Resignation or unfair dismissal?

Almost every employer can speak about the experience of employing a person whose ultimate resignation came as a relief. Relief at not having to go through the ugly process of terminating someone’s employment and possibly having to defend an unfair dismissal claim. But not every resignation is a successful bar to an unfair dismissal claim.

Constructive Dismissal

A forced resignation is commonly referred to as ‘constructive dismissal’.

Section 386(1)(b) of the Fair Work Act 2009 (Cth) states that a person has been dismissed if they resigned from their employment but were forced to do so because of conduct, or a course of conduct, engaged in by their employer. Section 12 of the Fair Work Act 2009 (Cth) provides a definition for ‘conduct’ which extends to an omission as well as an act.

Applying these sections, it would appear that an employee’s resignation will be deemed as a dismissal in the following circumstances:

• the employee is given an ultimatum by the employer either to resign or face dismissal; and/or
• the employee resigns in response to conduct on the part of the employer which gives them no other reasonable choice but to resign.

Examples of Constructive Dismissal

Giving an ultimatum, or being on the receiving end of an ultimatum, is relatively easy to identity. However, the question of whether or not an employer’s ‘conduct’ gives rise to a resignation which might fall within the definition of constructive dismissal is more difficult to determine.

The following are examples of “conduct” on the part of an employer, which would likely result in a finding that the “resignation” was a termination:

• advising an employee that they can either resign or be dismissed;
• failing or refusing to pay an employee their entitlements, particularly in relation to overtime;
• failing to sufficiently and comprehensively address allegations of bullying and harassment;
• significantly altering a staff member’s employment contract without consulting with them and obtaining their consent. This is particularly relevant in circumstances where an employee’s salary package is altered in a manner which is less advantageous to them;
• Accepting a letter of resignation from employee indicating an intention to resign in the future, especially if such a resignation letter is provided at a time that the employee is suffering from some form of distress.

Lessons to take away

Having an employee resign is by no means a fool proof way of avoiding an unfair dismissal claim.

If an employer is unhappy with an employee’s performance, the appropriate course of action is to address any such issues of under performance and give the employee the opportunity to remedy their under performance.

If you are concerned that you may have been forced into resigning or you are facing an under performance or misconduct issue in your workplace, please do not hesitate to contact me.