Constructive dismissal arises when an employee feels forced to resign from their employment due to the conduct of their employer.
The name, therefore, is slightly misleading because no ‘dismissal’ in its normal sense occurs.
How might constructive dismissal occur?
For constructive dismissal to occur, the employer’s conduct is regarded as being so serious that it caused a breach of the fundamental principles of the employment contract and can include:
- Refusal to pay wages.
- Failing to ensure mutual trust and confidence is maintained.
- Failing to allow an employee to take the legal amount of holiday entitlement.
- Refusing access to a pension scheme.
- Changing workplace location without suitable notice and contractual provision.
There's no requirement for one single major act from the employer to create a case for constructive dismissal. Indeed, on most occasions, an employee is deemed to have been constructively dismissed when there has been a buildup of multiple small issues leading to the employee’s resignation. The last incident is effectively deemed “the straw that broke the camel’s back”.
How can an employee claim constructive dismissal?
In order to bring a claim for constructive dismissal, three main elements must be established by the employee:
- That the employer seriously breached one or more fundamental terms of the employment contract (a repudiatory breach).
- Due to that breach, the employee promptly resigned.
- The employee did not waive the breach by continuing in their employment as normal.
Generally speaking, the employee must also have at least one year’s continuous service, unless the issue leading to their resignation was due to one of the protected grounds such as exercising one’s maternity rights, trade union membership etc.
What if other employees force an employee out?
It's important to remember that employers are liable for the actions of their employees. If, for example, an employee is being bullied at work, the employer will be liable if that employee claims constructive dismissal. As such, if an employer becomes aware of an employee grievance, it's imperative that this be fully and properly investigated.
If an employer fails to do so, once becoming aware, then the employee will have a strong case based on (a) the behaviour of other employees, and (b) the employer’s failure to act.
However, not every employer will become aware of incidents of bullying. For this reason, it's recommended to regularly train employees on bullying and to periodically circulate your internal bullying policies.
What if the employee resigns and we didn’t know they had a complaint?
It's often the case that an employee will resign and claim constructive dismissal without ever first notifying their employer of an issue. This is not an automatic defence for an employer, however.
On the one hand, an employer may still be liable where they ought to have known of the employee’s complaint. If the employer then fails to act, then there is an exposure. If, however, the employer could not have reasonably known about the employee’s concerns, then the employee will have a difficult time winning a constructive dismissal case if they didn’t first try resolving their concerns internally before seeking to claim.
What’s the risk?
Constructive dismissal is viewed very seriously by the Workplace Relations Commission and is the equivalent of an employer unfairly dismissing an employee. The purpose of constructive dismissal is to prevent employers from trying to avoid unfair dismissal claims by forcing the employee to resign through some inappropriate behaviour.
Thus, the award for constructive dismissal is exactly the same as that for unfair dismissal, namely two year’s gross pay compensation.
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