Can reduced work hours equal a constructive dismissal?
Often, a constructive dismissal (or forced resignation) can result from an employer significantly reducing a worker’s hours without their agreement. In this article, we look at two recent Fair Work Commission cases where the employee’s argued they were forced to resign. They both argued that they had no other choice but to resign because their hours were dramatically reduced.
Is it lawful to reduce an employee’s hours in Australia?
In the dynamic landscape of employment, situations may arise where businesses, faced with financial challenges or the need to cut costs, contemplate reducing an employee’s working hours. While this approach can help a company avoid layoffs, it raises important legal and ethical questions.
In general, Australian labour laws stipulate that employers cannot unilaterally change an employee’s contracted working hours without mutual agreement. This means that any significant alteration to an employee’s working hours must be agreed upon by both parties involved. The concept of mutual consent is fundamental to maintaining a fair and equitable employment relationship. In many cases, a unilateral change to an employee’s working conditions forced them to resign. And as a result, they can argue that they were forced to resign via a Fair Work Commission claim.
Reducing hours of full-time and part-time workers
Whether an employer can reduce an employee’s hours hinges on the employee’s type of employment contract. Most employment relationships in Australia are governed by written employment contracts. These contracts outline the terms and conditions of employment, including working hours, roles and responsibilities.
When considering changes to an employee’s working hours, employers must review the employment contract. If the contract includes a clause that permits the employer to change working hours, it must be done in accordance with that clause. However, if the contract does not contain such a clause, the employer is legally obligated to seek the employee’s agreement before proceeding with any changes.
For full-time and part-time employees, there exists a reasonable expectation of ongoing and regular work. In such cases, reducing an employee’s hours requires consultation and mutual agreement. The employment contract may need modification, necessitating the employee’s consent.
Reducing hours of casual workers
Casual employees, however, have a different status. They do not enjoy the same expectation of ongoing work, and employers can generally reduce their hours without explicit consent. However, adequate notice should be provided. The exception occurs when a casual employee has been consistently employed for more than 12 months, in which case additional considerations apply.
When is a reduction of hours unlawful?
Reducing an employee’s working hours is legally permissible, provided it involves proper consultation. Employers must uphold their responsibilities concerning employment terms, contracts, leave entitlements and wages. If an employer significantly reduces an employee’s hours, it could amount to a breach of the employment contract. It could force them to resign, and therefore they may be eligible to make an unfair dismissal claim with the Fair Work Commission.
Protection against discrimination
Australian labour laws prohibit employers from making changes to an employee’s working hours for discriminatory reasons. This means that changes cannot be made based on an employee’s gender, age, race or other protected characteristics. Furthermore, employers cannot alter working hours in retaliation for an employee exercising their workplace rights, such as taking leave or making a complaint.
Forced resignation’s due to a reduction of hours
A forced resignation, otherwise known as a constructive dismissal, is when a worker resigns due to the actions of their employer. In other words, they had no other choice but to resign. Their employer has forced their resignation due to actions it has taken.
A worker could be considered to have been forced to resign if their employer significantly reduced their working hours. This could also be true in cases where the employer has imposed longer working hours or altered essential job responsibilities without consent. Employers who make significant changes to an employee’s working hours or role without mutual agreement may find themselves facing constructive dismissal claims.
Receptionist forced to resign after hours reduced to 6.5 hours per week
A recent general protections case that involved an employee resigning due to reduced hours is Ms Sondra Zoumas v Sydney Physiotherapy 1 Pty Ltd . Sondra Zoumas started working for Sydney Physiotherapy 1 Pty Ltd in July 2014. Initially, she was employed as a full-time receptionist and support services worker. As time passed, her employment status transitioned into part-time employment. This saw her working hours dwindle to 19.5 hours per week by March 2021.
However, the situation took a more drastic turn in July 2022. This was when her hours were further reduced to a mere 6.5 hours per week. It is this pronounced reduction in her working hours that forms the crux of this forced resignation case. Ms Zoumas continued working for Sydney Physiotherapy until 19 June 2023. This was when she submitted her resignation.
Ms Zoumas claims forced resignation
In her general protections claim, Ms Zoumas argued to the Fair Work Commission that her resignation on 19 June 2023 was not a voluntary act. Rather, she claimed that it was a forced resignation. She said that it was an outcome of her employer’s adamant stance in maintaining her low number of hours per week. Ms Zoumas perceived this as a temporary reduction in her working hours.
“I was forced to do a constructive dismissal,” Ms Zoumas told the Fair Work Commission. “My employer did not terminate me; he wouldn’t terminate me – because he knew he would have to pay me out.”
Ms Zoumas argued that this untenable situation culminated in overwhelming financial hardships, leaving her with no recourse but to resign. She said that she had conveyed her dire financial circumstances to her employer on numerous occasions, only to be met with apathy and indifference. Ms Zoumas alleged that her forced resignation violated the general protections provisions of the Fair Work Act 2009.
Alleged trial period led to forced resignation
In her general protections claim, Ms Zoumas stated that she only accepted her reduced hours “on the basis that it would be for a trial period and not an indefinite arrangement.” This came after she had a conversation with Sydney Physiotherapy’s general manager. During the conversation, he told Ms Zoumas that “he could only afford to have her work one day per week.” He also said that “the business had no money” to pay out her entitlements. The general manager claimed that this was due to financial losses caused by the pandemic.
The general manager then gave Ms Zoumas a document to sign outlining her reduction in hours to 6.5 hours per week. But she refused to sign the document as it did not mention that the reduction would be part of a trial period.
Employer says resignation was not forced
Sydney Physiotherapy vehemently countered Ms Zoumas’ forced resignation claims. It maintained that the reduction in her working hours was the result of a mutual agreement reached between both parties. And that the reduction was by no means imposed upon her. The company argued that she willingly accepted the reduced hours, and her resignation was unequivocally a result of her own volition.
Sydney Physiotherapy bolstered its defence by pointing to Ms Zoumas’ own written communication as a testament to her voluntary resignation. Her letter, dated 19 June 2023, not only expressed gratitude for her tenure at the company. But it also explicitly conveyed her intention to resign. The employer contended that they had engaged in discussions with Ms Zoumas regarding the terms of her departure, including the stipulated notice period that culminated on 5 July 2023.
“I will forever remember my time here. Of course, this isn’t goodbye, I know we will keep in touch (I will pop in). Thank you for all your support and friendship,” wrote Ms Zoumas in her letter.
Was it a forced resignation? Fair Work Commission provides ruling.
The Fair Work Commission acknowledged the substantial economic challenges that Ms Zoumas confronted due to the reduction in her hours. It accepted that she had agreed to her reduced hours because she thought it would be temporary. And because it would help Sydney Physiotherapy recover from the losses it had made during the pandemic.
The Fair Work Commission acknowledged that Ms Zoumas had “raised her difficult economic circumstances with her employer on more than one occasion.” And that she had “sought to bring any trial period to an end.” But Sydney Physiotherapy were “indifferent to her requests and ultimately did not offer her any more work.”
Fair Work Commission sides with employer
However, despite these acknowledgements, the Fair Work Commission “was not satisfied” that Ms Zoumas was forced to resign. It could not find that it was the “conduct of the [employer] that brought the employment to an end.” The Fair Work Commission concluded that the employer’s conduct, leading up to Ms Zoumas’ resignation, was indicative of an employer content with the existing arrangement. That is, rather than one actively engaged in forcing her resignation.
It was acknowledged that Ms Zoumas had indeed entered into the reduced hours agreement voluntarily. And it was noted that Sydney Physiotherapy had undertaken efforts to assist her in securing additional part-time employment. As a result, the Fair Work Commission determined that Ms Zoumas was not forced to resign by the company. Her general protections application was consequently dismissed.
Worker wins $27,000 for unfair dismissal due to severely reduced hours
A recent case heard by the Western Australian Industrial Relations Commission had an entirely different result to the previous case. This case – Te Arai Tawha -v- Nullagine Community Resource Centre Association  – involved an employee who had his work hours drastically reduced. He also claimed to have experienced harassment from senior management. Both these factors, he argued, forced him to resign.
Worker forced to resign after hours reduced to 9 hours per week
Te Arai Tawha was employed as the Assistant Coordinator by the Nullagine Community Resource Centre Association (NCRC) from July 2020 to April 2021. He had been initially hired on a full-time basis, with a contractual commitment of 38 hours per week. On 23 February 23, Mr Tawha was informed by the NCRC that his weekly work hours would be slashed from 38 to a mere nine hours.
In his resignation letter, Mr Tawha described the working environment as “extremely stressful.” He claimed that he had been the target of an orchestrated campaign of harassment intended to force him to resign.One such incident involved the Chairperson physically blocking Mr Tawha’s exit from an office. During this incident, the Chairperson informed him of the changes to his job description and working hours. Another incident involved verbal abuse, with the secretary calling Mr Tawha “useless” and “stupid.” When the Chairperson read Mr Tawha’s resignation letter, the response was merely, “best of luck.”
On 23 April 2021, Mr Tawha resigned. He argued that he was forced to resign due to the four months of stressful workplace conditions inflicted by NCRC’s management. And due to his dramatically reduced hours.
WA Industrial Relations Commission rules on unfair dismissal case
The central issue at hand was whether Mr Tawha was dismissed due to a voluntary resignation. Or if it was a result of NCRC’s actions and conduct amounting to a forced resignation. The Western Australian Industrial Relations Commission (WAIRC) determined that NCRC unilaterally altered Mr Tawha’s employment terms. That is, by reducing his weekly working hours significantly.
This reduction constituted a significant breach of his employment contract. This breach allowed Mr Tawha to consider his employment as terminated due to the employer’s conduct. His dismissal therefore met the threshold for constructive dismissal or forced resignation. Reinstating Mr Tawha was deemed impractical. Therefore, the Commission exercised its authority to award compensation for the loss he suffered. The compensation, capped at six months’ salary under the Industrial Relations Act, was set at $27,098.46.
Have you had your work hours reduced?
Have you been forced to resign due to reduced hours? Or have you experienced harassment or discrimination within your workplace? A Whole New Approach is a steadfast advocate for equity and safety in workplaces across Australia. (we are not lawyers). Our team of workplace experts is deeply committed to championing your rights. If you have encountered an unfair dismissal, workplace mistreatment or discrimination, call us today.
Our services are in high demand, drawing roughly 120,000 online inquiries each year, and we provide completely free initial consultations. With over three decades of experience, our team is exceptionally well-equipped to navigate the legal intricacies of your case.
Do not allow unfair treatment to jeopardise your career prospects. Contact us at 1800 333 666 for a confidential consultation on how we can help you.