The FWC has rejected an HR manager’s constructive dismissal claim after it found that changes to her responsibilities and reporting line did not amount to forced resignation. What can HR learn from this case?
A recent ruling by the FWC has provided clarity on the parameters of constructive dismissal, after an HR manager alleged that changes to her role made by her employer amounted to forced resignation.
The employee claimed that her responsibilities were changed without proper consultation and that the change in her reporting line constituted a demotion. She also alleged she was bullied by the managing director at her organisation.
The FWC ultimately found in favour of her employer, who argued that the changes to her responsibilities were the result of a prior complaint she had made about her workload and that the change in reporting line did not fundamentally alter her role.
“This decision confirms that employers may make minor changes to an employee’s role and duties to satisfy the needs of the business or the employee without it amounting to a constructive dismissal,” says Fay Calderone, Partner at Hall & Wilcox.
“The minor nature of this change was an important factor in the case, with Commissioner Riordan giving weight to the fact that the employee’s title, work hours and salary were not affected.”
What constitutes constructive dismissal?
A constructive dismissal, or forced resignation, happens when an employee is given no real choice but to resign. In order to satisfy the criteria for constructive dismissal, says Calderone, the onus is on the employee to prove that the employer took action with the intent to bring the relationship to an end – or knowing that would be the probable result.
She recalls previous cases where the FWC found in favour of constructive dismissal claims, including a case where an employee was subject to bullying and harassment in the form of ongoing and purposeful exclusion from meetings, emails and decisions within the scope of the their role, and another where an employee was directed to transfer to a different site on different conditions under threat of dismissal if they did not agree.
On the flip side, constructive dismissal claims have been rejected in cases where an employee resigned before a disciplinary interview or where an employee resigned while under suspension and investigation.
Although the FWC ultimately found in favour of the employer in this case, Commissioner Riordan noted that the manager “could have dealt with the situation better by discussing the proposition directly with the applicant prior to a final decision being made”.
Interestingly, the Commission took into account the employee’s previous antagonistic behaviour towards the managing director, particularly when given directives that she did not agree with.
“In this decision, the applicant’s ‘combative’ nature weighed against the unreasonableness of the employer failing to consult her prior to making minor changes to her employment. This is because Commissioner Riordan accepted that it was ‘highly unlikely’ that the applicant would have accepted the change to her employment if consulted,” says Calderone.
“The minor nature of this change was an important factor in the case, with Commissioner Riordan giving weight to the fact that the employee’s title, work hours and salary were not affected.” – Fay Calderone, Partner at Hall & Wilcox
However, she stresses that a negative employment history will not provide an employer with immunity from a constructive dismissal claim.
“In some scenarios, such as [in this case], an employer may be able to make minor changes to an employee’s conditions without consultation. However, this carries risk, and it is best practice to discuss any changes to an employee’s duties with them prior to a decision being made,” she says.
“Modern awards and enterprise agreements will often require employers to consult with employees in respect of major changes to the employee’s role where there is an alteration of their rosters, hours of work or duties.”
Protecting your business from constructive dismissal claims
As well as considering the requirements of the relevant award or enterprise agreement, there are a number of measures employers can take to protect themselves from these claims arising in the first place, says Calderone.
These claims are most likely to arise in situations where an employee is subject to unreasonable treatment that constitutes a breach of their rights and/or presents a risk to their health and safety. Accordingly, to avoid constructive dismissal claims arising, HR should seek to ensure that:
- They provide a safe and healthy workplace and appropriate, safe avenues for complaints to be made and resolved;
- They consult with employees prior to making decisions that may affect their employment conditions; and
- Any significant changes to an employee’s role or remuneration are documented and agreed in writing.
“On a separate but related point, provisions should also be included in contracts so that if the employer alters a position, duties and responsibilities, reporting line, working hours, remuneration or location, the remainder of the terms set out in this employment agreement continue to apply,” she says.
“Employers should also be wary of relying on individual [FWC] decisions too heavily, as constructive dismissal claims will invariably be quite fact-specific.”
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