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What is Constructive Dismissal?

Constructive Dismissal

Whenever an employee initiates the termination of their employment (ie., resigns), it is important for the employer to consider if this resignation is purely voluntary or if the resignation was submitted following any pressure from the employer (ie., requesting the employee to resign, or making it so difficult for the employee that resignation is there only choice).  If the resignation was the desire of the employer, it may be that the termination will be found to have been brought about by the employer and therefore the employee will be deemed to have been dismissed.

This would be referred to as a ‘constructive dismissal’ and is an unlawful termination of a contract of employment.

The Fair Work Act provides that a person has been dismissed if they resigned from their employment but were forced to do so because of conduct, or course of conduct, engaged in by the employer.  Conduct includes both an act and a failure to act.

The Fair Work Act allows for a finding that an employee was dismissed in the following situations:-

  • Where the employee is effectively instructed to resign by the employer in the face of a threatened or impending dismissal; or
  • Where the employee quits their job in response to conduct by the employer which gives them no reasonable choice but to resign.

Actions that employers may take that may constitute constructive dismissal:-

  • Reducing an employee’s work hours and a reversion to casual employment. Although the employer is not intending for the employee to not work at all, this action would be deemed to repudiate the contract of employment and therefore would be dismissal at the initiative of the employer.
     
  • An employee who was unwell and distressed, who submitted a letter indicating an intention that they plan to resign in the future, was deemed not to be an effective notice of resignation. However the employer who accepted the resignation in these circumstances was deemed to have terminated the employee’s employment.
     
  • An employee resigned after receiving under half the wages they were owed over a period of 4 months. This was deemed a forced resignation due to the conduct of the employer.

In the circumstance of constructive dismissal the onus will be on the employee to evidence that they did not resign voluntarily and that their resignation was forced by the employer.

 

HR Advice Online can assist you with determining if you risk constructive dismissal claims.

 

Please contact us on 1300 720 004 or via email at [email protected] for more information on how we can help you.

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.

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