• Leah Norman

Constructive Dismissal

When a resignation is actually a termination...

In cases where an employee feels their resignation was the only choice they had left to resolve a particular issue, or if they felt that if they are forced to resign because of your conduct or a course of conduct engaged in by you, they may have a constructive dismissal claim.


There are three categories which broadly define constructive dismissal:

  • an employee given a choice between resigning, or being dismissed

  • the employer deliberately acting to pressure the employee to resign

  • the employer has acted so poorly towards an employee (by treating the employee highly unfairly) that the employee feels remaining in the job is no longer an option


Essentially, if one of your employees feels your actions, or lack of action, has made their working life so unbearable that they could not continue, this could constitute a constructive dismissal.

The test is whether your actions result directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee.


Just because your conduct was a factor in your employee’s resignation does not mean the resignation amounts to constructive dismissal. For example, if you reject an employee request for a pay rise and the employee becomes disgruntled and resigns, this is not constructive dismissal. This is despite the fact your actions have at least consequentially resulted in the resignation.


Your conduct must have been the principal contributing factor in the resignation. You must have engaged in some conduct that intended to bring the employment relationship to an end, or had that probable result.


In determining whether or not the termination of employment has been a constructive dismissal, it is not necessary for you to want the employee to resign. Ultimately it comes down to whether your actions, as the employer, caused the employee to resign, and whether the resignation was foreseeable. Also, a constructive dismissal does not need to be a result of one particular incident, it can be a series of actions or inactions.


It can be difficult to understand the difference between an employee simply resigning, and an employee resigning and making a claim of constructive dismissal, however, some examples to keep an eye out for include:

  • an employee resigning after being maliciously told to perform unpleasant or boring work

  • an employer failing to pay the employee’s wages on multiple occasions, or paying them late

  • a significant reduction in work hours of the employee, following a decision made by the employer with no consultation or agreement


For advice or support on constructive dismissal contact Yellow Consulting at support@yellowconsulting.co.nz

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.