Constructive Dismissal

Did you know that an employee can claim that they were dismissed, even where he or she ends the employment by resignation? Under the Fair Work Act (the FW Act) a dismissal can occur either (a) where the employment has been terminated at the employer’s initiative or (b) where 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?

Under the FW Act, a person has been dismissed from his or her employment if either (a) the employment has been terminated at the employer’s initiative or (b) 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. 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 FW Act, an employee must have been 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 FW Act, there will also be a dismissal where the employee has resigned from his or her employment, but was forced to do so 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 is likely that such conduct on behalf of the employer would amount to a repudiation 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 HR Assured client, you will 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 need help in exiting a troublesome employee from your business, contact HR Assured for a free consultation on 1300 345 875 or book online.