The Fair Work Commission (FWC) has recently handed down a decision that gives some clarification on the issue of constructive dismissal.

Background

A HR Manager, Belinda Williams (Ms Williams), recently contended that her employer, Valley Healthcare Group Pty Ltd (VHG), had unfairly dismissed her. Ms Williams alleged that she was forced to resign as a result of a course of conduct by VHG.

On 14 September 2022, VHG informed Ms Williams in a Teams meeting that her role was being modified. This meant that she would no longer perform the role of HR Manager for South Coast Facility Service (SCFS) and be involved in recruitment activity for the business.

Following this meeting, Ms Williams emailed VHG disputing the change to her role. In this email, she also made a complaint about the managing director’s directive to be involved in notifications regarding new hires and to submit formal reports to the managing director every Monday.

VHG responded to this correspondence refuting Ms Williams’ complaint and dispute regarding the changes in her role. VHG further reiterated that the only the reporting lines were changed – “back to what they were prior to merging operational functions of the business.” In addition, SCFS did not require HR support as this function would be performed by SCFS in-house.

VHG further asserted to Ms Williams that her role was “invariably the same.”

On 15 September 2022, Ms Williams resigned from her employment with VHG, stating that she was resigning in response VHG’s alleged “repudiatory breach of contract” and that she considered herself “constructively dismissed.”

Ms Williams’ allegations

In advancing her unfair dismissal application in the FWC, Ms Williams alleged the following:

• Her position was altered without proper consultation. VHG changed her responsibilities and reporting line, and this constituted a demotion;
• She was bullied by the managing director; and
• She was forced to resign from her employment as a result of the above.

VHG’s response

VHG alternatively argued the following in reply to Ms Williams’ allegations (non-exhaustively):

• The changes to Ms Williams’ responsibilities were as a result of prior complaint by Ms Williams about her workload;
• The change in reporting line did not change her position as a HR Manager. Her role fundamentally remained the same, and was done so due to the needs of the business; and
• Ms Williams was combative towards the managing director, particularly when given directives that she did not agree with.

In considering the above, it was VHG’s contention that Ms Williams was not demoted nor forced to resign from her employment, and that she resigned from her employment on her own initiative.

What is the law?

The FWC conveniently summarised the provision of the Fair Work Act 2009 (Act) as follows in respect of what constitutes a dismissal:

“386 Meaning of dismissed

(1) 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 refers to a situation of ‘constructive dismissal’.

The FWC referred to previous decisions in giving greater clarity as to what is required to determine if a constructive dismissal occurred, referring to O’Meara v Stanley Works Pty Ltd [2006] AIRCFB 496 at [23] in which it was stated that (FWC’s emphasis):

“…some action on the part of the employer which is either intended to bring the employment or has a probably result of bringing the employment relationship to an end…In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probably result or that the… [employee] had no effective or real choice but to resign.”

The FWC also referred to Bruce v Fingal Glen Pty Ltd (in liq) [2013] FWCFB 5279 at [23] in which it was stated that (FWC’s emphasis):

“…although it is an ‘important feature’ of constructive dismissal, it is not sufficient that the act of the employer results directly or consequently in the termination of the employment. There must also be either an intention to force an employee to resign, or else the conduct must be of such a nature that resignation was the probable result.”

What did the FWC decide?

The FWC found in VHG’s favour and disagreed with Ms Williams assertion that she was constructively dismissed from her employment.

It was decided that the reduction in Ms Williams’ duties was undertaken due to the needs of the business and the complaint made by Ms Williams in relation to her excessive workload. It also noted that the managing director acted consistently with his duties as a manager in taking steps to alleviate Ms Williams’ workload after she had made a complaint.

The FWC held that Ms Williams was not demoted, particularly noting that there was no change in her title, hours of work or salary, and that changing a reporting line does not constitute constructive dismissal.

Accordingly, the FWC noted:

• There was no action on the part of VHG which was either intended to bring the employment to an end or had the probable result of bringing the employment relationship between Ms Williams and VHG to an end;
• Ms Williams’ employment with VHG was not terminated on VHG’s initiative; and
• Ultimately, Ms Williams was not forced to resign from her employment with VHG.

Ms Williams’ unfair dismissal application was dismissed.

What can employers take away from this?

There are several key lessons that employers can take away from this recent decision:

• A change in reporting lines for a position may not necessarily amount to a demotion or be conduct that would result in an employee resigning from their employment in of itself (i.e. constructive dismissal);
• Employers should, where possible, consult with the employee on significant changes to their position; and
• Employers have a duty to address concerns raised by their employees where they are valid concerns, as a failure to do so could result in an employee claiming that they were constructively dismissed if they resigned as a result of their complaints not being addressed.

Nonetheless, each case needs to be taken on its individual merits and the above lessons are not universally applicable to every scenario. Therefore, we recommend that you always seek legal advice on such issues before taking any actions. If you would like to learn more about this topic, you can read our overview on constructive dismissal here.

If you think that you have been involved in a constructive dismissal and would like expert advice, please contact our Employment Law team.