Constructive Dismissal

Constructive Dismissal 

Questions are often asked around constructive dismissal - what is it? Employees relate a certain situation and ask the question “can I claim constructive dismissal”? - and employers ask the
question “the employee has resigned and is claiming a constructive dismissal – what do we do?”


Firstly, let us understand what it is - and it could be many things. The basics are that constructive dismissal may be defined as “a situation in the workplace, which has been created by the employer, and which renders the continuation of the employment relationship intolerable for the employee - to such an extent that the employee as no other option available but to resign.”


In Pretoria Society for the Care of the Retarded v Loots [1997] 6 BLLR 721 (LAC), the Court referred to Jooste v Transnet Ltd t/a SA Airways (1995) 16 ILJ 629 (LAC), stating that the first test was whether, when resigning, there was no other motive for the resignation - in other words, the employee would have continued the employment relationship indefinitely had it not been for the employer’s unacceptable conduct.


It went further to state that when any employee resigns and claims constructive dismissal, he is in fact stating that under the intolerable situation created by the employer, he can no longer continue to work, and has construed that the employer's behaviour amounts to a repudiation of the employment contract. In view of the employer's repudiation, the employee terminates the contract.


In addition, in bringing such a dispute, it is for the employee to prove that the employer was responsible for introducing the intolerable condition, and for the employee to prove that there was no other way of resolving the issue except for resignation. It is not for the employer (respondent) to show that he did not introduce any intolerable condition - it is for the employee to show that he did.


There have been many referrals of constructive dismissal to the CCMA which have not succeeded - because the applicant has failed to prove the introduction of any intolerable working condition, amounting to repudiation by the employer of the employment contract. Referrals based on salary increases not been granted, bonuses refused, unfavourable work performance assessment, overlooked for promotion, and so on - such referrals are bound not to succeed, because the applicant is unable to prove that the employer's action amounted to a repudiation of the employment contract, or introduced a condition that was irremediable.


There are some oddballs - for example, a dismissal based on the employer having followed an unfair disciplinary procedure, resulting in the resignation of the employee, could be a constructive dismissal. The resignation of an employee in the face of a disciplinary hearing - and resigning in order to avoid the disciplinary hearing - would not necessarily constitute constructive dismissal. It may well do so if the employee was threatened – “resign, or face a disciplinary hearing where you will be dismissed anyway.” that sort of thing might justify a dispute of constructive dismissal.


But the voluntary resignation of an employee, merely to avoid appearing at the disciplinary hearing, will not necessarily constitute constructive dismissal – furthermore, it will also not stay the proceedings. The employer is still entitled to proceed with the disciplinary hearing in the absence of the employee. There is no doubt that some employers, for various reasons, suddenly decided that a particular employee “has to go.”


In the absence of any justifiable reasons for dismissal, the employer proceeds to “construct” circumstances that will bring about a dismissal. In Pretoria Society for the Care of the Retarded v Loots [1997] 6 BLLR 721 (LAC), it was found that “the appellant (employer) had rendered the working environment intolerable for the respondent by, inter alia, “throwing the book at her”, finding her guilty of matters for which she could not be held responsible, humiliating her by publishing the news of her final written warning to the parents of inmates, and depriving her of keys.” The appeal (against the finding that the constructive dismissal was proved) was accordingly dismissed.


It is common practice for employers to “throw the book” at employees who, for various obscure reasons, are suddenly “no longer suitable.” Very often, the true reason is that cheaper labour can be found. Employers would do well to take note that while constructive dismissal may be difficult to prove, it is not impossible. Tactics like victimisation, continual harassment and so on, in the hopes of eventually getting the employee to resign, won't work.


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Constructive Dismissal (Additional information)


Section 186 (1) (e) of the Labour relations act states that in circumstances where "an employee terminated a contract of employment with or without notice because the employer made continued employment intolerable for the employee", constitutes a dismissal - in this context, a constructive dismissal.


I have been receiving an increasing number of e-mails lately from employees complaining about harsh or unjust or harassing treatment of employees by the employer. Where an employee resigns his employment because he alleges that the employer has made continued employment intolerable, the onus is on the employee to establish the fact of dismissal.


In Jooste v Transnet Ltd t/a South African Airways, it was held that, for such a dispute to succeed, one of the requirements would be that the employee must prove that he or she had not intended to terminate the employment relationship, but was faced with no option but to do so because of the employer's unacceptable and intolerable behaviour.


In Pretoria Society for the Care of the Retarded v Loots, the Labour Appeal Court stated that "the enquiry is whether the employer, without reasonable and proper cause, conducted itself in a manner calculated or likely to destroy it, or seriously damage the relationship of confidence and trust between employer and employee.  It is not necessary to show that the employer intended any repudiation of the contract: the Courts function is to look at the employer's conduct as a whole, and determine whether its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it."


In  Watt v Honeydew Dairies (Pty) Ltd the commission emphasised the difficulties faced by any employee who contemplates bringing a claim of constructive dismissal:

"It is submitted that an employee bears a considerable risk in the case of constructive dismissal.  In the first place, one of the requirements of a constructive dismissal is that the employee must resign.  This in turn means that if such employee is unable to show the requisite conditions that render continued employment intolerable, then that the resignation remains valid. (as a resignation and not as a constructive dismissal)."


It went on to state "the test is objective and therefore the subjective perceptions of the employee are not relevant in this regard." In Coetzer v The Citizen Newspaper, and Kruger v CCMA & Another, it was reiterated that constructive dismissal is to be determined objectively and that resignation must be the last resort.


In Beets v University of Port Elizabeth , it was found that the constructive dismissal takes place only if the employee resigned because of the employer's harsh, antagonistic and hostile conduct, and in another instance it was held that the resignation must be ascribed because the prospect of continued employment was intolerable.


Resignation need not be the employee’s only option, but should be the only reasonable option for a claim of constructive dismissal to succeed. In the event of material breach of contract by the employer, the employee may have the option of whether to terminate the contract, or hold the employer to its contractual obligations. It has been found that acceptance by any employee of the employer's repudiation of material terms of the contract amounted to constructive dismissal.


This repudiation of material terms would include suspension of an employee without pay after the employer experience financial difficulties, or the employer's unilateral reduction of the employee's remuneration would also be sufficient to establish constructive dismissal. Unfair disciplinary action taken by the employer also could constitute a breach of contract and may amount to a constructive dismissal.  However resignation to avoid a disciplinary enquiry does not amount to a constructive dismissal.


In Van Der Riet v Leisurenet Ltd t/a Health & Racquet Club, the employee resigned after being effectively demoted as a result of a restructuring exercise. The employer's failure to consult with the employee on the possibility of the demotion was considered unfair, and provided a sufficient basis for a claim of constructive dismissal. A demotion in another case also justify the claim of constructive dismissal.


In other matters such as sexual harassment, resulting the employee's resignation, may also constitute a constructive dismissal. From the above, it will be seen that this area of constructive dismissal is very complicated, and there are no hard and fast rules. Each case must be judged on its merits, and whilst there is an onus of risk placed on the employee in having to prove the dismissal, employers must also be aware of their behaviour and the way in which they handle employees.


For example, I have heard of cases where an employer makes a unilateral change to a remuneration structure, such as changing it from a monthly salary, to a basic and commission basis, simply because the employee is failing to reach target, could constitute a constructive dismissal. Employers who unilaterally impose the working of short time on the employees must also take note that this unilateral action would amount to breach of contract, and possibly constructive dismissal as well.


Employers would do well to take professional legal advice before acting on any matter that may have an affect on the employment contract in order to avoid being faced with disputes of constructive dismissal.


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