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 no alternative but to resign.

Employees can give their full contractual notice before resigning and still claim constructive unfair dismissal, as long as they are resigning in response to a fundamental breach of contract by the employer (section 95(1)(c) ERA 96).

A constructive dismissal has three key elements:

• the employer must have fundamentally breached the employment contract;

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

• the employee must not have waived the breach (also known as “affirming” the contract) by continuing to behave as if they are willing to treat the contract as ongoing after the contract breach (see page 279).