Constructive dismissal occurs when an employee resigns due to intolerable working conditions, or due to an employer’s actions effectively forcing them to leave.
Understanding how to navigate a constructive dismissal claim is crucial for ensuring that you get justice and compensation. In this article, we’ll explore the ins and outs of constructive dismissals, and your recommended next steps.
What is Constructive Dismissal?
Constructive dismissal occurs when an employee resigns, and can demonstrate that:
1. They were forced to resign due to their employer breaching their employment agreement.
2. The employer deliberately acted in a way that made employment incapable of continuing.
3. The employer gave the employee an ultimatum, leaving them with no reasonable choice but to resign.
Common Scenarios Leading to Constructive Dismissal
Employees may have grounds for a claim if they resign due to:
Unilateral Changes to Employment Terms: If an employer significantly changes an employee’s role, pay, or work conditions without agreement, it may be a breach of contract.
Bullying or Harassment: Persistent mistreatment that is not addressed by the employer could lead to a toxic work environment, justifying a claim.
Unreasonable Workload or Expectations: If an employer knowingly creates impossible conditions that cause undue stress and pressure, it may amount to constructive dismissal.
Failure to Address Complaints: When serious workplace issues, such as safety concerns or discrimination, go unresolved, employees may feel compelled to resign.
Ultimatums or Coercion: Employers suggesting or implying resignation as the only option in disciplinary situations can be seen as forcing an employee out.
Example Scenario
Situation
Sarah has been working as a customer service representative for a company in Auckland for 3 years.
Over the past 6 months, her manager, Tom, has started micromanaging her work, requiring her to check in with him multiple times a day even though she is fully capable of working independently.
Despite Sarah’s complaints about micromanagement and the lack of trust, Tom continues with this behavior. Additionally, Sarah’s work hours have been changed without any prior consultation, and her duties have been altered without explanation or her consent, making her job feel increasingly difficult and unmanageable.
After attempting to resolve the issue through raising a formal grievance with HR, the company does nothing to address her concerns.
Outcome
Eventually, Sarah resigns from her position, believing that she has no other choice due to the way she is being treated.
In this case, Sarah may claim constructive dismissal, arguing that her resignation was forced because her employer’s actions made it impossible for her to continue working in the same environment.
To prove constructive dismissal, an employee needs to show that the employer’s actions were so severe that resignation was the only reasonable option.
Steps to Take Before Resigning
Resigning immediately can weaken a constructive dismissal claim. Employees should take the following steps first:
1. Document Everything: Keep records of communications, complaints, and any incidents that contribute to the claim.
2. Raise the Issue Internally: Lodge a formal complaint with HR or management and allow the employer to respond.
3. Seek Mediation or Advice: Engaging a mediator through Employment New Zealand and/or consulting an employment relations specialist can provide clarity on the situation.
Making a Constructive Dismissal Claim
If an employee believes they have been constructively dismissed, they can file a personal grievance with the employer within 90 days of the resignation (12 months for sexual harassment).
If unresolved, they may take the case to the Employment Relations Authority (ERA) for a formal hearing. The ERA will assess whether:
The employer’s conduct was so unreasonable that resignation was the only option.
The employee exhausted other options before resigning.
The claim is supported by sufficient evidence.
Successful claims may result in compensation for lost wages, emotional distress, or reinstatement, though the latter is rare.
Conclusion
Constructive dismissal claims require careful consideration of employer conduct, workplace conditions, and procedural fairness. As an employee, you should gather strong evidence and seek advice before resigning, it’ll help you in the long run!
Mahi Law can Help!
Our expert team will help you understand your employment rights, and pursue resolution (including compensation) through various channels, such as: Without prejudice negotiations, mediation, the Employment Relations Authority, or Employment Court if required.
We also work on a no-win, no-fee basis – if we win your case, your employer covers the costs.
Get in touch for a free consultation! You can fill out this form – or contact us at [email protected], or 027 425 2231.
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