Information sheet

When does a resignation amount to a constructive dismissal?

 

What is a constructive dismissal?

 

In terms of section 186(1) (e) of the Labour Relations Act 66 of 1995 (LRA), one form of dismissal is when the employee terminates the employment contract (with or without notice) because the employer made continued employment intolerable.

 

This is generally referred to as constructive dismissal or where the employee is forced to resign. At first glance, this does not look like a dismissal at all as it is the employee who resigns. However, it is because the employer makes the working environment so unpleasant and intolerable that the resignation is regarded as a dismissal.

 

What must the employee prove to claim that there has been a constructive dismissal?

 

According to the labour court there are three requirements that an employee must prove in order to claim constructive dismissal, namely:

(1) the employee ended the contract of employment;

(2) the continued employment had become intolerable for the employee; and

(3) the employer must have made continued employment intolerable.

According to the constitutional court, the test for constructive dismissal does not require that the employee has no choice but to resign, but only that the employer should have made continued employment intolerable.

 

The employee must prove that there was a dismissal

 

In terms of section 192 of the LRA, an employee has the duty of proving that there was a dismissal. This applies to equally to constructive dismissals. It means that the employee must prove (by presenting evidence) that s/he resigned because the employer made the employment relationship intolerable.

Objective approach

 

When considering whether there was a constructive dismissal, an objective approach is used. The focus is not on the employee’s (subjective) feelings and perceptions. The employee must introduce evidence to show that he or she reasonably believed that the employer’s actions made further employment impossible.

 

The fact that the employment relationship has become ‘inconvenient’ is not enough. While a single incident may lead the employee to believe that the employment relationship is at an end, it is more often the case that there is a pattern of conduct on the part of the employer.

Taking disciplinary action or incapacity steps against an employee are also not a grounds for constructive dismissal.

 

Resignation must be the last resort

 

An employee should give the employer sufficient time to address the situation or problem.

 

Resignation must be the last reasonable resort available to the employee.  All internal procedures to air the grievances should be followed, and the employee should make every attempt to alert the employer to the problems and not just walk out.  However, in specific circumstances this may not be possible and this would be taken into account in dealing with the matter. For example, an employee who has been seriously assaulted by the employer cannot be expected to remain at work pending a grievance procedure.

 

The resignation must not be voluntary

 

The employee’s resignation must not be voluntary. This means that the employee must not have intended to terminate the employment relationship of his/her free will. An employee who resigns and then later tries to retract the resignation cannot claim to have been constructively dismissed.

 

Examples of constructive dismissal

 

There are many instances where a resignation may constitute a constructive dismissal.  Past cases offer some useful guidance:

  • If an employee has been sexually harassed by a co-employee, has reported this to management and yet nothing has been done about the matter, a resignation by the employee may constitute a constructive dismissal. The employer is expected to take action to protect the victim of the harassment.
  • Where there was suspension of employees without pay after the employer experienced financial difficulties.
  • Where employees were encouraged to resign or face unfair summary dismissal.
  • Where management promoted an under-qualified employee and failed to promote an employee without furnishing adequate reasons and knowing that this would be offensive to the employee.
  • Where an employee of a temporary employment service was employed on terms that were exploitative and did not comply with the Basic Conditions of Employment Act 75 of 1997.

 

In the following cases the employee did not succeed in proving that there was a constructive dismissal:

  • An employee resigned because the employer refused to provide the employee with salary-related information in terms of its existing policy. This was not conduct that (objectively) rendered the employment relationship intolerable.
  • The employee failed to use the grievance procedure in circumstances in which there was no basis to conclude that the employer would not in good faith seek to resolve the grievance. The resignation was considered to be premature.
  • An employee resigned, claiming unfair targeting for poor performance. The arbitrator found that, if an employer advises an employee of its required performance standards and gives the employee fair opportunity to meet them, the employee cannot terminate a performance review process by resigning and claiming constructive dismissal.

 

Constructive dismissal and section 197 transfers

 

Section 186(1) (f) of the LRA provides that a dismissal occurs where –

“(f)      an employee terminated employment with or without notice because a new employer, after a transfer in terms of section 197 or 197A, provided the employee with conditions or circumstances at work that are substantially less favourable to the employee than those provided by the old employer.”

If an employee resigns after the transfer of the business, in order to claim constructive dismissal s/he must demonstrate that the terms and conditions or circumstances of work are substantially less favourable than with the previous employer. The new employer is entitled to place transferred employees on new pension and medical schemes, provided the benefits overall are not substantially less favourable. That will be determined by the facts of the case.

Constructive dismissal

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