In the modern workplace, navigating conflicts between employers and employees can sometimes pose a complex challenge. Where an employee believes they had no real choice but to resign due to the conduct of their employer, they may assert that they have been constructively dismissed and commence an unfair dismissal or general protections claim.
What is Constructive Dismissal?
The concept of constructive dismissal (or “forced resignation”) is a well-established principle in statutory and common law. In Australia, constructive dismissal is legislated in section 381(b) of the Fair Work Act 2009 (Cth).
For an individual to be successful in a claim for constructive dismissal they must establish that:
Historically, the Fair Work Commission has been reluctant to accept constructive dismissal claims. This is because, as discussed in Doumit v Engineering Construction Pty Ltd, Print N6999, there is a narrow line between employer conduct that leaves an employee no real choice but to resign from employment and conduct that cannot be held to force an employee’s resignation at the initiative of the employer. It is important that this line is stringently observed so that the remedy for constructive dismissal claims is not invoked in circumstances where the discretion of the resigning employee gives rise to the termination of their employment. To correctly observe this line, the court will consider the employer’s conduct objectively. In circumstances where the employer’s conduct is ambiguous and the impact it has on the decision to resign is based on the subjective unilateral response of the employee, the court has adopted a cautionary approach and has been hesitant to treat these resignations as anything other than voluntary.
Case Law
This area of law is informed by several key cases. Two of these cases are Love, Danny v Alcoa of Australia Limited [2012] FWA 4300 (Love Case) and Marks v Melbourne Health [2011] FWA 4024 (Marks Case).
Love Case
The Love Case involved an employee, Mr Love, who brought a claim for unfair dismissal against his employer, a business trading under the name Alcoa World Alumina Australia (Alcoa), on the ground that he was constructively dismissed. In this case, Mr Love had admitted to taking company property without the authorisation of Alcoa. Following this, Alcoa scheduled a meeting with Mr Love. The purpose of this meeting was not disclosed to the plaintiff however there was an impression that the meeting was important and that his attendance was necessary. Prior to the meeting, Mr Love had two discussions with a senior employee, Mr Hope. Mr Love stated that during these discussions Mr Hope suggested that Alcoa had already decided to terminate his employment. The plaintiff did not attend the scheduled meeting and instead made a call to his supervisor and line manager, Mr Muir. Mr Muir gave evidence that, during this call, Mr Love informed him that he would be resigning from his employment with Alcoa. Following this call, the plaintiff failed to attend work for four shifts. In considering the circumstances and evidence of the case, the Fair Work Commission (FWC) determined that this statement constituted resignation on behalf of Mr Love. They then gave their attention to the question of whether Alcoa’s conduct forced Mr Love to resign from his employment. It was ultimately found that the defendant had not decided to terminate the plaintiff’s employment prior to the scheduled meeting. Rather, it was the FWC’s interpretation that Mr Love, who was aware of Alcoa’s position due to Mr Hope, other employees and his own knowledge of the facts, made the decision to resign voluntarily. On this basis, the case was dismissed. Mr Love applied to have this decision appealed however this was rejected (see Danny Love v Alcoa of Australia Limited [2012] FWAFB 6754).
Marks Case
The Marks Case involved an employee, Mr Marks, who brought a claim for unfair dismissal against his employer, Melbourne Health, on the ground that he was constructively dismissed. In this case, Mr Marks had delivered a letter to Melbourne Health indicating his intention to resign in the future. As this letter was sent during a period that he was distressed and unwell, and he later indicated that he did not have any real intention of resigning, it was held not to be an effective notice of resignation. However, in purportedly accepting this resignation, Melbourne Health was found to have terminated Mr Marks’ employment at their own initiative. They were subsequently ordered to compensate Mr Marks with 10 weeks of pay amounting to $12,732.
Conclusion
Navigating the ending of the employment relationship can be a complex challenge. It is important that both employers and employees gain an understanding of the concept of constructive dismissal in order to effectively address any conflicts that may arise.