Unfair dismissal; a classic definition of constructive dismissal

Here, from a recent decision of the Fair Work Commission is a classic definition and explanation of a constructive dismissal.

“In this case there was a jurisdictional objection raised in respect to that element contained in subsection 385 (a) of the Act, specifically whether the applicant was a person who had been dismissed. The question of whether or not a person has been dismissed from employment involves mixed findings of both fact and law. Further, section 386 of the Act prescribes a meaning of “dismissed”. Relevantly, sub-section 386 (1) of the Act is in the following terms:

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.”

[26] In this instance the applicant did not provide any written resignation but instead he treated his removal from rostered work on Wednesday, June 17, 2020, and his subsequent omission from the fortnightly roster, as his dismissal. In effect, the applicant was treating the actions of the employer as representing his dismissal without there being any overt action taken by the employer to dismiss the applicant other than his omission from rostered work on June 17.

[27] There are circumstances where an employee may be entitled to treat the actions of the employer as the termination of the employment at the employer’s initiative without the employer taking overt action to dismiss the employee. Such circumstances may be comprehended by the concept of constructive dismissal as explained by the learned authors of the often-quoted source book, Macken’s Law of Employment.  1 The following passage from that text is instructive:

“Alternatively, the employee may, in certain circumstances, treat herself or himself as discharged from further performance of the contract, and leave the employment without giving the requisite notice. This course will be justified where the conduct of the employer amounts to a repudiation of the contract, that is, the employer’s breach or proposed breach is sufficiently serious to allow the employee to regard herself or himself as discharged from further performance of the contract. The term “constructive dismissal” is often used to describe this situation.”

[28] Consequently, although it was not clearly articulated by the applicant, the circumstances in this instance involved an alleged constructive dismissal where the applicant has treated the conduct of the employer as the termination of his employment on the employer’s initiative, but without any overt act of, or advice of dismissal. In such circumstances, the conduct of the employer must be carefully examined so as to establish whether it was sufficiently serious so as to be an egregious breach of the contract of employment which represented a repudiation of the contract of employment. If the evidence established that the employer’s conduct was such an egregious breach, proper basis would exist so as to permit the applicant to regard himself as discharged from further performance of the contract. In such circumstances, the applicant would have been constructively dismissed.

[29] There is a significant amount of case law authority on the question of constructive dismissal. One case which is often referred to is that of Mohazab v Dick Smith Electronics (No2) 2 (Mohazab), which succinctly summarised the concept of constructive dismissal as follows:

“However industrial tribunals and courts have long accepted that an employee who resigns from his or her employment can and should be treated as having been dismissed by the employer if the dismissal is one where the employee did not resign willingly and, in effect, was forced to do so by the conduct of the employer.” 3

[30] In Mohazab, the Full Bench of the Court also referred to another authority in the case of Allison v Bega Valley Council  4 (Allison). The following extracts from the decision in the Allison case is particularly helpful for application in the present circumstances:

“Although the term “constructive dismissal” is quite commonly used it can deflect attention from the real inquiry. That inquiry should involve an analysis of what occurred. Did the employer behave in such a way so as to render the employer’s conduct the real and effective initiator of the termination of the contract of employment and was this so despite on the face of it the employee appears to have given his or her resignation?”

and

“In order to undertake the necessary analysis it is necessary to look carefully at all the relevant facts. It is necessary to determine whether the actual determination was effectively initiated by the employer or by the employee…”

Rajnoha v Sauer’s Bakehouse (2021) FWC 488 delivered 12 February 2021 per Cambridge C