Constructive dismissal

A constructive dismissal takes place where an employee resigns in circumstances where the employer’s behaviour amounts to a breach of contract so serious that it leaves them with no alternative but to resign. The breach can be of an express or implied contract term (see Chapter 3: Contract changes). The implied term most frequently relied on to justify a claim for constructive dismissal is the duty of mutual trust and confidence implied into every employment contract. The resignation must be in response to the breach.

To claim constructive dismissal, three elements must be present:

• the employer must have fundamentally breached the contract;

• the employee must have resigned in response to the breach; and

• the employee must not have waived the breach of contract (also known as “affirming” the contract). Affirmation takes place where the employee’s behaviour after the breach of contract suggests willingness for the contract to continue despite the employer’s actions.