Constructive dismissal occurs when an employee is forced to resign due to the employer’s conduct. Conceptually, the resignation is viewed as an act caused by the employer, meaning that a dismissal can be claimed, despite the employee resigning.

Constructive dismissal generally (but not necessarily) falls into three categories:

  1. The employee was left with no option but to resign;

  2. The employer followed a course of conduct with the deliberate and dominant purpose of coercing resignation; and

  3. The employer breached the duty of good faith or the employment agreement, causing the employee to resign.

Situations where the employee was left with no option but to resign tend to be the clearest examples of constructive dismissal. For example, where the employer tells the employee that they will be dismissed if they do not resign.

The second and third categories are more difficult to prove. The focus is on whether the employer’s actions or inaction were serious enough to make resignation reasonably foreseeable. However, it is not necessary for the employer to intend for the employee to resign. The ‘resignation’ can result from a single major event or a series of accumulating issues that lead to a “last straw” incident.

Why It’s Hard to Prove

When an employer dismisses an employee, the onus is on the employer to justify that decision—once it is accepted that the person was an employee and was dismissed (which is usually the case). However, when an employee resigns and claims constructive dismissal, the onus is on the employee to show that despite their apparent resignation, they were actually dismissed. This can be very difficult to prove in practice, as most employees are unaware of the legal tests they must meet to establish a constructive dismissal claim.

So, what is required to establish a constructive dismissal?

Examples that may contribute to a constructive dismissal claim include:

  • A serious breach of contract involving unilateral and significant changes to an employee’s role, hours, or pay without the employee’s agreement.
  • Serious and sustained bullying or harassment that the employer fails to address.
  • An employer neglecting serious health and safety concerns in the workplace, putting employees’ wellbeing at risk.
  • Serious and sustained neglect of employee wellbeing, including a failure to manage burnout.
  • Ignoring complaints and grievances, such as consistently failing to investigate and address legitimate concerns—especially when those grievances continue to the employee’s detriment.

Broadly, to establish a constructive dismissal claim the employee must show:

  1. A breach of duty or of the employment agreement: The employer no longer intended to be bound by an essential term of the employment agreement (the repudiatory conduct of the employer);
  2. That resignation was caused by the breach: The employee in fact resigned because of the repudiatory breach (and will normally need to have resigned fairly close in time to the repudiatory breach by the employer). The employee communicated in clear terms to the employer that the resignation was due to the breach;
  3. That resignation was foreseeability: The employer’s actions must be serious enough that resignation was a foreseeable response (and the employee should normally warn the employer of the risk that they will resign if the breach is not rectified before resigning);

If the employee continued to work under altered terms without protest may be viewed as acceptance of the changes, a claim for constructive dismissal is unlikely to succeed. However, there may still be other claims available such as for breach of contract.

Once the employee has established that they were constrictively dismissed, the employer must then prove their actions were justified or reasonable. If the employer can do that, then the claim for constructive dismissal (that is unjustified dismissal) will fail. In practice, this assessment may be quite short as repudiatory breaches, once established, would be difficult for an employer to justify.

Conclusion

Constructive dismissal can be difficult to establish. If you believe your employer is pushing you to resign or has breached your employment agreement, it is wise to seek legal advice before resigning.

As an employer, if you have received a personal grievance from an employee who has resigned alleging that they were dismissed, we can help you asses the merits of their claims and, potentially, in defending the claim.

 

The first step in getting support is to talk with a lawyer from Frontline Law about your situation and see what options we can offer you. Contact Frontline Law for a free initial consultation.

*The information in this blog post is general in nature and is not legal advice. If you need advice, you should contact us about your specific situation.