Constructive unfair dismissal

When will a resignation be capable of being regarded as a dismissal for the purposes of an unfair dismissal case? Here is the answer.

“The test for constructive dismissal was considered by the Full Bench in Kylie Bruce v Fingal Glen Pty Ltd (in liq): 198

“[13] The test of constructive dismissal in the context of the unlawful termination provisions of the Industrial Relations Act 1998 was considered by the Full Court of the Industrial Relations Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd (No 2) (Mohazab) and subsequently elucidated by Justice Moore in Rheinberger v Huxley Marketing Pty Ltd (Rheinberger). The commonly quoted statement of principle in Mohazab is that:

“In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship”.

[14] It is important that this passage be read in the context of the judgment as a whole. It is clear that the requirements set out by the Full Court in the passage quoted are necessary, but not sufficient, to establish that employer action constitutes constructive dismissal.

[15] These principles of constructive dismissal have been applied to the unfair dismissal provisions of the Workplace Relations Act 1996 by Full Benches of the Australian Industrial Relations Commission in Pawel v Advanced Precast Pty Ltd (Pawel) and ABB Engineering Construction Pty Ltd v Doumit (ABB Engineering), and we accept the Applicant’s submission that those decisions are relevant to any consideration of s.386(1)(b) of the Act.

[16] In Pawel the Full Bench said that:

“[13] It is plain that the Full Court in Mohazab considered that an important feature in the question of whether termination is at the initiative of the employer is whether the act of an employer results directly or consequentially in the termination of the employment and that the employment relationship is not voluntarily left by the employee. However, it is to be noted that the Full Court described it as an important feature. It plainly cannot be the only feature. An example will serve to illustrate this point. Suppose an employee wants a pay rise and makes such a request of his or her employer. If the employer declines and the employee, feeling dissatisfied resigns, can the resignation be said to be a termination at the initiative of the employer? We do not think it can and yet it can be said that the act of the employer i.e. refusing the pay rise, has at least consequentially resulted in the termination of the employment. This situation may be contrasted with the position where an employee is told to resign or he or she will be terminated. We think that all of the circumstances and not only the act of the employer must be examined. These in our view, will include the circumstances giving rise to the termination, the seriousness of the issues involved and the respective conduct of the employer and the employee…”

[17] In ABB Engineering, the Full Bench said that:

“Where it is the immediate action of the employee that causes the employment relationship to cease, it is necessary to ensure that the employer’s conduct, said to have been the principal contributing factor in the resultant termination of employment, is weighed objectively. The employer’s conduct may be shown to be a sufficiently operative factor in the resignation for it to be tantamount to a reason for dismissal. In such circumstances, a resignation may fairly readily be conceived to be a termination at the initiative of the employer. The validity of any associated reason for the termination by resignation is tested. Where the conduct of the employer is ambiguous, and the bearing it has on the decision to resign is based largely on the perceptions and subjective response of the employee made unilaterally, considerable caution should be exercised in treating the resignation as other than voluntary.”

[18] The four authorities cited above were summarised by a Full Bench of the AIRC in O’Meara v Stanley Works Pty Ltd (O’Meara) as follows:

“[23] In our view the full statement of reasons in Mohazab which we have set out together with the further explanation by Moore J in Rheinberger and the decisions of Full Benches of this Commission in Pawel and ABB Engineering require that there… be some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment.” Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.” [Footnotes not reproduced]

I will adopt the approach of the Full Bench in determining this matter.”

Bromley-Hoult v Belgravia Health & Leisure Group Pty Ltd T/A Ascot Vale Leisure Centre- [2018] FWC 4979 delivered 27 August 2018 per Cribb C