Constructive dismissal, in effect forced resignation, is
generally poorly understood, mainly because it can manifest itself
in a myriad of different situations depending upon the terms of any
given employment relationship.
Constructive dismissal occurs when the conduct of the employer
was so "harmful, adverse or unfriendly to" the contract
of employment and the employment relationship that the employee
could not be expected to put up with it.
Common examples include:
an employer expressly suggesting that an employee resign
(irrespective of whether the employee made the suggestion) so as to
assist with preserving the employee's future ability to obtain
an employer actively making it very difficult or impossible for
an employee to fulfil their role;
an employer continuously failing to provide, to a serious
degree, a safe and/or healthy working environment; or
an employer imposing unauthorised and detrimental variations to
the employee's contract, such as a pay-cut, demotion, change of
working hours, relocation or unreasonably failing to prevent or
punish a co-worker who may be harassing or discriminating against
The employee must prove that the employer's actions were the
principal contributing factor leading to their resignation. The
employer's action must be found to have directly and
consequentially resulted in the termination of the employment (that
the employee had no effective or real choice but to resign) and
that the employee would have remained employed but for the alleged
The resignation must occur immediately after, or very shortly
after, the conduct complained of, otherwise the employee could be
said to have accepted the continued existence of the employment
contract (in effect, 'tolerating' the conduct).
Constructive dismissal often forms the basis of
"dismissal-related" claims such as unfair dismissal or a
breach of the general protections provisions of the Fair Work
A recent example is the case of Foster v Sushi Tribe Pty Ltd T/A
Pacific Retail Management 2. That case involved Mr
Foster, a graphic designer employed by Sushi Tribe for over 8
years. On 22 June 2015 Sushi Tribe gave Mr Foster two
options; either he could take a voluntary redundancy package or
become an independent contractor.
Mr Foster rejected the offer of becoming an independent
contractor. The redundancy offer was then retracted by Sushi Tribe.
On 13 July Mr Foster was presented with a new, but inferior,
contract. It changed his employment to part-time but also
substantially increased his duties.
Mr Foster alleged that his manager, Ms Mills, had regular
confrontations with him, making his work situation intolerable. He
said he was the subject of a deliberate campaign to manage him out,
which had a significant negative impact on his mental and physical
Mr Foster tendered a "forced resignation" on 28 August
2015 and lodged his unfair dismissal claim on 15 October 2015.
Mr Foster had a witness, Mr Adams, who had elected to take the
voluntary redundancy but had been subjected to similar treatment as
Mr Foster. Mr Adams also witnessed Mr Foster's treatment at the
hands of Ms Mills.
Given Sushi Tribe failed to specifically respond to the
allegations at the Fair Work Commission hearing, Mr Foster only had
to get across the necessary evidentiary threshold without the
concern of opposing evidence or submissions.
The Fair Work Commission found that Mr Foster was constructively
dismissed. It reached this conclusion because of:
Sushi Tribe's attempt to achieve a redundancy or
independent contractor change;
the abrupt withdrawal of the redundancy offer;
the subsequent treatment of Mr Foster which affected his health
and welfare and family life; and
the reduction in his hours and the increase in his
All constructive dismissal cases make it clear that employers
need to carefully consider their actions when they decide they wish
to be rid of an employee. There is rarely a low-risk shortcut that
can substitute proper redundancy discussions or performance
1 Mohazab v Dick Smith Electronics Pty Ltd
(No. 2) (1995) 62 IR 200; O'Meara v Stanley Works Pty Ltd
 AIRC 496. 2  FWC 2201.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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An employee that refused a reasonable offer of settlement was ordered by the FWC to pay his ex-employer's legal costs.
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