When an employee resigns, it’s usually considered their choice – but not always. If an employee quits because of something the employer did or failed to do, the law may treat that resignation as a constructive dismissal.
This can leave businesses open to unfair dismissal claims, legal costs, and reputational damage.
In this article, our employer lawyer explains what forced resignation means for employers, how it happens, and how you can proactively reduce risk in your workplace.
Key Takeaways for Employers
Forced resignation (constructive dismissal) happens when an employee resigns because of employer actions or inaction.
Common employer missteps include sudden role changes, unpaid entitlements, or ignoring bullying complaints.
Even if an employee resigns, it may still be treated as an unfair dismissal under the Fair Work Act 2009 (Cth).
Employers should consult with employees before making changes, manage performance fairly, and maintain accurate records.
Seeking legal advice early (especially before redundancies or restructures) can help avoid legal claims.
What is Forced Resignation from an Employer's Point of View?
Forced resignation, or constructive dismissal, occurs when an employee quits, but only because the employer made the working environment so difficult that continuing wasn’t a viable option.
This might include:
Making major job changes without consent
Allowing harassment or bullying to go unaddressed
Failing to pay wages or entitlements
Undermining the employee’s position or status
Even if the resignation appears voluntary on the surface, the Fair Work Commission may still consider it a dismissal if the employer’s actions forced the outcome.
If you’re an employee, read on to learn more in our guide What does Forced Resignation mean?
When it’s Not Constructive Dismissal
Not every resignation is a forced resignation. Common scenarios that generally don’t qualify include:
The employee resigns after a lawful performance warning
A disciplinary process is underway, and the employee chooses to leave
The employer offered a valid redundancy package
The employee disagreed with business decisions but was not mistreated
The key legal question remains: Did the employer’s conduct leave the employee with no real choice but to resign?
Legal Consequences of Constructive Dismissal
If a resignation is found to be forced, employers can face serious legal and financial consequences, including:
Unfair dismissal claims
Compensation orders (up to 26 weeks’ pay)
Back payment of entitlements
Breach of contract claims
Reputational damage
This applies even if the employee never said they were being “forced out.” The legal focus is on whether your conduct left them with no real alternative.
For a deeper look at how to handle claims, see our guide on Defending Unfair Dismissal – A Guide for Employers.
How Employers Can Avoid Forced Resignation Claims
1. Create a Respectful, Safe Workplace
Implement clear workplace behaviour policies and take every complaint seriously. Early resolution of conflicts helps avoid legal escalation.
2. Consult Before Making Changes
Always speak with employees before making major changes to their job, hours, or pay. Get written agreement where possible.
Learn more about your legal duties in our guide on How Employers Can Meet Consultation Obligations.
3. Pay All Wages and Entitlements Promptly
Missed, underpaid or delayed payments are one of the fastest ways to damage trust and trigger legal claims. Stay compliant with Fair Work obligations.
4. Use Fair Performance Management Processes
Document performance management issues and improvement plans. Avoid sudden demotions, public criticism, or unfair targets.
5. Train Managers on Legal Obligations
Most constructive dismissal issues stem from poor management, not malice. Regular training helps leaders make informed, lawful decisions.
What to Do if You Receive a Forced Resignation Claim
If an employee alleges they were forced to resign, it’s important to respond carefully and strategically. Employers should take the following steps immediately:
Do not retaliate against the employee
Seek legal advice immediately
Review internal records (emails, contracts, complaints)
Consider mediation before formal hearings
Ensure your HR policies are up to date
At Prosper Law, we represent employers in Fair Work claims and help prevent disputes from arising in the first place.
Need to strengthen your workplace protections? See our employer guide on Anti-Bullying and Harassment Policies and Procedures.
Real-Life Example: Unpaid Overtime and Mental Health Impact
We assisted an employee who was required to work excessive unpaid overtime after several colleagues resigned. The employer failed to fill the vacant roles, leaving our client with an unsustainable workload.
Despite raising concerns about burnout and mental health, no support was provided. She felt she had no option but to resign.
We lodged a constructive dismissal claim with the Fair Work Commission, and she was successful in obtaining a monetary settlement.
Lesson for Employers: Ignoring workload issues (especially after staffing changes) can lead to legal exposure. Employers must proactively manage resourcing and respond to employee concerns to avoid claims.
Need a refresher on your obligations? Read our Fair Work Act – A Guide for Employers.
Frequently Asked Questions (FAQs)
Can offering a payout to resign be considered forced resignation?
Yes, if the offer is coercive or given as an ultimatum, it could be seen as a form of constructive dismissal.
What is the legal risk if an employee claims forced resignation?
You may face an unfair dismissal claim, be ordered to pay compensation, and risk reputational damage.
Do I need employee consent to change their duties?
In most cases, yes – significant changes without meaningful consultation can breach the employment contract.
Can I protect myself by getting resignation in writing?
Not entirely. A written resignation won’t protect you if your conduct forced the resignation. The law looks at the circumstances, not just the paperwork.
How can I reduce risk during restructures or redundancies?
Consult employees, provide notice, and seek legal advice. Sudden changes without support increase your legal exposure.
Planning a restructure? Read our guide: Restructuring a Business and Employment Law to ensure compliance.
If you’re managing employee performance, restructuring your team, or facing a claim – early legal advice is your best protection.
