In employment law, constructive dismissal, also called disguised dismissal,[1] constructive discharge or constructive termination, occurs when an employee resigns due to the employer creating a hostile work environment. This often serves as a tactic to avoid payment of statutory severance pay and benefits. In essence, although the employee resigns, the resignation is not truly voluntary but rather a response to intolerable working conditions imposed by the employer. These conditions can include unreasonable work demands, harassment, or significant changes to the employment terms without the employee’s consent.
The legal implications of constructive dismissal vary across jurisdictions, but generally, it results in the termination of the employee's obligations and grants them the right to pursue claims against the employer. Claims can arise from a single serious incident or a pattern of behaviour, and employees typically need to resign shortly after the intolerable conditions are imposed.
Guillermo Cabanellas de Torres explains that disguised dismissal occurs when the employer’s actions violate duties, forcing the employee to resign. This act, while not an explicit declaration of termination, effectively constitutes a dismissal.