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Forced Resignation

Section 386(1) represents a slight departure from the predecessor provision in the former WR Act (s 642(4)) under which a forced resignation was deemed to be a type of termination at the employers initiative. The two concepts have now been split so that a forced resignation is no longer categorized as a type of termination on the employers initiative. Instead, it is a stand-alone type of dismissal under the FW Act. The likely reason for this distinction is that the AIRC had interpreted the predecessor provision in the WR Act as representing a narrowing of the existing statutory rest, rendering redundant the earlier jurisprudence relating to constructive dismissal (including Mohazab and OMeara). For example, in Megna v No 1 riverside Quay (SEQ) Pty Ltd (2006) 58 AILR 100-531, the AIRC observed that the earlier constructive dismissal case law amounted to superseded analysis following the Work Choices reforms. Similarly, in Hard castle v CA Hill & Associates Pty Ltd (2006) 58 AILR 100-543(23), the AIRC noted that the statutory rest had been tightened since the decision in OMeara. This move away from the existing case law on constructive dismissal under Work Choices was expressly rejected by the government in the FW Act. The Explanatory Memorandum to the Fair Work reforms confirms that the forced resignation provision (s 386(1)(b)) is intended to reflect the common law concept of constructive dismissal. The Explanatory Memorandum suggests that the following two situations would amount to a forced resignation under the FW Act, giving an employee the right to bring an unfair dismissal claim: 1. Where an employee is effectively instructed to resign in the face of threatened or impending dismissal (that is, a resign or well sack you scenario), and 2. Where an employee quits his/her job in response to conduct by the employer which gives him or her no reasonable choice but no resign. Importantly, an employers conduct does not need to be a positive act. An omission or failure to act is also captured within the meaning of the term. Despite the statutory distinction, in practical terms, a forced resignation is a type of termination on the employers initiative. However, the distinction ensures that the pre Work Choices common law relating to constructive dismissals and employer-initiated terminations is preserved. (ii) Demotion One context in which the issue of constructive dismissal may arise is following the demotion of an employee. This issue is partly addressed by s 386(2)(c) of the FW Act, which provides that a demotion will not amount to a dismissal for the purposes of the Acts dismissal protections if: The demotion does not involve a significant reduction in the employees remuneration or duties, and The employee remains employed with the employer who effected the demotion. This provision prevents an employee who continues to be employed by his or her employer and performs similar duties and receives similar pay from arguing that his or her demotion amounts to a dismissal. However, where a demoted employee resigns from his or her employment, then the question becomes whether the employer, through the demotion, forced the resignation according to the test set in s 386(1)(b).
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