Constructive Dismissal & What You Need To Know As An Employer

Navigating the Intricacies of Constructive Dismissal as an Employer

Constructive dismissal occurs when employees experience intolerable work conditions that make them feel compelled to resign. Under South African labour law, it is deemed unfair dismissal, exposing employers to potential legal consequences if found to be guilty of a constructive dismissal event.

It is especially relevant for SMEs as pressures are brought to bear on the entrepreneur business owner due to ongoing economic instability, fractured electricity supplies due to ongoing load shedding and many more challenges that we as business owners are currently facing in South Africa.  Frustrations from navigating these circumstances can easily spill over into the workplace, introducing tension that impacts relations between the business owner and his/her team.

Entrepreneurs need to exercise caution to avoid instances of constructive dismissal due to the potentially severe legal and reputational consequences. If an employee successfully proves constructive dismissal, it could result in substantial financial penalties for the business owner.

What Validates a Constructive Dismissal Claim?

For a claim of constructive dismissal to be valid, three fundamental criteria must be satisfied:


Contract Termination

The employee should have actively ended their employment contract i.e. resigned from their role.


Unbearable Work Environment

The driving factor behind the contract termination should be that the continuation of employment has become unendurable for the employee.


Employer’s Role

The employer must be responsible for creating the unbearable work environment that gave rise to the termination of contract.

A successful claim of constructive dismissal hinges on the presence of all these three elements. If even one element is missing, it cannot be classified as a constructive dismissal.

Key Grounds for Constructive Dismissal

Unbearable Work Environment

For a claim of constructive dismissal to be valid, the employee must demonstrate that the employer created an intolerable work environment in which any reasonable person would find it impossible to continue working. This could encompass harassment, bullying, discrimination, or unsafe working conditions. Establishing that the employee’s resignation directly resulted from the employer’s intolerable conduct is vital.

Violation of Employment Contract by Employer

The employee needs to present evidence indicating a severe breach of the employment contract by the employer. This could involve unilateral changes to terms and conditions, failure to address grievances, implementation of unfair disciplinary procedures, or unjustified demotions.

Employee’s Resignation as a Consequence

The employee must illustrate a direct correlation between the breach of contract or the unbearable work environment and their decision to resign. The resignation should be a logical reaction to the employer’s actions.

Link Between Violation and Resignation

The employee must prove the connection between the employer’s contract violation, the unbearable work conditions, and their choice to resign. It should be evident that the employer’s actions or neglect directly triggered their resignation, with no unrelated factors involved.

Substantiating Claims of Constructive Dismissal

Establishing a case of constructive dismissal is not straightforward. It’s not solely about the employee’s claims; they are responsible for substantiating their allegations with proof. They must present compelling evidence that convincingly suggests, based on the balance of probabilities, that constructive dismissal has indeed taken place.

The Formal CCMA Proceedings

To initiate a claim of constructive dismissal, the employee must submit a formal grievance with the Commission for Conciliation, Mediation and Arbitration (CCMA) within 30 days following the alleged event. The CCMA will coordinate a conciliation or mediation session between the parties to reach a mutually agreeable resolution.

Should the dispute persist without resolution, it may advance to the arbitration stage. Here, an impartial commissioner is tasked with delivering a binding decision, thus determining the case’s outcome. Should the Commission for Conciliation, Mediation and Arbitration (CCMA) rule in the employee’s favour, they may be eligible for reinstatement or compensation.

Building Thriving Business Environments

Engaging in practices that lead to constructive dismissal is detrimental for entrepreneurs as it can lead to significant legal repercussions, including hefty financial penalties if an employee successfully proves their case. These actions can also severely damage your company’s reputation, making it more challenging to attract and retain high-quality employees in the future. Therefore, fostering a respectful, fair, and healthy work environment is not just an ethical approach, but it is also beneficial for the overall success and sustainability of the business.

At MMS Cloud Accounting, we are committed to supporting small to medium-sized business owners to create sustainable businesses. We offer outsourced accounting services packages that provide exceptional value to equip our clients with the essential resources they need to thrive in today’s competitive business landscape. For more information about our services, please contact our team.