6. Constructive dismissal

A constructive dismissal, on the face of it, does not seem to be a dismissal at all. It describes what happens where the employee resigns in response to treatment by the employer, or by someone acting on the employer’s behalf. That treatment must be serious enough to amount to a fundamental (i.e. very serious) breach of the employment contract.

Under section 95(1)(c) ERA 96, there will be a constructive dismissal where the employee terminates the employment contract (with or without notice) in circumstances in which the employee is entitled to terminate it without notice by reason of the employer’s conduct.

In other words, employees can give their full contractual notice before resigning and still claim for constructive unfair dismissal as long as they are resigning in response to a fundamental breach of contract by the employer.

To have a constructive dismissal, three elements must be present:

• 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 contract breach (see page 67).