08/08/2025
Did you know that just because an employee resigns, it doesn't mean you are safe from Unfair Dismissal Protections?
- Constructive Dismissal -
Let's say you run a small business - a cafe with 8 employees. Kate has worked at the cafe for 2 years. She consistently receives positive feedback from customers and is known for her reliability. One day, you hire your nephew, James, as a new full-time barista. James has little experience but he's in the family and you want to give him this opportunity.
Over the next month, more changes happen -
* you cut Kate's hours from 25 to 8 hours per week because you don't need her as much now that James is on board, and you do this without consultation or any explanation of performance issues
* you give James authority to over-ride Kate's decisions because after all he is there full-time
* you start noticing little mistakes that Kate is making and correct her in front of customers, and
* you cancel Kate's pre-approved request to take a weekend off for a family wedding because the cafe has been getting really busy on weekends.
When Kate raises her concerns, you tell her that "it is what it is" and if she doesn't like it, maybe this isn't the right place for her.
Kate ends up resigning and you breathe a sigh of relief because now James is on board, you really didn't need Kate anymore. A couple of weeks later, Kate lodges a claim with the Fair Work Commission for 'constructive dismissal', arguing that her working conditions were made so intolerable that she had no real choice but to resign.
Even though Kate's employment wasn't terminated (after all, she made the decision to resign), the business can still fall under unfair dismissal protections because you made such significant changes at work that Kate felt she had no option other than to resign. If Kate's claim is successful, you may be forced to reinstate her or pay her compensation up to half a year's pay.
- This applies even for small business -
Managing people is tricky and sometimes the path forward isn't as straightforward as it might seem. This is where getting HR support is vital - epm consulting provides HR support tailored to small business so you can focus on running your business and have confidence that you aren't opening the business up to undue risk.
Contact us for your obligation-free, 15-minute HR consultation - [email protected].