The Case
In June 2025, a manager at Freight Victoria was informed by two directors that a specific project officer role, which previously reported directly to her, was being temporarily reassigned to the commercial ports team for a 12-month period. The directors explained that this adjustment was temporary and based on feedback regarding her leadership approach.
The manager did not see it as a minor operational adjustment. Instead, she interpreted the structural change as a direct demotion and a calculated attempt to push her out of the business. In response, she resigned from her position and subsequently lodged a general protections application with the Fair Work Commission, claiming she had been constructively dismissed.
The Ruling
The Fair Work Commission completely rejected the manager’s claim. Deputy President Ian Masson ruled that she was not constructively dismissed and had ‘simply no basis’ to believe she was being forced out of her role.
The Commission’s investigation revealed that the employer’s decision to shift the reporting line was actually a proactive management step. Rather than trying to eliminate her position, Freight Victoria management was genuinely anxious to retain her. The change was driven by a genuine and balanced concern to protect the psychological safety of an incoming subordinate while simultaneously offering active coaching to help the manager develop into a more effective leader.
This decision was backed by formal staff complaints from project officers in 2022 and 2024 regarding the manager’s style. Subordinates noted she was frequently unavailable for guidance and addressed basic performance issues in a hostile manner. The Commission reaffirmed that constructive dismissal requires an employer to leave a worker with ‘no real choice’ but to resign. Reasonable management actions, such as altering reporting structures or adjusting responsibilities in good faith, do not meet this threshold.
How to do it better
While the employer successfully defended this claim because they acted in good faith and had clear evidence of performance issues, minor missteps in communication can easily lead to costly legal disputes. To handle structural changes and leadership coaching smoothly, organisations should:
- Document the ‘Why’ early: Maintain clear records of all performance feedback, staff complaints, and leadership coaching sessions. This provides an objective paper trail if a structural change is later challenged.
- Over-communicate the intent: When temporarily altering reporting lines or duties, explicitly frame the change in writing as a supportive development step rather than a disciplinary measure.
- Outline clear timelines and support: Set defined boundaries for temporary restructures, detailing exactly what milestones need to be met and what training will be provided to help the manager succeed.
The Bloom HR Take Away
A restructure or a shift in operational responsibilities is not automatically a constructive dismissal, provided it is handled reasonably and for a legitimate business purpose. This ruling is a reassuring reminder for Australian employers that you are fully entitled to manage your teams, protect the psychological safety of your staff, and implement leadership development strategies without fear of forced resignation claims.
The secret to success lies in your intent and your execution. When you approach performance challenges with a genuine desire to coach and retain your people, and support those actions with robust documentation, you protect your organisation while building a healthier workplace culture.