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Constructive dismissal
If an employee feels they have no choice but to resign, it could be considered ‘constructive dismissal’ and grounds for raising a personal grievance claim against the employer.
Employees have an obligation to raise concerns and give their employer an opportunity to address those concerns before claiming to have been constructively dismissed.
What is constructive dismissal?
Constructive dismissal may be considered to have happened when the actions, or inaction, of an An individual or organisation that hires 1 or more employees and contracts them to work in exchange for wages or salary under a ‘contract of service’ (commonly called an ‘employment agreement’). Any person, whatever their age, who is employed by an employer to do any work for hire or reward under a ‘contract of service’ (commonly called an ‘employment agreement’). When an employee tells their employer they will be leaving their job.
There are three broad categories of When an employee feels they have no choice but to resign.
- the employer gives an employee a choice between resigning or being
dismissed When an employer removes an employee from their job, for example, as a result of misconduct or redundancy.
- the employer deliberately pressures (directly or indirectly) the employee to resign
- the employer has acted so badly (by breaching the
employment agreement or treating the employee highly unfairly) that the employee feels they cannot remain in the job.A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement.
It’s not necessary for the employer to have intended the employee to resign – the question is whether:
- the employer’s actions, or inaction, caused the employee to resign, and
- the employer’s action or inaction was sufficiently serious to make the resignation reasonably foreseeable.
Constructive dismissal does not have to be the result of a single event. It could be a series of actions, or repeated inaction, by the employer.
Examples of constructive dismissal:
A constructive dismissal could be the result of:
- an employee being bullied to the point of resignation, where the employer is responsible
- an employee being maliciously assigned unpleasant or unproductive work
- an employee working excessive hours under a lot of stress
- an employer repeatedly failing to pay an employee’s wages
- an employee being moved from a permanent contract to a casual one
- an employer drastically reducing an employee’s hours without getting the employee’s agreement first.
What’s not constructive dismissal
Not all upsets or disagreements meet the criteria for constructive dismissal. For example:
- a person who’s unhappy about being given a lawful and reasonable request to do a task they do not usually do, cannot use this as a reason to resign and claim constructive dismissal
- a resignation to avoid an upcoming performance management process or disciplinary meeting is unlikely to be grounds for a constructive dismissal claim, unless the employer is undertaking such a process without good reason.
Some examples of situations where the The tribunal established under the Employment Relations Act to resolve employment relationship problems.
- the employer reasonably believed the employee was not in a fit emotional state to do their job and the employee agreed to resign, but later changed their mind
- the employer gave the employee reasonable instruction within the scope of their employment – for example, teaching subjects the employee was not familiar with
- an employee was suffering from work-related stress but did not tell their employer and the employer did not have a chance to try to manage the stress
- an employer with whom the employee had negative history spoke to the employee, resulting in them resigning and leaving despite the employer’s attempts to get them to stay.
You can use our Mediation services - Mediation
Other useful links:
Employment Relations Authority(external link)
Employment Court - Employment Court of New Zealand(external link)
What employees can do
If an employee believes they’ve been constructively dismissed, they can raise a An action that an employee can take against a current or former employer when they have an employment issue they cannot resolve.
You can use our Mediation services - Mediation
Other links you might find useful:
Employment Relations Authority(external link)
Business.govt.nz(external link)