Forced resignations and the fair work system

This is a useful extract from a recent unfair dismissal case decision about the legal principles which the Commission applies when resolving whether a resignation was “forced” (commonly also referred to as a constructive dismissal) and thus can be regarded as a dismissal.

“Legal principles – forced resignation

[7] The term ‘dismissed’ is defined in section 386 of the Act as follows:

“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.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement; and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.”

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Consideration

[27] I have taken into account all of the submissions that have been provided by the parties and I have attached the appropriate weight to the evidence of the witnesses. The fact that an issue is not mentioned in this decision does not mean that it has not been taken into account.

[28] A person cannot bring an unfair dismissal application under s.394 of the Act unless the person has been ‘dismissed’. Section 386(1) states that a person has been dismissed if the person’s employment was terminated ‘on the employer’s initiative’ (s 386(1)(a)) or 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’ (s 386(1)(b)).

[29] It is not in contention that the Applicant resigned from her employment with the Respondent (albeit the Applicant asserts that she was forced to do so). In these circumstances, my determination in this matter is based upon whether the Applicant was dismissed within the meaning of s.386(1)(b) of the Act.

[30] The case of Mohazab v Dick Smith Electronics (No 2) 20 is a foundational case in determining what is classified as a ‘forced resignation’. There it was stated:

“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.”

[31] In Bupa v Tavassoli, the Full Bench helpfully expounded on Mohazab in the following terms:

“[31] The approach taken in Mohazab that a termination of employment at the initiative of the employer could be constituted by a “forced” resignation was followed in numerous decisions made in respect of the various iterations of the termination of employment scheme in the Workplace Relations Act 1996. These decisions most notably include Rheinberger v Huxley Marketing Pty Limited and O’Meara v Stanley Works Pty Ltd. In the former decision, the Industrial Relations Court (Moore J) referred to Mohazab and said:

“However it is plain from these passages that it is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination of the employment at the initiative of the employer. Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect. I leave open the question of whether a termination of employment at the initiative of the employer requires the employer to intend by its action that the employment will conclude. I am prepared to assume, for present purposes, that there can be a termination at the initiative of the employer if the cessation of the employment relationship is the probable result of the employer’s conduct.”

[32] In the latter decision a Full Bench of the Australian Industrial Relations Commission said:

“[23] … 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.”

[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.”

(My emphasis)

[32] Mr Reinberger has been the Service Manager for 12 months. He testified that “the Applicant performed some of her work very well, whilst some of it was not so good”. Mr Reinberger claimed the Applicant could, at times, be a difficult employee to manage. In saying that, Mr Reinberger did not want the Applicant to resign but to take notice of her warning and improve her performance. I regard Mr Reinberger to be a witness of credit. I have taken this into account.

[33] It is obvious that the Applicant preferred to be supervised by Mr Curran. Clearly they were friends. However, Mr Curran was promoted to run the family business. The Applicant’s new managers did not have the same relationship with the Applicant. The Applicant’s work performance may have slipped or her new managers may have expected more in her performance. The Applicant’s manager is allowed to set his own benchmark, as long as it is not unreasonable. I have taken this into account.

[34] I accept that the Respondent may not have dealt with the complaints by the Applicant in an expeditious manner. However, if the Applicant believed that she was being bullied and that her complaints were being ignored, I am satisfied that the Applicant could have made a stop bullying application to the Commission.

[35] The Applicant is clearly an intelligent young woman, with an effervescent personality. However, what is evident from the proceeding, is that the Applicant struggles when she is criticised or disciplined, even when these actions are undertaken in a constructive manner. I have taken this into account.

[36] Relevantly, the Applicant offered to withdraw her resignation and return to work under the supervising structure that was in existence. This offer by the Applicant was rejected by the Respondent. I have taken this into account.

Conclusion

[37] I am satisfied and find that resignation was not the only option available to the Applicant. The actions of the Respondent in issuing a warning to the Applicant and a colleague and asking her to attend an investigative meeting for another issue are not actions which fall within the context of deliberate actions by an employer directed at ensuring the outcome of the Applicant’s resignation.

[38] The Respondent was simply adopting reasonable management action to ensure that its employees operated in accordance with the Respondent’s policies, including treating each other with respect.

[39] I find that the Applicant resigned from her employment of her own accord.

[40] I find that the Applicant was not forced to resign because of the conduct of the Respondent, nor was she dismissed at the initiative of the Respondent.

[41] The Respondent’s jurisdictional objection is upheld and the Application for unfair dismissal remedy is therefore dismissed.”

Lloyd v P D Curran Plumbing Pty. Limited (2022) FWC 71 delivered 11 February 2022 per Riordan C