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.

As an employee you have an obligation to raise concerns and give your employer an opportunity to address those concerns before you can claim that you have been constructively dismissed.

What is constructive dismissal?

Constructive dismissal may be considered to have happened when the actions, or inaction, of an employer makes the situation at work so intolerable that an employee feels they have no choice but to resign.

There are three broad categories of constructive dismissal:

  • the employer gives an employee a choice between resigning or being dismissed
  • 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.

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.

Hours of work

Employment agreements

Types of worker

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.

Performance issues

Disciplinary process

Some examples of situations where the Employment Relations Authority or Employment Court have found that a constructive dismissal did not take place include:

  • 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 links you might find useful:

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 personal grievance. There are time limits that apply.

Personal grievance

You can use our Mediation services - Mediation

Other links you might find useful:

Employment Relations Authority(external link)

Business.govt.nz(external link)

Citizens Advice Bureau(external link)

Community Law(external link)

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