Full force denied: Commission rejects constructive dismissal claim after finding performance review process did not force employee to resign

For an employee to access the unfair dismissal jurisdiction, they must be “dismissed” from their employment by the employer. In some instances, a resignation can be a “dismissal”, when an employee is forced to resign due to the employer’s conduct. This is referred to as a “constructive dismissal”. 

In the recent decision of Burgess v Optus Administration Pty Ltd T/A Optus [2021] FWC 4459, the Fair Work Commission (FWC) was tasked with considering whether an employee was constructively dismissed following a performance review process which he claimed left him no choice but resign.   

The employee was employed as a Strategy and Reporting Analyst for Optus Administration Pty Ltd (the Employer).

In June 2020, the Manager commenced a formal performance improvement plan (PIP) with the employee in relation to his poor performance. The outcome of this PIP resulted in the Employer issuing the employee a formal warning on the basis that he had not met the Employer’s expectations in relation to tasks outlined in the PIP.

The warning stated that failure to complete future PIP requirements would result in further disciplinary action and potentially the termination of the employee’s employment.

In July 2020, a second PIP was initiated and resulted in the Employer issuing the employee a second and final warning for again not completing the tasks outlined in the PIP to a satisfactory standard.

In October 2020, the Manager informed the employee that she would be conducting a third PIP. It was following the introduction of this PIP that the employee raised a bullying complaint against the Manager claiming that the PIPs were not developed for the purpose of improving his performance, but rather to set him up to fail.

The Employer investigated the bullying complaint and found that the employee was subject to reasonable management action. During the investigation process, the employee reported to an Acting Manager.

In November 2020, the Acting Manager invited the employee into a performance discussion as he had again not met the requirements set out for him under the third PIP. The employee was told that the purpose of the meeting was to formally discuss further disciplinary action and that his employment was at risk of termination.

The meeting did not occur as the employee called in sick and took extended sick leave. During this time, the employee sought a review of his bullying complaint.

Over two months later, in February 2021, the employee tendered his resignation by email stating that he was unable to accept the workplace bullying conditions and it was easier to remove himself from the workplace to minimise further harm to his health.

The Acting Manager invited the employee to withdraw his resignation and informed him that his bullying complaint was still under review. The employee responded to the email stating he had no intention of withdrawing his resignation. On this basis, the Employer processed the resignation with immediate effect and with the notice period paid in lieu.

The employee subsequently made an unfair dismissal application claiming that he was constructively dismissed. The employee submitted that he was forced to resign because the outcome of his workplace bullying complaint and the performance improvement process had an adverse effect on his health.  

The Employer opposed the application, submitting that the FWC had no jurisdiction to hear the unfair dismissal application as the employee was not dismissed from his employment and therefore was not protected from unfair dismissal.

The FWC was required to determine whether the employee was dismissed or not.  

The FWC held that the PIPs implemented by the Employer were clearly set out to assist his performance and denied the employee’s submission that the Employer had any ulterior motive.

In coming to this position, the FWC considered the PIPs to have clearly identified performance outcomes, actions to be taken by the employee, the support available to achieve tasks and the measure of results contained in the PIP.

Accordingly, the FWC held that the actions taken by the Employer were reasonable performance management, were not bullying and that this was not a scenario in which the employee had no other choice but to resign.

The FWC therefore concluded that the employee had failed to establish that he was constructively dismissed and consequently he was not protected from unfair dismissal. Therefore, the application was dismissed.

Lessons for employers

Where an employee has claimed that they have been constructively dismissed, they will need to demonstrate that the employer’s conduct or course of conduct left them no other option but to resign.

As seen in this decision, the FWC objectively assessed the circumstances of the employee’s resignation and the action of the employer. In doing so, it found that the situation was not one that left the employee no other choice but to resign.

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog.

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