What is a ‘forced resignation’?

Imagine a heated argument has taken place between an employee and her manager. The manager invites her to go home and have a think about whether she wants to continue with the company, given the heated things she has said…. then the employee never returns to work.

Or, imagine you as HR manager suggest to an under-performing employee they should ‘jump before you’re pushed’ and resign instead of facing a later dismissal.

What if the employee later argues the employer‘s actions forced her to resign? Would the above two scenarios result in a finding of ‘voluntary’ resignation or constructive dismissal, exposing the company to considerable risk?

Was the resignation not voluntary?

A key consideration of whether the above employees can make an unfair dismissal claim is the Fair Work Act 2009 (Cth) (“FW Act”) definition of the concept of unfair dismissal. Section 385(1)(a) of the FW Act requires “the person has been dismissed”.

Additionally, s 386(1) then defines the meaning of dismissed, that is, a person has been dismissed if

(a) their employment has been terminated on the employer’s initiative; or (b) the person resigned from the employment, but was forced to do so because of conduct engaged in by the employer.

As the employee resigned her employment the employer might attempt to argue under s 386(1)(a) of the FW Act the employment was not terminated at the “initiative of the employer”. However, the employee would, in turn, rely on the definition at s 386(1)(b) of the FW Act and claim the resignation was ‘forced’.

The leading authority is the Full Federal Court decision of Mohazab v Dick Smith Electronics Pty Ltd (No. 2) which held the phrase ‘termination at the initiative of the employer’ involves a: “termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship… [A]n important factor 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.” (emphasis added)

Therefore, on the definition stated above, if there is an element of voluntariness from the employee choosing, or electing, to resign her employment it will not be considered to be a termination at the ‘initiative’ of the employer.

Example 1: Resignation after a heated discussion

In the first example, whilst the employee may have been unhappy with her manager and had ‘heated’ words, but at no time did the manager demand she resigns or otherwise tells her that if she did not resign, she would be dismissed.

Anything less than such a conversation will likely be considered a voluntary choice made by the Applicant. The employee elected to not return to the workplace; she was not prevented from doing so and continuing her role.

Therefore, the employer would argue the Applicant has not been ‘dismissed’ and therefore does not meet the requirement of s 385 of the Act. Consequently, she is not capable of being ‘unfairly dismissed’ as defined in the FW Act and the FWC must dismiss the Application. For how FWC treats discussions like these see [2011] FWAFB 4038.

Example 2: ‘Jump or you’ll be pushed’ discussion

However, regarding the ‘jump or you’re pushed’ conversation, this concept of an employee being presented with ‘options’ was considered by SDP O’Callaghan in Richardson v Inghams Enterprises Pty Ltd [2008] AIRC 1117. However, if the alternative ‘option’ presented is dismissal (‘resign or be terminated’), this will likely suffice for the FWC to find such an ultimatum ‘forced’ the employee to resign – see [2010] FWA 5753. She will, in turn, be considered to have been ‘dismissed’ under s 386(1) and can pursue her unfair dismissal claim.

This issue is so important as if the employee successfully jumps this jurisdictional hurdle (that they were dismissed as opposed to resigning) they will be well on their way to a successful unfair dismissal claim, owing to the employer likely having not complied with the requisite steps under s 387 of the FW Act (owing to the employer in such circumstances considering the employee to have resigned rather than being ‘dismissed’).

What do you think? Is the FWC considering the above situations in the proper way or do you think they get it wrong? Love to hear your thoughts.

Workplace Wizards partners with employers to advise on performance management and dismissal processes, and defend dismissal-related employee claims. Email me at support@workplacewizards.com.au for more information.