In this month’s First Tuesday Q&A, Bernard Martin, Solicitor in A&L Goodbody’s Employment Practice Group, provides some insights on constructive dismissal and looks at case law in the area, including some recent decisions.

What is a Constructive Dismissal?

Constructive Dismissal arises where it is reasonable for an employee, due to their employer's conduct to resign or, again as a result of employer conduct, the employee has suffered a unilateral and fundamental change to his/her terms and conditions of employment.

Section 1 of the Unfair Dismissals Act defines constructive dismissal as:

"The termination by the employee of his contract of employment with his employer…….in circumstances in which, because of the conduct of the employer, the employee was or would have been entitled, or it was or would have been reasonable for the employee, to terminate the contract of employment…"

Who bears the burden of proof in constructive dismissal cases?

While the burden of proof in "normal" unfair dismissal cases rests on the employer, in a constructive dismissal claim the employee bears the burden of proof. They must either show that (a) their conditions and treatment in the workplace were so intolerable and intractable that they had no other reasonable option but to involuntarily resign or (b) that the employer breached the employment contract entitling the employee to resign.

This is a high threshold to meet for the employee. For the purposes of (a) not only must they show that the employer's behaviour was unreasonable but also that their decision to resign was a reasonable one in the circumstances.

Generally, but not always, an employee is expected to exhaust internal procedures such as grievance or Dignity at Work before a decision to resign may be considered reasonable. The EAT in Conway v Ulster Bank (UD474/1981) stated "the claimant did not act reasonably in resigning without first having substantially utilised the grievance procedure to attempt to remedy her complaints. An elaborate grievance procedure existed but the claimant did not use it. It is not for the Tribunal to say whether using this procedure would have produced a decision more favourable to her but it is possible."

In the recent case of A Chartered Physiotherapist v A Clinic (ADJ-00023518), a physiotherapist considered herself constructively dismissed after being “threatened during an emotionally charged meeting”. However, the Adjudication Officer did not accept that the Complainant felt compelled to resign at this time. The Adjudication officer stated:

"the complainant did not take the time to formalise a grievance prior to her departure. I appreciate that she did not have a template available to her through company procedures…..It was reasonable for her to withdraw from the highly combative meeting……However, it was unreasonable for her to leave it at that."

In what circumstances will an employee's resignation be considered to be a constructive dismissal?

The Labour Court in its decision in Cedarglade Limited v Tina Hliban (UD/17/45, ADJ-00006881) outlined two situations in which an employee resignation may amount to a situation of constructive dismissal:

(i) Where the employer’s conduct amounts to a repudiatory breach of the contract of employment and in such circumstances the employee would be “entitled” to resign from his position. This situation requires the employer to be guilty of conduct which is a "significant breach going to the root of the contract of employment", or which shows that the employer "no longer intends to be bound by one or more of the essential terms of the contract", as held in Western Excavating (ECC) Ltd v Sharp ([1978] IRL 332).

(ii) An additional reasonableness test asks whether the employer "conducted his or her affairs in relation to the employee so unreasonably that the employee cannot fairly be expected to put up with it any longer and, if so, she is justified in leaving". 

If an employee does not submit a grievance prior to their resignation will their constructive dismissal claim automatically fail? 

Not necessarily. As outlined above, this is normally expected but each case will be confined to its particular facts.

The Labour Court held in the case of An Employer -v- A Worker (Mr. O No. 2) that:

“The Court accepts that in normal circumstances a complainant who seeks to invoke the reasonableness test in furtherance of such a claim must also act reasonably by providing the employer with an opportunity to address whatever grievance they may have. However, there is authority for the proposition that this is not a fixed or universally applicable rule and that there can be situations in which a failure to give prior formal notice of a grievance will not be fatal (see Liz Allen v Independent Newspapers [2002] 13 ELR 84, Moy v Moog Ltd, [2002] 13 ELR 261 and Monaghan v Sherry Bros [2003] 14 ELR 293"

In a relatively recent case of A Security Guard v A Security Firm (ADJ-00018217), a case involving constructive discriminatory dismissal, the Adjudication Officer found that the complainant's failure to avail of an appeal of his unsuccessful grievance was not fatal to his claim for constructive dismissal, where "any confidence or trust that the Complainant had in the effectiveness of the internal procedures was totally eroded and undermined by virtue of the ineffective manner in which the Respondent had conducted the investigation."

What steps can an employer take to avoid a claim for constructive dismissal?

It goes without saying that good employee relations is the best way to avoid claims of constructive dismissal. However, simply having good employee relations is not always enough. Often situations that arise or actions taken may need to be remedied or reversed by the employer.

In the recent case of A Care Worker v A Residential Care Centre (ADJ-00026644) following some issues with an employee on probation, his supervisor met with him and proposed placing him on a "relief panel" rather than normal rostered hours. The Adjudication Officer stated that this was a "very substantial alteration to his contract of employment" and "had matters rested there it could easily be said to have amounted to a termination of the complainant’s employment and a breach of his probationary contract." After the meeting with his supervisor, the complainant was contacted by the HR manager who told him clearly that he was on the roster for the coming week. The complainant told the hearing that his decision not to accept this was a reaction to the conversation with his supervisor and that that was the action which led him to leaving under terms constituting a constructive dismissal. In finding that the test for constructive dismissal had not been met, the Adjudication Officer stated:

"The complainant must have known that the HR Manager outranked his supervisor in these matters and, upset as he may have been about the discussion with the supervisor things changed in his discussion with [the HR Manager]; notably in being retained on the roster.

[the placing of the complainant on the relief panel without some process] would have been a clear breach of the contract of employment, which was only narrowly rescued by the HR Manager’s intervention."[1]

In the above case we see how an employer's actions (via the supervisor) were sufficient to cause a constructive dismissal. However, this inappropriate action was effectively undone by the HR manager and so the high threshold for constructive dismissal was not met.

Employers should also ensure that employees are made aware of and in a position to avail of internal grievance procedures. A failure to do so may mean that the requirement for an employee to exhaust such procedures will not need to be met. In addition, it is often the case that such issues can be resolved through internal procedures.

A final step to protect against claims of constructive dismissal is to ask an employee to reconsider their decision to terminate their employment. The employee should be offered any appropriate internal procedures as well as EAP if available. If possible, this should be done in person and followed up in writing. This can lead to the employee returning but if not, demonstrates the employer's willingness to engage and continue the employment relationship.

For more information in relation to this topic, please contact Bernard Martin, Solicitor, or any member of the A&L Goodbody Employment team.