What does being dismissed actually mean?
Losing your job can be a confusing and stressful experience. Many employees who seek unfair dismissal remedies through the Fair Work Commission (FWC) first need to establish whether they were actually dismissed under the law as the distinction can be crucial to your case. This might seem straightforward—if you’re no longer employed, doesn’t that mean you were dismissed? Not necessarily.
A recent Fair Work Commission case, Yates v Stephanie Muir Ridge [2024] FWC 2973, sheds light on the legal test for determining whether a person has been dismissed. In this article, we’ll explain these legal principles in simple terms so you can better understand your rights.
What Is a ‘Dismissal’ Under the Fair Work Act?
Under section 386(1) of the Fair Work Act 2009 (Cth), an employee is considered to have been dismissed if:
Their employment was terminated at the employer’s initiative (meaning the employer took action that resulted in the termination); or
They resigned, but only because they were forced to do so due to their employer’s conduct (this is called constructive dismissal).
If neither of these conditions apply, the employee has not been dismissed under the Act and cannot lodge an unfair dismissal claim with the FWC.
Let’s take a closer look at these two categories.
1. When an Employer Terminates Employment
The most common type of dismissal is when an employer explicitly ends an employee’s job. This includes situations where:
An employer tells the employee they are fired.
A fixed-term contract is not renewed, despite an expectation that it would be.
The employer restructures the business and makes the role redundant (though redundancy has different legal requirements).
However, there are less obvious situations where an employee may be considered dismissed, even if they appear to have resigned.
Resignations in the Heat of the Moment
In some cases, an employee may resign impulsively due to stress, frustration, or emotional distress. If the employer immediately accepts the resignation without checking whether the employee genuinely meant to resign, the resignation may not be legally valid.
This principle was explained in Bupa Aged Care Australia Pty Ltd v Shahin Tavassoli, where the FWC confirmed that:
“There may be a dismissal … where, although the employee has given an ostensible communication of a resignation, the resignation is not legally effective because it was expressed in the ‘heat of the moment’ or when the employee was in a state of emotional stress or mental confusion.”
In such cases, if an employer treats the resignation as final without following up, it may be considered a termination at the employer’s initiative.
Employer Conduct Leading to Termination
The employer’s role in ending the employment relationship is critical. The case Mohazab v Dick Smith Electronics Pty Ltd explained that a termination will be classified as being at the employer’s initiative when:
“The action of the employer is the principal contributing factor which leads to the termination of the employment relationship.”
In other words, if the employer sets a chain of events in motion that effectively forces the employee out, the termination may still be considered at the employer’s initiative—even if no explicit words of dismissal were spoken.
2. When an Employee Is Forced to Resign (Constructive Dismissal)
A forced resignation, also known as constructive dismissal, happens when an employer makes conditions so unbearable that the employee has no real choice but to resign.
The Fair Work Commission applies the following test to determine whether a resignation was forced:
Did the employer intend to force the employee out? OR
Was resignation the probable result of the employer’s actions, making it inevitable?
Some common examples of forced resignations include:
The employer drastically cutting an employee’s hours.
The employer bullying, harassing, or intimidating the employee.
A sudden demotion or change in role that is clearly intended to make the employee quit.
A refusal to pay wages or entitlements, making it impossible for the employee to continue.
If the employer’s actions left the employee with no reasonable alternative but to resign, the law will treat it as a dismissal.
How These Principles Apply in a Real Case
A recent decision, Yates v Stephanie Muir Ridge [2024] FWC 2973, provides a clear example of how the Fair Work Commission assesses whether an employee was dismissed.
Yates and his employer had a disagreement about his employment status and whether he was becoming a business partner.
The employer claimed that Yates had resigned.
Yates denied resigning and argued that he was dismissed.
The employer later asked Yates to confirm his resignation in writing.
Yates refused, stating clearly that he had never resigned.
The employer did not respond to this or take steps to clarify the situation.
Key Findings of the Fair Work Commission
The Fair Work Commission found that Yates had not resigned and that his termination was at the employer’s initiative. The reasons included:
Continued Working: Yates kept working after the alleged resignation date, which did not align with someone who had truly resigned.
Employer-Controlled Termination: The employer cut off Yates’ access to work accounts and instructed him not to speak to staff or clients—actions consistent with a dismissal, not a voluntary resignation.
Lack of Clarity from the Employer: If Yates had truly resigned, the employer would not have needed to ask him later to confirm his resignation.
Yates’ Clear Denial: When asked, Yates put in writing that he had not resigned and had no intention of resigning. The employer failed to dispute this.
Because of these factors, the Fair Work Commission ruled that Yates had been dismissed and was therefore entitled to unfair dismissal protections under the Fair Work Act.
Key Takeaways for Employees
✔️ Not all resignations are final. If you resigned in the heat of the moment or under emotional stress, your employer should allow time for clarification.
✔️ If you were forced to resign due to your employer’s conduct, you may still have been dismissed.
✔️ If your employer takes actions that make it impossible for you to keep working, it might be considered a termination at their initiative.
✔️ If your employer later asks you to confirm your resignation in writing, it may indicate that you never actually resigned.
