Constructive Dismissal, what is it?

BY Australian Retailers Association
28 June 2016

The Fair Work Act says that a person has been dismissed if they have resigned from their employment but were forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.” In other words, if the conduct within the workplace was so bad that the employee had no other choice but to resign.

How could a constructive dismissal occur?

There are a number of different occasions that employees say caused them to resign from their employment, but some of the most common include:-

  • An employer not providing a safe workplace;
  • An employer suggesting that an employee should resign;
  • An employer making it really difficult for an employee to actually do their job;
  • An employer imposing unfavourable changes to the terms and conditions of employment, i.e. demotion or pay-cut; and
  • An employer failing to prevent an employee from bullying, harassing or discriminating against another employee .

Can any claims arise from a “constructive dismissal”?

If an employee resigns as a result of the conduct of their employer, and felt that they had no other reason but to resign, they may be able to make an unfair dismissal application.

If your employee made this type of application they would have to prove that the actions of the employer were the primary contributing factor ultimately leading to their dismissal. They need to be able to show that had the conduct not been entered into by the employer, they would have remained in their employment.

In a recent Fair Work Commission decision, an employee was given the option of either taking a voluntary redundancy package or becoming an independent contractor. When the employee rejected both offers, his employment contract was varied by making him a part time employee, with reduced pay but increased duties.

After feeling he was being “managed out” the employee tendered his “forced resignation” and soon after lodged an unfair dismissal claim. The Fair Work Commission found that the employee was constructively dismissed by a combination of a few factors, namely; the withdrawal of the redundancy offer, the reduction in hours (going to part time) and the increase in workload.

For more information regarding constructive dismissals or terminations in general please contact the ARA Employment Relations Team on 1300 368 041.

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Australian Retailers Association

Founded in 1903, the Australian Retailers Association (ARA) is Australia’s largest retail association representing Australia’s $310 billion sector, which employs more than 1.2 million people. As the retail industry’s peak representative body, the ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members throughout Australia. For more information, visit or call 1300 368 041.

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