Employer Liability And Risk Management In Constructive Dismissal Claims

Introduction

Constructive dismissal, also referred to as constructive discharge, occurs when an employee resigns because the employer’s actions (or inaction) have made the work environment intolerable or has breached fundamental terms of the employment contract.¹ In such situations, the resignation is not truly voluntary, although the employer does not directly terminate the employee’s employment, their conduct however effectively leaves the employee with little or no reasonable choice but to leave.

Constructive dismissal differs from wrongful termination in both cause and legal characterization. Constructive dismissal arises when an employer’s conduct causes a fundamental breach to the employment relationship by creating intolerable or hostile working conditions that effectively compel the employee to resign. In contrast, wrongful termination occurs when an employer expressly ends the employment relationship in a manner that breaches the express or implied terms of the employment