What is a constructive dismissal?

In a recent case an employee’s personal grievance claim for constructive dismissal was upheld by the Employment Relations Authority. The employee resigned after she was taunted with racial comments by her colleagues. The Authority ordered the employer to pay the employee over $9,000 for lost wages plus $12,000 in compensation for humiliation, loss of dignity and injury to feelings.

We often get asked for advice by employees who feel they have no choice but to resign from their employment.

An employee may have been constructively dismissed if one of the following situations apply:

1. The employer has given the employee a choice to resign or be dismissed; or
2. The employer has followed a course of conduct that is dismissive and repudiatory, and which has the deliberate and dominant purpose of pressuring the employee to resign; or
3. The employer has breached a duty owed to the employee (for example, the duty of good faith, or has failed to keep the employee safe in the workplace) which causes the employee to resign.

The breach of duty by the employer must be sufficiently serious so that the employee’s resignation is reasonably foreseeable.

The employee must establish that they have been constructively dismissed. The standard is high, as often it is unclear whether the employee has been constructively dismissed or if they resigned freely. The employee must have tried all other avenues to resolve issues and be left with no reasonable alternative but to resign before a constructive dismissal will be established.

If an employee believes they have been constructively dismissed, they have 90 days in which to raise a personal grievance for constructive dismissal. An employee may be able to claim lost wages, or request reinstatement, as well as compensation for hurt and humiliation.  

It is useful to seek legal advice (before you resign if possible) when raising a constructive dismissal claim due to the strict legal tests which must be met.