As an employer, you may have been in a situation where an employee resigns but returns to the business, arguing that your business forced them to resign. Forced resignation, also known as constructive dismissal, is when an employee has no real choice but to resign due to conduct engaged in by an employer. This article will outline:
- what is forced resignation;
- the differences between forced resignation and voluntary resignation; and
- how employers can avoid either situation.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Constructive Dismissal
The Fair Work Act 2009 defines a dismissal as either:
- employment terminated on the employer’s initiative; or
- the employee has resigned but was forced to do so because of their employer’s conduct.
Constructive dismissal or forced resignation falls under the second limb of the definition and usually occurs where the:
- employee feels they have no real choice but to resign due to the conduct of the employer; or
- employer engaged in certain conduct intending to bring the employment to an end (or this probable result).
The employee bears the onus of proving that they did not voluntarily resign and the employer forced their resignation. Nevertheless, it is a fine line between:
- an employee resigning on their own initiative; and
- resigning based on conduct that leaves them no choice but to resign.
The word ‘forced’ indicates the relatively high threshold that the employee needs to establish to prove they had no choice but to resign because of the actions of their employer.
Examples of Constructive Dismissal or Forced Resignation
An example of forced resignation includes when an employer paid half of their employee’s wages for the previous four months and, consequently, decided to give notice of resignation. This did amount to a forced resignation due to the conduct of the employer.
On the other hand, an employee subject to a disciplinary investigation who resigns, rather than attend the disciplinary meeting to discuss their alleged misconduct, would not amount to a forced resignation by the employer, as it was a voluntary resignation.
Ultimately, the application of this definition of forced resignation has to be considered on a case by case basis.
Differences Between Forced Resignation and a Voluntary Resignation
Whether an employee’s employment is terminated because of a forced resignation or whether they voluntarily resign has a large impact on various employment entitlements. Some entitlements include:
- whether the employee can bring an unfair dismissal claim; and
- long service leave entitlements.
Unfair Dismissal Claim
For an employee to bring an unfair dismissal claim, they must have been dismissed. Ordinarily, if an employee voluntarily resigns, they have not been dismissed and cannot bring a claim. On the other hand, if any employee is forced to resign, it could amount to a dismissal, and they may be able to bring an unfair dismissal claim.
Long Service Leave Entitlements
In New South Wales, an employee will get paid a pro-rated amount of long service leave if they:
- completed between five and ten years of service; but
- leave their employment due to their employer terminating them, other than for serious misconduct.
However, if the employee voluntarily resigns, they do not receive the long service leave entitlement, unless the employee resigns as a result of:
- illness;
- incapacity; or
- domestic or other pressing necessity.
As an employer, you need to be aware that your conduct with your employees can amount to additional risks on termination. Simply because an employee resigns does not mean there is no risk to your business. You should be open and clear with your communication with your employees at all times.
Continue reading this article below the formHow Can I Avoid ‘Forced’ Resignations in My Business?
One way to try and avoid ‘forced’ resignations or constructive dismissals in your business is to listen and support employees when they have a concern or request. This may start with having open communication so that employees feel comfortable coming to you.
For example, say an employee makes a bullying complaint in relation to their manager, and you do not do anything about it. As such, they resign. In this instance, your failure to do anything might be considered forced resignation.
In the context of a ‘heat of the moment resignation’ (or where the employee resigns under extreme pressure), you may need to:
- allow a reasonable period of time to pass; and
- to confirm your employee’s intention to resign.
Otherwise, it may be considered a forced resignation.
Key Takeaways
Your conduct as an employer can place employees in a position where they have no choice but to resign. Nevertheless, you must understand the implications of forced resignation and the impact it can have to the business. It is essential to obtain advice on how to terminate employees if you are looking to pursue that avenue. You must ensure you have everything correct procedurally and make sure there is a clear line of communication between you and your employees.
If you need help with forced resignations, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Forced resignation usually occurs when the employee feels they have no real choice but to resign due to the conduct of the employer or the employer engaged in certain conduct intending to bring the employment to an end (or this probable result).
The employee bears the onus of proving that they did not voluntarily resign and the employer forced their resignation. If an employee can prove that your business forced them to resign, you will face the same risks as if you had directly terminated the employee’s employment. This includes the employee making an unfair dismissal claim.
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