An employee has been dismissed if their employment has been terminated by their employer or the employee has resigned from their employment but was forced to do so, because of the conduct of their employer. This second scenario, also known as Constructive Dismissal, will be unpacked in this article.

When can Constructive Dismissal occur?

Constructive dismissal occurs when an employee initiates the termination of their employment by resigning, but their resignation is in response to the actions of the employer. It will also be taken to be a dismissal if an employee leaves, without expressly being dismissed by their employer, because the employer treats the employee in such a way that the employment is deemed to be at an end.

Who must prove that the resignation was not voluntary?

The employee must prove that they did not resign voluntarily and their employer forced their resignation. They must also show that they would have remained in their employment had it not been for the direct or indirect actions of their employer. Examples include:

  • An employee resigns because they have been told to do so by their employer after being threatened with dismissal;
  • An employee resigns because they are given the choice of resignation or facing an investigation after being accused of wrongful behaviour in the workplace;
  • An employee resigns because they have no other reasonable choice and they are unable to continue with their employment for reasons such as bullying, poor treatment or safety concerns;
  • An employee resigns because they are not being paid their salary or superannuation payments; or
  • An employee resigns because their employer unreasonably refused their request for flexible working arrangements even though it was made by their Employment Agreement.

What Can an Employee Do About Constructive Dismissal?

An employee may be able to use constructive dismissal as part of their argument for unfair dismissal. To lodge an unfair dismissal claim, an employee may apply to the Fair Work Commission but first, they should determine whether they are eligible using the Eligibility Checklist on the Fair Work Commission website. If you are unsure, contact an employment lawyer at LegalVision to take you through the process.

If an employee is eligible, the application must be lodged within 21 days of the dismissal taking effect. A copy of the application will be sent to their employer and the Fair Work Commission will request a response to the application. In most cases, the claim will be resolved at a conciliation, which is a voluntary and informal telephone meeting between the employee, employer and a Fair Work Commission Conciliator.

It will only proceed to a conference or hearing before a Member of the Commission if it cannot be resolved at the conciliation. This is when a decision will be made about whether the dismissal was unfair. The employee will need to present evidence to satisfy that:

  • They were dismissed; and
  • The dismissal was harsh, unjust or unreasonable; and
  • The dismissal was not a case of genuine redundancy; and
  • If they were employed by a small business, your dismissal was not consistent with the Small Business Fair Dismissal Code.

An employee was constructively dismissed but what makes the dismissal harsh, unjust or unreasonable?

When the Fair Work Commission considers whether they are satisfied that the dismissal was harsh, unjust or reasonable, they must take into account:

  • If there was a valid reason for the dismissal which relates to the capacity or conduct of the employee; and
  • If there was notice of that reason; and
  • If there was any opportunity to respond; and
  • If the employer refused to allow the employee to have a support person present in any discussions relating to the dismissal; and
  • If the employee was warned about their unsatisfactory performance before the dismissal; and
  • If the size of the employer’s enterprise would impact on the procedures followed in causing the dismissal; and
  • If the absence of HR management would impact on the procedures followed in causing the dismissal; and
  • Any other matters that the Commission considers relevant.

How can an employee show that their constructive dismissal was not a case of genuine redundancy?

A genuine redundancy occurs at the hands of the employer when the job held by the employee doesn’t need to be done by anyone in the business and where the employer has followed the consultation requirements in the relevant award, enterprise agreement or other registered agreement.

An employee can show that their Constructive Dismissal is not a genuine redundancy as described above if:

  • The employer still requires the job previously held by the employee to be done by someone so the employer gives the job to another employee or hires a new employee; or
  • The employer has not followed relevant requirements to consult with the employees about the redundancy under an award or registered agreement; or
  • The employer could have reasonably, in the circumstances, given the employee another job within the business or an associated entity.

How can an employee show that their constructive dismissal is inconsistent with the Small Business Fair Dismissal Code?

If the dismissed employee is employed by a small business employer who employs fewer than 15 employees, they must show that the Constructive Dismissal was inconsistent with the Small Business Fair Dismissal Code. This will be the case if the employee can show that, for example:

  • The employee was not given a reason as to why they were at risk of being dismissed, where the reason is based on their conduct or capacity to do their job;
  • The employee was not warned, either verbally or in writing, that they were at risk of being dismissed if they do not improve;
  • The employee was not provided with an opportunity to respond to the warning;
  • The employee was not given a reasonable chance to rectify the problem or given additional training; or
  • The employee was not aware that they are allowed to have another person present in their discussions with their employer.

Key Takeaways

Constructive dismissal occurs when an employee unwillingly resigns from their employment because of the conduct of their employer. It can form part of a claim for unfair dismissal at the Fair Work Commission when it satisfies the criteria we have described above.

If you have any questions as an employee or an employer about Constructive Dismissal, get in touch with our employment lawyers on 1300 544 755.

Rachel Amiri

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