Fair work cases; forced dismissal

It is quite common for people to refer to a “forced dismissal” and that term is used by a Deputy President of the Fair Work Commission in this extract from an unfair dismissal case. Personally, I think the expression is commonly mis-used, however you be the judge.

Forced dismissal – the legal principles

[84] Under the FW Act, a person can only be “unfairly dismissed” if they have been “dismissed” (section 385(a)).

[85] Section 386(1) provides:

“386 Meaning of dismissed

(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.

[86] Although arising under the previous Act, 27 the following approach of the Full Bench of the Australian Industrial Relations Commission in O’Meara v Stanley Works Pty Ltd28 remains generally apposite to the consideration of section 386(1):

“[21] In this Commission the concepts have been addressed on numerous occasions and by a number of Full Benches. In Pawel v Advanced Precast Pty Ltd (Pawel) a Full Bench said:

“[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. In the instant case the uncontested factual findings are that the applicant had for almost the whole of his employment performed welding duties; that there was no objective threat to his health and safety involved in the requirement that he undertake welding duties so long as it was not on a continuous basis and that the welding he was required to do was not continuous.”

[22] In the Full Bench decision of ABB Engineering Construction Pty Ltd v Doumit (ABB Engineering) it was said:

“Often it will only be a narrow line that distinguishes conduct that leaves an employee no real choice but to resign employment, from conduct that cannot be held to cause a resultant resignation to be a termination at the initiative of the employer. But narrow though it be, it is important that that line be closely drawn and rigorously observed. Otherwise, the remedy against unfair termination of employment at the initiative of the employer may be too readily invoked in circumstances where it is the discretion of a resigning employee, rather than that of the employer, that gives rise to the termination. The remedies provided in the Act are directed to the provision of remedies against unlawful termination of employment. 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.”

[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 to 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 omitted)

[87] A Full Bench (dealing with the FW Act) accepted the relevance of the above approach in Bupa Aged Care Australia Pty Ltd t/a Bupa Aged Care Mosman v Tavassoli: 29

“[33] Notwithstanding that it was clearly established, prior to the enactment of the FW Act, that a “forced” resignation could constitute a termination of employment at the initiative of the employer, the legislature in s.386(1) chose to define dismissal in a way that retained the “termination at the initiative of the employer” formulation but separately provided for forced resignation. This was discussed in the Explanatory Memorandum for the Fair Work Bill as follows:

“1528. This clause sets out the circumstances in which a person is taken to be dismissed. A person is dismissed if the person’s employment with his or her employer was terminated on the employer’s initiative. This is intended to capture case law relating to the meaning of ‘termination at the initiative of the employer’ (see, e.g., Mohazab v Dick Smith Electronics Pty Ltd (1995) 62 IR 200).

  1. Paragraph 386(1)(b) provides that a person has been dismissed if they resigned from their employment but were forced to do so because of conduct, or a course of conduct, engaged in by their employer. Conduct includes both an act and a failure to act (see the definition in clause 12).
  2. Paragraph 386(1)(b) is intended to reflect the common law concept of constructive dismissal, and allow for a finding that an employee was dismissed in the following situations:
  • where the employee is effectively instructed to resign by the employer in the face of a threatened or impending dismissal; or
  • where the employee quits their job in response to conduct by the employer which gives them no reasonable choice but to resign.”

[34] It is apparent, as was observed in the decision of the Federal Circuit Court (Whelan J) in Wilkie v National Storage Operations Pty Ltd, that “The wording of s.386(1)(b) of the Act appears to reflect in statutory form the test developed by the Full Court of the then Industrial Relations Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd (No. 1) and summarised by the Full Bench of the Australian Industrial Relations Commission in O’Meara v Stanley Works Pty Ltd” (footnotes omitted). The body of pre-FW Act decisions concerning “forced” resignations, including the decisions to which we have earlier referred, has been applied to s.386(1)(b): Bruce v Fingal Glen Pty Ltd (in liq); Ryan v ISS Integrated Facility Services Pty Ltd; Parsons v Pope Nitschke Pty Ltd ATF Pope Nitschke Unit Trust.” (footnotes omitted)

[88] Accordingly, the general principles to be applied in this case are well settled. Stated succinctly, they include:

  • the question as to whether the resignation was forced within the meaning of the FW Act is a jurisdictional fact that must be established by the applicant;
  • a termination at the initiative of the employer involves the conduct (or course of conduct) engaged in by the employer as the principal constituting factor leading to the termination. There must be a sufficient causal connection between the conduct and the resignation such that it “forced” the resignation;
  • the employer must have engaged in some conduct that intended to bring the employment relationship to an end or had that probable result;
  • conduct includes an omission 30;
  • considerable caution should be exercised in treating a resignation as other than voluntary where the conduct of the employer is ambiguous and it is necessary to determine whether the employer’s conduct was of such a nature that resignation was the probable result such that the employee had no effective or real choice but to resign; and
  • in determining the question of whether the termination was at the initiative of the employer, an objective analysis of the employer’s conduct is required.”

Extract from Hallard v Campus Retail Services Pty Ltd T/A The General (2021) FWC 3125 delivered 3 June 2021 per Anderson DP