When your employees resign, beware. There may be reasons behind their resignation that you are not aware of and a claim for ‘constructive dismissal’ may be on the horizon.

It can be a grey area but constructive dismissal can generally be considered to have occurred when a worker feels that employment conditions are such that continuing employment is untenable.

Constructive dismissal is among a number of legal protections workers have against wrongful or unfair dismissal by unscrupulous employers and for justifiable reasons however, ethical employers can also unwittingly leave themselves open to such claims when they don’t handle resignations properly.

A common scenario is when an employee has made complaints of workplace bullying and considers that the employer has not addressed those complaints adequately, leaving the employee to feel they have no choice but to leave.

This scenario can play out when, due to employee confidentiality, the complainant is not privy to investigative activities and disciplinary action that may have been taken by the employer against the Subject of the complaint and is under the mistaken impression that no action has been taken to remedy their concerns.

Other examples of circumstances which could be constructive dismissal:

  • An employer changes shifts or relocates an employee so that attending work becomes unviable.
  • A reduction in hours so that the employment becomes unviable.
  • A change in duties or job description so as to make employment unviable.
  • Acceptance of a ‘heat of the moment’ resignation.
  • A forced resignation whereby an employer gives an ultimatum – resign or be dismissed.

It is important for employers to sit up and take notice when an employee announces their intention to resign.

Below are some general guidelines around combating potential constructive dismissal claims:

  1. Conduct an exit interview with the employee whereby you ask the employee to detail the reasons behind their resignation. Ask whether there is anything that can be done to change their mind? There is no harm in asking whether the employee is leaving because of unsafe or untenable working conditions or workplace bullying. And, of course, if they tell you there are problems, you should be addressing them to the best of your ability.
  1. Prepare a mutual separation agreement to be signed by the employee prior to their departure. The agreement should state that the employee is leaving of their own accord and that they have been given the opportunity to openly and honestly discuss their reasons for leaving and have not raised any objections in relation to their employment as a reason for leaving.

Managing Change

What happens when you have to make significant changes to an employee’s working conditions for operational reasons? Below are some tips for avoiding constructive dismissal claims under such circumstances:

  1. Effective Change Management is important for preventing constructive dismissal claims. When an employee is subjected to major changes in their working conditions such as a transfer or redeployment, the employee should be given adequate time to understand and consider the changes before they come into effect. If the employee objects to the change, the options include:

a.attempting to negotiate modifications to the employment change to try and resolve employee objections.

  1. if applicable, concede the role is made redundant by the change; confirm the employee’s wish not to be redeployed and retrench the employee.
  1. maintain the position that the employer has the right to make the change unilaterally and be willing to dismiss the employee for disobedience (and defend any ensuing wrongful dismissal claim if necessary); or
  1. reach a confidential mutual separation agreement with the employee (which of course is an option that can follow (a)-(c) above).

Of course, it is always recommended that you seek legal advice before taking any of the above actions.