What is Constructive Dismissal in New Zealand?
Constructive Dismissal happens when an employer’s actions or inactions make working intolerable for an employee, pushing them to resign. Examples of conduct that amounts to constructive dismissal include:
- Saving Face: giving an employee the choice between being dismissal and resignation.
- Deliberate Pressure: employer acts in a way which directly or indirectly pressures the employee to resign.
- Breach of Contract: employer acts in a way that seriously breaches the employment agreement, causing an employee to feel they must resign from the job. To qualify breaches must be substantial and fundemntal such as compromising safety, not paying wages, or a breach of a fundemental duty the employer has.
Examples of Constructive Dismissal Cases ↗
The employer’s course of conduct need not intend to cause resignation; instead, the Employment Relations Authority asks the following:
- Was it foreseeable that the employer’s actions had a substantial risk of causing a resignation?
- Did those actions cause the employee to resign?
Proving Constructive Dismissal Legal Test in NZ ↗
For example, it’s been previously found that a substantial rearrangement of job responsibilities or even high levels of workplace harassment can amount to constructive dismissal. The cause for resignation does not have to be a single event, either, with the Court finding that a series of actions towards the employer can amount to constructive dismissal. The key to all good constructive dismissal claims is solid evidence.
Examples of Constructive Dismissal Cases
The following are fictionalised examples of constructive dismissal cases. If you feel that you may have a case, do not resign; seek legal advice. Call our toll-free employment hotline and let our team of employment law specialists at Sacked Kiwi help.
Saving Face: Resignation or Dismissal Ultimatums
Where an employee is given the ultimatum between being dismissed or resigning, the Employment Relations Authority has found that to be clear, constructive dismissal.
Case Example:
Sarah worked at a manufacturing company for over ten years, consistently receiving positive feedback. After a management shift, her new boss cited an unexplained “lack of motivation” and suggested she either resign or face dismissal. Feeling cornered, Sarah resigned to avoid the embarrassment of termination. When she sought legal advice with Sacked Kiwi, the ERA determined her resignation was, in effect, a constructive dismissal. The company’s pressure tactics and lack of performance evidence were seen as forcing her hand.
Significant Changes in Job Responsibilities
Where an employer significantly changes the responsibilities of a role without proper consultation or process that significantly impacts the number of hours an employee works or amounts to major changes to the duties of the role, courts have found constructive dismissal.
Case Example:
Jacob was a project manager at a design firm, managing a team and overseeing client accounts. One day, his employer decided to reassign him to a role that involved basic administrative tasks, with no team or client interaction, claiming “company restructuring.” He was also expected to work double his usual hours. The drastic change, without any warning or agreement, left Jacob feeling degraded and undervalued. Upon seeking legal advice through Sacked Kiwi, Jacob’s case was deemed constructive dismissal due to the employer’s failure to consult on major role changes properly.
Suggestions of Dishonesty When Money is Missing
If an employer accuses an employee of dishonesty when money goes missing without conducting a fair and thorough investigation, this can amount to constructive dismissal.
Case Example:
Alicia worked in a mechanics shop. One day, $100 dollars goes missing from the owner’s office. At lunch break later that day, the owner heavily implies that Alicia stole the money, going so far as to suggest that her new earrings, a gift from her mother, were bought with the money. Humiliated and annoyed, Alicia seeks advice from Sacked Kiwi before resigning. After filing a personal grievance, the ERA ruled this as constructive dismissal and awarded damages.
Inconsistent Payments of Wages
Employers must pay employees correctly and on time. Repeated failure to meet wage commitments can justify constructive dismissal.
Case Example:
Tom worked as a chef at a restaurant that frequently delayed his paychecks and occasionally paid him less than agreed upon, claiming cash flow issues. When Tom questioned his wages, the owner would brush him off, insisting he should be “grateful for the opportunity.” Frustrated and struggling to meet his financial obligations, Tom resigned and filed a complaint with Sacked Kiwi. The ERA ruled this as constructive dismissal, as the employer’s inability to pay him consistently created a hostile environment and breached Tom’s basic employment rights.
Repeated Serious Harassment
Persistent harassment by colleagues or supervisors, if not addressed by the employer, can result in constructive dismissal claims.
Case Example:
Priya worked in an office environment where a senior colleague constantly made inappropriate comments about her background and appearance. Despite multiple complaints to HR, no action was taken. Priya felt isolated and disrespected, leading her to experience stress and anxiety. When she ultimately resigned with Sacked Kiwi’s help, the ERA reviewed her case and determined the employer’s inaction on her harassment claims constituted constructive dismissal, as it left her with no choice but to leave.
Resonate with one of the examples? Get in touch with our team of employment law experts before you resign. Call our toll-free employment hotline!
Legal Process for Filing a Constructive Dismissal Claim
Step 1: Documenting Incidents and Evidence
Start by gathering all relevant documentation that showcases a hostile or intolerable work environment. Emails, meeting notes, and any formal complaints made to HR or management should be carefully organized to support your claim.
Step 2: Contacting Sacked Kiwi
Reach out to Sacked Kiwi’s employment advocates for guidance. Their no-win, no-fee service provides expert support through the grievance process, helping you navigate legal complexities and strengthen your case.
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Step 3: Filing a Formal Claim
With Sacked Kiwi’s support, you can file a formal claim with the Employment Relations Authority (ERA). This involves presenting your documented evidence and demonstrating how your work conditions forced you to resign, establishing grounds for constructive dismissal.
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How to Gather Evidence for a Constructive Dismissal Case
If you’re considering a constructive dismissal claim, gathering solid evidence is essential for a strong case. Constructive dismissal in New Zealand requires a clear record showing that unresolved issues and a toxic work environment left you no choice but to resign. By documenting emails, meeting notes, and official complaints, you’ll build a compelling paper trail to support your claim with the Employment Relations Authority. Here’s how to collect and organize the evidence you need to make your constructive dismissal case in New Zealand as strong as possible.
Remember before you resign always seek legal advice. Our employment law experts are waiting to help you with your case on our toll-free hotline.
Best Practices for Documentation
- Create a Detailed Paper Trail:Start gathering every relevant document that proves the deteriorating conditions. Think of emails, meeting notes, and text messages that show ongoing issues or mistreatment.
- Document Complaints and Responses: Record all instances where you raised concerns with management. Emails showing you tried to address issues demonstrate that resignation was a last resort and add credibility to your claim.
- Compile Consistent Documentation: Keep a chronological record of incidents that contributed to your decision to resign. Consistent documentation shows a pattern, which is crucial for proving a hostile work environment.
- Highlight Employer Inaction: Focus on any ignored or inadequately addressed complaints. Evidence that your employer neglected or dismissed your concerns strengthens your case by showing a breach of duty.
Learn more about documentation ↗
Proving Constructive Dismissal Legal Tests in NZ
Key Elements of a Constructive Dismissal Claim
The core legal test to a successful claim of constructive dismissal is twofold:
- First was the resignation caused by an employer breaching their duty to you, and
- Second it was foreseeable to the employer that by acting the way they did there was a substantial chance of resignation.
This was set out in Auckland Electric Power Board v Auckland Provincial District Local Officers IUOW by the Court of Appeal. These core legal elements have exceptions and qualifications for different circumstances, which is why advice to prove constructive dismissal in New Zealand legal advice is so important. Operating for over 10 years in New Zealand our team of employment law experts are ready to help you.
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Compensation for Constructive Dismissal: What to Expect
In constructive dismissal cases, the Employment Relations Authority (ERA) evaluates compensation based on the circumstances and impacts of the dismissal, aiming to provide fair redress for the losses and hardship endured by the employee. Often, parties may reach a settlement before, during, or even after mediation, potentially avoiding a full ERA hearing.
Learn more about the personal grievance process ↗
Types of Compensation Available in New Zealand
In New Zealand, compensation for constructive dismissal may include:
- Compensation for Lost Wages: Covers income lost due to leaving the position.
- Damages for Breach of Contract: Compensation for violations of the employment contract by the employer.
- Hurt and Humiliation Damages: Redress for emotional distress and impact on well-being caused by workplace conditions.
- Job Reinstatement: In cases where the employment relationship is salvageable, the ERA may consider reinstatement to the former position.
These types of compensation are awarded on a case-by-case basis, with the ERA evaluating each claim individually to address unique circumstances.
Factors Affecting Compensation Amount
Compensation are be influenced by various factors, such as:
- Severity of Breach: The seriousness and duration of any contract violations or workplace mistreatment.
- Financial Losses Incurred: The extent of lost wages and benefits.
- Impact on Employee Well-being: The emotional toll and mental health effects of constructive dismissal
- Employer’s Response to Complaints: How actively or adequately the employer addresses issues raised by the employee prior to resignation.
Whether through settlement during mediation or by the ERA’s decision, constructive dismissal claims aim to achieve a fair resolution for affected employees.
How Sacked Kiwi Can Help with Constructive Dismissal Claims
We’re dedicated to uncovering the full story behind employment disputes. Our team will thoroughly investigate your situation, represent you in mediation, and provide the guidance and support you need during this challenging time. We understand that being out of work can be overwhelming, so we offer a no-win, no-fee service, covering any costs until your case is resolved.
If you believe you’ve experienced constructive dismissal, reach out to us for a free consultation as soon as possible.
Additional resources and information on available support can be found here.
FAQs on Constructive Dismissal in New Zealand
How long do I have to file a claim?
In New Zealand, constructive dismissal claims must be filed with the Employment Relations Authority (ERA) within 90 days of your resignation. Acting promptly ensures you remain within the legal timeframe to pursue a grievance, so contact an employment advocate or legal professional as soon as possible to initiate your claim.
Learn more about the personal grievance process ↗
Have any other questions?
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Legal Disclaimer
The content posted on the Sacked Kiwis website should not be considered or relied upon as legal advice or opinion. The information we present here is not intended to serve as legal guidance. Over time, laws and regulations evolve, potentially altering the accuracy of previously shared information. Updates in jurisprudence or legislation (for example, changes to the Employment Relations Act), which could happen without immediate notice, may render the legal information on this platform outdated or obsolete. Seeking legal advice is always advisable.
Should you need employment advice, please don’t hesitate to contact us.
