Resignation vs Termination: When Has an Employee Really Chosen to Leave?

The distinction between resignation vs termination can have significant consequences for an employee’s rights under Australian employment law. An employee may appear to have resigned because they walked out, said they were leaving or formally ended their employment. However, that does not always mean the departure was legally a voluntary resignation. In some circumstances, the employer’s conduct may have brought the employment relationship to an end, while in others, the employee’s words may not have amounted to an effective resignation at all.

The Fair Work Act 2009 (Cth) (FWA) recognises these distinctions. Section 386(1) addresses both employment terminated on the employer’s initiative and circumstances where an employee resigns because they were forced to do so by the employer’s conduct. Section 119, concerning redundancy pay, similarly refers to employment being terminated at the employer’s initiative. Determining who really brought the employment relationship to an end can therefore affect the rights, entitlements and protections available under the FWA.

When is Employment Terminated at the Employer’s Initiative?

The starting point is Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200, where the Full Court held that an important feature of termination at the employer’s initiative is that the employer’s conduct results, directly or consequentially, in the employment ending and the employee has not voluntarily left. Put another way, had the employer not taken the relevant action, the employee would have remained employed.

The principle was applied in Fishlock v The Campaign Palace Pty Ltd [2013] NSWSC 531. There, the employer substantially diminished the employee’s status and responsibilities, amounting to a repudiation of the employment contract. Although the employee formally brought the contract to an end by accepting that repudiation, the Court considered that the better view was that the employment had nevertheless been terminated at the employer’s initiative. The case demonstrates that an employer does not need to expressly say “you are dismissed” for a termination to occur at its initiative.

The modern approach under s 386 of the FWA was clarified in Bupa Aged Care Australia Pty Ltd v Tavassoli [2017] FWCFB 3941 and later summarised in Emma-Louise Gillies v Safe Places Community Services Limited [2023] FWC 3029. It is not enough merely to show that the employee did not wish to leave. Nor is it always necessary to prove that the employer intended to end the employment. The question is whether, having regard to all the circumstances, the employer’s conduct was likely to bring the employment relationship to an end.

However, constructive dismissal is not readily established simply because an employee is dissatisfied with their working conditions. If resignation remains the employee’s effective and voluntary choice, the employment will generally not be treated as having ended at the employer’s initiative.

What Amounts to a Resignation?

Employees should be alive to the fact that resignation does not necessarily need to be written or formal. However, the intention to end one’s employment must be clearly communicated.

Whether this has occurred is assessed objectively. As explained in Koutalis v Pollett [2015] FCA 1165, the question is what a reasonable person in the position of the parties would have understood from the employee’s words and conduct, considered in their surrounding circumstances.

Context is therefore critical. For instance, a vague expression of an intention to resign sometime in the future may be insufficient, as occurred in Marks v Melbourne Health [2011] FWA 4024. Particular caution is also required where words are spoken during an emotional or heated exchange.

Christina Sawyer v Wards Accounting Group Pty Ltd [2025] FWCFB 167 (Sawyer): A Case Study

During a heated meeting, Ms Sawyer told her employer: “I’m leaving and I won’t be back, especially after your behaviour today.” Wards Accounting treated those words as a resignation and subsequently wrote to her purporting to confirm her resignation.

The Full Bench held, however, that Ms Sawyer had not unambiguously resigned. Her words were equally capable of meaning that she was leaving the meeting and would not return to it and the surrounding circumstances were critical: the exchange occurred during a serious disagreement, Ms Sawyer had worked with the business for almost 16 years, and she continued working until approximately 5pm that day.

The Full Bench emphasised that whether a resignation occurred depends on an objective assessment of what a reasonable person would have understood from the employee’s words and conduct. Where words are spoken in the heat of the moment, they may not convey a genuine intention to permanently end the employment relationship.

Because Ms Sawyer had not effectively resigned, it was Wards Accounting’s subsequent conduct in cutting off her access and treating her employment as over that actually brought the relationship to an end. Her employment was therefore terminated at the employer’s initiative for the purposes of s 386(1)(a).

Sawyer is a useful reminder that the first question is not always whether an employee was forced to resign. Sometimes the more fundamental question is whether there was ever a legally effective resignation at all.

Need Advice?

At Leo Lawyers, we understand that disputes about whether an employee resigned or was terminated can arise quickly and have significant consequences for unfair dismissal rights, redundancy entitlements and other employment claims. What may appear to be a resignation is not always legally effective, particularly where words are spoken under pressure, in the heat of the moment or following conduct by the employer that leaves the employee with no real choice. We assist employees to understand how their departure may be characterised and to protect their rights before taking steps that could affect their legal position.

Feel free to contact Damin Murdock at Leo Lawyers via our Website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, to our YouTube, LinkedIn, Facebook and Instagram, and kindly give us a favourable Google Review.

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us