Dismissal vs resignation


The following passage from a recent decision of the Fair Work Commission is a good summary of the legal distinctions between a dismissal, a constructive dismissal and an effective resignation.

“A termination is at the employer’s initiative when the employer’s action directly and consequentially results in the termination of employment and the employment is not voluntarily left by the employee. That is, had the employer not taken this action, the employee would have remained employed. 57 Circumstances of a dismissal within the first limb (s.386(1)(a)) may include where an employer has repudiated the contract, and an employee accepts the repudiation thereby exercising their right to terminate the contract.58 The test for repudiation is whether the party’s conduct is such as to convey to a reasonable person, in the position of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.59 For example, it may be repudiatory for an employer to reduce wages without the employee’s consent or where there is a serious intrusion on the employee’s status or responsibilities in a way which is not permitted by the contract and as such evinces an employer’s intention to no longer be bound by the contractual terms.60 The issue turns upon objective acts and omissions and not on uncommunicated intention.61

[45] An ostensible resignation may attract application of the first or second limb of s.386(1). In this context, a Full Bench of the Commission summarised the position with regard to the long line of authorities and the bifurcation in the definition of “dismissal” established in s.386(1) of the FW Act, 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 probably 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.” 62

[46] In considering s.386(1)(b), an objective assessment of the employer’s conduct is required. 63”

Dunn v Serco t/a Serco Traffic Camera Services (Vic) Pty Ltd (2020) FWC 3888 delivered 28 July 2020 per Mansini DP