Constructive dismissal

 

This is what the Fair Work Commission’s un fair dismissal benchbook says about a termination of employment at the initiative of an employer.

“The action of the employer must cause the termination

A termination is at the employer’s initiative when:

  • the employer’s action ‘directly and consequentially’ results in the termination of employment, and
  • had the employer not taken this action, the employee would have remained 153

There must be action by the employer that either intends to bring the relationship to an end or has that probable result.154

The question of whether the act of an employer results ‘directly or consequentially’ in the termination of employment is an important consideration but it is not the only consideration.155 It is important to examine all of the circumstances including the conduct of the employer and the employee.156

Repudiation

The test for repudiation by the employer is whether the conduct of the employer, when judged objectively, showed an intention to no longer be bound by a contract.157 The employer’s actual or subjective intention is not relevant.158

A repudiation of the contract does not bring the contract to an automatic end but gives the affected party the right to terminate the contract.159 If the affected party accepts the repudiation the contract will end. 160

Where an employer has repudiated the contract, and an employee accepts the repudiation and exercises their right to terminate the contract, this will amount to a termination at the employer’s initiative.

An employee may engage in conduct amounting to a repudiation by seriously breaching the contract of employment.

The question of whether there has been a repudiation of the contract of employment is determined objectively. It is unnecessary to show a subjective intention to repudiate and is a question of fact not law.161

Repudiation may exist where an employer reduces the wages of an employee without the employee’s consent or where there is a serious non-consensual intrusion on the nature of the employee’s status and responsibilities in a way which is not permitted by the contract. Similarly, if an employer seeks to bring about a change in the employee’s duties or place of work which is not within the scope of the express or implied terms of the contract of employment, the conduct may evince an intention to no longer be bound by those terms. Therefore, in these circumstances if an employee does not agree to the change, which if agreed would amount to a variation of the contract, the employee may claim to have been constructively dismissed.162″