Employment Law | Jersey Business Legal Services
What is Constructive Dismissal ?
Constructive dismissal is where an employer decides unilaterally to make substantial changes to the essential terms of an employee’s contract of employment and the employee does not agree to the changes and leaves his or her job.
Since the employer has not formally dismissed the employee, this has been referred to as “constructive dismissal”. The employee can then treat the contract as being in breach and can issue proceedings against the employer for damages. This can also have ramifications for the employer, such as losing the right to enforce restraint of trade clauses in the contract of employment.
How does a Court determine constructive dismissal?
To reach the conclusion that an employee has been constructively dismissed, the court must determine whether the changes imposed by the employer substantially altered the essential terms of the employee’s contract of employment.
The types of unilateral changes that amount to constructive dismissal vary from case to case. It will depend on the nature of the change and the employment relationship in question. Constructive dismissal may arise for example in the following situations, where a move is made unilaterally and without reasonable notice, namely:-
- The employee’s salary is reduced;
- The employee is demoted;
- The employee compensation package is removed.
This list is by no means exhaustive of the types of significant unilateral changes that may lead to a constructive dismissal.
How can an employer minimise risk?
As long as the employment contract permits such and reasonable notice of any changes is given to the employees, an employer is entitled to manage its workplace and implement unilateral changes to the employment contract from time to time.
The requirement that an employer provides reasonable notice to an employee of its intention to implement significant changes to the terms of employment has its roots in the employer’s duty to provide reasonable notice of dismissal. The two requirements are very closely related.
- assess the potential impact of any proposed changes to the terms of employment on an individualised basis, as well as in relation to overall impact to the business;
- Provide reasonable advance notice to an employee of the significant change to the employment contract;
- Document communications with employees affected by changes to their employment;
- ensure that records are well kept as you go through the process.
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