Constructively Dismissed But Not Unfair Dismissal
In one of the first constructive dismissal cases for 2022, an employee was found to be constructively dismissed or forced to resign. However the Fair Work Commission still deemed the dismissal fair. It’s constantly assumed by employees if you can prove your forced to resign. (constructively dismissed).Then its automatically assumed that its unfair. This article “Constructively Dismissed But Not Unfair Dismissal” will run through the details and the legal test you must meet. My view is you never ever resign until you get advice. Going without income is not easy.
Details of the unfair dismissal claim
In Costigan v KOR Equipment Solutions Pty Ltd. Mr Michael Costigan made an application alleged he was unfairly dismissed after he was forced to resign from his employment with KOR. KOR is an import and distribution business. The industrial equipment they import are truck mounted vacuum and hydro-excavation units which they distribute throughout Australia and New Zealand. Mr Costigan commenced employment by KOR on 3 August 2020. When his employment with KOR ceased on 31 August 2021, he was working as a Business Analyst.
On 22 July 2021, Mr Roberts and Mr Costigan had a meeting (the July meeting). Mr Roberts gave Mr Costigan a formal warning detailing what he says were errors in Mr Costigan’s work. Costigan says that this constituted his first formal warning. Mr Robert says that this was the second formal warning.
On 31 August 2021, Mr Robert met with Mr Costigan in a disciplinary meeting to discuss Mr Costigan’s alleged performance issues. (the resignation meeting). Mr Steven Cusworth, the Managing Engineer of KOR, also attended this meeting. At the meeting, Mr Roberts said that Mr Costigan had continued to make errors in his work in August. He then proceeded to detail those errors. Mr Costigan did not agree with the manner in which the issues raised by Mr Roberts are characterized.
Choose to resign, rather than be dismissed
At the resignation meeting, Mr Roberts told Mr Costigan that the day of the meeting would be his last day working for KOR. Told him that he could choose to resign rather than be dismissed. Following the meeting, Mr Costigan sent an email to Mr Roberts stating that. “At this point in time I would like to exercise my right to resign effective today.” Is this choice or forced, is the important question.
Forced to resign because of the conduct or course of conduct
Under the Fair Work Act 2009 (Cth) (the FW ACT), the term dismissed is defined where a person’s employment has been terminated at the employer’s initiative or a person was forced to resign because of the conduct or course of conduct engaged in by the employer. A forced resignation, also referred to as a constructive dismissal, is when an employee has no real choice but to resign. Thus, the onus is on the employee to prove that their resignation was not voluntary. This issue may form the basis of a jurisdictional issue when dealing with claims such as Unfair Dismissal applications in the Fair Work Commission.
Given that Mr Costigan resigned, Commissioner Mirabella of the Fair Work Commission conducted a hearing in which she had to determine whether Mr Costigan resigned voluntarily. Or whether he was forced to do so and thus constructively dismissed.
Under the Fair Work Act 2009 (Cth) (the FW ACT). The term dismissed is defined where a person’s employment has been terminated at the employer’s initiative. Or a person was forced to resign because of the conduct or course of conduct engaged in by the employer left the employee with no real choice but to resign.
Despite an employee feeling they have no other choice but to resign, constructive dismissal claims are extremely difficult to win. Whilst it is your application, the onus is on you to prove the resignation was forced, in order to satisfy the test of constructive dismissal, as it was you who ended the employment relationship.
Employers intent to bring the relationship to an end
In order to satisfy the legal test for a forced resignation or constructive dismissal claim, the employee must demonstrate that the employer has taken action with the intent to bring the relationship to an end. Or that has that probable result. In the words of the Full Bench, of the Fair Work Commission, in O’Meara v Stanley Works Pty Ltd. Adopted in Bupa Aged Care Australia Pty Ltd v Tavassoli, the test is whether the employer engaged in conduct with the intention of bringing the employment to an end. Whether termination of the employment was the probable result of the employer’s conduct such that the employee had no effective or real choice but to resign.
Similarly, the Australian case of Mohazb v Dick Smith Electronics Pty Ltd (No 2). States that “an important feature 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”. For example: An employee resigned after having been paid under half of what he was owed in wages over a period of 4 months. This was held to be a forced resignation due to the conduct of the employer and thus constituted a dismissal by the employer.
Each unfair dismissal matter turns on its own facts.
In Costigan v KOR Equipment Solutions Pty Ltd. Commissioner Mirabella acknowledged that not every resignation following notification of an impending termination will constitute a dismissal. Each matter turns on its own facts. In this case, Commissioner Mirabella found that there was time pressure imposed on Mr Costigan. The actions of Mr Roberts were instrumental in Mr Costigan’s resignation and the resignation was Mr Roberts’ idea.
Commissioner Mirabella found that Mr Robert’s presented the notion of resigning as an alternative to termination. Together with a positive reference and an additional bonus. KOR’s intention was that Mr Costigan. Whether through termination or resignation, would cease to be employed by them within less than two hours. Commissioner Mirabella found that there was no genuine attempt to give Mr Costigan time to contemplate the choice of resignation. That it is difficult to conclude that Mr Costigan was exercising his individual judgement when he accepted the offer to resign.
He had no effective choice regarding the tenure of his employment at KOR. In respect of the constructive dismissal, Commissioner Mirabella held that the only choice Mr Costigan had was the manner in which he would depart.
Is the constructive dismissal harsh, unjust or unreasonable?
Aforementioned, if an employee is forced to resign and can successfully prove this is a direct result of the employer’s conduct, this will constitute a dismissal. If satisfied that the employee has been dismissed, the employee can make an unfair dismissal claim in the FWC. In order to qualify for an unfair dismissal, the employee must have completed at least the minimum employment period with the employer.
The minimum employment period is 6 months’ continuous service at a particular time, for non-small business employers. If the employer is a small business. Which employs less than 15 employees at the relevant time, the employee must have completed at least 12 months of continuous service at the particular time.
Despite the employees’ eligibility to make an unfair dismissal claim after establishing their forced resignation constitutes dismissal under the FW Act. The employee would need to establish that the dismissal was harsh, unjust or unreasonable. In Grundy v Brister and Co. The Fair Work Commission found that the employer had forced the employee to resign and that the employee was therefore constructively dismissed after a resignation letter was prepared by the employer and the employee was required to sign it.
However, when assessing whether this constructive dismissal was unfair, the Fair Work Commission held that the dismissal was not harsh, unjust or unreasonable. As the employees engaged in abusive behaviour and had a threatening attitude towards fellow employees. Although the Fair Work Commission noted procedural failings. Such as preparing the resignation letter for the employee, the Commission held this did not outweigh the seriousness of the employee’s misconduct.
Valid reason for the dismissal
When assessing whether a constructive dismissal is harsh, unjust or unreasonable, the Fair Work Commission will look at whether there was a valid reason for the dismissal. Which relates to the employees’ capacity or conduct. Whether the employee was notified of this reason. Was the employee was given any opportunity to respond to that reason. Whether there was any unreasonable refusal by the employer to allow the presence of a support person for any discussion relating to the dismissal.
Was the employee was warned about unsatisfactory performance prior to the dismissal if this was the reason for the dismissal. The degree to which the size of the employer’s enterprise would likely impact on the procedures followed in making the dismissal. The degree to which the absence of dedicated human resource manager specialists. Or expertise in the employer’s enterprise would be likely to impact on the procedures followed in the dismissal. Finally any other matters the Commission considers relevant.
Could not perform the job to the required standard
In Costigan v KOR Equipment Solutions Pty Ltd. Commissioner Mirabella found that there was a valid reason for Mr Costigan’s dismissal. When taking into account several matters in which it was alleged he had failed to perform at the required standard. Thus, even though Mr Costigan was constructively dismissed, there was still a valid reason for his dismissal.
Ultimately, Commissioner Mirabella found that KOR dismissed Mr Costigan because he could not perform his job to the required standard. Further could not be relied upon to deliver accurate work. Mr Costigan was provided with feedback over several months, opportunities for improvement and two warnings. Mr Costigan was dismissed because he could not perform the job that was required of him and his dismissal was not unfair.
Conclusion: Constructively Dismissed But Not Unfair Dismissal
I hope this article was helpful to you. This area can get even more complex when you discussed resigning, but didn’t resign. You mentioned you might leave in the future. Took a week off, and the employer has assumed to have left. Choose your words carefully, particularly if the relationship with the employer is deteriorating. Your always welcome to get advice from us at, AWNA, its free and to the point. All abandonment of employment issues, Fair work Australia, worker’s rights, employment rights.
Forced to leave my job, click here
Resignation letter do’s and Don’ts, click here
Constructive dismissals too hard to win, click here
How much is my claim worth, click here
Constructive dismissal, withholding of wages, Click here
One of the nations leading workplace advisors, representatives and commentators. Gary has represented some 12,000 clients over some 20 plus years, published some 300 plus articles. He is passionate about employees rights and the test of fairness in the workplace. Have a problem, concern, wants to contribute to the debate or research, call him directly.