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Constructive Dismissal NZ

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When an employee is about to be fired but the employer offers that the employee can resign, the employee will be giving up their personal grievance rights if they resign. Constructive dismissal could be a potential claim that could be raised by the employee but it is a more difficult path to take. The bottom line, we say, don't resign. Talk to us first.

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Constructive Dismissal

"It is the Wolf of dismissal in the sheep's clothing of resignation"
New Zealand Woollen Workers IUOW v Distinctive Knitwear NZ Ltd

A constructive dismissal is where an employer places an employee in a position where the employee has not choice but to resign. Where an employee has resigned and claims to have been constructively dismissed the onus is on the employee to show that a dismissal has occurred. In essence a constructive dismissal is where the employee has fired the boss.

The Court of Appeal has said that constructive dismissal includes cases where:
Auckland, etc, Shop Employees, etc, IUOW v Woolworths (NZ) Ltd

  • An employer gives an employee an option of resigning or being dismissed.
  • An employer has followed a course of conduct with the deliberate and dominant purpose of coercing an employee to resign.
  • A breach of duty by an employer leads an employee to resign.

The courts have established further case law surrounding constructive dismissal such as:

  • The "but for" test. If it wasn't but for the breach of duty of the employer.
  • The "reasonably foreseeable" test. Was the breach of duty by the employer sufficiently serious to make it reasonably foreseeable that there was a substantial risk of resignation?
  • The "final straw" or the "cumulative effect".

While we are advising that employees should not resign and should let the boss fire them so that we can take an actual (not constructive) unfair dismissal case against the employer, there are situations where a resignation and a constructive dismissal claim would be the better option to take. Proper and timely advice is recommended before taking action.

If you are contemplating resignation because of unsatisfactory treatment or a situation has led you to lose trust and confidence in your employer, talk to us first before resigning.
Do not resign until you speak to us first.

Dismissal and Resignation

Whether its a disciplinary meeting, a workplace investigation, or an issue that an employer has with an employee, if the employer is proposing termination of employment but at the last minute the employer is offering the employee to resign and that the resignation would be accepted instead of dismissal, we say, do not resign, follow our advice.

If you resign you are giving up your employment rights to raise a personal grievance for unfair dismissal.

Involve us, and you will be in a much better position for us to achieve a great result for you.

Settlements and Compensation

Where an employer is going to dismiss an employee but offers that the employee can resign, the employee should instead take this approach with our help:

  1. Do not resign
  2. If the dismissal is unjustified, we will raise a personal grievance for unfair dismissal.
  3. We will negotiate with the employer to achieve a settlement before, at, or after an Employment Mediation.
  4. The settlement can record that the employee resigned instead of having been fired.
  5. We often achieve a reference or certificate of service for the employee.

If settlement is not achieved because of the employer's refusal to negotiate, we then take the case further to the Employment Relations Authority (the ERA).

Read our full article

We write employment law commentary for the Deals on Wheels magazine. Read our full article here: If you are about to be dismissed, don't resign

If you are going to be dismissed, don't resign Download File: If you are going to be dismissed, don't resign

Last Updated: August 7, 2021 0800 WIN KIWI