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Difference between dismissal and resignation

The fundamental difference between resignation and dismissal is that dismissal is termination of employment at the initiative of the employer, and the other corresponds to termination at the initiative of the employee. In theory, the difference between these two concepts is quite easy to understand and the two situations easy to distinguish, however, the reality is far more complex.

For a resignation to be considered as a resignation under the Fair Work Act 2009 (Cth) (“FWA”) it must result from a voluntary action. However, if there is conflict or controversy at the workplace leading up to the resignation, the employee may still ‘voluntarily’ resign, but there may be some element of coercion in the decision. Circumstances may actually have led to the employee reaching a decision that he/she had no option other than to resign.

Constructive dismissal and the FWA

Pursuant to s 386(1) of the FWA, 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.

The critical verb in s 386(1)(b) of the FWA is "forced". This section of the FWA requires that a resignation, in order to be a resignation at the initiative of the employer, must be a resignation that was forced upon the Applicant by the course of conduct of the employer.

Constructive dismissal and the Courts

It is generally accepted that “constructive dismissal” occurs when the employer's actions or words result in the employee effectively having no reasonable choice or alternative but to terminate the employment contract.

Courts and tribunals have found that, under limited circumstances, the employer’s conduct may amount to constructive dismissal rather than resignation, for example:

  • Failing to pay wages due;
  • Harassment or humiliation;
  • Unilaterally and significantly changing the employee’s position responsibilities or terms of employment;
  • Significantly changing the employee’s job location at short notice;
  • Undue demotion or disciplinary procedures; or
  • Inappropriate duties.

Legal Advice

An employee has to prove that he or she was forced to resign. Due to this heavy burden of proof an employee should never resign without taking prior legal advice. A court is unlikely to find constructive dismissal if an employee resigns prematurely or while alternatives are still open.

If you require advice with respect to your personal circumstances, and whether they may amount to constructive dismissal, please feel free to contact us. The content of this article is not to be taken as legal advice.