What Is Constructive Dismissal?
Under section 386(1)(b) of the Fair Work Act, a person will be considered dismissed if “the person resigned, but was forced to do so because of conduct, or a course of conduct, engaged in by the employer.”
An employee is “forced to resign” if “the employer engaged in the conduct with the intention of bringing the employment to an end or … 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”.
Common examples can include:
- Significant reductions in pay or duties without consultation,
- Persistent bullying or harassment,
- Failure to respond to serious workplace complaints,
- Unsafe or hostile work environments, and
Pressure to resign under threat of termination.
The Sewell Case
In the Sewell case, the applicant resigned after her employer failed to adequately deal with complaints about inappropriate comments made by a male colleague. After considering the evidence, the FWC found that her employer:
- Mishandled Ms Sewell’s complaint during an internal investigation;
- Failed to interview key witnesses;
- Communicated the outcome to her inadequately; and
- Refused to adjust her roster to avoid ongoing contact with the colleague in question.
The commission was satisfied that those circumstances were enough to make Ms Sewell’s resignation ‘forced’, and the commission awarded her significant compensation.
Implications for Employers
The Sewell decision is a reminder that an employer’s response to employee complaints is critical. Failure to follow proper processes can result in significant liability under the Fair Work Act.
Employers should ensure that they:
- Act promptly when a complaint is received;
- Conduct thorough, impartial investigations, including interviewing all relevant witnesses;
- Keep the complainant informed of outcomes and support options;
- Implement appropriate interim measures to protect complainants, such as modifying shifts or work arrangements where possible;
- Document all steps taken and seek legal advice when necessary.
