When does poor management become forced resignation?
The Fair Work Commission (FWC) recently dealt with a claim of forced resignation where a worker argued that repeated conflicts with his employer, coupled with alleged bullying behaviour and a job advertisement for his position, left him with no choice but to resign.
The case explored the fine line between choosing to leave a job and being forced out through workplace conduct.
The FWC explored questions about professional disagreements, management styles, and what truly constitutes constructive dismissal in Australian workplaces.
Background of the case
The worker started at a financial services company in 2016 as a contractor before becoming a full-time asset manager in 2017. The company specialised in providing low documentation loans. Though he never signed a formal contract, his role included a 5% profit share arrangement and another 5% share from a property development project.
Early tensions emerged over loan assessments. The employer maintained the worker was excessively cautious in evaluating loans, which affected business opportunities.
The employer's accountant gave evidence that the worker's past experience with an Australian Securities and Investments Commission’s (ASIC) investigation made him overly careful with loan approvals, making the process more demanding than necessary for their low-documentation loan business.
The worker had previously resigned in March 2022 but stayed after the employer asked him to reconsider and requested "a 1 pager of what he would like to see happen if he was to stay." Though the worker continued working, he never provided this feedback.
Toxic office environment and disagreements
In July 2022, tensions escalated through email exchanges about business operations. The worker wrote to his employer stating: "In my mind this has now reached a ridiculous position and your business is completely out of control."
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The CEO responded by addressing the office environment: "[the worker] I'm totally hearing you the environment in the office is toxic... My view is the toxic attitude in the office, People constantly questioning my decisions."
The employer later forwarded this exchange to the HR officer, writing that if the worker didn't want to work during the employer's absence, they should "get onto Employsure send the below email to them and send a warning show over his bow."
A pivotal meeting occurred on March 19, 2024, when the CEO proposed an equity plan to three employees, including the worker. The discussion became heated when the worker demanded formal documentation rather than an email agreement.
During this confrontation, witnesses confirmed the CEO told the worker "You should be licking my boots." After this incident, the CEO suggested the worker take paid leave for the rest of the week.
Worker’s resignation amid ‘toxic’ workplace allegations
On March 19, 2024, a job advertisement appeared for an "Investment Fund Manager/Credit Manager" position.
While the worker viewed this as evidence of the employer's intent to replace him, the employer maintained it was only a "market scan" to prepare for potential staffing changes.
The CEO sent an email to the worker on March 20, 2024, stating: "Are you staying or are you going? the way things are between us now no, you're going.... If our relationship improves significantly over the coming months, yes you can stay."
Is it forced resignation?
The FWC found that despite workplace tensions, the situation didn't constitute forced resignation. The Commission noted:
"[The worker] was not left with no real choice but to resign. At the time [the worker] resigned, [the CEO] was overseas. [The CEO] had suggested on 26 March 2024 that the parties should 'take the next couple of weeks off from each other'."
The Commission emphasised that workplace unpleasantness alone doesn't equate to forced resignation:
"Forced resignation requires more than an unpleasant work environment. It requires that [the worker] be left with no real choice but to resign."
In its final determination, the Commission stated:
"[The worker] had options; to continue working, make a bullying application or seek mediation if he thought that might assist. [The CEO] was clearly of the opinion that he valued [the worker's] skills and was open to continue working with him albeit in a more harmonious way."