In the recent Fair Work Commission decision of Wilson v Services Australia FWC 3328 (5 November 2025), the Commission awarded over $30,000 in compensation to a former Services Australia worker who resigned amid significant mental health challenges. The key issue was whether his resignation was a genuine and voluntary termination of employment or a constructive dismissal resulting from employer conduct. This case provides critical guidance for employers managing resignations under conditions of employee distress.

Case Background

Mr Luke Wilson, an acting senior project officer, worked for Services Australia initially in Toowoomba and then transferred to Maryborough at his request. After a transfer that involved working in a reopened office following mould treatment, Mr Wilson’s mental health deteriorated. He reported bullying, experienced distress from workplace interactions, and lodged a worker’s compensation claim related to his condition.

Despite these efforts to raise concerns, Mr Wilson felt unsupported. His mental health worsened as he struggled with an alleged hostile work environment and financial hardship during a period without income. In March 2025, he resigned, later filing an unfair dismissal claim alleging he was effectively forced to resign — a claim known as constructive dismissal.

The Commission’s Decision

Deputy President Tony Slevin carefully reviewed the evidence, including emails and witness accounts, concluding that Mr Wilson was in a “very dark place” mentally. Services Australia had contacted his doctor to confirm he was of sound mind to resign, but this was not enough to demonstrate a genuine intention.

The Commission emphasised the legal test for resignation: the employee must be capable of conveying a real, voluntary intention to resign, free from confusion or emotional distress. Mr Wilson’s resignation did not meet this threshold due to his mental state and the employer’s handling of the situation. Instead of facilitating his recovery and clarifying his resignation, Services Australia immediately treated his notice as final termination without adequate follow-up, effectively dismissing him.

Furthermore, the Commissioner found that Mr Wilson’s financial and emotional situation left him “no effective or real choice” but to resign.

Key Lessons for Employers

This case highlights important considerations for employers dealing with resignations linked to health issues:

• Assess mental capacity: Before accepting a resignation from an employee experiencing severe distress, confirm they are mentally and emotionally capable of making such a decision.
• Provide space and support: Avoid overwhelming employees with repeated contact during vulnerable periods. Allow them time to recover and consult external support if needed.
• Clarify intentions: Do not immediately treat a resignation as final where it could be later challenged. Engage respectfully to ensure it is a real and voluntary decision.
• Document carefully: Keep clear records of communications and steps taken to support the employee.
• Recognise risk of constructive dismissal: A resignation extracted by employer conduct or during mental confusion can be deemed a dismissal, exposing the organisation to liability.

Conclusion

Wilson v Services Australia serves as a reminder that the legal test for a genuine resignation is stringent, particularly where mental health is concerned. Employers must exercise due care and sensitivity, balancing operational needs with employee well-being. Taking these steps not only reduces legal risk but supports healthier workplace outcomes.