Practice in spotlight after HR manager claims she was constructively dismissed
Employers need to take care when changing a manager’s role or re-structuring workloads, so they don’t end up with an employee taking them to the Fair Work Commission.
A recent case, where a human resources manager resigned when she considered herself constructively dismissed, was rejected by the Fair Work Commission as her work duties had not fundamentally changed and that changing a reporting line does not constitute constructive dismissal.
What is constructive dismissal?
“A constructive dismissal is an unfavourable assertion, but when considered objectively, it can be a strategy by employers to dispense with employees without actually or expressly dismissing them,” Robin Young, partner and team leader, Holman Webb Lawyers’ workplace relations group, said.
Technically, constructive dismissal occurs when, through conduct of the employer, an employee resigns from employment, he said.
“It is considered to be a termination at the initiative of the employer, rather than the employee, because the employer’s conduct forces the resignation such that the employee has no other option.
“Employers need to be aware that such conduct by them may not prevent an employee who resigns from bringing an unfair dismissal claim and may also give rise to other legal claims.”
Conduct that is designed to force an employee to resign is inconsistent with the very heart of the relationship and may constitute breach of conduct, breach of good faith or repudiation of contract, Young said, “giving rise to claims such as unfair dismissal, general protection claims, applications for stop bullying orders and workers compensation claims.”
The laws you need to know
The Fair Work Act 2009 section 386 Meaning of Dismissed states:
A person has been dismissed if:
“(a) the person's employment with his or her employer has been terminated on the employer's initiative; or
(b) 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.
Section 386(1)(b) of the Act (above) refers to a situation of constructive dismissal.”
This provision excludes the application of unfair dismissal remedies “where the employee decides to resign of their own volition, but importantly not where it may otherwise appear to be a resignation but was, objectively, through the conduct of the employer,” Young said.
“It most accurately reflects the elements of constructive dismissal, however, there have been judicial statements on what is required - including whether the conduct of the employer ‘was of such a nature that resignation was the probably result or that the employee had no effective or real choice but to resign’ and ‘an intention to force an employee to resign, or else the conduct must be of such a nature that resignation was the probable result’.”
It will always be a contentious issue when an employee claims constructive dismissal because of a lot of “he said, she said” conversation will occur, and written evidence will be crucial to the claim.
Changing an employee’s role
Employers are allowed to change an employee’s role if the business changes either from a positive or negative perspective. Consultation with the employee is always preferred in any situation and most Modern Awards apply definitions in relation to terms such as “significant change” and impose broad timeframes in relation to notice and obligations concerning representation.
“Fundamentally, consultation does not require agreement, but it does require disclosure as to what changes are being affected and how they are intended to take effect,” Young said. “The consultation process must also afford the employee a fair opportunity to provide input and feedback, as well as to have their position heard and considered.
“The process may include consultation with an affected group or even an entire workforce but should involve individual meetings with those affected and consideration of issues raised, before a decision is made and notified.”
This process could take a matter of hours or it may involve several weeks involving submissions and counter submissions, he said, “depending on the nature of the change and the complexity of the impact.”
What can lead to claims of constructive dismissal?
This is not a simple issue. Many factors will be taken into consideration such as the new role and responsibilities.
“This will depend upon many factors, including the nature and seniority of the role, the nature and extent of the changes and how they impact the employee’s ability to perform the role,” Young said. “Sometimes, a change in other areas may impact a role, like when another employee is redundant, and aspects of the redundant role are added to the duties of another existing role.
Similarly, changes in reporting lines may lead to a role losing or gaining reporting lines, he said.
“Whether or not this results in a fundamental change may depend on whether there are other corresponding changes such as grade, remuneration and status/title.”
Sometimes, change may lead to surplus workforce, leading the employer to reduce the workforce, which is a redundancy situation, Young said.
“Even a change in location may lead to a fundamental change in the role and the employee’s ability to perform the role.
“This may result in redundancy or potentially a constructive dismissal as an unintended consequence - for example, where resignation was not an intended consequence, but the employee had no choice but to resign because of personal circumstances.”
This may result in indirect discrimination claims if the personal circumstances were a result of a proscribed factor such as family carer responsibilities, he said.
“Importantly, redundancy usually results from intended change, but can occur other than by design, such as by factors not contemplated in advance. This may lead to constructive dismissal, whereas most redundancies are not constructive, but actual dismissals.”
