What is a “forced” resignation in fair work cases

The following dicta is a summary of the law which applies to unfair dismissal cases when there is a dispute about whether a resignation was “forced” upon the employee by the employer.

“The onus to prove that a resignation was not voluntary and formed a constructive

dismissal lies with the employee alleging constructive dismissal occurred.4 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.”5

[30] The decision of Senior Deputy President Richards in Megna v No 1 Riverside Quay

(SEQ) Pty Ltd provides instruction on how to interpret the term “forced”:6

“[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 …

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[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)

[31] In determining whether the Applicant was left with “no effective or real choice but to

resign”, there are numerous case law examples from which to draw. In Boulic v Robot Building

Supplies, it is held:7

“[16] From the many authorities on this subject it appears that there must be a “critical

action” or “critical actions” of the employer which was intended to bring the

“employment relationship” to an end and perhaps action which would on any reasonable

view probably have that effect. In identifying both the critical action of the employer

and its intent “it is a matter of objectively looking at the employer’s conduct as a whole

and determining whether its effect, judged reasonably and sensibly, is such that the

employee cannot be expected to put up with it.” The examination of the employer’s

conduct must also take into account that the employer is under an implied obligation

that it “will not without reasonable and proper cause, conduct itself in a manner

calculated or likely to destroy or seriously damage the relationship of confidence and

trust between employer and employee.”

[32] In Bruce v Fingal Glen Pty Ltd T/A Comfort Inn Adelaide Riviera, Senior Deputy

President O’Callaghan stated that there must be consideration of all alternative options available

to the employee:8

“[28] Whilst in absolutely no way condoning Fingal Glen’s behaviour, I have concluded

that the resignation decision was based on Ms Bruce’s perception and a perfectly

understandable and subjective response. That resignation decision was not, as of 10

January 2013, the only option open to Ms Bruce.”

[33] In NSW Trains v James [2022] FWCFB 55 at 45, the majority of the Full Bench have

stated the following regarding demotion and dismissal:

[45] We agree with the proposition that the expression ‘employment … has been

terminated’ in s.386(1)(a) means termination of the employment relationship and/or

termination of the contract of employment. Contrary to the Deputy President’s view at

first instance, on this construction, unless the circumstances in s.386(2)(c) apply, an

employee may be dismissed within the terms of s.386(1)(a) if the employer has

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repudiated the employee’s contract of employment by demoting the employee and the

employee has accepted that repudiation but has continued to be employed by the

employer under a new employment contract.

[34] The Full Bench further elaborated the meaning of dismissed in the context of demotion

stating:

[72] In the context of a demotion, in Charlton the Full Bench of the AIRC held that if

the repudiation of the contract of employment is accepted, either expressly or by

conduct, then the contract of employment is terminated: ‘[34] … If, in such

circumstances, the demoted employee then remains in employment with the employer,

this occurs pursuant to a new contract of employment in respect of the demoted position.

It may be noted that where the employment continues with the employee allegedly

acquiescing in a reduction in salary or other terms of employment, difficult questions

may arise as to whether the continued employment involves the continuation of the

original contract of employment (but with the employer breaching that contract by

paying the reduced salary), a consensual variation of the terms of the original contract

or the termination of the original contract and a substitution of a new contract of

employment.’ [references omitted, emphasis added]

[73] We agree with this observation.

[76] The question of whether a demotion constitutes a dismissal for the purposes of

s.386(1)(a) must be considered in its statutory context and common law principles

applied in this context. It is clear from the legislative history and previous consideration

of the provisions by the Commission and its predecessors that Parliament did not intend

s.386 to exclude all demoted employees who remain employed after their demotion from

accessing the unfair dismissal provisions in the FW Act. Section 386(2)(c) proceeds on

the premise that a demotion where employment continues can amount to a ‘termination

of employment’ (and then clarifies that particular demotions fall outside the scope of

s.386(1)). As a general proposition, provided the employee makes clear their objection

to the demotion, they should not be taken to have affirmed their original contract of

employment merely by continuing to work in the demoted position and being paid for

that work whilst challenging the alleged dismissal before the Commission. Of course, it

will be a question of fact in each case as to whether the conduct of an employee

constitutes an affirmation of their contract.9

[161] We agree that the expression ‘significant reduction [in remuneration or duties]’

takes its ordinary meaning as being a reduction that is ‘important; of consequence’.

Previous AIRC and Commission decisions give an indication of the magnitude of a

reduction that may constitute a significant reduction. We also agree that whether a

reduction in remuneration or duties is ‘significant’ is an objective test, having regard

to all the circumstances. [references omitted]

CONSIDERATION

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[35] The decision turns on whether the employer’s conduct intended or had the probable

effect or result of bringing the employment of the relevant employee to an end, such that the

employee effectively had no choice but to resign.

[36] Repudiation is not a question of law but fact.10 Repudiation occurs when there is absence

of readiness or willingness to perform their contractual obligations. It is important to regard all

the circumstances when claiming there was repudiation and a significant reduction in her duties

per NSW Trains v James. It is a question of fact as to whether the conduct of an employee

constitutes an affirmation of their contract.

[37] It is acknowledged that the Respondent’s redundancies and restructuring would have

caused the Applicant and its other employees additional stress arising from the redeployment.

This may have been exacerbated through the Applicant’s submission that the Respondent had

not communicated with her. However, I am not satisfied that there was no repudiation from the

Respondent’s conduct which forced the Applicant to resign.

[38] The company was going through a restructuring resulting in sixty redundancies during

the 2-month time period which the Applicant submits that the Respondent did not consult with

her about the major workplace change or was not provided any information about the changes

regarding her position. The Applicant was eventually consulted about redeployment

opportunities on 12 October 2022.

[39] The Respondent provided steps of redeployment by providing a role to the Applicant as

a Planning Support Officer.

[40] The employer was unable to perform their existing contractual obligation during the

restructuring and did not keep the Applicant in her previous role. The Respondent identified the

Applicant as a high performer and had provided redeployment opportunities to which she could

have declined.

[41] However, the Applicant did accept the new terms of her redeployment. She was offered

a Level 4 – Planning Support Officer role and accepted the Level 4 role on 25 October 2022.

The Applicant accepted the new terms of contract on 26 October 2022 and acknowledged she

would require further training in her new role. The Applicant states that she would have been

eligible for Level 6 later in the year, and that she did not receive a pay increase for attaining

Level 5 although she had met all expectations. No evidence was presented to confirm this

assertion. The Respondent did not have an obligation to increase the Applicant’s renumeration

as the Applicant had accepted the new role at this point.

[42] On balance, I am satisfied that the Applicant accepted a consensual variation of the

terms of the original contract or had accepted a new contract with her redeployment.

[43] I do not find the Respondent was unreasonable in redeploying the Applicant in another

role. There were only 2 employees retained in her team, and her requests were considered. For

instance, she was retained by SAA instead of being transferred to NAN, her duties may have

changed but she had accepted them by accepting her new contract and had been working in the

role for 3 weeks when she received a text message from her co-worker. The Applicant’s salary

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was maintained, and she was able to keep her flexible working arrangements. I am not satisfied

that the redeployment resulted in her significant reduction of her duties or renumeration.

[44] The Applicant provides evidence regarding another co-worker on 17 November 2022 at

Annexure 8 where that co-worker maintained the same band prior to redeployment. It fails to

take into account that the Applicant was at a higher band than the co-worker and does not

provide much support or context that the Applicant was demoted as it was only one

circumstance.

[45] The Applicant was unsatisfied with the Level 4 role only when she was communicated

with other another employee on 17 November 2022 regarding maintaining her level. This was

three weeks after she had accepted the new contract. The Applicant then sought to seek a mutual

separation on the same day asking 10 weeks of pay. The Applicant had chosen to repudiate the

employment relationship when the Respondent refused.

[46] As a result, I am not satisfied that the Applicant was forced to resign because of conduct,

or a course of conduct within the meaning of s386(1)(b) of the Act. The Respondent had tried

to maintain the Applicant’s employment and had paid her the same rate and at the same level

as she was prior to her redeployment. Her duties were not a significant reduction, but a change

because of operational requirements of the Respondent. The Applicant does not meet the criteria

of a person protected from dismissal pursuant to s.386(1)(b) of the Act.

[47] Therefore, this Application is dismissed. I Order accordingly.”

Quayle v SAA Management Pty Ltd  [2023] FWC 883 delivered 8 May 2023 per Lake DP