Understanding constructive dismissal

Understanding constructive dismissal

Constructive dismissal, in effect forced resignation, occurs when the behaviour or conduct of an employer is so harmful, adverse or unfriendly to their employment relationship with an employee that the employee cannot be expected to deal with it.

Examples include an employer:

  • expressly suggesting that an employee resign
  • actively making it difficult or impossible for an employee to fulfil their role
  • failing to provide a safe or healthy working environment
  • imposing unauthorised and detrimental changes to the employee’s contract, such as a demotion, change of working hours or relocation

Employees must be able to prove that their employer’s actions were the primary contributing factor that resulted in their resignation and that the employee would have remained employed if the alleged conduct did not take place.

The employee’s resignation must occur immediately after the conduct complained of. Otherwise, the employee could be said to have accepted the continued existence of the employment contract.

Constructive dismissal often creates the basis of dismissal-related claims in Australia and New Zealand, such as unfair dismissal or a breach of the Fair Work Act.


If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.

Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.

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