‘Constructive dismissal’ refers to circumstances where an employee resigns from their employment, but the termination of employment is deemed to be at the initiative of the employer. In such instances, it needs to be demonstrated that the employee’s resignation occurred as a result of the employer having engaged in conduct which had the intention of bringing the employment to an end, or which resulted in the employee having no choice but to resign. Conduct which could result in constructive dismissal can include, but is not limited to, situations where an employee is effectively instructed to resign by the employer in the face of a threatened or impending dismissal; or where contractual terms are repudiated, (for example, where the employer unilaterally reducing hours of work).
In a recent case heard by the Fair Work Commission, it was determined that while an employee had resigned from her employment due to feeling that she was under ‘immense pressure’ from her employer, the resignation itself did not amount to a constructive dismissal. Rather, it was determined that the employee did have alternative options available to her which she failed to explore and as such, she had not been ‘forced’ to resign.
The employee commenced as a full-time Store Manager with a retail industry employer in late 2015. As Store Manager, she was responsible for the management of one of the employer’s retail stores. After having been employed for a period of 19 months, the employee submitted her resignation via email, terminating her employment.
Prior to submitting her resignation, the employee had applied for a period of extended annual leave which was initially approved by the employer. The employee subsequently planned, booked and paid for an overseas holiday. However, it was found by the employer that at the time of having requested the period of leave:
- The Store Manager had failed to disclose that her Assistant Store Manager already had a period of approved leave scheduled during the requested period of absence.
- That the employee had sought approval to engage two casual employees as a means to help cover both periods of absence, which had been denied.
Upon becoming aware of the Assistant Store Manager’s approved leave, the employer made the decision was made to revoke its initial approval for the Store Manager’s leave due to the operational requirements of the company and on the basis that they had been misled due to operational information having been withheld from them by the Store Manager at the time she had applied for the leave.
In response to the employer’s withdrawal of their approval for the leave, the Store Manager emailed the employer stating that she was resigning from her position and that the employer had given her “no option but to resign” due to her having already made travel plans that could not be changed or cancelled. The Store Manager further claimed that she had been forced to resign “under duress” because she had been placed in what she referred to as being “an impossible position” by the company.
The resignation email was provided after the employee had taken time to seek advice from friends and family members, and as such was not deemed to have been submitted in the heat of the moment.
In determining whether constructive dismissal has occurred, it is the responsibility of the employee making the claim to establish and demonstrate:
- that their resignation was forced by the actions or conduct of the employer.
- that the employee had no alternative option but to resign from their employment thereby making their termination having arisen at the initiative of the employer.
In making its findings for this particular case, the Commission did acknowledge that:
- the employer’s decision to withdraw approval for the period of approved leave could be seen as being a harsh reaction; and
- it could understand why the Store Manager felt as though this action was being taken as a form of punishment
however, it was determined that the employer’s actions were based on the genuine and valid operational requirement of the business, and that within reason, an employer “does have the right” to determine the time for taking annual leave.
Based on the circumstances of this particular case, it was determined that the employer’s decision to revoke the employee’s leave was not unreasonable. While the employee may have initially felt that she had no other option but to resign from her employment, she failed to explore other potential options which may have been available to her (such as to seek to reduce the period of leave requested).
While there is a risk of an employee lodging an unfair dismissal claim on the basis of constructive dismissal in situations where they have chosen to resign following conflict or disagreement having occurred, there are steps which can be taken to help minimise any such potential risk. Such steps include:
- Ensuring that due process is adhered to when undertaking performance management or redundancy processes
- Not issuing an employee with an ultimatum (i.e. giving them the option to either resign or to have their employment terminated).
- Not making the workplace so uncomfortable for an employee they have no choice but to leave. (such as imposing unauthorised changes an employee’s hours of work or remuneration).
Should you have any questions regarding constructive dismissal, or any HR matter, please contact a member of our HR Advice Team on 1300 720 004 or [email protected]
Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.