Constructive dismissal occurs when an employee resigns because their employer’s behavior has become so intolerable or made life so difficult that the employee has no choice but to resign. Since the resignation was not truly voluntary, it is in effect a termination.
The Employment Act, 2007 (the “Act”) which is the primary legislation governing labour relationships in the country, does not make explicit reference to the term constructive dismissal. However, Section 45 of the Act provides that an employee may terminate their employment where the employer has breached a fundamental term of the employment contract. Therein lies the substratum of constructive dismissal and this Article seeks to delve deeper into the concept of constructive dismissal and the legal framework around it.
Constructive dismissal is an exception to the general rule that an employee who voluntarily resigns from employment forfeits the right to sue an employer for wrongful termination of employment.
The fundamental breaches by the employer towards an employee forcing them to resign from work may include non-payment of remuneration, demotion in rank, failure to provide an employee with work, and serious cases of sustained discrimination or mistreatment or if the employer unilaterally varies terms of the contract.
Determining Constructive Dismissal
The court of appeal in Coca Cola East and Central Africa Limited versus Maria Kagai ligaga, (2015) eKLR, set out principles for determining constructive dismissal to be as follows:
- What are the fundamental or essential terms of the contract of employment?
- Is there a repudiatory breach of the fundamental terms of the contract through conduct of the employer?
- Has the conduct of the employer fundamentally or significantly breached the contract or gone to the root of the contract of employment or shows that the employer no longer intends to be bound by one or more of the essential terms of the contract?
- An objective test is to be applied in evaluating the employer’s conduct.
- There must be a causal link between the employer’s conduct and the reason for employee terminating the contract i.e., causation must be proved.
- An employee may leave with or without notice so long as the employer’s conduct is the effective reason for termination.
- The employee must not have accepted, waived, acquiesced or conducted himself in a manner preventing him from asserting the repudiatory breach; the employee must within a reasonable time terminate the employment relationship pursuant to the breach.
- The burden to prove repudiatory breach or constructive dismissal is on the employee
An employee can obtain redress for constructive dismissal, provided the employee resigned within reasonable time from his employment, with or without notice as a result of the employer’s hostile treatment or hostile working conditions at his workplace. The employer must also not have expressed the desire to terminate the employee. It is also important to note that the employee should not have consented to the change prior to the resignation. Further, courts have held that suspension for an indefinite period particularly with no pay amounts to a constructive dismissal.
However, mutual agreement between an employer and employee does not amount to constructive dismissal since it is an established principle of the law of contract that parties to a contract, including a contract of employment, can terminate their relationship voluntarily through mutual agreement. Moreover, voluntary resignation of an employee merely to avoid appearing at the disciplinary hearing will not constitute constructive discharge since the employer is entitled to proceed with the hearing in the absence of the employee.
Where courts have made a finding as to the existence of constructive dismissal, they have not shied away from awarding damages and other remedies to the affected employee as against the employer, including the wages which the employee could have been entitled to had he been granted adequate notice as prescribed under the Act or the Contract of service.
Section 49 of the Act also provides for the following remedies: any loss arising between the date of dismissal and the date of expiry of the notice period which the employee would have been entitled to by virtue of the contract and, at the discretion of the court, the equivalent of a number of months wages not exceeding twelve months based on the gross monthly wage or salary of the employee at the time of dismissal.
Constructive dismissal can have significant consequences on both the employer and employee. Therefore, employers ought to be wary of the legal implications of their actions to ensure that they do not create unbearable working conditions for their employees or cause a fundamental breach of the contract of service. Employees also need to be vigilant against any actions that may amount to constructive dismissal.
By Nyaega Brendah
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