The complete guide to forced resignation in Australia

TL;DR The Fair Work Commission defines forced resignation as “when an employee has no real choice but to resign”.

Forced resignation often involves the employer either:

1. Giving an employee a choice between resigning or being dismissed.
2. Acting in a deliberate way (directly or indirectly) to pressure the employee into resigning.
3. Acting so badly (by either breaching the terms of employment or treating the employee so unfairly) that the person feels they have no option other than resignation.

An employee in this position could make a claim of unfair dismissal, which can wind up costing the business money, time, and effort to resolve or defend.

This article takes a look at forced resignation (also known as constructive dismissal), the implications for your workplace, what to do if a team member feels pressured to resign, and ways to mitigate risk and manage employee issues and dismissals fairly.

What is forced resignation in Australia?

Forced resignation is not defined as such in the Fair Work Act, however, Section 386 states an employee has been dismissed 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.”

Most employees have 21 days from the day after the dismissal took effect to lodge either an unfair dismissal claim (so long as they have been employed for at least 6 months or 12 months if they work for a small business) or a general protections dispute relating to discrimination or the dismissal.

In bringing the claim, the employee will have to prove their resignation wasn’t voluntary and that their employer forced their resignation by taking action “with the intent (or which had the probable result) of bringing the relationship to an end”.

They could claim compensation for lost salary or wages.

The legal test for forced resignation

The legal threshold for a successful forced resignation claim is pretty high, because the employee needs to prove that their resignation was, in fact, a dismissal.

The Fair Work Commission (FWC) considers forced resignation claims on a case-by-case basis, and the onus is on the employee to establish that their resignation was due to the employer’s actions (or lack of action) and resigning was genuinely their last resort.

If the employee can do so, then the onus shifts to the employer, who must establish that their actions were justified or reasonable.

Typically, cases of forced resignation result from problems or actions building up over a period of time - e.g. failing to stop the person being harassed, consistently underpaying them or paying them late - rather than being the result of a single incident or event.

An employee can’t resign and claim forced resignation because they don’t want to face fair and proper performance management or disciplinary action, or because their boss has given them a lawful and reasonable request to perform a task that’s outside their usual role.

There’s a fine line between conduct that leaves a worker no real choice but to resign and the person resigning of their own accord. However, rulings by FWC have established that the line will be “closely drawn and rigorously observed”.

What should an employer do if an employee feels pressured to resign?

Obviously, it’s best for employees to be able to raise matters or concerns with their employer or manager before they feel they have no choice but to resign. If the employment relationship is healthy and lines of communication are open, it’s highly unlikely that things will get so bad without either party raising it beforehand.

If an employee raises concerns - e.g. unsafe work conditions, underpayment, claims of bullying or harassment - take them seriously and try to resolve them. Not only are you legally required to meet all minimum pay rates and entitlements, and provide a safe and healthy workplace, working to resolve problems will help an employee feel they have options other than resigning.

If the relationship is strained or the problem is longstanding or complex, taking steps to resolve the matter in a mutually beneficial way could be more difficult. The situation may require mediation or assistance from a third party, e.g. an industry or business association, or the Fair Work Ombudsman.

How employers can avoid a forced resignation claim

It is not uncommon for an employee facing disciplinary action or a misconduct investigation to resign instead of going through the process. They may then claim forced resignation.

To best avoid claims an employee was unfairly dismissed because their resignation was forced (or put yourself in a strong position to defend any that arise), here are some key tips:

• Be aware that your conduct or attitude could put employees in a position where they feel they have no real choice but to resign.
• Be open and clear with your people at all times.
• Establish a solid basis for the employment relationship so employees understand what the business expects and you know what they expect from you.
• Take employee concerns and complaints seriously and address them when they arise rather than letting them escalate.
• Have a robust performance review and management process for all employees.
• Have a clear, legally-sound process for handling disputes and disciplinary action, and make sure you follow it.
• Always follow the correct procedure when ending employment, whether that is led by the employee or by the employer, and conduct exit interviews that give employees a chance to ask questions. 
• Be consistent in disciplinary and termination procedures (focus on the issue not the person), and avoid spur-of-the-moment decisions when emotions are running high. This includes giving employees a period to “cool off” if they resign in the heat of the moment.

Learn more about terminating employment correctly.

Forced resignation FAQs

How hard is it to prove forced resignation?

Establishing forced resignation is difficult, because the legal burden of proof falls on the employee in the first instance (rather than the employer having to justify their actions, as in a regular termination). The employee has to prove that the employer acted with the intent to bring the employment relationship to an end and that they were left with no other reasonable choice but to resign.

Is forced resignation the same as unfair dismissal?

Forced resignation isn't a legal claim in its own right, but is a type of unfair dismissal claim (or general protections application, e.g. if it relates to discrimination, termination of employment, or not being paid final entitlements).

How long does an employee have to raise a forced resignation claim?

Employees typically have 21 days from the day after the dismissal to lodge an unfair dismissal or general protections claim with the Fair Work Commission (the FWC may allow an employee to lodge a claim beyond this time limit in exceptional circumstances).

To lodge an unfair dismissal application, employees must be employed for at least 6 months before they can apply (or at least 12 months if they are employed by business with less than 15 employees). Employees who aren't covered by an award or agreement cannot apply for unfair dismissal if they earn more than the high income threshold (currently $190,100).

What can an employee claim for in a forced resignation case?

Remedies for unfair dismissal claims focus on compensation for lost salary or unpaid wages, and possible reinstatement to a role.

Compensation for unfair dismissal is capped at 26 weeks’ pay or half the high-income threshold (whichever is lower).

There is no compensation cap for general protections applications and employees can claim for compensation for emotional distress or psychological impact. On top of any compensation award, the FWC can also impose penalties - up to $19,800 per breach for an individual or $99,000 per breach for a company.

Can an employee claim constructive dismissal during a disciplinary process?

While an employee could lodge an unfair dismissal or general protections dismissal application at any time, it probably wouldn't be successful.

The threshold for successfully claiming that a resignation was forced by the employer's conduct is very high - disciplinary action (or performance management) where the employer followed fair and reasonable process won't be enough..

Can an employee claim forced resignation if they are passed over for promotion?

Being passed over for a promotion would not typically be enough for an employee to prove an employer’s actions gave them no choice but to resign from their employment.

Employers have the discretion to select who they believe will perform best in a role. However, the employee could have a case if they could prove their failure to be promoted was discriminatory (e.g. they were denied the promotion because of their race, sex, gender, age, religion, or other prohibited grounds) or it was part of a deliberate pattern of unfair treatment that breached their employment rights or created an intolerable environment that forced their resignation.

If I dismiss an employee while they’re on leave, can they claim forced resignation?

If you have followed fair and legal process in dismissing the employee, they cannot claim forced resignation, regardless of when it was you dismissed them.

To be considered forced resignation, the employee has to resign and then prove that your behaviour left them with no other choice.