Understanding the Concept of Constructive Dismissal

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Section 20 of the Industrial Relations Act 1967 states that “where a workman … considers that he has been dismissed without just cause or excuse by his employer, he may make representations in writing to the Director General to be reinstated in his former employment; the representations may be filed at the office of the Director General nearest to the place of employment from which the workman was dismissed.”

In layman terms, this basically means that the employer (either by words, conduct or both) has done everything possible short of officially ‘firing’ the employee and has made the working conditions so unbearable that the employee is forced to walk away from the company. Hence the employee here considers himself dismissed, even if the employer did not actually dismiss or terminate him.

The main element that the courts will look into in a case of Constructive Dismissal is whether or not the Company has breached a fundamental term of the employee’s employment contract or displayed an intention to no longer be bound by the terms of the said contract. Additionally, the conduct of the Company towards the employee will also be closely scrutinised in ascertaining whether a fundamental term has been breached. These considerations are most relevant when the Company is considering taking disciplinary action against errant staff.

While a Company has the right to discipline their employees as they see fit for any indiscretions, misconducts, and etc, the Company must resist the temptation to put employees in ‘cold storage’ or subject them to mental torture or treatment which may be construed as demeaning or insulting, with the hope that they will leave on their own accord.

The most important thing to remember when dealing with or trying to diffuse a potential Constructive Dismissal case is that the employee’s perception, feelings and expectations must be managed accordingly.

As an employer, when deciding on taking appropriate action against an employee, especially relating to discipline, the best practice is to always engage with the employee and treat him as fairly as possible. If the employee can understand where you are coming from, it is much less likely that he will bring an action against you in court.