"I resigned because the company left me no choice. Can I claim constructive dismissal?"

An employee has worked for a company for eight years.

Following a management dispute, the company removes her supervisory responsibilities, transfers her to a distant location and substantially reduces the allowances forming part of her remuneration.

She objects in writing.

The company replies:

“You have not been dismissed. You are still employed. If you resign, that is your own decision.”

Two weeks later, she resigns and states that the company’s conduct has made continued employment impossible.

The absence of a termination letter does not necessarily end the inquiry.

A dismissal may be alleged even where the employee was the person who formally tendered the resignation.

1. Constructive dismissal is not simply an unhappy resignation

Constructive dismissal generally arises where an employer commits a fundamental breach of the employment contract and the employee resigns in response to that breach.

The central question is not merely whether the employer acted unfairly or whether the employee felt distressed.

The issues commonly include:-

• What contractual obligation did the employer breach?

• Was the breach sufficiently serious?

• Did the employer intend not to be bound by an essential term of the employment relationship?

• Did the employee resign because of that breach?

• Did the employee wait too long and thereby affirm the contract?

The employee carries the burden of establishing the alleged constructive dismissal.

2. Not every change to employment amounts to a fundamental breach

Employers usually retain some managerial discretion.

Depending on the contract and circumstances, an employer may be entitled to:-

• restructure reporting lines;

• reallocate reasonable duties;

• introduce workplace policies;

• transfer employees within an agreed area;

• assess performance; or

• commence disciplinary proceedings.

The existence and extent of that discretion must be determined from the employment contract, handbook, collective agreement and established employment practices.

A change is more likely to become contentious when it affects an essential term such as salary, status, job function, work location or the employer’s obligation of mutual trust and confidence.

A contractual transfer clause does not automatically make every transfer lawful. The manner, purpose and practical effect of the transfer may still be relevant.

3. A series of events may need to be considered together

Sometimes no single act appears sufficient on its own.

An employee may rely on an accumulation of conduct, followed by a final event which causes the resignation.

For example:-

• responsibilities are gradually removed;

• access to necessary systems is withdrawn;

• the employee is excluded from meetings;

• salary is repeatedly paid late;

• complaints are ignored; and

• the employee is eventually demoted without explanation.

The sequence, timing and connection between these acts may be important.

However, an employee should not assume that every unpleasant incident can be combined to establish constructive dismissal. The alleged breaches must still be proved and legally significant.

4. The employee should ordinarily communicate the objection

Before resigning, the employee should consider stating clearly:-

• the decision or conduct being challenged;

• why it is inconsistent with the contract;

• the effect on the employee;

• what corrective action is requested; and

• a reasonable period for the employer to respond, where appropriate.

This gives the employer an opportunity to investigate or rectify the position.

It also creates a contemporaneous record. A resignation letter that merely says “personal reasons” may later make it more difficult to establish that the resignation was caused by the employer’s alleged breach.

There may be situations where an immediate resignation is justified, but that depends on the seriousness and circumstances of the conduct.

5. Delay may affect the employee’s claim

An employee alleging a fundamental breach must act consistently with the position that the contract can no longer continue.

If the employee remains for a substantial period without protest, accepts the changed terms or acts as though the contract remains in force, the employer may argue that the breach was affirmed.

That does not mean every employee must resign immediately.

An employee may require reasonable time to obtain clarification, invoke a grievance procedure or assess the employer’s response.

The question will be whether the employee’s conduct, viewed objectively, remained consistent with rejecting the breach.

6. The employer should not treat every complaint as an ultimatum

When an employee objects to a transfer, reduction of benefits or change in duties, the employer should examine:-

• the contractual basis for the decision;

• its genuine operational reason;

• whether the decision is temporary or permanent;

• whether the employee was consulted;

• whether comparable employees were treated consistently;

• the financial and status implications; and

• whether the issue can be corrected or clarified.

A carefully documented response may resolve a misunderstanding before it becomes litigation.

Conversely, backdating documents, creating reasons after the event or pressuring the employee to resign may seriously undermine the employer’s position.

7. A constructive dismissal representation is subject to a strict deadline

Section 20 of the Industrial Relations Act 1967 provides a statutory route for a workman who considers that he or she was dismissed without just cause or excuse to make a representation for reinstatement.

The representation must generally be filed within 60 days of the dismissal.

In a constructive dismissal case, identifying the effective date of dismissal is therefore important. It may relate to the date the resignation took effect rather than the date the dispute first arose, depending on the facts.

Missing the statutory deadline can be fatal even if the employee believes the underlying complaint is strong.

8. What happens after a representation is filed?

The matter ordinarily proceeds through the statutory industrial-relations process.

There may first be an opportunity for conciliation. If the dispute is not resolved, it may be referred to the Industrial Court in accordance with the Act.

The Industrial Court will examine the real reason for the termination and whether the dismissal was with just cause or excuse.

The proceedings are evidence-based. The employee may need to prove the contract, the breach, the objection, the employer’s response and the connection between the breach and resignation.

9. Compensation is not calculated from the employee’s preferred figure

The primary remedy contemplated by section 20 is reinstatement.

Where reinstatement is not appropriate, the Industrial Court may consider monetary relief such as back wages and compensation in lieu of reinstatement, subject to the applicable statutory principles and the circumstances of the case.

Relief is not automatic.

Factors potentially affecting an award include:-

• the employee’s length of service;

• post-dismissal earnings;

• contributory conduct;

• delay attributable to the employee;

• the nature of the employment relationship; and

• whether reinstatement remains practical.

A claim should therefore not be valued merely by multiplying the employee’s salary by the number of years remaining before retirement.

10. Contractual claims may involve a different legal route

An employment dispute may also involve:-

• unpaid salary;

• contractual bonuses;

• commission;

• notice pay;

• accrued leave;

• expenses;

• confidentiality obligations; or

• post-employment restrictions.

Not every monetary claim forms part of an unfair-dismissal representation.

The correct forum and cause of action depend on the nature of the right, the employee’s position and the relief sought.

An employee should identify each complaint separately instead of assuming that one Industrial Court case will determine every financial dispute.

11. What evidence should be preserved?

The employee and employer should retain:-

• the employment contract;

• job descriptions;

• staff handbooks and policies;

• salary slips;

• transfer or restructuring letters;

• performance appraisals;

• warning letters;

• grievance correspondence;

• WhatsApp and e-mail records;

• meeting notes;

• medical documents, where relevant; and

• the resignation letter.

Contemporaneous documents normally carry greater weight than explanations constructed after the relationship has ended.

Secretly removing confidential company data is not an appropriate method of preserving evidence. Both sides should retain relevant material lawfully and maintain its integrity.

12. Should the employee resign first and seek advice later?

That can be risky.

The wording, timing and circumstances of the resignation may determine whether the employee is treated as having resigned voluntarily, affirmed the contract or left in response to a fundamental breach.

The employer also faces risk if it implements a major unilateral change without reviewing the contract and documenting its reasons.

Constructive dismissal cases are rarely decided by one dramatic message.

They are usually decided by the contract, the chronology and what each party did when the employment relationship began to break down.