Constructive dismissal: is it a real thing?

A constructive dismissal occurs when an employee resigns from their position, but their decision to resign was forced upon them at the initiative of the employer.

The term is usually used within the context of an ex-employee seeing advice on their options around “dismissal-related” claims such as unfair dismissal or a breach of the general protections provisions of the Fair Work Act 2009.

While the term “constructive dismissal” does not appear in the Fair Work Act, the wording in the Unfair Dismissal provisions of the Act (Part 3-2) concentrates whether or not the circumstances of the termination of employment occur at the initiative of the employer.

Section 386 of the Act notes:

386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

Constructive dismissal – in effect forced resignation – is generally poorly understood. For an employee’s claim on constructive dismissal to succeed, the employee must prove that the employer’s actions were the principal contributing factor leading to their resignation.

So what’s the takeaway for employers on the topic of constructive dismissal? First, know what the term actually means. Second, as with any decision relating to dismissal, the employer should carefully consider their options prior to taking a termination decision. There is rarely a low-risk shortcut that can substitute for a transparent performance management or redundancy process. Finally, if you’re out of your depth when it comes to dealing confidently with this type of thing, call in an expert. Getting it wrong can cost you big time. Think of a good HR Consultant as an investment in your business.

Need some help in managing an underperforming employee? Want to separate myth from fact when it comes to employee termination and your employer obligations under the Fair Work Act? Give Bare Bones Consulting a call. Your first chat costs you nothing…can’t get better value than that!