When an employee claims they had no choice but to resign because of the behaviour or actions of colleagues, or unreasonable expectations of their employer, it could be a case of constructive dismissal, which is also referred to as forced resignation.
Beyond disagreements and personality clashes
Constructive dismissal is not about having a disagreement with a manager. It’s a situation that can occur when an employer makes the work environment so difficult or demanding, an employee feels they have no other option but to resign.
Some employer actions that could lead to constructive dismissal include:
- Reducing pay and work hours without employee consent.
- Not addressing workplace bullying, harassment, or discrimination claims.
- Demoting an employee and removing responsibilities without justification.
- Transferring an employee’s work location to an area with an unreasonable commute
- Not paying correct wages and entitlements.
- Being told to choose between resigning or being sacked.
- Choosing to ignore a workplace hazard that could potentially cause harm to an employee.
If an employee is subjected to regular instances of bullying, physical or sexual harassment, verbal abuse or constant ridicule by co-workers, their manager, or employer, they may feel constructively dismissed if their employer has taken no reasonable steps to address the situation.
In order to be considered constructive dismissal by Employment New Zealand, an employee must provide conclusive evidence they did not choose to leave their employment voluntarily. They will need to prove the employer’s failure to meet their employment obligations and because of the on-going unreasonable conduct at their workplace they were left with little choice but to resign.
What’s the difference between constructive dismissal and resignation?
It’s important to remember, just because an employee may not like the conduct of their employer, it does not automatically mean their constructive dismissal claim will be successful.
Constructive dismissal is when an employee’s resignation is not voluntary but forced by the employer’s actions or inactions to address certain issues or repetitive behaviour.
Resignation is when an employee freely chooses to leave their current job. This could be for personal reasons, because they have been offered a new job with a promotion and higher wage, they may be relocating, want a career change, or for numerous other reasons. Importantly, the decision to resign is made by free choice and without being pressured.
Resigning involves formally notifying the employer by providing a letter of resignation, which includes the minimum notice period outlined in their employment contract and intended final day of employment.
What is not considered constructive dismissal?
There are times when a constructive dismissal claim is rejected because it does not meet the high threshold that the employee’s resignation was the only option available to them.
Scenarios that are not considered constructive dismissal:
- The employee receives a performance review that is critical but fair and follows workplace policies.
- Not being offered a promotion the employee desired or expected.
- Not receiving all or part of a discretionary bonus.
- A request to work from a different location on occasion.
- Being asked to complete tasks the employee doesn’t consider challenging or important.
One way to assess if a situation could be considered constructive dismissal is to ask if a reasonable person facing the same circumstances or requests would consider resignation as their only course of action. Simply being dissatisfied in their role or not agreeing with an employer’s decision is not enough to lodge a constructive dismissal claim.
Responding to a constructive dismissal claim
These are some steps employers can take to help minimise the possibility of a constructive dismissal claim:
- Immediately address and take any claim of bullying, harassment, or poor conduct seriously and investigate fully and fairly.
- Ensure compliance with entitlements such as providing a safe working environment and paying wages on time.
- If making changes to an employee’s role, conditions, or wages, follow enterprise agreement processes or company policies outlined in their employment contract. Ensuring the employee agrees without coercion.
- Take all reasonable steps to resolve disputes quickly, fairly and maintain open communication with employees.
If a constructive dismissal claim is made against an employer, it is up to the employee to prove the ongoing poor conduct or breach of contract is what led to the employee resigning. For free initial advice dealing with a constructive dismissal claim, call and speak to one of the specialist Peninsula team members.
This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.