An employee walks into your office. You’ve documented poor performance, attendance issues, or conduct concerns. You think the conversation will lead to resignation. Instead, a year later, you’re facing a Fair Work Commission hearing where they’re claiming constructive dismissal — and the FWC agrees they were forced to resign.

This is happening more often in 2026. Unfair dismissal claims involving forced resignation are rising sharply, and many employers are losing because they don’t understand the legal difference between resignation and constructive dismissal.

The consequence? Compensation up to $95,050 (the 2026 cap), legal costs, management time, and reputational damage.

This guide breaks down exactly what constructive dismissal is, how the FWC decides whether a resignation was “forced,” and the specific steps employers must take to protect themselves.

What Is Forced Resignation? The Legal Definition

A forced resignation is also called constructive dismissal. It’s when an employee resigns, but the Fair Work Commission finds the employer’s conduct was so unreasonable that the employee had “no real choice but to resign.”

Under the Fair Work Act 2009, a dismissal includes a forced resignation. If the FWC agrees the resignation was forced, the employee can pursue an unfair dismissal claim — just as if the employer had formally terminated them.

The critical threshold: Did the employer’s actions make the employment relationship untenable? Not mildly uncomfortable. Not frustrating. But genuinely impossible to continue.

The FWC Test: What Makes a Resignation “Forced”?

The Fair Work Commission applies a three-part test:

1. Was the employer’s conduct unreasonable?
The FWC looks at whether a reasonable employer in that situation would have acted the same way. Examples that have failed this test:

• Threats (“resign or I’ll fire you without notice”)
• Sudden unilateral changes to pay, role, or location without notice or consultation
• Sustained harassment, bullying, or discrimination
• Breaches of trust (e.g., false accusations, public humiliation)
• Unfair disciplinary processes (denying the right to respond)

2. Did the employer’s conduct cause the employee to resign?
There must be a causal link. If the employee resigned over a personal matter (moving interstate, health reasons, new job), the FWC may find the employer’s conduct was irrelevant, even if it was harsh.

3. Did the employee have a real choice?
This is the “no real choice” test. Would a reasonable employee in that position have felt compelled to resign? Or could they have stayed, raised a complaint, or sought help?

If all three are answered “yes,” the FWC will likely find constructive dismissal.

Real FWC Decisions: What Employers Got Wrong

Case 1: The Ambiguous Threat
An employer told an underperforming employee: “If you can’t improve in the next week, we’ll need to look at your future here.” The employee resigned the next day. The FWC found this was constructive dismissal because the threat was clear: improve or face termination, and the employer did not give fair warning or a proper performance management process. The employer had to pay $48,000 in compensation.

Case 2: The Role Change Without Consultation
A manager was told mid-project that their role was being “restructured” — they would now report to someone they’d had conflict with, take on additional hours, and lose their private office (affecting their client-facing credibility). No consultation. No notice. They resigned. The FWC found the unilateral, substantial change in conditions made the role untenable. Cost: $62,500.

Case 3: The Unfair Investigation
An employee was accused of misconduct. During a disciplinary meeting, the employer presented “evidence” that contradicted the employee’s account. When the employee asked to see the documentation, they were refused. They were told a decision would be made “by end of week.” They resigned before the meeting ended. The FWC found the process was so unfair that the employee had no real choice. Cost: $55,000.

Case 4: The Successful Employer Defence
An employer placed an employee on a performance plan. The employee missed multiple deadlines, did not improve, and was given written warnings. During a meeting to discuss dismissal options, the employee asked “Are you firing me?” The employer said “Not yet, but we need to discuss next steps.” The employee resigned. The FWC found the employer’s conduct was reasonable, the employee had been given fair warning and opportunity, and the resignation was voluntary. Employer won.

Red Flags: What Puts You at Risk of a Constructive Dismissal Claim

1. Coercive Language: Any suggestion that resignation is “better than the alternative.”
2. No Process: Skipping performance management, investigation procedures, or consultation before major changes.
3. Unilateral Changes: Altering pay, hours, location, or duties without notice or agreement.
4. Documented Conflict: Complaints from the employee about harassment, discrimination, or bullying before they resign.
5. Rushed Timeline: Giving an employee 24–48 hours to “decide” their future.
6. Denial of Fair Process: Refusing to show an employee evidence against them, not allowing representation, or not giving them time to respond.
7. Management Anger: Emotional, accusatory language (“You’ve destroyed this team,” “You’re incompetent”) in front of others.

If the employee resigns within days or weeks of any of these, you’re at heightened risk.

How to Protect Yourself: The Employer Checklist

Before a Difficult Conversation

• Plan the message. Script your opening. Avoid threats or coercive language.
• Give clear notice. If you’re discussing dismissal, termination, or role changes, give the employee notice they’ll need to talk to you about it. No ambush.
• Document the reason. Performance issues, misconduct, redundancy — have the evidence ready.
• Ensure representation rights. Let the employee know they can bring support (a companion, lawyer, union rep, depending on the circumstance).

During the Conversation

• State the facts. Be clear about what the issue is. Don’t argue or interrupt.
• Give the employee time to respond. Don’t make a decision in the room. Let them take a moment. Offer them time to seek advice.
• Avoid threats. Don’t say “If you don’t resign, I’ll have to let you go.” Instead: “We’re here to discuss the options, which may include redesigning your role, performance improvement, or, if things don’t improve, termination.”
• Don’t pressure resignation. If you want to offer a mutual separation agreement with a settlement, that’s fine. But don’t frame it as “resign now or I’ll fire you.”
• Keep records. Take notes on what was said, what was offered, and what the employee said in response.

After the Conversation

• Follow up in writing. Send the employee an email confirming what was discussed, what outcomes were offered, and next steps. This protects you if they later claim they “had no choice.”
• If they ask for time, give it. Unless there’s an immediate safety risk, let the employee think about it.
• If they resign, document it. Keep their resignation email or letter. Note the date and time. If there were any statements in the conversation that might later be disputed, reference them in the follow-up email.
• Consider the timing. If they resign within 48 hours of a difficult conversation, be prepared for a claim.

The Bright-Line Rule: The 21-Day Notification Period

Under Fair Work Act section 389, an employer must give an employee written notice of the intended termination at least 21 days before the dismissal takes effect. The notice must state:

• The reason for the dismissal
• The employee’s right to respond
• The date the dismissal will take effect

If you skip this step and then the employee resigns, the FWC may infer you were trying to force them out. Always follow the 21-day rule, even if you think the employee might resign before then.

When an Employee Resigns: What to Do

If an employee resigns, especially after a difficult conversation:

1. Accept the resignation in writing. Don’t question it. Don’t say “Are you sure?” or “Maybe you should think about it.”
2. Ask if they want to withdraw it (if your policy allows). Some employees resign in anger and change their minds within a day. If that’s the case, deal with it then.
3. Clarify the resignation date. Make sure they understand their notice period (if one applies) and the final day of work.
4. Confirm in writing. Email them summarizing the conversation, the resignation, and the final date.
5. Do not say or imply they were forced to resign. Don’t apologize for the conversation or suggest the termination was imminent. Don’t say “We were going to let you go anyway.”

If they do claim constructive dismissal later, your written record will be your best defence.

What to Do If You Face a Constructive Dismissal Claim

If an employee lodges an unfair dismissal claim based on forced resignation:

1. Get legal advice immediately. This is complex, and the claim threshold has risen in 2026.
2. Gather documentation. All emails, meeting notes, performance records, and communications before the resignation.
3. Prepare your defence. Be ready to explain:
   • Why the conversation happened (performance, conduct, redundancy, etc.)
   • What was said and how (no threats, threats, or coercion)
   • Why the employer’s conduct was reasonable
   • What choice the employee had
4. Consider conciliation. Many of these claims settle early. The FWC will offer a conciliation conference before a hearing.
5. Know the cost of losing. Up to $95,050 in compensation, plus legal costs if you lose.

Key Takeaways for Employers

• Forced resignation = constructive dismissal. The FWC treats a forced resignation the same as a formal termination for unfair dismissal purposes.
• The test is objective. Did a reasonable employer act the same way? Would a reasonable employee feel compelled to resign?
• Process is critical. Fair warning, consultation, documentation, and the 21-day notice period are your best defences. Link to HR best practice guides for ongoing compliance.
• Avoid threats and pressure. Any suggestion of “resign or else” exposes you to a claim.
• Document everything. Emails, notes, and written follow-ups are your evidence.
• If they resign within days of a difficult conversation, prepare for a claim. Have your defence ready.

The FWC’s bar for constructive dismissal has risen, but it’s still a real and costly risk. The employers who avoid these claims are the ones who follow fair process, give clear notice, and never pressure an employee to resign.