The termination of employment is sometimes viewed as a straightforward process, typically initiated by an employee’s resignation or an employer’s decision to dismiss an employee. However, the concept of ‘constructive dismissal’ introduces a layer of complexity to such an event. This article explores the nuanced realm of when an employee’s resignation may truly be deemed a dismissal, focusing on the notion of ‘constructive dismissal’.

Constructive Dismissal Defined

Constructive dismissal refers to a situation where an employee resigns from their position due to a breach of the employment contract by the employer. Unlike a conventional resignation, where the decision to leave is voluntary, constructive dismissal arises when the employer’s actions or behaviour creates an untenable working environment, essentially forcing the employee to resign.

One example of a situation which can lead to a constructive dismissal is when there have been significant changes in terms of employment. While it is normal for there to be minor changes in any job, if an employer unilaterally makes substantial changes to the terms of employment without the employee’s agreement – such as a significant reduction in salary, altered job responsibilities, or relocation without consultation – it may constitute constructive dismissal.

Other examples of situations which may constitute constructive dismissal are outlined below.

Workplace Harassment or Discrimination

Sustained harassment, discrimination, or a hostile work environment can force an employee to resign. If the employer, despite being aware of the situation, fails to address or mitigate such issues the employee may have grounds for claiming constructive dismissal.

Breach of Implied Duties

Employers have implied duties, such as providing a safe work environment, respecting an employee’s privacy, and acting fairly. A consistent breach of these duties may give rise to a claim of constructive dismissal.

Unfair Disciplinary Action

Unfair or excessive disciplinary actions, particularly when it is not in line with established company policies, can be grounds for constructive dismissal. This includes arbitrary terminations or severe penalties for minor infractions.

Rights of the Employee

When an employee believes they have been constructively dismissed, they may choose to treat the situation as an unfair dismissal and pursue legal recourse.

Employment legislation provides protections against unfair dismissal, outlining specific criteria and procedures for filing a claim. These laws are designed to ensure that employees are treated fairly and reasonably in the termination of their employment.

Successful claims of unfair dismissal may result in remedies such as compensation or reinstatement. Compensation aims to recompense the employee for losses suffered due to the dismissal, while reinstatement involves restoring the employee to their former position.

Assessing Employer’s Conduct

Determining whether a resignation is truly a dismissal involves assessing the employer’s conduct against established legal principles. The legal standard applied in determining constructive dismissal involves both subjective factors (how the employee perceived the situation) and objective factors (whether a reasonable person in the same circumstances would consider the conduct to be a breach).

Breach of Contract

The crux of constructive dismissal lies in the breach of the employment contract. It is not sufficient that there has been a minor breach of the contract, there must be a breach of an essential terms so that the contract is no longer tenable. An employee must demonstrate that the employer’s actions or omissions amounted to a fundamental breach of the contract, leaving them no reasonable option but to resign.

The employer’s intent and knowledge of the impact of their actions play a crucial role. If the employer is aware – or reasonably should be aware – that their conduct would lead to the employee’s resignation, it strengthens the case for constructive dismissal.

The employee’s response to the alleged breach is also assessed. If the employee resigned immediately without attempting to address the issue or explore alternatives, it may impact the viability of the constructive dismissal claim.


Navigating the fine line between resignation and constructive dismissal requires an understanding of employment law and the specific circumstances surrounding the termination.

Employees facing challenging workplace conditions must carefully assess the circumstances of their resignation, considering factors such as significant changes in employment terms, workplace harassment, or unfair disciplinary actions. Recognising their rights under unfair dismissal laws, employees can seek redress for constructive dismissal and hold employers accountable for breaches of the employment contract. Employers, in turn, must be mindful of their actions to avoid potential legal repercussions and maintain a fair and respectful workplace environment.

This is general information only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on (03) 9600 2768 or email [email protected].