Managing employee exits can be tricky business, particularly when dismissing an employee for unacceptable conduct and behaviour. In some cases, the parties will try and reach an amicable solution to end the employment relationship such as agreeing to allow the employee to resign.

However, employers must be careful when entering into these types of discussions. The way in which an employee’s employment is finalised could have a significant bearing on that employee’s entitlement to make certain claims, such as unfair dismissal.

When faced with claims of unfair dismissal, one of the jurisdictional objections available is that the termination was not at the initiative of the employer (i.e. the employee resigned). The question of the employer’s initiative becomes murky where the resignation is given in response to the employer saying – “You should resign. We are going to fire you if you don’t.”

An employee will be taken to have been forced to resign (and therefore constructively dismissed) if they can prove that the employer engaged in a course of conduct which forced the employee’s hand and had the intent of bringing the employment relationship to an end.

The Fair Work Commission (FWC) recently examined this type of scenario in Grundy v Brister and Co [2019] FWC 3242. In this matter, an employee had lodged an application alleging he was forced to resign from his employment as a Boilermaker and Welder, immediately after being advised that he was dismissed for serious misconduct.

The employee had been involved in a number of incidents over a period of six months which the employer considered to be serious misconduct. On each occasion, the employee had been verbally cautioned that such conduct was not tolerated in the workplace and that he could be dismissed for such behaviour.

Immediately following the last incident, the employer determined that the employee’s conduct was repeated and unacceptable, that it was disruptive and disrespectful, and that he had been warned not to repeat his behaviour but had carried on regardless. Accordingly, the employer arranged a meeting to advise the employee that his employment was to be terminated for serious misconduct.

After advising the employee that his employment was being terminated, the employer told the employee, while he was packing up his things, that it would offer him the opportunity to resign and would provide him with a positive reference. The employee accepted this and the employer drafted a resignation letter for him to sign.

On this basis, the employer raised a jurisdictional objection that the employee had voluntarily resigned.

In its decision, the FWC found that the employer had forced the employee to resign and that the employee was therefore constructively dismissed. In coming to this decision, the FWC noted that the resignation had been an idea that was conceived and advanced by the employer. It also noted that the resignation letter had been prepared by the employer and was agreed to in circumstances where the employer had already dismissed the employee and that the dismissal would have stood if the employee had not agreed to resign.

Despite this finding, the FWC made no criticism of the employer in bringing about the resignation. It considered this to be the employer’s recognition of the employee’s past contribution to the business and an acknowledgement of the harsh consequences of the dismissal.

The FWC was then required to determine whether this constructive dismissal was unfair. It found that it was not unfair. In doing so, it noted that the employee had been dismissed because of a pattern of insubordination. This pattern was characterised by abuse and swearing at managers and other people in the workplace, a threatening attitude and an indifference to the consequences of that behaviour.

The FWC acknowledged that there were procedural failings in the employer’s approach to the dismissal but that this did not outweigh the seriousness of the employee’s misconduct.

The FWC therefore dismissed the application.

Lessons for employers

When negotiating employee exits, employers must remember that a negotiated resignation will not always protect an employer from subsequent claims of unfair dismissal. For this reason, employers must ensure that there are valid reasons for dismissing an employee and that procedural fairness is afforded to the employee at all stages of the disciplinary process.

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