Constructive Dismissal

Constructive dismissal is where an employee technically resigns, but the law treats the termination as a dismissal because the real impetus for ending the employment relationship came from the employer. It is not enough that work became unpleasant, stressful or disappointing. The employer's conduct must cross the line into conduct capable of legally causing the resignation.

This distinction matters. If the resignation amounts to constructive dismissal, the employee can potentially pursue an unjustified dismissal Personal Grievance and seek the same kinds of remedies that can arise from a direct dismissal. If it was simply a voluntary resignation, those dismissal remedies may not be available.

The three recognised constructive dismissal situations

New Zealand employment law has long recognised three broad categories of constructive dismissal. The facts do not always fit neatly into one box, but these categories are a useful starting point.

What can amount to a serious breach?

There is no automatic checklist. The seriousness, persistence and surrounding circumstances matter. One major event can sometimes be enough; in other cases a series of acts or omissions becomes serious when viewed together.

Examples that can raise constructive dismissal issues include:

• Repeatedly failing to pay wages correctly or on time.
• Unilaterally making major changes to hours, pay, duties, status or location without proper agreement or process.
• Failing to deal appropriately with serious bullying, harassment or workplace complaints.
• Requiring unlawful or plainly unreasonable conduct from the employee.
• Serious breaches of the employment agreement or minimum employment obligations.
• Removing work, authority, responsibilities or support in circumstances that effectively undermine the employee's position.
• Using disciplinary, performance or restructuring processes as a device to drive the employee out rather than genuinely address an employment issue.
• A sustained course of unjustified treatment that makes continued employment objectively untenable.

What is usually not enough?

Feeling unhappy at work does not automatically make a resignation constructive dismissal. Employment relationships can be difficult without the employer legally dismissing the employee. Examples that may not, without more, be enough include:

• A lawful and reasonable instruction you disagree with.
• A properly-run performance management or disciplinary process.
• Ordinary workplace conflict or a personality clash.
• Stress the employer was never told about and had no reasonable opportunity to address.
• Resigning while the employer is genuinely taking reasonable steps to resolve the problem.

Causation matters: why did you actually resign?

Even if the employer did something wrong, the employee still needs to connect that conduct to the resignation. The employer may argue that the employee resigned for a different reason — another job, personal circumstances, dissatisfaction unrelated to the alleged breach, or simply a desire to leave.

Timing can therefore be important. A resignation immediately following the relevant conduct may present a very different evidential picture from a resignation months later after the employment relationship has apparently returned to normal. Delay does not automatically destroy a claim, but it can make causation and whether a breach was accepted or affirmed more difficult.

Before resigning: raise the problem where reasonably possible

Before resigning, it is often important to tell the employer clearly what the problem is, what conduct needs to stop or be corrected, and what outcome you require. The employer should generally have a reasonable opportunity to respond where the problem is capable of being fixed.

This is not an inflexible rule. There may be circumstances where raising the issue further is unsafe, futile or impractical. But an employee who resigns without clearly raising a fixable problem can later face the argument that the employer never had the chance to put matters right.

A useful written complaint normally identifies:

• What happened, with dates and specific examples.
• Why the conduct is unacceptable or inconsistent with the employment relationship.
• Any relevant documents, messages or witnesses.
• What you want the employer to do to remedy the problem.
• A reasonable timeframe for a response where appropriate.

The resignation letter can become important evidence

If resignation becomes necessary, the letter should accurately record why the employee says the employment relationship is ending. A bare “I resign effective immediately” can leave an unnecessary evidential gap. Equally, a long emotional email containing exaggerations or accusations that cannot be proved can cause its own problems.

The appropriate wording depends on the facts. In some cases notice will be worked; in others the employee may contend that the employer's breach justifies ending employment immediately. That decision should be considered carefully rather than assumed.

Already resigned?

Do not assume you have lost your rights. We can assess what happened before the resignation, what was communicated to the employer, whether the employer's conduct was sufficiently serious, whether it actually caused the resignation, and whether resignation was reasonably foreseeable in the circumstances.

If you resigned in the heat of the moment and are actually trying to withdraw the resignation rather than claim constructive dismissal, see our separate page on Mistake of Resignation.

Evidence that can make or break the case

• Your employment agreement and later variations.
• Emails, texts, Teams/Slack messages and written instructions.
• Meeting invitations, disciplinary or performance documents and meeting notes.
• Complaints you made and the employer's response.
• Pay records where wages or contractual entitlements are part of the problem.
• Evidence of changed duties, hours, status, location or reporting arrangements.
• A contemporaneous timeline identifying the sequence of events.
• The resignation letter and any response from the employer.
• Job-search evidence after employment ends, where lost wages may be claimed.

A recent Employment Court example

Personal Grievance and remedies

Constructive dismissal is a form of unjustified dismissal. Depending on the facts, remedies can include reimbursement of lost wages, compensation for humiliation, loss of dignity and injury to feelings, and other remedies available under the Employment Relations Act. Contribution, mitigation and the particular facts can affect any award.

Most Personal Grievances must be raised with the employer within 90 days. Do not wait until all evidence is assembled before checking the deadline. Sexual-harassment grievances have a different notification period.

How we approach a constructive dismissal case

We first work out whether resignation should happen at all. Where the employee is still employed, preserving the job while forcing the employer to address the problem can sometimes be the strongest strategy. In other cases the relationship has genuinely reached the point where continued employment is no longer realistic.

If the employment has ended, we identify the legal category, build the chronology and evidence, raise the Personal Grievance where appropriate, and pursue resolution through negotiation or mediation. If settlement cannot be achieved, suitable cases can proceed to the Employment Relations Authority.

Related employment issues

Unfair Dismissal Mistake of Resignation Disciplinary Meeting Exit Package