What every employer needs to know about constructive dismissal

Sometimes, a resignation is not just a simple resignation. Generally speaking, an employee will leave their employment for one of a few standard reasons. Either by their own choice, being dismissed for misconduct or performance, or being terminated as a result of redundancy. But if an employee feels they are forced to resign, this is called constructive dismissal, and it can put your business at risk. In this article, we’ll cover why constructive dismissal happens, the three ways it can occur and how employers can avoid it altogether.

Why would an employee feel forced to resign?

On the surface, resignation might seem like an open-and-shut case of the employee choosing to leave, but behind the scenes, there could be an unfair labour practice or a difficult environment that made the employee feel like they could not solve their issues internally, and therefore had no option but to resign.  If this happens, it’s potentially an unfair dismissal and may result in a personal grievance. That’s why it’s called a ‘constructive dismissal’ because it can be interpreted that the employer ‘constructed’ (or forced) the resignation.

The whole idea of establishing fair processes is to prevent unfair dismissals, but this is one exception where an unfair dismissal can possibly occur without the employer even knowing why it happened. The employee alleging constructive dismissal is effectively saying that they’ve felt they had no choice but to resign. Therefore, it’s unfairness that’s subjective, in the mind of the employee.

There are three ways a constructive dismissal can occur:

1. An employer can openly force an employee to resign by saying or implying ‘you should resign or you’ll be dismissed’ or ‘maybe you should resign’. This can happen for example in a disciplinary hearing, where an employer is pushing hard for a particular outcome, or even by trying to be nice to an employee so that they don’t have a dismissal on their record! It can also include an indirect threat such as ‘you wouldn’t want a dismissal on your CV’ or ‘there’s no future for you here’.

2. An employer deliberately behaves in a way that’ll pressure the employee to resign. This can be through excessive workloads, unreasonable shifts, repeatedly refusing reasonable requests, allocating meaningless (or overly complicated) work, excessive micromanaging, overlooking an employee for an obvious promotion, giving the ‘cold shoulder’, cutting off communication, exclusion from meetings etc.

3. An employer can act in such a way as to destroy the working relationship. For example, by breaking promises, breaching the employment contract, or treating the employee unfairly so that they feel they can’t continue working there.

What doesn’t count as constructive dismissal?

Not everything that upsets an employee is sufficient grounds for resigning and putting in a personal grievance. The following would be unlikely to be grounds for a claim of constructive dismissal:

• If an employee chooses to resign after an employer starts reasonable disciplinary proceedings or a performance management process.
• An employee resigns after the employer requests that they do reasonable tasks, even if it’s not what they normally do, given that the employee knows how to do the task and it’s safe for them to do so.
• An employee who makes no reasonable effort to solve a minor issue but resigns instead.

How can employers avoid this type of resignation?

It’s important to remember that the actions and behaviours of any employee can create this environment – not just a manager. If another employee is making things difficult for an employee, including bullying, discrimination or harassment etc, and the employer does not act to solve this, the employer is at risk of a constructive dismissal and potentially an unfair dismissal claim. But the employer has to know that the situation exists, or at least had information that would create an expectation that they act to address the situation.

The employer should be aware of any situations and types of behaviours in the workplace that can cause employees to feel this way, and actively manage those environments to prevent employees reaching a level of frustration where they might solve their problems by resigning. Process and record-keeping is very relevant to any situation of constructive dismissal as it will help establish the reasonableness of the employer’s conduct.

However, if an employee’s reaction to their employer’s conduct or situation is unreasonable and leads to their resignation, it likely won’t qualify as constructive dismissal.

It can be a single event or an accumulation of a lot of small actions that lead to an employee being forced to resign

Whether those events are carried out by another employee or management, it’s the employer’s responsibility to ensure that constructive dismissal doesn’t occur by following proper procedures. Accurate record keeping and proper processes will allow you to protect yourself if a claim comes up.

A thorough HR compliance audit can help identify potential risks and ensure your business is following best-practice procedures to prevent constructive dismissal claims.

Citation HR Software will help with record-keeping and processes

It’s incredibly important that your organisation’s records are complete, accurate and accessible. At Citation HR, we offer a tailored HR software that can manage and store employee records, complete with hundreds of legally sound, best-practice templates, documents, policies, and workflows that will give you peace of mind that your employment records are up to date.