Constructive Dismissal

When making a constructive dismissal claim, the employee must prove that they did not resign from their employment voluntarily and that they were instead forced to do so because of their employer’s conduct. In essence, the employee must show that their employer took action with the intention of bringing the employment relationship to an end or took action that would have the probable result of doing so. This can be difficult for an employee to establish but will typically arise if your employer unilaterally and significantly reduces your salary or otherwise attempts to drastically change the terms of your employment without your agreement.

For example, the Fair Work Commission has consistently held that a significant unilateral reduction to salary will usually constitute conduct by an employer that leaves the employee with no other option than to resign. Similarly, a failure to pay wages over an extended period will also usually constitute conduct that has the probable result of bringing the employment relationship to an end.

A constructive dismissal will not usually arise simply because you have been issued a warning or placed on a performance improvement plan.

What if I resigned “in the heat of the moment”?

An employer is usually able to rely on a clear resignation given by an employee, even if it was given while the employee was feeling some amount of pressure.

However, if the resignation was given under extreme pressure and the employee seeks to withdraw the resignation immediately afterwards, special circumstances may arise. The employer may be under an obligation to allow a reasonable period of time for the resignation to be withdrawn or to confirm the resignation if there is some uncertainty about the circumstances in which it was given.

What do I do if I believe I have been constructively dismissed?

If you feel that your employer’s conduct has left you no other option but to resign, you should seek legal assistance immediately.

In order to take action for constructive dismissal, the employment relationship must end in a careful and controlled way. Once the employment ends, you may be able to make a claim for a significant breach of employment contract and/or an unfair dismissal claim under the Fair Work Act.

What are the consequences of constructive dismissal?

If you can establish that you were forced to resign from your employment, you may be eligible to make an unfair dismissal claim or general protections application to the Fair Work Commission. It might also give rise to certain common law rights and entitlements under the terms of your employment contract.

What is an unfair dismissal claim?

An unfair dismissal claim is an allegation by an employee that their dismissal was harsh, unjust or unreasonable. In instances of constructive dismissal, the employee would be alleging they were left with no other option than to resign due to the harsh, unjust and unreasonable conduct of their employer. Under the terms of the Fair Work Act, a high income threshold operates as a limit to an employee’s eligibility to be protected from unfair dismissal laws. If you are not covered by a modern award, or if an enterprise agreement does not apply to you, your annual income must be less than $167,500 to make an unfair dismissal application.

If you think you have been unfairly dismissed by way of constructive dismissal, it is important to obtain legal assistance as quickly as possible. There are a number of complexities to the unfair dismissal jurisdiction in the Fair Work Commission, and you only have one opportunity to pursue your claim. Constructive dismissal cases can be difficult for an employee to establish so seeking professional advice is recommended.