More on Constructive dismissal

Constructive dismissal occurs where an employee resigns because of his employer’s behaviour. The employee must prove that the behaviour was unfair — that the employer’s actions amounted to a fundamental breach of contract or the law.

The employee may resign over a single serious incident or over a pattern of incidents. Generally, the employee must have resigned soon after the incident.

The notion of constructive dismissal comes from the concept that (as it is phrased in United Kingdom law) “An employer must not, without reasonable or proper cause, conduct himself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between the employer and the employee.” (Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84, EAT.)

Proof of constructive dismissal contemplates a two stage factual enquiry into the question of constructive dismissal:

1.      Did the employee, in resigning, intend to terminate the contract? If established, the enquiry is at an end and there is no dismissal. The onus is on the employee to establish that there was no intention to voluntarily resign.

2.      In order to succeed, the employee must prove that s/he resigned in consequence of the employer’s conduct and that he or she would have carried on working indefinitely but for the conduct complained of.

Examples of actions potentially justifying resignation

• Putting managers into excessively difficult work situations without supporting their decisions.
• Harassment or humiliation, particularly in front of less senior staff.
• Victimisation of the staff member.
• Unilaterally changing the employee’s job content or terms of employment.
• Significantly changing the employee’s job location at short notice.
• Falsely accusing an employee of misconduct or of not being capable of carrying out their job.
• Undue demotion or disciplinary procedures.
• Sabotage of employee’s work product either directly or indirectly with repeated interruption, confusing or inaccurate direction, or uncommunicated deadline changes.
• Vandalizing the employee’s workspace, home or other personal property. Such tactics could range from minor destruction of immaterial items to more severe acts of vandalism.

Constructive Dismissal and case law 

Ø       Ø       To amount to a constructive dismissal, the employee’s resignation must be a response to a breach of employment contract on the part of the employer. This breach of contract can be associated with reducing benefits, the removal of facilities that go with the position, reduced job functions, transfer which is seen as a demotion or punishment, where an employer gives an employee the option of resigning or being dismissed, withholding pay, redefined position descriptions, abusive treatment, short-term lay-off, forced leave absence, etc. Employers, who perpetrate such actions, whether knowingly or unknowingly, run the risk of a constructive dismissal case being referred against them. The law then treats such cases as a form of statutory dismissal against the employer. The employer should, therefore, guard against any action that attacks the root of the contract of employment to avoid such cases. For example, in the case of Van Wyk v Albany Bakeries Ltd & others [2003] 12 BLLR 1274 (LC), the applicant resigned after the respondent employer abolished his former post of regional manager and appointed him branch manager without loss of salary or benefits. He claimed that he had been constructively dismissed, and referred a dispute to the CCMA. Though the commissioner erroneously held that the applicant had failed to prove constructive dismissal, the Labour Court held that the commissioner had accordingly misdirected himself by finding that the applicant had not been constructively dismissed. Therefore, the award was set aside and the applicant was awarded compensation equivalent to six months’ remuneration.

Ø       Ø       In Loubser v PM Freight Forwarding (1998) 7 CCMA 6.13.13 commissioner Loveday warned that “It is important to be cautious in adopting a wide interpretation of what conduct by an employer would constitute constructive dismissal because of the danger of inviting a flood of employees who resign and then repent and want to claim the protection of the Act … On the one hand, it would be a corruption of the Act to adopt a very restrictive interpretation. The definition in section 186 (e) was clearly designed to protect employees who resign in desperation as a last resort because of the unlawful or unfair conduct of the employer that makes a continued employment relationship intolerable. Employers do have the responsibility to avoid acting in a manner that would likely to destroy or undermine the employment relationship…(2003:23). This means that care should be taken of the conduct of the employee and the interaction between both parties in determining the existence of a constructive dismissal. Bell Gully (2003:1) states that it may happen that actions of the employer may not amount to a breach of an express term of the employment agreement sufficient to amount to a repudiation of the agreement. Therefore, the LRA requires that the breach must be so serious that the employee cannot reasonably be expected to continue the contractual arrangement

Ø       Ø       The employee must prove that the employer had repudiated the contract, meaning that the employer has indicated an intention to no longer to be bound by its terms. Though each case has to be decided on its own merits, the conduct of the employer in the employment relationship has to be determined as a source of the employee’s resignation. This is important in that not every breach of contract is serious enough to be a repudiatory breach. For example, in Milady’s, a division of Mr Price Group Ltd v Naidoo & others [2002] 9 BLLR 808 (LAC), an employee’s over-reaction to management style of which she disapproved was held not to be a ground for claim of the constructive dismissal. In other words, a breach of a less fundamental term would not entitle an employee to resign and claim constructive dismissal. This so happens because that would not go to the root of the contract.

Ø       Ø       Alternatives to resignation – Employee failing to exhaust alternative remedies before resignation – Employee may not choose constructive dismissal while other options available – Employee failing to discharge onus that dismissal constructive. – Onus – No evidence, other than employee’s subjective evidence, placed before CCMA.  No evidence to support contention of constructive dismissal – On objective assessment not fair, to employer if subjective perceptions of employee, which are incorrect, determining factor in penalizing employer. KRUGER v CCMA (J4995/00)

Ø       Ø       Constructive dismissal. The applicant was working for the respondent as an HR officer. He resigned after alleging that the company was making continued employment intolerable. His resignation letter was polite and to the point. It only made reference to the applicant giving notice of his resignation. The applicant then referred a dispute to the Labour Court alleging constructive dismissal within the meaning of s186 (1) (e), which was automatically unfair in terms of s187 (1)(f) of the LRA, as well as racial discrimination. Noted: Constructive dismissal is defined as a dismissal where an employee resigns with or without notice because the employer made continued employment intolerable s186 (1)(e). The applicant in a constructive dismissal bears the onus of proving the elements of constructive dismissal, in instances where:

The employee terminated the contract of employment,

The employee’s continued employment had become intolerable,

The circumstances that rendered the employee’s continued employment intolerable, were of the employer’s making. JS174/02: Donald Mafomane v Rustenburg Platinum Mines Limited

Ø       Ø       Section 186(e) of the labour relations act 66 of 1995 defines a constructive dismissal – applicant’s resignation was not motivated by any reason other than the fact that it was what he desired at the time – he did not make any determined effort to raise his concerns – applicant being unhappy with his employment does not lead to the inference that the respondent made his working conditions intolerable – applicant failed to prove that he was constructively dismissed. Mudge and Manhattan Mining Equipment (Pty) Ltd. (ARB)

Ø       Ø       Conduct of employer – Promotion of unqualified white colleague to position above qualified black employee – Promotion provocative and an insult to employee – Subsequent resignation constituting constructive dismissal on racial grounds. MAHARAJ v C P DE LEEUW (PTY) LTD

Ø       Ø       Constructive Dismissal: Sexual harassment – Employer making sexual advances, which were refused by employee, who was then required to work odd and long hours. Employer touching employee on thighs and buttocks, came into her bedroom and slept on top of her. Employer then began finding fault with her work, reprimanding her in front of other employees – employee resigned. Constructive dismissal – awarded eight months salary as compensation. NP1573 COETZER v J J JOUBERT

Ø       Ø       Constructive Dismissal: Sexual harassment – Employee claimed that, over a period of 18 months, she was subjected to sexual harassment including foul language, touching, unsolicited (and sometimes intimate) gifts and sexual advances. Finally, she tendered her resignation and claimed constructive dismissal. She had complained to the employer about his behaviour, but he persisted. Commissioner found this was constructive dismissal brought about by sexual harassment, and awarded the employee nine months salary as compensation.  NW75 PRETORIUS v BRITZ

Ø       Ø       Constructive Dismissal: Requirement to prove. Employee at supervisory grade B asked to fill in for the day as a guard (grade C), as company was a guard short. Because he had transport problem, and regarded this as alteration in day-to-day job content, resigned and claimed constructive dismissal. Commissioner found, while the company’s conduct may have indirectly resulted in employee resigning, company could not be held liable for decision of employee to resign. Particularly as company had not expressed intention to dismiss, or even discipline employee if he refused the request. Constructive dismissal can only be claimed where, because of the conduct of the employer, there was no reasonable alternative option available to the employee other than to resign, and that continued employment was intolerable.  GA168 SMITH v MAGNUM SECURITY

Ø       Ø       MEGA2319 Dismissal – Constructive – Employee resigned after superior changed design to be submitted to client – Employer’s action not rendering employment intolerable – Constructive dismissal not proved

Ø       Ø       A unilateral variation of the contract by the employer will not in itself justify a claim of constructive dismissal. The variation must demonstrate an intention on the employer’s part to repudiate the contract to warrant a constructive dismissal. In other words, if the employer’s conduct renders it impossible for the employee to work, a constructive dismissal can be alleged. In Kannemeyer v Workforce Group – GA32443-04 (CCMA), after unsuccessfully lodging grievances relating to a unilateral change in her commission structure, the employee resigned and alleged a constructive dismissal at the CCMA. The commissioner found that the employee had no other option but to resign and held that the employee had been constructively dismissed.

Ø   Ø    After a restructuring exercise the employee who was employed as a senior manager was placed under a general assistant manager. He complained that a number of responsibilities had been taken away from him and that he was being sidelined. He then applied to be granted a retrenchment package in light of the fact that his position was becoming redundant. On the same day he gave notice of resignation, listing a number of complaints. After his notice period has expired, he referred a dispute to the CCMA, describing dispute as a constructive dismissal. When conciliation failed the matter was referred to the Labour Court. The employer raised a point in limine that the LC did not have jurisdiction to hear the matter. The point in limine was upheld. J569/98 – Rapp v Transnet Ltd:

Ø       Ø       Applicant decided to retire due to restructuring of company without proper consultation and beneficial pay out (par 3) and unilateral change in managerial status (par 6)-also claimed retrenchment and therefore entitled to severance package (par 7) -jurisdiction of the Labour Court disputed as there was no dismissal and dispute concerns a contractual claim for accumulated leave pay (par 10) -claim actually based on employment contract-such a dispute should be referred to arbitration in terms of s 24(1) and (2) (par 16) -accumulated leave pay is not a benefit as intended by Item 2 of Schedule 7 (par 20)-remuneration should be excluded from the term ‘benefits’ (par 22) Gaylard/Telkom S A C153/97

Ø       Ø      Grievance/(residual) unfair labour practices – constructive dismissal – employee choosing voluntary retrenchment, when faced with summary dismissal as alternative, deemed to be constructively dismissed – employee entitled to warning that poor performance could lead to dismissal and to reasonable opportunity to improve – Unilong Freight Distributors (Pty) Ltd v Muller