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What is Constructive Dismissals

16 September 2014

Author: André Claassen & Jan du Toit

Source: Legal Talk SA

Constructive dismissal has become a convenient escape for disgruntled employees and we find more and more that employees resign with a special condition to their resignation, so as to keep open the back door for a claim of constructive dismissal, alternatively the employee just refers a constructive dismissal dispute to the CCMA after resignation.

Also known as “forced resignation”, a constructive dismissal in terms of section 186(e) means that the employer made continued employment intolerable for the employee, leaving the employee with no alternative but to resign. It may be that the employer created or varied the employee’s original terms and conditions of employment in such an adverse way, that continued employment under the created or varied terms and conditions of employment has been rendered intolerable for the employee. Another example of a constructive dismissal would be the failure of the employer to investigate and protect an employee form sexual harassment, afraid to go to work and leaving the employee with no alternative but to resign.
Unfortunately many employees resign out of free will only to later realize that they are not eligible to claim UIF because they resigned and were not dismissed. It is then when all sorts of stories are told at the CCMA in an effort to prove that a constructive dismissal took place.
The important elements (that the employee must prove) are that:

  • The intolerable working conditions were brought about by the employer
  • The working conditions rendered continued employment intolerable for the employee, to the extent that
  • The employee was left with no option but to resign – there was no other avenue available to the employee.

By implication, therefore, the employee must have resigned – if there has been no resignation, there can be no claim of constructive dismissal.
The burden of proof lies with the employee – not with the employer. The employee must prove that;

  • It was the employer who rendered the continuance of the employment relationship intolerable
  • The employee had exhausted all internal procedures in an effort to rectify the situation before resorting to resignation, such a lodging a grievance
  • The conduct of the employer was unfair or unlawful or both.

Various cases went through the Labour Court and the CCMA this year and the principle still remains, if you make the work life unbearable for an employee, resulting in a resignation, it will constitute a dismissal. In such a case, the employee bears the burden of proof, which is not always an easy burden to comply with. To succeed in the claim that the employee was constructively dismissed, the employee has to show that objectively assessed, the conditions at the workplace were so intolerable that he or she had no other option but to terminate the employment relationship.
The test for determining whether or not an employee was constructively dismissed was set out in Pretoria Society for the Care of the Retarded v Loots (1997) 18 ILJ 981 (LAC) [also reported at [1997] 6 BLLR 721 (LAC): The LAC found that the test is whether the employer, without reasonable and proper cause, conducted itself in a manner which is calculated or likely to destroy or seriously damage the relationship of confidence and trust between the employer and employee. It is not necessary to show that the employer intended any repudiation of a contract.
When referring it, it is the court’s function is to look at the employer’s conduct as a whole and determine whether its effect, judged reasonable and sensibly is such that the employee cannot be expected to put up with it.
Van Greunen v Johannesburg Fresh Produce Market (Pty) Ltd – (2010) 19 LC 6.13.1 is one such example where the applicant just could not satisfy the court as to the facts of constructive dismissal. The employer changed her terms and conditions of employment, which can be a ground for constructive Page 2 of 4
dismissal, however the conduct of the employer must be unjustified and the working conditions intolerable. In this case it was not.
The applicant had served as manager of the office of the respondent’s CEO for about a year, a new CEO was appointed. Soon after this, the applicant was informed that a post of personal assistant to the CEO had been advertised, and she was offered a choice between two posts in the HR Department. The applicant filed a grievance, the upshot of which was an undertaking by the respondent to supply the applicant with details of the alternative positions. After the respondent insisted that she accept one of the two alternative posts, the applicant resigned. She claimed that she had been constructively dismissed, and that the dismissal was automatically unfair because it was based on her race.
The Court noted that the applicant was initially prepared to move from the office of the CEO, but had insisted that she be transferred to the marketing department. The applicant had also been prepared to accept a lateral transfer to the HR department on the same salary, but had merely insisted on details of those posts before she resigned. The applicant’s evidence that she had been deprived of a telephone was improbable. The application was dismissed, with no order as to costs.
In Chabeli v CCMA & others (2009) 18 LC 6.13.1 and [2010] 4 BLLR 389 (LC) the applicant, although he claimed to have been constructively dismissed, did not give any hint of a reason in his letter of resignation. Only in his founding affidavit in the review application had the applicant alleged that he had resigned because the respondent had made his employment intolerable by making unilateral decisions about his position. The application was dismissed.
In Lang v GJP Services (2010) 19 CCMA 6.13.1 the Commissioner noted that “Intolerability” is not unfair per se, but also depends on who created the situation and how long it endures. The incident took place only once and the employer tried to rectify it. The employee should attempt to rectify the situation by all available means before terminating the employment relationship. The applicant had merely handed his keys to a colleague and declared that he would not be returning to work. He had made no attempt to seek advice or reason with his employer. While the owner’s conduct was unacceptable, the single incident was insufficient to render the employment relationship intolerable.
In Graham / CIPSA (Pty) Ltd – (2010) 19 CCMA 6.13.5 the principle that the circumstances must be created by the employer, was confirmed. The applicant resigned from his position as managing director of the respondent property broker because he had not received his salary. The respondent said it had not paid the applicant’s salary because of cash flow problems caused by the economic downturn, and that it had been agreed that the applicant would cease being a salaried employee and become a broker instead.
On the merits, the commissioner noted that the test for whether a constructive dismissal has occurred is objective. The question is whether the employer conducted itself in a manner that left the employee with no reasonable option but to resign, even if the employer had not intended that result. The commissioner held that, since payment of remuneration is one of the essentialia of the contract of employment, failure to pay remuneration is generally accepted as a circumstance that renders employment intolerable. However, the employer must be to blame for the failure to pay. The commissioner accepted that the respondent was in financial difficulties brought about by circumstances beyond its control. The commissioner accordingly found that the respondent was not to blame for the circumstances that induced the applicant to resign.
In Solidarity obo Behr / Blue Key Consult (2011) 20 CCMA 6.13.2, the applicant resigned after she was not paid her agreed salary for a period of three consecutive months. The issue in dispute was whether there actually was a dismissal and if so, whether it had been a fair dismissal.
It was held that that the applicant proved on a balance of probabilities that she had met the requirements to prove constructive dismissal by showing that:

  • She is the one that terminated the employment relationship;
  • Her resignation was as a result of her employer’s conduct and not as a result of her or a third party’s conduct;
  • It was the employer that made continued employment intolerable by failing to pay her salary for about two or three months.

In Mqolomba / Vodacom Group Ltd (2011) 20 CCMA 6.13.1, the applicant resigned and claimed that she was constructively dismissed by her employer, Vodacom.
Ms. Mqolomba testified that she transferred to another department and that in this department the following happened to her:

  • She was overlooked when work was distributed;
  • Her manager hinted that he only wanted employees with legal degrees and she did not have such a degree;
  • She was overloaded with work when other employees left the department;
  • Pressure was put on her to delay her studies since her manager could not afford her taking study leave during the year;
  • Her performance was assessed on the wrong system and she only scored 68% for the year;
  • Other “intangible people issues” caused her to feel that her employment had become intolerable.

Mqolomba did not lodge a grievance or report her concerns to a senior person in Vodacom. After deciding to resign Mqolomba gave notice and served her notice period.
The Commissioner stated that; “A final key concept is that one has to understand who the employer actually is. In the case of small businesses where the owner actually manages the business himself, he is the employer. In larger or corporate environments, there is generally always someone who is in a higher position than the person who is allegedly making life intolerable for one. In situations such as this, the alleged perpetrator is not the employer. The employer becomes that person, or persons, who are more senior to the alleged perpetrator and who are divorced from the alleged intolerability that is occurring in the employee’s specific working area. Thus, if senior management is not aware of what is allegedly happening to a specific individual, then the employer has not made anything intolerable because they are completely unaware of it and are not party to it. Hence, the test that has developed in our law relating to constructive dismissals, which is, that the employer must be given the opportunity to remedy the wrong. How is this accomplished? The employee must bring this to the attention of senior management. This can be done formally through a grievance process, with grievance documents being served on either senior management or the HR department, or informally to the same individuals.
In the present case, the applicant has not lodged any grievance to HR or to senior management. On this aspect alone her case should fail, as it cannot be said that the employer has committed anything.
I cannot think of one alleged act by Ms. Mqolomba’s manager, Mr. Lekitima that was so heinous as to create an intolerable situation. Many of the allegations made by Ms Mqolomba have been denied by Mr. Lekitima. Receiving a written warning is not intolerable. Receiving a low score on one’s performance assessment is not intolerable. Receiving a suggestion that one should consider taking a one year break from one’s studies is not intolerable. The employer’s case appears to be that the applicant created her own uncomfortable conditions in that she was doing some of her studies at the workplace during work time, therefore fell behind in her work, thus causing her own pressure due to non-performance.”
There was no evidence before the Commissioner that Ms. Mqolomba made any effort to try and get a transfer. She was clearly aware of the transfer procedure, as she had transferred from another department to this one. The Commissioner did not find any unreasonable pressure was put on the employee that the reasonable man could not handle, and continue working.
The employer, Vodacom Group Ltd, did not make continued employment intolerable for the applicant, Ms Mqolomba.
Where, for example, an employer notifies an employee of a disciplinary hearing, this could genuinely be seen as unbearable to the employee. However, a resignation by the employee for purposes of avoiding the disciplinary hearing is unlikely to constitute unfair constructive dismissal. In the case of Mvamelo vs. AMG Engineering (2003, 11 BALR 1294) the employee was informed he was to face a disciplinary hearing for theft and that criminal charges would also be laid. He resigned and claimed constructive dismissal, but lost the case because it was found by the arbitrator that he resigned to avoid the disciplinary steps of which he had been notified.
However, where disciplinary steps have been taken unfairly and this renders the employment circumstances intolerable, this can constitute constructive dismissal. In the case of Solidarity obo Van Der Berg vs. First Office Equipment (Pty) Ltd (2009, 4 BALR 406) the employee was found to have been performing his work poorly. As a result the employer stopped paying him his salary and replaced it with a commission structure. The employee resigned and went to the CCMA, where it was found that the employee had been a victim of unfair constructive dismissal. This was because the employee could not be expected to continue employment under such intolerable circumstances.
Based on the above – and a large number of similar disputes – it would seem that employers are in a strong position in these kinds of disputes.
Key Points

  • A resignation with or without notice must have taken place in order for a constructive dismissal to be entertained by the CCMA.
  • A constructive dismissal took place if the working conditions that were brought about by the employer rendered continued employment intolerable for the employee, to the extent that the employee was left with no option but to resign and that there was no other avenue available to the employee.
  • The employee must prove that;
    • it was the employer who rendered the continuance of the employment relationship intolerable, knowingly or unknowingly;
    • the employee had exhausted all internal procedures in an effort to rectify the situation before resorting to resignation, such a lodging a grievance;
    • the conduct of the employer was unfair or unlawful or both.