Constructive dismissal occurs when an employer does something that drastically alters any of the main or fundamental terms of the employment contract. This amounts to breach of contract.
There is a breach when the employer does something that show that a particular term is no longer binding although the employee has never agreed to it.
The employer's action must have brought about a situation that caused or forced the employee to resign.
As an Employer
As an employer, you may incur liability for constructive dismissal if you have done any of the following:
In unfair dismissal cases, employees need to understand that the employer needs to show that the termination was reasonable.
Under dismissal that is constructive, the employee must -
The resignation is an indication of the employee's refusal to accept the breach by the employer.
If you are an aggrieved employee, you can make claim for basic damages such as:
However, it is not easy to prove constructive dismissal. You need to ensure that the case against your employer is strong before you resign. If you do, you may end up losing your job and not being able to claim any damages against your former employer.
Settlement Out of Court
It is much better for employers to abide by the terms and conditions of the employment contract.
This is good for the organization's image. Employers, by virtue of their being the stronger party, should not take advantage of their employees. They cannot do as they like. They need to abide by the terms of the employment contract.
On the other hand, employees must also abide by the employment contract and not give their employer any reason to initiate action to terminate the employment relationship.
Either party needs to take pro-active action to learn and understand the laws on what constitutes breaches of contract by either party to the employment contract. This can prevent the case from being brought before the law courts or tribunals.
Settlement out of court may favor the employer more than the employee. In clear-cut cases, the preferred choice by employees is to go for a full-trial. But this is not the case in most cases.
Only ethical employers will try to avoid anything that gives them a bad image, including indulging in practices that can lead to claims for constructive dismissal.
Whether as an employer or an employee, you need to understand what amounts to breach of contract. This will help you avoid many problematic issues that may affect the continued viability of the organization.