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When is resignation actually dismissal?

An employee cannot make an unfair dismissal claim under the Fair Work Act 2009 (Cth) unless termination of employment is at the initiative of the employer. A forced resignation can constitute dismissal if the employer’s conduct results directly or consequentially in the resignation, making it involuntary.

When is resignation forced?

Resignation can be forced by conduct, or a course of conduct, engaged in by the employer. Conduct includes both an act and a failure to act.

Where it is said a resignation is forced by conduct or a course of conduct on the part of the employer, the test is whether:

  • 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.

An obvious case is where the employer effectively instructs the employee to resign or be dismissed.

The focus is on the employer’s conduct. Would a reasonable employee in the same circumstances consider that, based on what the employer has done or said (or not done and/or said), they had no choice to resign?

Often it will only be a narrow line that distinguishes conduct that leaves an employee no real choice but to resign employment, from a situation in which the conduct merely makes it in the employee’s interests to quit.

Where an employer’s conduct is ambiguous, and the employee’s decision to resign is based largely on their perceptions, it will difficult for the employee to argue that the resignation was forced by the employer’s conduct.

The employer’s conduct must be operative at the time of resignation. In some cases, a course of conduct by the employer might lead an employee to reasonably consider that they have no choice but to resign. The cumulative effect of the employer’s conduct might make the employee’s situation insufferable as to make continued employment untenable.

Application by the Fair Work Commission

These issues were considered recently by the Fair Work Commission (FWC) in Yelda v Sydney Water (2022).

In this case, a female employee agreed to have her photo used in a poster to be displayed in the workplace as part of a health and safety campaign. She employee was not told how the photo would be used in the campaign.

After viewing the poster in the workplace, the employee complained that the use of her photo was overly sexualised and offensive. The employer removed the posters immediately. The employee then commenced a long period of leave, and during part of that leave she received workers’ compensation payments. The employee resigned 4 years’ later.

While still employed, the employee was awarded $100,000 as compensation for sex discrimination and sexual harassment under NSW anti-discrimination laws.

Following her resignation, the employee made an unfair dismissal claim. The FWC ruled the employee did not resign voluntarily but was forced to do so because of conduct, or a course of conduct, engaged in by her employer, namely the employer’s:

  • approval and publication of the poster;
  • failure to communicate the results of the investigation it conducted into the employee’s grievance about the poster;
  • failure to apologise to the employee after the investigation, and to specify in writing the number of posters distributed, returned and destroyed (the employer did issue an initial apology, but the FWC observed it did not reflect the gravity of what the employer had allowed to occur and was issued prior to any formal investigation having been undertaken); and
  • failure to communicate with the employee for the 3 years prior to her resignation.

The FWC considered that publication and distribution of a poster that publicly sexualised, demeaned and humiliated the employee demanded a thorough investigation, the outcome of which ought to have been communicated to the employee clearly and in a timely manner. The employer’s failure to do so was part of the course of conduct that led to the resignation.

The FWC rejected the argument that, because the employee had declined to participate in the second investigation, the employer was justified in not communicating its outcome to the employee. The FWC observed that the employee had participated in the first investigation. It was unclear what further information the employee could have provided in the second investigation beyond what she had already provided in the first investigation.

The FWC also rejected the argument that the long period of time between the employer’s failings (i.e. not communicating to the employee the outcome of the investigations, an apology and the number of posters distributed, returned and destroyed) and the resignation, meant that they couldn’t be considered to be contributing factors to the resignation. The FWC treated these as elements of a pattern of conduct of omissions by the employer that was ongoing at the time of resignation and which contributed to the decision to resign.

While there was significant time between the employee becoming aware of the poster and tendering her resignation, the FWC considered the effect of the anti-discrimination proceedings and the publication of the decision of the anti-discrimination tribunal meant the issue of the poster clearly remained live and unresolved up to the time of resignation.

The FWC rejected the employer’s argument that the compensation awarded under anti-discrimination laws somehow sanitised the employer’s failings. The employee hoped the employer would, in the wake of that decision, apologise to her and attempt to mend the relationship. The failure to do this contributed to the resignation.

The FWC accepted that managing a litigious employee who was unfit for work is difficult but ignoring her for 3 years displayed an intent to bring the employment relationship to an end or would have had that probable result.

The FWC rejected the argument that the employee’s failure to give her employer any prior notice or communication of her feeling compelled to resign meant that it could not be said that the employee’s resignation was forced. To the contrary, the FWC observed that if this prior indication had been given it would support a conclusion that her decision to resign was a considered choice rather than a decision borne of compulsion.

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