Dismissal or resignation; fair work principles

This extract from a recent unfair dismissal decision contains an explanation of the principles which distinguish a genuine resignation from a constructive dismissal.

“Matter in dispute – was there a dismissal

[36] Central to the consideration in this case is the operation of s 386(1) of the Act.

[37] Section 386(1) of the Act defines what constitutes a dismissal for the purpose of Part 3-2 of the Act, which concerns Unfair Dismissal. The word ‘dismissed’ is defined in s 12 of the Act as having adopted the meaning in s 386 of the Act.

[38] Section 386(1) of the Act reads:

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

[39] There are exceptions under s 386(2) of the Act regarding when a person has been dismissed; those exceptions are not relevant to this case.

[40] The definition of dismissal in s 386(1) of the Act has two elements, both of which have been subject to consideration. The first traverses ‘termination on the employer’s initiative’ and the second, ‘resignation in circumstances where the person was forced to do so because of conduct or a course of conduct’. This bifurcation was explained by the Full Bench in Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli (Bupa), 12 in the following terms:

[47] Having regard to the above authorities and the bifurcation in the definition of “dismissal” established in s.386(1) of the FW Act, we consider that the position under the FW Act may be summarised as follows:

(1) There may be a dismissal within the first limb of the definition in s.386(1)(a) where, although the employee has given an ostensible communication of a resignation, the resignation is not legally effective because it was expressed in the “heat of the moment” or when the employee was in a state of emotional stress or mental confusion such that the employee could not reasonably be understood to be conveying a real intention to resign. Although “jostling” by the employer may contribute to the resignation being legally ineffective, employer conduct is not a necessary element. In this situation if the employer simply treats the ostensible resignation as terminating the employment rather than clarifying or confirming with the employee after a reasonable time that the employee genuinely intended to resign, this may be characterised as a termination of the employment at the initiative of the employer.

(2) A resignation that is “forced” by conduct or a course of conduct on the part of the employer will be a dismissal within the second limb of the definition in s.386(1)(b). The test to be applied here is whether the employer engaged in the conduct with the intention of bringing the employment to an end or whether termination of the employment was the probable result of the employer’s conduct such that the employee had no effective or real choice but to resign. Unlike the situation in (1), the requisite employer conduct is the essential element. 13

[41] While a summary of the position under s 386(1) of the Act was proposed in Bupa, a later decision of the Full Bench in City of Sydney RSL & Community Club Limited v Mrs Roxana Balgowan (City of Sydney RSL), 14 gave further consideration to the operation of s 386(1)(a) of the Act, expressing:

[10] It seems clear…that the concept of constructive dismissal is to be accommodated by s.386(1)(b) and that concept is not subsumed in s.386(1)(a).

[11] Section 386(1)(a) seems plainly to be intended to capture the case law determining the meaning of termination (of the employment relationship) at the initiative of the employer. In Mohazab the Court considered that the expression “termination at the initiative of the employer” was:

“. . . a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship. We proceed on the basis that the termination of the employment relationship is what is comprehended by the expression ‘‘termination of employment.’’” (references omitted)

[42] The Full Bench in City of Sydney RSL placed reliance on the decision of the Industrial Relations Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd [No 2] (Mohazab). 15 This is unsurprising given the Full Court of the Federal Court in Mahony v White observed that the Act had retained the use of the phrase and that the judgment in Mohazab remained good authority as to the connotation of that formula. 16

[43] While finding it unnecessary and undesirable to endeavour to formulate an exhaustive description of what constituted ‘termination at the initiative of the employer’, the Court in Mohazab identified that an important feature was that the act of the employer resulted directly or consequentially in the termination of the employment and the employment relationship was not voluntarily left by the employee. 17 Furthermore, while a termination of employment may involve more than one action, it was important to ask oneself what was the critical action or actions, which constituted a termination of employment.

[44] My findings can be succinctly put – I have found the Applicant resigned voluntarily for the following reasons.

[45] On receipt of the Warning, the Applicant was aware that a decision to terminate his employment had not been communicated to him. However, the Applicant concedes that he stated that ‘he may as well resign’. In the Form F3 Employer Response filed in the Commission it is written that the Applicant informed Mr Marsh, others in the workplace and subsequently Mr Byrne, that he was resigning.

[46] The Respondent did not call Mr Marsh to provide evidence in the proceedings. The reason for not doing so said the Respondent, was its unfamiliarity with the jurisdiction and lack of knowledge that for Mr Marsh’s evidence to be considered by the Commission, he would need to file a witness statement and be available for cross examination. Whilst I do not disbelieve the Respondent in this respect, the directions issued to the parties were clear, and in the circumstances where Mr Marsh was not called and his evidence was untested, I consider little weight can be attributed to his account.

[47] However, after the interaction with Mr Marsh, the Applicant encountered Mr Byrne at the photocopier. From the evidence given, it appeared that this interaction occurred after the issuance of the Warning.

[48] I accept that both the Applicant and Mr Byrne attempted to assist the Commission by accurately recounting their recollections and circumstances.

[49] In particular, I found that Mr Byrne was open in his evidence and made appropriate concessions. It appeared that Mr Byrne was genuinely disappointed about the events which had unfolded. He observed that he considered that the Applicant had been a good operator and his preference initially had been to keep him employed despite of what he considered to be serious misconduct regarding the timekeeping. Mr Byrne further noted that previously he had loaned a work vehicle to the Applicant, had followed up on the Applicant’s recommendations for new recruits and had trusted the Applicant to do the right thing for the business. When the Applicant asked Mr Byrne about the level of Aboriginal employment within the Respondent business, Mr Byrne responded by informing the Applicant, that the question was a good question to have asked, and conceded that such engagement was limited to the Applicant.

[50] For his part, it is apparent that the Applicant tried not to be disruptive over the accommodation at Grass Valley having initially agitated about the state of it. However, at hearing the Applicant went to some lengths to explain the impact of the living quarters on his mental health. The Applicant explaining that on 15 November 2021, he was not in a good space mentally and the Respondent should have put in place better supports for him.

[51] However, if the argument of the Applicant was that he had not resigned or that he had resigned in the heat of the moment, the argument cannot be sustained based on the evidence given.

[52] It is not disputed that the Applicant packed up his gear subsequent to the meeting with Mr Marsh. Further, it is not disputed that the Applicant held a conversation with Mr Byrne in which he discussed his resignation and questioned about the duration of the current project with a view to communicating his final date of employment.

[53] After the discussion at the photocopier had concluded, I am satisfied that the Applicant had unequivocally informed Mr Byrne that he was resigning. While the Applicant purported to have inserted the word ‘may’ thereby leaving himself with some latitude to move from the position of resignation, if he so desired, the conversation with Mr Byrne included reference to the current project being worked on and timing the end day of employment with that project. It was not the case that the Applicant was making up his mind whether to resign or not, that decision had, on any objective level, been made by him. It was the case that what was left to be determined was the final date of employment. I am therefore unpersuaded that it was the act of the Respondent that resulted directly or consequentially in the termination of the Applicant’s employment.

[54] As noted, at times it was difficult to discern whether the Applicant was contending that he had resigned in the heat of the moment. If that was the contention, it again does not stand up on the evidence. By the time the conversation was held with Mr Byrne, there was no mention by either party of the Applicant displaying emotive or reactive tendencies, or the Applicant having a level of confusion. Furthermore, it is not evident that the Respondent had seized upon the opportunity to simply end the employment at the time the meeting was held with Mr Marsh or Mr Byrne. Whilst accepting of the Applicant’s resignation when communicated, Mr Byrne clearly contemplated that the Applicant would work out his notice period.

[55] This position was reinforced when Mr Byrne located the Applicant, who had opted not to drive his colleagues to the cultural awareness training. The Applicant’s reticence to drive the truck, necessitated a discussion between Mr Byrne and the Applicant about the Applicant’s obligations as an employee during the notice period. Again, it cannot be said that the Respondent acted readily to accept the Applicant’s resignation. Rather, it was more the case that the Respondent was concerned about retaining the Applicant as an employee during the period of notice and having him comply with his employment obligations.

[56] In my view, this is a case where quite clearly the discretion of the resigning employee gave rise to the dismissal. The Applicant’s resignation was tendered in circumstances where he had been informed of the Warning and was clearly aggrieved, considering it unjust. However, Mr Ballem provided cogent evidence as to what had led to the issuing of the Warning, and I do not doubt his observations of the Applicant’s conduct during his time on the Grass Valley site. Further, for the aforementioned reasons, I do not consider that the resignation was given in the ‘heat of the moment’ as contemplated in Bupa. While the Applicant may have displayed defensive behaviour towards Mr Ballem, by the time the discussion was held with Mr Byrne this was not the case.

[57] It is not the case that it is suggested that the Applicant always conducted himself in the manner he did whilst working at the Grass Valley site. Clearly Mr Byrne had valued the Applicant as a good employee who had fallen into error, but notwithstanding he wished to retain his services.

[58] The Applicant had clearly referred to his mental health challenges whilst working on the Grass Valley site and that the accommodation provided led to his impaired mental health. However, whilst Mr Byrne indicated to the Applicant that he was ready to address the accommodation issue, the Applicant himself put a stop to that. Furthermore, the Applicant did not at any time indicate to Mr Ballem, Mr Walsh or Mr Byrne that he was unfit or otherwise in need of additional support concerning his mental health.

[59] There was a dispute between the parties concerning whether the Applicant threw the Warning at Mr Ballem or handed the Warning to Mr Ballem. I consider that more likely than not the Applicant pointedly discarded the Warning in Mr Ballem’s direction and it dropped to Mr Ballem’s feet. On this point, I prefer the evidence of Mr Ballem for the reasons already cited noting that he was forthright in his evidence, and rather than engaging in histrionics regarding the incident, he retold simply taking the Warning to the Respondent’s office on the basis that he considered the Warning was private.

[60] While the Respondent opted not to have the Applicant to work out the notice period but accepted his resignation immediately, this does in the circumstances of this case, render the resignation a dismissal. Furthermore, it is noted that payment was made in lieu of notice.

[61] I note that the Respondent sought to rely on the evidence of Mr Jorgensen regarding his evidence that he and the Applicant had inaccurately reported their time worked on the Grass Valley site. However, little weight has been attributed to Mr Jorgensen’s account in light of him being a relatively inexperienced worker who had purportedly engaged in misconduct, had received a warning for the same misconduct, and who was called to give evidence on behalf of the Respondent in circumstances where he is a relative of one of the directors of the Respondent. I am therefore not satisfied as to his independence. Notwithstanding, an argument that the Respondent afforded differential treatment to Mr Jorgensen and the Applicant, is not made out on the evidence given that Mr Jorgensen received a warning as did the Applicant – albeit Mr Jorgensen was accepting of it.

[62] The Applicant may consider that he had not voluntarily resigned, but he did. He may also feel that he had no choice but to resign due to a course of conduct engaged by the Respondent or that he had resigned in the heat of the moment. I have found that this was not the case.


[63] Based on my factual findings and all of the circumstances, I have concluded that the Applicant was not dismissed for the purpose of s 386(1) of the Act. The Application is therefore dismissed and an accompanying Order 18 is issued to this effect.”

Eades v MGC Solutions Pty Ltd (2022) FWC 671 delivered 6 April 2022 per Beaumont DP