What is a “Constructive Dismissal”?
Employers and employees commonly misapprehend what constitutes constructive dismissal and both are frequently unclear about the legal ramifications that flow from it. By talking to us you will minimize your risks.
On the one hand, employers often expose themselves to potential liability arising from constructive dismissal when business decisions impact on important terms of employment such as employee compensation, duties, reporting structure.
Meanwhile, on the other hand, employees who face such employer initiated, often unwelcome changes to their terms of employment are often unclear as to their rights and are very often at a loss as to what can be done about positively resolving their situation. Contact us and we will take the stress and difficulty away.
Most definitions of constructive dismissal revolve around the employer making material changes to an employee’s contract of employment and the conditions of work that make employees position untenable. No the employee does not resign or give notice but treats the changes as being a breach.
To reach the conclusion that an employee has been constructively dismissed, it must be therefore be determined whether the changes imposed by the employer substantially altered the essential and basic terms of the employee’s contract of employment.
The types of unilateral changes that amount to constructive dismissal vary from case to case, depending on the nature of the change and the employment relationship in question. Constructive dismissal may arise in the following situations:
Where the employer unilaterally and without reasonable notice reduces the base salary earned by an employee, or takes away certain important employee benefits, car allowance, and or bonus entitlements;
When the employer demotes an employee from a position in the company to an inferior position.
Where the employer unilaterally and without reasonable notice transfers an employee to a different geographical work location and the new work location is a significant material distance from the former location of employment.
The above list is by no means exhaustive of the types of significant unilateral changes that may lead to a constructive dismissal, although the majority of situations that can trigger a constructive dismissal invariably fall into one of the above noted situations.
Accordingly, all employers must be vigilant in preventing employees from engaging in harassment and should closely monitor the interpersonal relationships of their managers and their subordinates and should take immediate corrective action in situations where it appears that a manger’s management style is hostile or abusive, to minimise the constructive dismissal risk, as constructive dismissal can be very expensive. In addition, employers should ensure that their managers are properly and continually trained in how to address the varying situations of harassment in the work place. It is necessary today in Ireland to have a workplace policy on harassment in place that clearly outlines the appropriate process to be followed should it occur.
Moreover, a constructive dismissal can occur without a fundamental change to an essential term of the employment relationship. If, for instance, an employer engages in conduct that demonstrates that it no longer intends to be bound by the employment contract such conduct may often give rise to a constructive dismissal, the employer was found to have constructively dismissed the employee on the basis that he created a very negative and or hostile work environment that made the employee’s continued employment with the organization untenable.
If a constructive dismissal does occur, the employee may sue the employer for damages on the basis that the constructive dismissal amounts to a wrongful dismissal.
Constructive dismissal is a very negative thing to happen for all parties so call one of our employment law solicitors for a free consultation now!