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What Is Constructive Dismissal?

What Is Constructive Dismissal?

Not all resignations occur because an employee has found a bigger and better opportunity. Sometimes workers quit because they are at the end of their tether and feel they need to depart the workplace as soon as possible to preserve their mental and/or physical health.

This can be known as ‘constructive dismissal’ and if it is not handled appropriately, it can become an issue for both the employer and the employee.

Here’s how to make sure constructive dismissal does not cause a problem for your employees or your organisation.

What is constructive dismissal?

Put simply, constructive dismissal (also known as constructive unfair dismissal) is involuntary resignation that is forced because the employee felt they had no choice but to resign from the organisation.

This area of employment law can be complex, as constructive dismissal can form a part of an unfair dismissal claim.

When does constructive dismissal occur?

Constructive dismissal can occur off the back of long term bullying, during the heat of the moment, during periods where the employee is under extreme duress or due to other ‘forceful’ factors. These factors can include negative experiences in the workplace such as a reduction in hours without warning or a legitimate reason for doing so or non-payment for time worked, which can compel the employer to seek other employment, even if they did not want to leave their current job.

What is the difference between constructive dismissal and unfair dismissal?

There is no direct comparison between unfair dismissal and constructive dismissal as constructive dismissal can form part of an unfair dismissal claim.

While some dismissals are legal and just, many are not, and if an employer:

  • threatens dismissal;
  • engages in misconduct;
  • makes significant changes to the role or workplace; or
  • subjects an employee to disciplinary action that is unwarranted

then the employee may resign involuntarily, which could form the basis of an unfair dismissal claim.

If an unfair dismissal claim is brought to the Fair Work Commission against an employer, the onus is on the employee making the allegation to prove that they were unfairly dismissed by way of constructive dismissal, in that they believed they were left with no choice but to resign.

In these instances, the employee must be able to prove that their employer intended for the working relationship to come to an end, or that the employer believed it was probable the relationship would come to an end.

How can an employer protect itself against an unfair dismissal claim?

In cases where constructive dismissal may be alleged against an employer in an unfair dismissal claim, the employer will be required to defend itself against the allegations.

To ensure that your organisation is not found to have unfairly dismissed an employee who resigns due to constructive dismissal, you should ensure that your grievance and bullying and harassment policies clearly set out the process for making a complaint and the formal investigation procedure for claims of bullying and harassment.

If an employee makes a spur-of-the-moment decision to resign, you should ensure that their reason for resigning is clear and offer them the option to rescind their resignation should their reason for resigning simply be that they felt they had no other choice.

If the employee has stated an issue or issues that is driving them to resign, you should offer to investigate these issues to determine whether or not they can be resolved prior to accepting their resignation.

If you are an employer who needs assistance navigating employment laws around constructive dismissal, or you are an employee who has resigned as a last resort to misconduct in the workplace, contact our experienced HR consultants in Cairns. 

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