What factors constitute constructive dismissal?

 Ivan Israelstam

Constructive dismissal means the employee resigns and claims that the resignation occurred not because the employee wanted to leave but as a result of the employer's intolerable conduct. Because of the fact that the employee alleges that the resignation was involuntary and was intentionally or unintentionally coerced by the employer, the resignation becomes a constructive dismissal. It is possible that this terminology originated from the idea that such a resignation submitted under duress can be seen to have been "constructed" or "created" by the employer.

To convince an arbitrator or judge that unfair constructive dismissal has taken place the employee must show that:

• The employment circumstances were so intolerable that the employee could truly not continue to stay on.
• The unbearable circumstances were the cause of the resignation of the employee.
• There was no reasonable alternative at the time but for the employee to resign to escape the circumstances.
• The unbearable situation must have been caused by the employer.
• The employer must have been in control of the unbearable circumstances.

The labour law on constructive dismissal was borne out of case law and was later codified in the Labour Relations Act No 66 of 1995 (LRA). Section 186 (1) (e) includes in the definition of dismissal the situation where "… an employee terminated a contract of employment with or without notice because the employer made continued employment intolerable for the employee". It must be stressed that questionable acts of the employer will not always constitute unfair constructive dismissal.

This will depend on the extent to which the employer's conduct falls within the five tests for constructive dismissal outlined earlier in this article. However, employers need to be careful in interpreting the meaning of these five tests. For example, test number 3, where the employee must show that he had no reasonable alternative but to resign, must not be simplistically interpreted.

For instance, it is often the case that the employee theoretically has the option of remaining in the employment relationship and referring an unfair labour practice to the CCMA or other tribunal. Where the employee fails to do so and resigns instead, this will not always mean he has failed test number 3. Passing this test will depend a great deal on whether, under the circumstances at the time, the employee could reasonably have been expected to stay in the employer's employ for purposes of referring the unfair labour practice dispute.

Truly unendurable circumstances would make such a route unreasonable. Employees must be equally careful not to misinterpret the law. Where, for example, an employer notifies an employee of a disciplinary hearing, this could genuinely be seen as unbearable to the employee.

However, a resignation by the employee for purposes of avoiding the disciplinary hearing is unlikely to constitute unfair constructive dismissal. For example, in the case of Mvamelo vs AMG Engineering (2003,11 BALR 1294) the employee was informed he was to face a disciplinary hearing for theft and that criminal charges would also be laid.

He resigned and claimed constructive dismissal, but lost the case because it was found by the arbitrator that he had resigned to avoid the disciplinary steps of which he had been notified. However, where disciplinary steps have been taken unfairly and this renders the employment circumstances intolerable, this can constitute constructive dismissal. For example, in the case of Solidarity obo Van Der Berg vs First Office Equipment (Pty) Ltd (2009, 4 BALR 406) the employee was found to have been performing his work poorly.

As a result the employer decided to stop paying him his salary and replaced it with a commission structure. The employee resigned and went to the CCMA, where it was found that the employee had been a victim of unfair constructive dismissal. This was because the employee could not be expected to continue employment under such intolerable circumstances. Employers need to be extremely careful they do not discipline employees unfairly.

Otherwise the employer might have to pay compensation and legal costs.

• Ivan Israelstam is chief executive of Labour Law Management Consulting. He can be contacted at 011 888 7944 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it  
• Our appreciation to Ivan and The Star newspaper for permission to publish this article.