Sometimes, an employee may feel that things at work are so bad - maybe their boss is treating them really unfairly or hasn’t done anything to remedy issues the person has raised - that they have no real option but to resign. This is called forced resignation (or constructive dismissal).
The business doesn’t necessarily have to want to get rid of the employee. What matters is that the employee was left with no option other than resigning and that the employer's actions (or inaction) was the principal contributing factor to ending the employment relationship.
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, 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?
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.”
Forced resignation has been well established in case law and the Fair Work Commission (FWC) defines it as “when an employee has no real choice but to resign”.
In bringing an unfair dismissal 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”.
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.
What to 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 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.
If the issue can’t be resolved and the employee feels that they had no alternative to resigning, they can claim the dismissal was unfair and seek remedy from the FWC - so long as they have been employed for at least 6 months (or 12 months for small-business employees) and the application is lodged within 21 days of the dismissal taking effect. They could claim compensation for lost salary or wages.
The 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 their last resort. If the employee can do so, then the onus shifts to the employer, who must establish that its actions were justified by:
- Proving they had a valid reason (good cause) for the dismissal; and
- The dismissal process was fair and reasonable (i.e. they gave the employee warnings, an opportunity to give feedback, an opportunity to improve etc).
The legal threshold for winning a forced resignation claim is pretty high, because the employee needs to prove that their resignation was, in fact, a dismissal. 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”.
Avoiding forced resignation claims
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.
- Tackle issues when they arise rather than leaving them to deteriorate.
- 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.
