Constructive Dismissal With Real Case Examples

‘Constructive dismissal’ is a term that can be used interchangeably with ‘forced resignation’. Constructive dismissals are covered by the part of the Fair Work Act 2009 (Cth) which deals with unfair dismissals.

Therefore, if you meet the criteria for constructive dismissal, you might be able to bring an unfair dismissal claim against your employer to the Fair Work Commission.

What is a Constructive Dismissal Under the Fair Work Act?

It might come as a surprise that there is no definition of constructive dismissal under the Fair Work Act. It can also be referred to as a constructive resignation or forced resignation.

The Act does state that where a person resigned, ‘but was forced to do so because of conduct, or a course of conduct’ by their employer, they will be taken to have been dismissed. This means that if the dismissal was unfair, they can lodge an unfair dismissal claim.

Although this sounds like an easy bar to meet, the Fair Work Commission and Courts have interpreted constructive dismissal narrowly. That is, it is often difficult to prove that an employee had no real choice but to resign, rather than that they resigned at their own initiative.

Another difficulty is that it is up to the employee to prove constructive dismissal. They must prove that they did not resign voluntarily. And that their employer forced them to resign. They also must prove that they exhausted all other options to rectify their situation prior to resigning.

What is the difference between a constructive dismissal and unfair dismissal?

A constructive dismissal, if it is judged to meet certain criteria by the Fair Work Commission, can be deemed to be an unfair dismissal. But a constructive dismissal differs from most unfair dismissals in that the employee was not dismissed by their employer. Rather, they were forced to resign from their job due to the behaviour of their employer.

Contesting a constructive dismissal through the Fair Work Commission

The Fair Work Act 2009 provides Australian workers with protection from unfair dismissals and constructive dismissals. The legislation requires that an employer must have a valid reason to dismiss an employee. For example, because they weren’t adequately performing. Or they committed serious misconduct.

The legislation also protects Australian workers from a dismissal that is harsh, unjust or unreasonable. Or in the case of a constructive dismissal, it protects workers from harsh, unjust or unreasonable treatment that forces them to resign.

If you have experienced a constructive dismissal, you can take action through the Fair Work Commission by lodging an Unfair Dismissal Application (F2 Application). There are two remedies provided by the Fair Work Commission if your claim is successful. You can either be reinstated to your former job. Or your employer may be ordered to pay you financial compensation.

It’s worth reminding that the onus is on the employee to prove that a constructive dismissal took place. That is, to prove that they were forced to resign, rather than chose to resign voluntarily. The way the Fair Work Commission will interpret which is true depends on the facts of the specific situation. Below are some examples of themes in recent constructive dismissal cases.

Themes in constructive dismissal cases heard by Fair Work Commission.

Because of conduct, or a course of conduct of the employer.

Unknown

For there to be a constructive dismissal, the employee must be forced to resign by conduct, or a course of conduct by their employer.

One indication of this is whether the employee demonstrated an intent to resign independently of their employer. An unfair dismissal case where this situation occurred is Jenny Yang v FCS Business Service Pty Ltd [1].

In the case, an FCS Business Service director had learned that the employee had allegedly been spreading rumours. Namely, that her boss was engaging in an affair with a co-worker. The director did not launch a workplace investigation into whether the employee had spread the rumours. Instead, he immediately levelled the accusation at the employee.

The employee denied the accusation. In response, the director told the employee that he had witnesses that could attest that she had spread the rumour. The employee said that she wanted to know who these witnesses were. She asked that he hold a meeting of all staff so that she could confront them.

During the meeting, the director asked for a show of hands as to whether the employee had spread the rumour. No one raised their hand, so the director undertook an anonymous vote. The director then confronted the employee, hoping that she would resign in an emotional outburst. He had even prepared her resignation letter beforehand. And the employee did in fact resign on the spot.

Fair Work Commission rules on the constructive dismissal case

At the unfair dismissal hearing, the director argued to the Fair Work Commission that the employee did not experience a constructive dismissal. It claimed that she had resigned on her own volition. And that he had even been forced to try and persuade her not to.

However, the Fair Work Commission found that the director had already decided that the employee would be dismissed. And that he had created a situation to make her resign.

Although the employee and employer disagreed as to whether the employer demanded that she sign a resignation letter, the Fair Work Commission focused on the fact that before the meeting, there was nothing to indicate the employee had contemplated resigning.[2]

Therefore, the Fair Work Commission ruled that the employee had experienced a constructive dismissal. FCS Business Service was ordered to pay the employee $40,940 in financial compensation.

No ‘real choice’ but to resign

The Fair Work Commission has found that for there to be a constructive dismissal, it must be the case that the employee had no real choice but to resign.[3] Let’s look at a few unfair dismissal cases where this choice featured as a key focus for the Fair Work Commission.

Costigan v KOR Equipment Solutions Pty Ltd

In the unfair dismissal case Costigan v KOR Equipment Solutions Pty Ltd, [4] the employee was told that he was making errors in his work by a manager. He disagreed with the nature of the accusation. And so the manager gave the employee two options.

He was told that it would be his last day working at KOR Equipment Solutions. And as such, he would have the option to either resign and receive a positive reference and bonus. The other option was for him to be dismissed. He was given two hours to make that decision. In an email after the meeting, the employee stated that he would like to take the resignation option.

Fair Work Commission rules on the constructive dismissal case

The question the Fair Work Commission was required to answer was whether the employee was given the choice to resign. Or if he had no choice but to resign. The Fair Work Commission found that KOR Equipment Solutions had not given the employee a fair amount of time to consider the two options. It ruled that he had no effective choice in relation to his continuing employment. And that the only choice he was given was the way in which he would leave the company.

However, the Fair Work Commission found that there was a valid reason for the employee’s dismissal. This was because he had failed to live up to performance standards. It was found that the employee was provided with the chance to improve by KOR Equipment Solutions. He had also been given two warnings.

The Fair Work Commission therefore found that the employee was dismissed as a result of not being able to perform the duties of his role. It was therefore ruled that the employee’s dismissal was not harsh, unjust or unreasonable.

Lloyd v P D Curran Plumbing Pty Limited

In the unfair dismissal case Lloyd v P D Curran Plumbing Pty Limited,[5] the employee complained to her employer that she was being bullied and harassed. She alleged that she had been verbally abused by several managers at P D Curran Plumbing. This included being called a “child” and a “bogan.” Also, that she was “a f**king liar” who speaks “nothing but f**king bullsh*t.”

The employee also accused a manager of emotional abuse her by gaslighting her. And she accused P D Curran Plumbing of launching a disciplinary action against her for conduct that she claimed did not happen. This included the employee allegedly using profanity.

The employee made six separate complaints alleging bullying and harassment. She told the Fair Work Commission that P D Curran Plumbing gave her no sign that it was investigating the complaints. She claimed that while she was subject to two false complaints, they were investigated promptly. But when it came to her complaints, they were ignored.

The employee told P D Curran Plumbing that she would be willing to continue her employment if her bullying complaints were investigated. And she told the Fair Work Commission that she had no intention of resigning when she did not have another job lined up.

P D Curran Plumbing provided the employee with a written warning for her alleged inappropriate conduct. And she was requested to attend a meeting to discuss the allegations. But shortly after receiving the meeting invitation, the employee tendered her resignation. She handed her resignation letter to her manager, saying “I’ve had enough, I’m out.”

Fair Work Commission rules on the constructive dismissal case

The Fair Work Commission found that if the employee was being bullied, she could have made a Stop Bullying Application via the Fair Work Commission before resigning. She also could have attended the investigative meeting to explain her side of the story. She had a ‘real’ choice whether to resign.

Lloyd v P D Curran plumbing Pty Limited demonstrates the difficulty in proving constructive dismissal. It seems that an employee must exhaust all other options, no matter how difficult, before resigning.

Incorrect pay causes resignation

Employees may resign because they are being paid incorrectly. In some cases, this has been classified as constructive dismissal.

In Hobbs v Achilleus Taxation Limited (‘Hobbs’),[6] the employee was paid less than half of his wages for around four months. No reason was given for this. This was found to clearly be constructive dismissal. The underpayment meant the employee could no longer provide his services to the employer.

By contrast, in Bruce v Fingal Glen Pty Ltd,[7] the employee was frequently paid her wages late. She was also not paid superannuation. This was not found to be a constructive dismissal.

In Bruce, the Fair Work Commission stated that the facts were less severe than those in Hobbs. Further, the employee could have taken up the superannuation issue with bodies such as the Fair Work Ombudsman, or the Court.

Again, it appears that the Fair Work Commission will not find there is a constructive dismissal unless an employee has exhausted all avenues to recoup underpayment before resigning.

This might seem extreme to employees. It is understandable that an employee would not spend the time and money of going to court, for example, before resigning.

‘Special Circumstances’

One circumstance where the Fair Work Commission has been more generous is where an employee has resigned, but there are ‘special circumstances’.

These ‘special circumstances’ require an employer to confirm the resignation after some time. If they do not, there will be a constructive dismissal.

Special circumstances include whether the resignation was made ‘in the heat of the moment’, whether the employee was distressed, or had some other vulnerability. Below, we provide two such examples of constructive dismissals that were contested at the Fair Work Commission.

Bupa Aged Care Pty Ltd v Shahin Tavassoli

An example of an employee resigning in such circumstances is the unfair dismissal case Bupa Aged Care Pty Ltd v Shahin Tavassoli [8]. The central issue of the case was whether the employee voluntarily resigned or was effectively dismissed by her employer.

The employee was an Iranian refugee with limited English language proficiency. She was requested by a Bupa Aged Care general manager to step outside of the work premises for a conversation. However, the general manager left her waiting for an extended period without providing any information regarding the accusations against her

The long wait caused the employee considerable distress. Because of her cultural background, she feared being accused of theft and being dismissed by Bupa Aged Care. So, when a co-worker passed by while she was waiting outside, she asked them to draft a resignation letter. The handwritten letter included a four-week notice period. But upon returning inside and submitting the letter to the general manager, her resignation was not accepted.

In a subsequent meeting, the general manager read out letters containing unrelated allegations of misconduct. But the employee was not provided with copies of the letters. And she had difficulty understanding their contents. Feeling frustrated and wanting to avoid the workplace investigation, she crossed out the notice period on her resignation letter and returned it.

The following day, the general manager accepted her resignation with immediate effect. However, the employee attempted to retract it. The general manager refused to rescind the resignation. Consequently, she filed an unfair dismissal claim, contending that she was coerced into resigning as a result of Bupa Aged Care’s actions.

Fair Work Commission rules on the constructive dismissal case

At the employee’s unfair dismissal hearing, the Fair Work Commission ruled that her resignation was not a true resignation. Rather, it was found that it was a constructive dismissal that was a result of the behaviour of Bupa Aged Care.

The Fair Work Commission accepted that the employee attempted to rescind her resignation. And that in refusing to do so, Bupa Aged Care had constructively dismissed her. This is because given the employee’s level of distress and limited English skills at the time she resigned. The employer should have confirmed whether resignation was really her intention.

The Fair Work Commission thereby ordered Bupa Aged Care to reinstate the employee.

Aitken v Alpine Fresh Pty Ltd

Another example of an employee who resigned in the heat of the moment is the unfair dismissal caseAitken v Alpine Fresh Pty Ltd [9]. This case highlights that the actions of an employee after a ‘heat of the moment’ resignation will also be relevant. These sorts of resignations are not automatically constructive dismissals.

The employee in this case was hired by Alpine Fresh as a driver. He claimed that he had been dismissed by his supervisor while having a phone conversation with them.

Leading up to that phone call, the employee reported to work that morning with the assignment of delivering milk. Alpine Fresh contended to the Fair Work Commission that it had provided the employee with written instructions specifying the truck and trailer he was to use. The company asserted that these instructions were placed in an envelope with the employee’s name and left in front of the window.

However, the employee denied seeing the envelope. He instead claimed that he sought assistance from an employee he believed to be the Night Allocator. The employee also argued that the specified truck was unavailable, so he ended up using a different truck and trailer.

Shortly after, the employee received a phone call from a supervisor who instructed him to return to the depot. This was because he had taken the wrong truck and trailer. The employee complied and headed back to the depot. Soon after, he received another call from the supervisor regarding the situation.

According to Alpine Fresh, the supervisor instructed the employee to take the alternative truck and confirm whether he would proceed with the delivery. The employee alleged that the supervisor became abusive and refused to drive any truck other than the Kenworth truck. However, the employee maintained that he refused to use that particular truck, deeming it unsafe and unsuitable for the delivery. The call concluded with supervisor telling the applicant to “fuck right off.” The employee interpreted this as a dismissal.

Alpine Fresh claimed that the employee did not respond to any follow-up calls. He did not return to work until five days later, when he attended a meeting with a director of Alpine Fresh. According to the company, the employee resigned during this meeting. But the employee claimed that he had already been dismissed by the supervisor.

Fair Work Commission rules on the constructive dismissal case

The Fair Work Commission found that the employee had freely resigned. It considered the supervisor saying ‘F*** right off” as merely an expression of frustration. By failing to respond to phone calls or turn up to work afterwards, the employee was deemed to have resigned.

This case suggests that although an employer may have a duty to confirm the resignation, the employee should not later act in a way that is consistent with a freely made resignation. 

Harsh, unjust, unreasonable

Even if a constructive dismissal is found, an employee must still prove that this was ‘unfair’ to succeed in an unfair dismissal claim.

Whether a dismissal is unfair will depend on whether it was ‘harsh, unjust, or unreasonable’. There are several factors that the Fair Work Commission will consider, including whether there was a valid reason for the dismissal, and whether the employee was notified of this.

Instead of applying these factors to termination, these factors will be applied to a resignation.

For example, in Hobbs, the Fair Work Commission found there was no valid reason for the employee’s dismissal, as no reason was given for the underpayment of wages, such as underperformance.[10]

As the employer in that case was an accountancy business, they would have had the expertise to pay wages properly. This made the underpayment of wages especially harsh.

This reasoning demonstrates how the ‘harsh, unjust or unreasonable’ factors are being applied to the employer’s conduct which forced the employee to resign.

Jurisdictional Issues

It is vital that when lodging an unfair dismissal claim, the employee is confident in that there is a constructive dismissal.

This is because an employer may make a jurisdictional objection that the employee was not dismissed but resigned.

If the employer does this, the unfair dismissal claim may bypass the conciliation stage and proceed to a more formal, jurisdictional hearing.

In jurisdictional hearings, the employee and employer must make submissions and witness statements. The Fair Work Commission will then determine whether it has jurisdiction to hear the matter. This means making a finding for the employee or the employer.

This is a riskier process than conciliation, which is an informal negotiation between an employee and employer.

Making an unfair dismissal claim via the Fair Work Commission

If you have experienced a constructive dismissal, you can take action through the Fair Work Commission. But you have to act fast – you must make an unfair dismissal claim within 21 days of your constructive dismissal.

The Fair Work Commission mandates that an employee can seek a remedy for unfair dismissal if they meet the following criteria:

• They are employed by a national system employer, which applies to most employers in Australia and includes the majority of workers. And;
• They have completed the minimum employment period before being dismissed, which is 6 months (or 12 months for small business employers). And;
• Their earnings fall below the high-income threshold, which is a limit defined by the Fair Work Regulations 2009. Generally, employees who exceed this threshold are not eligible for protection against unfair dismissal, unless they are covered by an award or agreement. As of July 2022, the high-income threshold is set at $162,000.
• If they are a casual employee, they have worked on a regular and systematic basis prior to their dismissal. And they have reasonable grounds to believe that this pattern would have continued.

What is the unfair dismissal process?

When you lodge an unfair dismissal claim, the Fair Work Commission will provide a copy of you claim to your employer. They will then need to respond in writing. A conciliation will then be arranged, which will be mediated by a Fair Work Commission representative.

The vast majority – 78 per cent – of unfair dismissal claims end with the employee and employer reaching a settlement during a conciliation. A conciliation is an informal and voluntary discussion between the two parties. Its aim is to set forth the facts concerning the constructive dismissal and for both parties to hopefully reach an agreement.

If the employer and employee don’t reach a settlement during conciliation, the unfair dismissal claim will proceed to a formal hearing or conference. It is at this stage that the Fair Work Commission will hear the evidence of both the employer and employee. And make a ruling based on the facts of the constructive dismissal case. That is, to determine if the employee was forced to resign due to their actions of their employer. Or if their resignation was the result of their own voluntary actions.

It is possible for an employee to represent themselves at a Fair Work Commission hearing or conference. However, it is not advised. This is because it is often difficult for the lay person to understand the laws concerning their constructive dismissal. And they may not know how to handle the defence put up by their employer.

We can help you contest your constructive dismissal

Experiencing a constructive dismissal is not only emotionally distressing, but can also have a significant impact on your professional and financial well-being. At A Whole New Approach, we understand the agony that comes with a constructive dismissal. We can help you take action through the Fair Work Commission by making an unfair dismissal claim.

Timing is crucial when it comes to filing an unfair dismissal application. You must initiate the process within 21 days from the day of your dismissal. Seeking professional assistance is a wise decision, as navigating the legal complexities can be daunting for anyone. By having a dedicated team to guide you through the entire process, you can greatly enhance your chances of success.

At A Whole New Approach, we specialise in assessing the eligibility of unfair dismissal claims and helping individuals secure the compensation they are entitled to from their employers. As Australia’s leading workplace mediators and commentators, we bring over two decades of experience to the table. We’ve assisted more than 16,000 Australian workers in taking action through the Fair Work Commission.

One of the key advantages of choosing A Whole New Approach is our no win, no fee service. We are committed to ensuring access to justice for all, regardless of financial circumstances. Don’t suffer in silence and let your professional integrity be tarnished. Take control of your situation by booking a free confidential consultation session with us today. Our team of dedicated professionals is here to listen to your story and provide you with personalised advice and guidance. To start your journey towards justice, call us at 1300 766 700.

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[1] Jenny Yang v FCS Business Service Pty Ltd [2020] FWC 4560 [17].

[2] Ibid [54].

[3] Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200.

[4] Costigan v KOR Equipment Solutions Pty Ltd (2022) FWC 176.

[5] Ms Alys Lloyd v P D Curran Plumbing Pty Limited (2022) FWC 71.

[6] Hobbs v Achilleus Taxation Pty Limited ATF The Achilleus Taxation Trust and another [2012] FWA 2907 (‘Hobbs’).

[7] Kylie Bruce v Fingal Glen Pty Ltd T/A Comfort Inn Adelaide Riviera (Fingal Glen) [2013] FWC 2941.

[8] Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli [2018] FWC 1074.

[9] Darren Aitken v Alpine Fresh Pty Ltd [2022] FWC 965.

[10] Hobbs [17].