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Constructive Dismissal

Have you ever been faced with an employee who claimed that the working environment that he or she is faced with, is so intolerable that continued employment is impossible resulting in the employee handing in his/her resignation? This scenario is known as constructive dismissal.

Section 186 (1) (e) of the Labour Relations Act states that a constructive dismissal occurs when: “an employee terminates a contract of employment with or without notice because the employer made continued employment intolerable for the employee”.

Normally such resignation/termination is executed without the employee giving notice of the termination of service to the employer. In some instances constructive dismissal can still be claimed when notice of termination of service is given to the employer.

Should an employee be aggrieved by the conduct of the employer, such an Employee should follow the grievance procedure set out by the company. Should such a grievance procedure not be followed it will be extremely difficult for the specific employee to be successful with his/her claim in respect of constructive dismissal.

By entering into an employment contract it is in essence implied that both parties will act in good faith towards each other and that none of the parties will act in any manner which could damage the trust and working relationship – or could lead to the employee’s continued employment being made intolerable.

If the continued employment of the employee is made intolerable, the employer in actual fact repudiates the employment contract. In this instance normal contractual principles apply and the employee then has the right to either reject the repudiation and demand specific performance, or if the employee wishes, cancel the contract and claim damages.

When establishing whether the employer made itself guilty of constructive dismissal, it is essential that the conduct of the employer is considered prior to the resignation of the employee. If the conduct of the employer was of such a nature that it led to a total breakdown in the trust relationship of the parties it is likely that the employee was constructively dismissed. In Pretoria Society for the Care of the Retarded v Loots (1997) 18 ILJ 981 (LAC) it was said that the conduct of the parties should be considered as a whole together with the cumulative impact thereof.

Eagleton v You Asked Services (Pty) Ltd (2009) 30 ILJ 320 (LC) it was established that:

“In order to prove a claim for constructive dismissal, the employee must satisfy the court that the following three requirements are present:

(i) The employee terminated the contract of employment (the employee has resigned).

(ii) Continued employment has become intolerable for the employee;

(iii) The employer must have made continued employment intolerable.”

The employee should have been the party that terminated the employment relationship which naturally means that the employee should have resigned. If the relationship was terminated by the employer or by mutual consent it will not be seen as constructive dismissal. It is important to understand that the test applied to establish whether the working relationship rendered continued employment intolerable, is a subjective test. The employee should have subjectively believed that he/she could not continue with the working relationship. On the other hand, when considering the conduct of the employer the test would be an objective one.

In order for a dismissal to be constructive, the resignation of the employee should have been the last resort for the employee. The grievances lodged by the employee should also not have been dealt with by the employer.

In Jooste v Transnet Ltd t/a SA Airways (1995) 16 ILJ 629 (LAC) it has been established that the employee is required to prove that his termination of the relationship was due to the conduct of the employer. Only once the employee has discharged his/her burden of proof, the burden shifts to the employer to prove that the conduct by the employer could not have reasonably led to the employee resigning.

The CCMA’s website indicates that the following might be considered to be examples of constructive dismissals (note that this list is not exhaustive):

  1. Sexual Harassment;
  2. Instructions given by superiors that is unlawful and so leads to the forced resignation of the employee;
  3. If the employer offers the employee inferior employment and together with such an offer threatens to dismiss the employee if he/she does not accept same; and
  4. When an employee is faced with a lawful deduction from his/her salary and subsequently decides to resign.

After the employee resigned, he/she has the right to refer a constructive dismissal dispute to the relevant forum. This referral should be made within the allocated time frame, being 30 days from the date that the dispute arose.

The employee may indicate that the relief sought is compensation and the employee can receive up to a maximum of 12 months compensation should he/she be successful with the claim. It will also be nonsensical and unlikely that reinstatement would be ordered as appropriate relief by the Commissioner, as the employee resigned due to the fact that he could no longer work in the specific environment. Only in circumstances where the intolerable working environment no longer exist or has changed, will reinstatement be considered to be appropriate relief.

In view of the fact that constructive dismissal is one of the most difficult and technical matters in labour law, employers should always be vigilant in dealing with grievances from employees. Ensure that you have a proper grievance policy in place and that all employees are aware thereof and that all issues of the employee(s) are dealt with in accordance with the policy.

Douw Breed (B.Com LLB) is a director at Barnard Inc. Attorneys

Barnard Incorporated is a firm of attorneys situated in Centurion, Pretoria.

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