforceable will depend on the specific terms, any agreement to vary or waive them, and the parties’ conduct.
Read the full case here: Felipe Martin v Jim Aitken & Partners No. 1 Pty Ltd t/as Aitken Real Estate [2025] FWC 1542
If you need advice about an employee leaving the business, please feel free to contact us at admin@kvlaw.com.au or give us a call on (08) 6109 6644.