Unfair constructive dismissal and heat of the moment resignations

Two of the most misunderstood legal doctrines in unfair dismissal practice are heat of the moment resignations and constructive dismissal.

Here is an excellent summary of the legal principles applied to those concepts on show in the factual situation in a recent unfair dismissal case.

“Legislation and applicable case law

Section 386 of the Act states:

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.

Section 386 of the Act has created a clear “bifurcation in the definition of “dismissal” and has created two clear grounds on which a claim could potentially proceed. 4 In Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli [2017] FWCFB 3941, the Full Bench expanded on the content of the two limbs:

[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 (sic) 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.

(emphasis added)

On the facts presented Mr Hopping was not terminated in his employment. The Applicant’s case therefore relies upon s 386(1)(b) – that the Applicant was forced to resign due to the conduct of the Respondent.

The case of Mohazab v Dick Smith Electronics (No 2) (1995) 62 IR 200 is a foundational case in determining what is classified as a ‘forced resignation’. There it was stated: 5

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.

(emphasis added)

In Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli [2017] FWCFB 3941, the Full Bench helpfully expounded on Mohazab:

[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.”

(emphasis added)

The onus to prove that a resignation was not voluntary and formed a constructive dismissal lies with the employee alleging constructive dismissal occurred. 6 Case law regarding constructive dismissal has established that the line distinguishing conduct which leaves an employee no real choice but to resign, from an employee resigning at their own initiative is a narrow one, which must be “closely drawn and rigorously observed.”7

Further, it has been found that where an employee is subject to disciplinary procedures, this is not in itself sufficient to demonstrate that a resignation was forced by actions of the employer. 8 In Pacific National (NSW) Ltd v Bell [2008] AIRCFB 555, Mr Bell resigned prior to the conclusion of a formal determination regarding his falsely signing of timesheets. He contented in his resignation letter that his resignation was “due to circumstances beyond his control”. Further, there was reliable evidence that the employer stated that “it’s serious business and [Mr Bell’s] employment may be terminated.” The Full bench concluded that “this was no more than mere fact, acknowledged by Mr Bell on his own appreciation of the position.”9 A statement that an employee may be terminated as a result of an investigative process is not, on its own, determinative of whether a constructive dismissal has occurred.

In the current case, the Applicant was put on notice of the investigation and show cause process and was aware that these could lead to a termination of the Applicant’s employment. However, this alone could not be enough to class the Applicant’s resignation as one forced upon him.

The decision of Senior Deputy President Richards in Megna v No 1 Riverside Quay (SEQ) Pty Ltd 10 provides instruction on how to interpret “forced”:

[14] It seems that the term “forced” is the past tense of the verb form “to force”, and as such, an understanding of the plain meaning of the term “force” is relevant to applying s.642(4).

[15] Relevantly, the Macquarie Dictionary defines “force” as:

… strength or power exerted upon an object; physical coercions; violence … power to influence, affect or control; power to convince … to compel; constrain or oblige (oneself or someone) to do something … to bring about or effect by force; bring about of necessity or as a necessary result … to put or impose (something) forcibly on or upon a person … to press, urge or exert to violent effort or to the utmost …

[16] The term “force” appears to encompass both the application of physical power to directly achieve a result and the actions of a person to persuade or otherwise convince another for the same purpose. In either case, there is an important element of compulsion present.

[17] In the contextual circumstances now before the Commission, the issue is whether the Applicant herself is able to demonstrate:

  • That she did not voluntarily resign her position or employment;
  • But that her employer, because of its actual conduct, forced her to do so, such that there was an element of compulsion present. (emphasis added)

There is no reliable evidence before the Commission that the Respondent engaged in any conduct that satisfies the requisite element of compulsion.

In Ashton v Consumer Action Law Centre, 11 Commissioner Bisset considered whether an employee was forced to resign due to supervisory requirements placed on the employee, which he claimed were so onerous that it made his job impossible to do. However, it was stated in that decision that even where an employee believes supervisory requirements to be harsh, it does not mean they are so. Further, it was determined:

[59] It is not expected that employees will always be happy in their employment. Dissatisfied employees resign from their employment on a regular basis. That they were not satisfied with management’s actions or decisions does not mean that there was a constructive dismissal or that the actions of the employer, viewed objectively, left the employee with no choice but to resign.

[60] That, following the grievance outcome and the delivery to him of a letter seeking his response on performance matters, Ashton felt he had no choice but to resign does not mean that the actions of the Respondent were intended to force that resignation.

[61] In this matter, viewed objectively, the actions of the employer in investigating Mr Ashton’s grievance and/or in instigating higher level supervisory requirements and/or in providing him with a letter outlining specific areas of concern with his performance were not designed to force Ashton to resign.

[62] I find that Mr Ashton was not forced to resign because of conduct, or a course of conduct, engaged in by his employer.

The salient facts in the current case are as follows:

  • Mr Hopping was the subject of two historical complaints. Both of these were reviewed by Ms Maxwell and she concluded that the complaints lacked sufficient evidence or information and could not be substantiated. Ms Maxwell informed Mr Hopping no further action would be taken regarding these. 12
  • Mr Hopping had been subject of several more recent complaints around the beginning of 2020, with one capable of being considered elder abuse. These were referred these to the HR Department and as a result of the most recent complaint he was stood down with pay pending an investigation.
  • On Monday 24 February, Mr Hopping met with Ms Maxwell and Mr Owen-Turner at 10:30. Mr Owen-Turner outlined that the purpose of the meeting was to discuss the allegations against him and that he would also be able to raise concerns that he had. Following that opening Mr Hopping stated that he was here to resign, he signed a resignation that he had pre prepared and following Mr Hopping signing the letter he left the meeting.
  • The statements of both Ms Maxwell and Mr Owen-Turner support the contention that the meeting at which he resigned was not in fact a disciplinary meeting as Mr Hopping purports, but rather an informal one to gather his responses to a number of questions that the facility management wanted to understand as part of an investigation. 13
  • Ms Maxwell stated in her statement that Mr Hopping had never submitted any formal complaints to her, neither did he provide any evidence or specific information to support his complaints. 14Further, Mr Hopping did not raise any formal concerns regarding workplace health and safety, as required by the Respondent’s policy15 and Ms Maxwell never received any formal concerns from Mr Hopping regarding WHS matters.16
  • Ms Maxwell also stated that she had performed a performance review several months prior to the events of above and felt that the meeting was a positive effort and no performance issues were identified. She made mention that Mr Hopping had been feeling stressed by some events in his personal life and that they had discussed this issue. There were no indications that this process was used to target or to highlight any deficiencies of his performance. Further, this was not a single performance review, as the Respondent conducted seven or eight reviews with other employees. 17

In reviewing the conduct of the Respondent, it does not seem that they were performance managing the Applicant. If this had been the case, then it may have accounted for the Applicant feeling pressured and under examination. Rather, the employer was in the early stages of an investigation, no evidence was produced that the respondent was considering termination or even of any discipline being considered. They were correctly having a meeting with the Applicant to get his views and responses, it was planned to be an informal session as the investigation was in the early stages. Prior conduct would indicate that the Respondent had not unnecessarily pursued the Applicant, with previous complaints against the Applicant being dismissed without investigation for a lack of substance.

Given the serious nature of at least one of the complaints, the Respondent had a duty to investigate; such an issue is of far greater magnitude than the Applicant’s unsubstantiated complaints. A failure to investigate the complaints of the Applicant do not amount to bullying conduct. Through the information provided it seems clear that the Respondent does not investigate all matters brought to its attention, only those of a serious or well substantiated nature. Indeed, the Applicant has benefited personally from this approach, with his two historical complaints being deemed lacking sufficient evidence and therefore, not investigated. In this regard, the behaviour of the Respondent is consistent and would not constitute bullying or otherwise reasonably inspire an employee to resign.

There is no evidence to support the view that the Respondent s behaviour was any more than one of a responsible management working through what may be a serious issue. The investigation had not yet germinated, and as such, it is impossible to tell what fruit it would bear, but one thing is certain: beginning an investigation procedure to address a serious issue could not possibly constitute compelling an employee to resign. The Applicant’s complaints of bullying are largely unsubstantiated and even if substantiated, would not leave “no effective or real choice but to resign”. The Applicant could have raised any WHS issues with his employer as per company policy and better particularised any concerns he had so that they might be investigated.

Given this context and on an objective analysis of the Respondent’s conduct it cannot be shown that there was any compulsion on the facts which led to the Applicant’s resignation. Mr Hopping was not forced to resign because of conduct or a course of conduct engaged in by the Respondent.

Accordingly, I find that there was not a dismissal pursuant to s.386(1)(b) of the Act.”

Hopping v Bolton Clarke (2020) FWC 3753 delivered 16 July 2020 per Lake DP