Constructive Dismissal Affect
If an employer’s actions create a working environment that is so intolerable that an employee feels compelled to resign, the company may have committed constructive dismissal. While this can be difficult to prove, a constructive termination lawsuit could lead to substantial compensation for the worker.
constructive dismissal involves an employer changing essential terms of employment without the employee’s consent, which can include any element of their contract including salary, benefits, job responsibilities, reporting functions within the organization hierarchy, working conditions or the place of work. It can also include a change to an implied term such as the employer’s duty to maintain safe workplace conditions. It is more difficult to prove a breach of an implied term, but any bad faith behaviour that destroys the employee-employer relationship of trust and confidence can be considered constructive dismissal.
In most cases, an employer cannot be accused of constructive dismissal if their actions are in accordance with the law. It is a highly fact-driven process that takes into account the specific circumstances of each individual case, including any previous verbal or written communication between an employer and their employee that may be evidence of an expectation or obligation of future conduct.
How Does Constructive Dismissal Affect Corporate Governance Practices?
For example, a manager may have made it clear to an employee that the company expected them to meet certain sales targets in exchange for a bonus. If this was communicated in writing, the employee should have the right to expect that management would provide adequate staff coverage or resources to ensure that their responsibilities are met. If the manager then tries to make up for this shortcoming by continually criticizing their performance and refusing to provide adequate support, it could be considered constructive termination.
Another common example is when an employer changes an employee’s work location without proper notice. This can be particularly damaging if the move negatively impacts an employee’s commute or work-life balance. In most cases, if a manager changes the terms of an employee’s employment contract and does not follow the law in doing so, they can be found guilty of breaching the employment contract.
While avoiding constructive dismissal is difficult, there are some strategies that can help employers minimise the risk of claims being brought against them. In addition to ensuring that employees are aware of any changes to their contracts and are informed about their rights, it is helpful to encourage open communication between managers and employees. Employees that feel listened to and supported are less likely to take issue with management decisions, which can be a significant contributing factor to a constructive dismissal claim.
Regular training sessions can also help to reduce the risk of misunderstandings or unintentional breaches of employment contracts. This training can be delivered by HR professionals or other experienced representatives of the business to ensure that all employees are up to date on the latest changes and how they affect their own working conditions. In doing so, a business can avoid the consequences of constructive dismissal and maintain a healthy, happy and productive workplace.
