Constructive Dismissal

Did you know that an employee can claim that they were dismissed, even when he or she ended the employment by resignation? Under the Fair Work Act a dismissal can occur when:

• the employment has been terminated at the employer’s initiative;
• when the person has resigned from his or her employment, but was forced to do so because of the employer’s conduct. The latter of these two scenarios is commonly referred to as a “constructive” dismissal.

What is a constructive dismissal?

A constructive dismissal occurs when a person has resigned from his or her employment, but was forced to do so due to their employer’s conduct. In effect, the employee is claiming that he or she had no real choice but to resign. In doing so, the employee must prove that the employer forced their resignation.

Often, the issue of constructive dismissal arises where an employee alleges that he or she has been the subject of bullying or harassment at work, either at the hands of the employer of fellow work colleagues. The failure of the employer to appropriately manage such misconduct will almost inevitably result in a claim by the employee that he or she was forced to resign.

Why is constructive dismissal a problem?

Under the Fair Work Act, an employee must be dismissed in order to have access to the unfair dismissal regime. There will, of course, be a dismissal where the employment has been terminated at the employer’s initiative. But under the Fair Work Act, there will also be a dismissal where the employee was forced to resign because of the employer’s conduct.

In addition to the risk of a claim for unfair dismissal, a constructive dismissal also presents a risk of a claim for breach of the employee’s contract. In circumstances where the employee has been forced to resign because of the employer’s conduct, it’s likely that the employer’s conduct would amount to a violation of the contract, therefore giving the employee the right to elect to terminate the contract and claim damages in respect of the breach.

How do you avoid the risk of a constructive dismissal?

As a Citation HR client, you’ll have access to a complete Human Resource Information System (HRIS) which will assist you in managing the risks of constructive dismissal, as well as access to a team of experienced workplace relations consultants to talk you through tricky situations when these arise. If you’re worried about a constructive dismissal claim arising, we’d love to offer you a free, no-obligation chat to discuss your situation. You can contact us here.