Understanding Forced Terminations

Under the Fair Work Act 2009 (Cth) (the FW ACT), the term terminated is defined where a person’s employment has been terminated at the employer’s initiative or a person was forced to resign because of the conduct or course of conduct engaged in by the employer. A forced termination, also referred to as a constructive termination or termination, is when an employee has no real choice but to resign and thus, the onus is on the employee to prove that their termination was not voluntary. This issue may form the basis of a jurisdictional issue when dealing with claims such as Unfair termination applications in the Fair Work Commission.

An Unlawful Termination claim can take immense time for those who have not done it before. That time and your claim can go to waste if it is not lodged the right way within the given timeframe of 21 days. We can lodge an unfair termination claim the right way, Maximizing your chance of getting the largest compensation you deserve.

Test for Constructive Termination

In establishing whether an employee has been forced to resign, the employer must have taken action with the intent to bring the relationship to an end or that has that probable result. In the words of the full bench in O’Meara v Stanley Works Pty Ltd, adopted in Bupa Aged Care Australia Pty Ltd v Tavassoli, the test is whether the employer engaged in conduct with the intention of bringing the employment to an end or whether termination of the employment was the probable result of the employer’s conduct such that the employee had no effective or real choice but to resign. Similarly, the Australian case of Mohazb v Dick Smith Electronics Pty Ltd (No 2), states that “an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship”.

Termination vs Resignation

If a termination is given in the heat of the moment or under extreme pressure, special circumstances may arise. In these circumstances, employers may be required to allow a reasonable amount of time to pass before they treat the employees’ ‘resignation’ as an actual termination. For instance, an employee and their employer have a heated and angry discussion in which the employer believes the employee resigned but the employee believes they were terminated. The employee continues to present for work as they were under the belief that they had to work out the notice period for their termination. In these circumstances, the employee is found not to have resigned as they did not demonstrate an intention to not be bound by their contract of employment.


If an employee is demoted and this demotion involves a significant reduction in duties or remuneration, this can also constitute termination despite the employee remaining employed by the employer. However, if the employee’s contract or industrial instrument contains an express term allowing demotion without termination, then any demotion will not amount to a termination at the employer’s initiative.

Lodging an Unfair Termination Application for Constructive Termination

If an employee believes they have been constructively terminated and the termination was harsh, unjust or unreasonable, the employee can lodge an Unfair Termination (Form F2) with the Fair Work Commission. An unfair termination application must be lodged with the Commission within 21 days after the termination takes effect and the Commission may allow a further period for lodgement in exceptional circumstances. Once an application is lodged, the Fair Work Commission will set the matter down for a conciliation conference, a private proceeding conducted by an independent conciliator. This conference is an informal method of resolving an Unfair termination dispute in which an independent conciliator will assist the parties in exploring options for resolution and help them to reach an agreement without the need for a formal hearing or court proceedings. As constructive termination claims may form the basis of a jurisdictional issue, a jurisdictional hearing can occur before or after conciliation. A jurisdictional hearing is a formal process by which a member of the Commission will make a decision as to whether the Commission can deal with the unfair termination case. This process involves the parties to the matter making submissions, giving sworn evidence and provides an opportunity to challenge or cross-examine the other party’s evidence. In regards to constructive termination, the jurisdictional hearing will assess whether the employee has been forced to resign and thus constructively terminated, in order to qualify for an unfair termination application.

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