A constructive dismissal may occur when an employee has resigned, but the resignation has been forced or initiated by some unjustifiable action of the employer. This will typically occur under the following circumstances (we refer to Auckland Shop Employees Union v Woolworths (NZ) Ltd [1985] 2 NZLR 372):

  1. Where an employer gives an employee the choice of either resigning or being dismissed; or
  2. Where the employer has followed a course of conduct with the deliberate and dominant purpose of coercing an employee to resign; or
  3. Where the employer is in breach of a term or condition of employment to such an extent that the employee is justified in treating the employer’s conduct as terminating the employment.

While an alleged breach may relate to a quite specific term, it is also common for an employee to claim a breach of the employer’s obligation of “fair and reasonable treatment”.

In cases where the employee is given little to no choice but to “resign” as the only alternative to dismissal, the situation is straightforward.  In other cases, however, the employee’s options are more complicated and pose particular problems for an employee.

The onus is on the employee to establish that the employer’s conduct was such that it effectively terminated the employment relationship – and the threshold for this is set high. In order to establish a constructive dismissal, the Authority or the Court would consider whether a substantial risk of resignation was reasonably foreseeable, having regard to the seriousness of the breach.

Successful constructive dismissal claims therefore usually require something quite severe – like not investigating a bullying or harassment complaint, not paying wages, or a serious breach of health and safety obligations for example.

With constructive dismissals being such a complicated personal grievance claim, it is important to seek professional advice early in the process.  We assist employees and employers to effectively manage their employment relationships and avoid getting to this point, however, if you’re an employee wishing to raise a personal grievance, or are an employer having received a constructive dismissal claim, then we can help you resolve it.

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Please do not substitute this article for professional advice.