Constructive dismissal in workplace law

One of the circumstances in which Australian statutory employment law is prepared to treat a resignation as a termination of employment at the initiative of an employer for the purposes of unfair dismissal is where the employee resigns having has no real choice but to do so. However this is not as easy to make out as it sounds.

“No effective or real choice but to resign

[26] In determining whether the Applicant was left with “no effective or real choice but to resign”, there are numerous case law examples from which to draw. In Boulic v Robot Building Supplies, it is held: 13

[16] From the many authorities on this subject it appears that there must be a “critical action” or “critical actions” of the employer which was intended to bring the “employment relationship” to an end and perhaps action which would on any reasonable view probably have that effect. In identifying both the critical action of the employer and its intent “it is a matter of objectively looking at the employer’s conduct as a whole and determining whether its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it.” The examination of the employer’s conduct must also take into account that the employer is under an implied obligation that it “will not without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.

[27] In Bruce v Fingal Glen Pty Ltd T/A Comfort Inn Adelaide Riviera, Senior Deputy President O’Callaghan stated that there must be consideration of all alternative options available to the employee: 14

[28] Whilst in absolutely no way condoning Fingal Glen’s behaviour, I have concluded that the resignation decision was based on Ms Bruce’s perception and a perfectly understandable and subjective response. That resignation decision was not, as of 10 January 2013, the only option open to Ms Bruce.

[28] In Ashton v Consumer Action Law Centre, Commissioner Bisset considered whether an employee was forced to resign due to supervisory requirements placed on the employee, which he claimed were so onerous that it made his job impossible to do. However, it was stated in that decision that even where an employee believes supervisory requirements to be harsh, it does not mean they are so. Further, it was determined:  15

[59] It is not expected that employees will always be happy in their employment. Dissatisfied employees resign from their employment on a regular basis. That they were not satisfied with management’s actions or decisions does not mean that there was a constructive dismissal or that the actions of the employer, viewed objectively, left the employee with no choice but to resign.

[60] That, following the grievance outcome and the delivery to him of a letter seeking his response on performance matters, Ashton felt he had no choice but to resign does not mean that the actions of the Respondent were intended to force that resignation.

[61] In this matter, viewed objectively, the actions of the employer in investigating Mr Ashton’s grievance and/or in instigating higher level supervisory requirements and/or in providing him with a letter outlining specific areas of concern with his performance were not designed to force Ashton to resign.

[62] I find that Mr Ashton was not forced to resign because of conduct, or a course of conduct, engaged in by his employer.

(emphasis added)

[29] In the context of an investigation, consideration should be given to the actions and motives of the Respondent during the investigation process: 16

[35] The evidence about Sunrise Health Service’s actions and motives includes that it had received and acted upon complaints of bullying and harassment by Ms Sherman against other employees of the Corporation. The evidence shows that it properly received the complaints and decided to investigate them through the appointment of an arms-length investigator. The report provided by the investigator shows her work to have been undertaken in a measured and methodical manner, having regard not only to the complaints that were made, as well as to principles of natural justice and procedural fairness. The report provided to Sunrise Health Service by Ms Ellison shows that she spoke with numerous witnesses and took into account the matters each had to say. She sought a response from Ms Sherman and appeared open to the matters that Ms Sherman wished to address. While Ms Ellison made findings of fact and expressed opinions about the matters she had found, and recommended her findings be considered by Sunrise Health Service for disciplinary action, she did not recommend specific action.

[36] I have accepted that Mr Hopp’s evidence is that the purpose of the meeting, had a resignation not been offered at the start, would have been for the Corporation to have Ms Sherman “show cause” about the investigation outcomes and why her employment should not be terminated. Despite that disclosure, there is no evidence that either Mr Hopp or Mr Dean had already settled on dismissal as being the only available course of action.

[37] I therefore consider it more likely than not that, at the time Ms Sherman resigned, Sunrise Health Service had not decided on dismissal as being the only available sanction.

[38] I do not consider that Sunrise Health Service’s actions in investigating the bullying and harassment allegations against Ms Sherman, or in inviting her to a meeting to discuss the results of the investigation, or in disclosing to Ms Doyle the findings of the investigation, were done with the intention of bringing Ms Sherman’s employment to an end. Nor do I consider that those actions would, on any reasonable view, probably have that effect. Each of the actions by Sunrise Health Service in these regards were proper and in accord with its obligations to receive and investigate allegations of bullying and harassment.

[39] Likewise, I am unable to find there was, at the relevant time, evidence of any subjective intention of forcing Ms Sherman to resign. The actions of Sunrise Health Service, while no doubt headed in a direction with serious consequences for Ms Sherman were not such as to cause an involuntary departure from employment.

[30] Sherman indicates a general position: during an investigation, if the employer has not yet concluded to terminate the employee, then the process of investigating certain conduct will not be considered to ‘force’ a resignation.

[31] As I have previously stated in Moore, “it would be a perverse outcome to consider an objectively fair investigation and show cause process as imposing forcibly upon the Applicant that they must resign.” 17 Where an employer conducts an investigation, highlighting the conduct of an employee, and as a result they resign, it may be that the employee “did not voluntarily leave his or her employment”. Had the conduct in question not been highlighted, the employee may have continued in their employment. However, as highlighted in Mohazeb, this is insufficient to amount to constructive dismissal. What must be shown is that the conduct of the employer was “intended to bring the employment to an end.” The usual purpose of an investigation is not to bring about termination; the intention is to ascertain, with a degree of certainty, what event – or series of events – transpired. Once that information is gathered, then the employer may decide what action is appropriate. If in conducting an investigation, serious and deplorable conduct is uncovered, then the employer may elect to terminate the employee. In that situation, it is the conduct of the employee which leads to their termination – had no conduct been uncovered, no termination would have occurred. The investigation would have no effect.”

Wilson v Westpac Banking Corporation – [2021] FWC 763 delivered 14 February 2021 per Lake DP