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What is Constructive Dismissal?

Constructive dismissal is a term used at common law to describe situations where the employee has left employment apparently voluntarily, because they have felt forced to resign from the employment due to the employer’s conduct which has created a hostile work environment. Constructive dismissal is a resignation against the employee’s own will.  

Constructive dismissal can occur for various reasons. The employer’s failure to appropriately manage the misconduct will result in a claim of forced resignation. Examples of constructive dismissal bullying include:  

  • Your employer refuses to pay your salary  
  • Your employer has put your health and safety at risk  
  • Benefits initially offered in written contracts have not been provided  
  • Your employers have demoted you without any prior information or valid reasoning.  
  • Workplace bullying or sexual harassment 
  • Your employer withheld equipment that was necessary for your employment  

Fair Work Act provisions  

Under the Fair Work Act 2009 (Cth) s 386(1)(b) outlines that a person will be found to have been dismissed for the purpose of an unfair dismissal if “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”.   

The test for constructive dismissal is quite a high standard. You, as an employee, must prove that you have been effectively dismissed due to the employer’s conduct. The employer’s conduct must be the principal contributing factor to your resignation because you felt that you had no other option in the circumstances. It is unlikely that a commission will find constructive dismissal if you, as an employee, have resigned whilst other options are still available. The commission typically asks whether it was unreasonable for the employer to ask the employee to tolerate the conduct.  

The recent case of Penelope Mary Kathleen Phair v Active Kids Pre School Centre of Excellence Pty Ltd [2022] FWC 4034 provides a good example of constructive dismissal under the Fair Work Act. In this case, the applicant had been employed with a childcare service, Active Kids.  During the employment Active Kids told Phair that she would be permanently moved to a centre significantly further away, would work only with children 0 to 3 years and have less work hours. Following this discussion, Active Kid’s sent emails to Phair that conveyed that Phair’s employment would only continue if she accepted the transfer. As a result, Phair resigned her employment. The Commission found that Phair was forced to resign, and under s 386(1)(b), there was a dismissal. As the dismissal was harsh, unjust or unreasonable she was as granted compensation. 

If you believe you are constructively dismissed, you may have a claim for unfair dismissal or some other remedy. Segelov Taylor Lawyers can represent and support throughout your claim. Firm Principal, David Taylor is an Accredited Specialist in Employment and Industrial law with over 20 years of experience. He understands that each case needs to be treated case-by-case to challenge the employer and ensure you receive the best outcome. Contact our office on 1800 196 202 or email David directly, david@segelovtaylor.com.au.   

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