What is Forced Resignation?
Forced resignation is the term used under the Industrial Relations Act 1984 (SA) when a constructive dismissal occurs. A constructive dismissal arises when a person resigns from their position due to the conduct of their employer. In other words, the actions of the employer have caused the employee to resign from their employment. This is not in circumstances where the employee simply wants to change their job, but rather when the employer’s actions have pushed the employee out the door.
A forced resignation occurs when the employer’s behaviour has gone beyond that which could be expected to be tolerated by an employee of substance. Examples of this include: The Test — Reasonableness If a forced resignation has occurred there is a requirement to then ascertain whether the actions of the employer reached the level of unreasonableness. In Hillier and Others v TranzRail [1999] 1 ERNZ 302 , it was held: It is essential to the act of resigning that the employee must have had no effective choice other than to resign. The question is: was it reasonable for the employee, in all the circumstances, to take the step of resigning? If it were not then there has not been a constructive dismissal. This Test is often more difficult than it sounds. When forcing someone to resign, you are essentially creating a situation where they will need to leave their employment. If the issue is major enough, and the employee has gone through the grievance process, the business may be better of terminating the employment.
When Forced Resignation is Legal
The legal implications of forced resignation are far-reaching. For employees, the existence of a constructive dismissal may entitle them to certain remedies and/or compensation. For employers, the payment of constructive dismissal damages, or the potential loss of an employee through the judicial notice of a constructive dismissal termination may carry significant costs to the business.
The legal implications of forced resignation usually lie between the rights of the former employee claiming they were constructively dismissed and the employers’ defence that the employee left for reasons not related to work. The employer may argue that the employee was not subjected to a constructive dismissal.
From an employer’s perspective, the cost of defending a constructive dismissal claim can be very high. In the event that a court finds that an employee was constructively dismissed (in accordance with the above test), the amount of constructive dismissal damages varies according to the employee’s age, length of service, level of responsibility, and the circumstances of the employee’s resignation. For example, it has been held that a 25-year employee with the most tenuous financial prospects can be entitled to up to 24 months’ pay in lieu of reasonable notice.
For an employee, it is important to remember that the legal implication of resigning under circumstances indicative of a forced resignation from the perspective of the employer. Depending on the jurisdiction, resignation under these circumstances may involve a release of all claims against the employer. As a result, the employee may be forfeiting the right to recover for wrongful dismissal damages if he or she voluntarily leaves without reasonable notice, resists or fails to pursue suitable alternative employment, or does not take additional steps to mitigate the damages.
The question of whether a resignation constitutes a constructive dismissal continues to be largely determined on a case-by-case basis. Forced resignation challenges employers to consider whether a formal resignation has occurred, what the employees intended to communicate by their conduct, and whether their conduct indicates a willingness to abandon the litigation process.
No matter the industry, employees in all jurisdictions are afforded protection from constructive dismissal.
Employees’ Rights When it Comes to Forced Resignation
Employees who have been forced to resign because of discrimination or harassment on the part of their employer or fellow employees may be able to seek "forced resignation" and/or wrongful termination compensation. "Forced resignation" is not a specific term in the law, but merely describes the act of being forced to either quit or resign.
All employees (regardless of what kind of employment agreement they are under, or none at all) may be forced to quit – or to be fired in such a way as to be forced to quit – even though the general presumption in California is that an employee is not actually terminated until the employer provides them with notice of that termination. In a practical sense, managing the forced resignation issue is always a struggle. How do the parties know if an employee has quit? Another common approach is the end of the situation is for the employer to state, "effective immediately you are no longer employed by this company." But might a forced resignation be under the terms of an employment agreement?
The "is my employment at will" question must be answered individually. Some employment agreements provide employees with particular employment security, such as specified notice periods, cause grounds for termination, non-termination during controlled probationary periods, and the like. However, it remains general practice to terminate an employee and ask them to either resign, or leave immediately (rather than force them out if they are dissatisfied or unhappy), thus absolving the company of concern, and not stigmatizing the employee. But what is the legal issue if an employee is forced to resign?
They may have a forced resignation case. Such a case may turn on whether the resignation was plainly coerced, or whether the employee was offered a choice. Did you really have a choice, or did you plead with your employer to allow you to stay in your position, to no avail. Do you believe you were threatened with direct retaliation, retaliation in general, or physical harm if you did not resign? Did you explicitly point out the harassment/retaliation/discrimination and nothing was done, leaving you to quit or be subjected to it?
Unfortunately, many employers will "fish or cut bait." They will terminate the employee and tell them they can leave voluntarily or not, thus putting the ball in your court. But if you truly felt that your immediate safety was at risk, and that you would have been treated in further unlawful ways, were you "free" to stay or did you really run for your life? If you quit, when – we counseled clients previously about having to take that leap, and how scary it is. That’s free choice. But if you really had to jump out of a burning building to save yourself, that was no real choice at all.
But if you show up at work and are told, "either clean out your desk right now, or be fired. It’s your choice." In that scenario, the employer may be the most culpable party. You may be able to walk away with an award dbl the damages. See how it’s all about the details, and directing the discussion toward the damage, not just what happened and who caused it.
What is really critical to any legal analysis is that the employee recognize that the series of events involved were not "just the situation," but rather a legal claim that is recognized in law, with courts that will enforce it. This issue is significant, however, because someone strong enough and smart enough to deal with a forced resignation at work is also strong enough to handle the filing of a lawsuit for forced resignation. If you walk in and say, "how much should I get?" the answer is that you can get the same as if you had stayed and fought back, but you must also answer the question of why you didn’t stay. That question tends to shock an employee to their core, because it reveals their vulnerability.
Ultimately, it is the employer which bears responsibility. A forced resignation could be the basis for compensation well beyond the general wrongful termination, including the value of any lost employment benefits. In the logical progression of events and projects, forfeiture of future stock options, health insurance (continuation), retirement, a raise in pay are all foreseeable injury resulting from termination – forcing the resignation.
Steps to Follow If You Were Forced to Resign
Should an employee have to face a forced resignation, he or she should gather all evidence surrounding the resignation. That evidence should include witness statements, notes from meetings about the resignation, and any emails about the subject. Any paperwork related to the resignation whether digitally or physically should be kept in a file. Once an employee has gathered all of this information, he or she should consult with an experienced labour lawyer. After consultation, the employee will know which steps he or she should take whether that involves pursuing a claim for constructive dismissal or pursuing all owed vacation and other entitlements. In some cases, an employee might be required to file a complaint with the Ministry of Labour about the last days he or she was employed to resolve severance owed as well as the additional entitlements listed above.
Employer’s Role in Forced Resignation and Prevention
While preventative measures can often assist clients in avoiding lawsuits in the first place, many clients who hire us to defend discrimination lawsuits are often equally interested in de-escalation and "getting the record straight" as they are in litigating. Forced resignation claims are no different.
Employers should interest themselves in whether their supervisory personnel are following the law when it comes to managing employees. In particular, supervisors should understand that (a) there is no "employee at will" doctrine in California (i.e., except for unionized employees, employees cannot be fired without cause, although the cause may be any legal reason, or for no reason, unless the employee has an express contract to the contrary); and (b) pretext is any reason given after the fact. Accordingly, employers who plan to react harshly to certain workplace performance or behavior issues may be better served if they start the disciplinary process as suggested by counsel, and/or when the employee’s conduct permits such action. Using California’s high unemployment rate, budget crises, or cultural difficulties in finding alternative employees to replace every employee may not be a reasonable ground, nor will attempts to argue that things are not so bad now that the employee is no longer necessary have much merit. If the employee’s performance or behavior is not "good enough , " successful alternatives to a forced resignation are possible.
All employers should also remember that a threat of forced resignation can be just as dangerous as forced resignation in the litigation world. We have seen our equal pay claims filed under the California Fair Employment and Housing Act (FEHA), which is why we previously advised clients to treat the demand for a forced resignation as any other disciplinary matter.
Forced resignation claims can also be litigated under the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A(a)(1). In particular, this Act applies to businesses that are required to file periodic financial reports with the SEC (e.g., publically traded corporations and companies that prepare, audit or present information or financial reports that are submitted to authorities). The Act specifically protects employees who engage in any of these activities:
Forced resignation claims can also be litigated under the federal False Claims Act, 31 U.S.C. § 3730(h)(1). To prevail, the employee must prove that:
It is the employer’s responsibility to develop and follow policies and procedures to prevent forced resignations, including training their upper management and human resources professionals on the legal requirements. The problems that arise when forced resignation occurs can be avoided through appropriate planning, evaluation of options, and consulting with employment counsel to ensure that the employer is operating within the law.
Forced Resignation Case Studies
Over the past decade, the Supreme Court of Canada (SCC) has ruled on four cases considering forced resignations. In all four, the SCC found that termination payments were due. The four decisions are:
Ostrowski v. Conopco (Canada) Ltd ("Conopco")
Wallace v. United Grain Growers ("UGG")
McKinley v. BC Tel ("McKinley")
Honda Canada Inc v Keays ("McKinley")
In Conopco, an employee was dismissed for cause but the Court found that there was not just cause to dismiss the employee. Further, the Court awarded the employee 3 months compensation for "wrongful dismissal" because of the employer’s conduct leading up to the termination.
In UGG, the employee was threatened with termination if he was unable to return to work after a non-work related absence following a heart attack. The Court stated that the employer’s conduct was "oppressive and unfairly prejudicial" and therefore the employee was entitled to damages for wrongful dismissal in addition to damages for mental distress.
In McKinley, the employee was dismissed because he failed to disclose that he had a medical condition that required medication with painkillers. The Court in McKinley limited the types of circumstances where a constructive dismissal claim will be allowed and held that an employee who has been constructively dismissed does not need to show bad faith on the part of the employer.
In Honda, the Court reaffirmed that Wallace damages no longer stand alone as a separate tort but rather are part of an employee’s reasonable notice period. Further, the Court confirmed that an employee does not need to show bad faith to establish Wallace damages.
Frequently Asked Questions on Forced Resignation
How do I prove forced resignation?
In most cases, an employee can establish that the resignation was obtained as a result of duress or coercion by showing that he or she signed the resignation letter only because of fear of a serious consequences or the loss of a benefit or other privilege. Essentially, he or she can show that it was not voluntary. In order to show this, Courts examine the circumstances of the case including the threats made, psychological pressure brought to bear, the employee’s reasonable alternatives, and the physical and mental pain inflicted.
If I have been forced to resign, what can I do?
If you feel that you have been forced to resign, it’s important to consult an attorney to discuss your options and determine what legal action may be available to you. Typically forced resignation claims are based on constructive discharge, which requires that you be able to prove that working conditions were so intolerable that a reasonable person in your situation would feel compelled to resign or submit to the employer’s demands . Key to any forced resignation claim is that your resignation must be caused by the employer’s wrongful acts and not by your purely personal reason.
What should I do if I am told to resign?
Keep in mind that an employer does not have the right to tell you resign. However, they can request that you resign with the understanding you will still be paid a salary. In these situations is best to consult with a lawyer who has experience in this type of litigation.
What happens if my employer wants a resignation letter?
Again, it is illegal in California for an employer to require an employee to sign a resignation letter, but if it occurs, simply state that you do not want to sign the letter but would be willing to write your own statement if that is acceptable to them. Anything desired in writing should be put in your own words. We recommend stating no knowledge of the circumstances that led to your departure from employment. The reason for recommending your own writing is because the employer may attempt to use the forced resignation as a reference so that you are further harmed in future employment opportunities.