When is a resignation a dismissal?


The concept of constructive dismissal is known to most Australians, but that is not to say that most people will understand what is technically required for a resignation be be capable of being characterized as a dismissal for the purpose of unfair dismissal or the general protections’ laws. Many employees believe that it is sufficient that the boss behaves badly. Is that the case? The answer is no.

“Consideration of the extent to which the termination of Ms Caltabiano’s employment was at the initiative of E’Nuf is assisted by a recent decision of the Full Court of the Federal Court of Australia, Mahony v White [2016] FCAFC 160. In that matter the Court stated:

“19. The concept of the termination of employment having been at the “initiative” of the employer has its genesis in the Convention Concerning Termination of Employment at the Initiative of the Employer adopted by the International Labour Organisation (“the Convention”) on 22 June 1982. Legislative effect was given to that Convention when the Industrial Relations Act 1988 (Cth) (“the IR Act”) was amended by the Industrial Relations Reform Act 1993 (Cth). The Convention then became Sched 10 to the IR Act. Articles 3 and 4 of the Convention provided as follows:

Article 3
For the purpose of this Convention the terms termination and termination of employment mean termination of employment at the initiative of the employer.

Article 4
The employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service.

It will be noted that Art 4 was expressed in the passive voice. Absent the terms of Art 3, Art 4 would have applied to termination by either party in the employment relationship. But, as the title of the Convention made clear, that was not the intent. The Convention applied only to a termination at the employer’s initiative, that is to say, to a termination which, in Anglo-Australian systems of law, would be described as a dismissal.

  1. In the provisions of the IR Act which implemented the Convention, the passive voice was not used. In every case, a direct legislative prohibition, enforceable by court proceedings, was established by use of the formula, “an employer must not terminate an employee’s employment” (see ss 170DB, 170DC, 170DE, 170DF and 170DG). Nonetheless, it was provided by s 170CB that an expression in the relevant Division of Pt VIA of the IR Act had the same meaning as in the Convention.
  2. It was in this state of the law that the Full Court of the Industrial Relations Court of Australia decided Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200. There the question was whether the termination of the employment of the employee concerned had been at the initiative of the employer. The employee had signed a letter of resignation, but that had been done in circumstances where he had been given a choice by his employer either to resign or to have the police called in to investigate what, according to the employer, was the theft of an item of stock. The Full Court held that the employee’s resignation had been at the initiative of the employer and had, therefore, been a termination within the meaning of the Convention and the legislation. The effect of this judgment was that, notwithstanding the use of the active voice in the legislation, a termination that had not been done by the employer might nonetheless have been, and in that case it had been, done at the initiative of the employer and thus covered by the statutory prohibitions.
  3. The Full Court said (62 IR at 205):

These definitions reflect the ordinary meaning of the word “initiative”. Viewed as a whole, the Convention is plainly intended to protect workers from termination by the employer unless there is a valid reason for termination. It addresses the termination of the employment relationship by the employer. It accords with the purpose of the Convention to treat the expression “termination at the initiative of the employer” as a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship.

And (62 IR at 205-206):

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.

  1. Although their Honours were concerned, as they had to be, with meanings conveyed by the terms of the Convention, the formula “at the initiative of the employer” has been retained in the FW Act (albeit not in that precise grammatical arrangement). This judgment remains good authority as to the connotation of that formula.”

See Caltabiano v CA Bound & HL Bound & BA Reynolds T/A Enuf Burger Bar (2016) FWC 9201 delivered 22 December 2016 per O’Callaghan SDP