Constructive Dismissal Advice for Irish Employers [Published 2024]

According to a search on the Workplace Relations Committee website, there have been 146 cases this year (as of 25th October 2024) before the WRC pertaining to constructive dismissals. Changing only the date range on that same search shows an upward trend over the past few years – 94 results for 2021, 161 results for 2022 and 204 results for 2023.

Despite low success rates, some cases – particularly those involving severe misconduct or unaddressed grievances – have resulted in significant payouts, sometimes reaching tens of thousands of euros. This is particularly the case involving either a fundamental breach of the employment contract on the part of the employer or where the conduct of the employer was such that it was reasonable for the employee to resign, for example due to an unaddressed or mishandled grievance.

There are many factors that may be impacting this trend in constructive dismissal cases including, but not limited to, evolving workplace dynamics (especially around remote and hybrid working models), greater awareness of employee rights, stricter standards for workplace conduct and economic triggers.

What is a Constructive Dismissal?

A situation may be deemed a constructive dismissal if the employer’s behaviour makes the employee’s work circumstances so unbearable that they feel compelled into resigning. In cases like this, the employee argues that the employer’s behaviour—whether through direct actions, neglect, or a toxic workplace culture—has left them with no reasonable choice but to leave. 

In some cases, a constructive dismissal may not be limited to the employer’s behaviour alone but can also involve other employees’ actions if the employer fails to address them. For example, a constructive dismissal might result from the mishandling of a grievance, or bullying or harassment complaint.

The focal point for constructive dismissal is that the employee must utilise all the internal procedures before taking a claim for constructive dismissal. Did your employee clearly convey and outline any unrest to you in the months leading up to his resignation? If so, did he avail of and exhaust the grievance procedure? It is highly unlikely he will succeed in a Workplace Relations Commission claim if he didn’t – presuming that you have a robust and up to date procedure in place, as well as adequately trained managers to implement it. 

Legal Grounds for Constructive Dismissal

Here in Ireland, the law surrounding constructive dismissal was established to prevent employers from circumventing unfair dismissal claims by creating conditions that effectively force an employee to resign through inappropriate or unreasonable conduct or a fundamental breach of the employment contract.

Constructive dismissal claims in Ireland are generally heard by the Workplace Relations Commission (WRC), which handles disputes under employment legislation, including the Unfair Dismissals Acts 1977-2015. 

Unlike other unfair dismissal claims, the burden of proof in cases of constructive dismissal rests with the Complainant. It is your employee who must demonstrate to the WRC that, because of the company’s actions, that he had no other option than to resign from his employment.  

There are a whole host of prerequisites that must be met by an employee in order to successfully raise a constructive dismissal claim.

To claim constructive dismissal, the employee must typically:

• Have at least one year of continuous service with the employer.
• Prove that there was a fundamental breach to their employment contract or that the employer’s actions or behaviours were so unreasonable that resignation was their only feasible option.
• If  the resignation was as a result of the employer’s actions or behaviours, the employee must demonstrate that they exhausted all internal grievance procedures to seek resolution before resigning

In the case of Finnegan J in Berber v Dunnes Stores [2009], the Supreme Court stated that:

“The conduct of the employer complained of must be unreasonable and without proper cause and its effect on the employee must be judged objectively, reasonably and sensibly in order to determine if it is such that the employee cannot be expected to put up with it.”

 Case Law lays out two circumstances in which a resignation may be considered a constructive dismissal – The “Contract” test and the “Reasonableness” test.

The “contract” test

A constructive dismissal is where the employer has failed to comply with the terms of the employee’s contract. This can include change to rates of pay, change to hours, demotion etc that the employee did not agree to. 

This protection is in place to ensure that employers cannot “force” employees to resign by making their working situation untenable. 

The “reasonableness” test

Constructive dismissal is a potential claim that could arise from a resignation where it is clear that the employee has a grievance of some sort or has other workplace issues that should be addressed. Constructive Dismissal is effectively where an employee claims “I have had no other option but to resign from my employment due to the conduct of my employer”. 

By offering the employee access to the internal procedure and encouraging them to reconsider their resignation an organisation can help eliminate the risk of these claims.

The burden of proof in a constructive dismissal claim rests on the employee rather than the employer therefore the employee has to show they have exhausted the internal before taking the decision to resign.

Common Reasons for Constructive Dismissal Claims

Common examples of constructive dismissal claims include:

• Breaches of Contract: If an employer makes significant changes to an employee’s job without agreement, such as reducing their pay or changing other core terms, it may be seen as a constructive dismissal. These breaches must impact essential terms of employment​
• Harassment and Bullying: Failing to prevent or address harassment or bullying by colleagues or supervisors can create a hostile work environment, potentially leading to constructive dismissal. This includes verbal abuse, physical intimidation, or discriminatory actions left unresolved​
• Demotion or Unjust Disciplinary Actions: Demoting an employee without cause or implementing disciplinary actions without proper procedures can be considered unfair treatment. This could create an environment where the employee feels forced to resign​
• Unsafe or Hazardous Working Conditions: If an employer requires an employee to work in unsafe conditions without addressing their concerns, it may constitute grounds for constructive dismissal, especially if the conditions pose a risk to the employee’s health and safety​
• Failure to Address Grievances Properly: Constructive dismissal claims may arise if an employer ignores or inadequately addresses grievances, particularly those related to unfair treatment or workplace safety. This lack of action often indicates to the employee that their concerns will not be taken seriously​

How to Prevent Constructive Dismissal Claims

It goes without saying that constructive dismissal claims are best avoided due to the significant associated financial risks and potential damage to reputation. Additionally, defending against such claims is time-consuming and resource-intensive, often disrupting daily operations.

By implementing proactive strategies and maintaining open lines of communication, employers can address employee grievances effectively and prevent situations that could lead to constructive dismissal claims. Here are key steps on how to prevent constructive dismissal:

1. Establish a clear and accessible grievance procedure 
2. Create and maintain positive workplace conditions
3. Promote fair and respectful treatment
4. Address complaints of harassment, bullying or discrimination promptly
5. Regularly Review Employment Contracts and Policies

Establish a Clear and Accessible Grievance Procedure

Clear and accessible grievance procedures are the number one preventative measure in an employer’s arsenal when it comes to constructive dismissal claims. When employees know they have a channel to address issues, they are less likely to feel forced into resignation.

A grievance procedure should aim to encourage consistency, transparency, and fairness in the handling and management of workplace issues or complaints. It provides employees with a course of action if they have a complaint relating to their employment.

Regularly review and update your grievance procedure to ensure it aligns with the Code of Practice on Grievance and Disciplinary Procedures (often referred to as S.I. No. 146/2000). This ensures compliance with best practices and legal standards, reducing the risk of claims.

Ensure the grievance procedure is communicated clearly to all employees and managers. A well-communicated process helps employees feel confident in the support available, while managers are better equipped to handle grievances effectively.

The grievance procedure should provide points of contact and timeframes to resolve issues of concern, demonstrating an employer’s commitment to fairness. A robust procedure prevents a buildup of issues and promotes job satisfaction and good working relationships.

Those involved in dealing with grievances should be trained in each element of the procedure, including both the informal process and the stages of a formal investigation. The procedure should be applied fairly and consistently to all staff. An employer should contact their employment law consultant for assistance in developing or updating a grievance procedure tailored to their business.

Defending Against Constructive Dismissals Claims

We’ve already mentioned that should you find yourself in a situation where you are defending against a constructive dismissal claim, the burden of proof will be on the employee and this is an extremely high bar to achieve. Having said that, there are some things you should know in case of that eventuality. 

In cases of constructive dismissal, the responsibility lies with the employee to demonstrate that they were compelled to resign due to the employer’s actions. Employers, on the other hand, should aim to establish that their behaviour was fair and did not violate the employment contract. By following the proactive measures outlined, you can ideally avoid a constructive dismissal situation altogether. However, here are some additional tips:

• Get legal advice early: Consulting with an employment law specialist can provide clarity on best practices and ensure all actions taken are fully compliant with Irish employment law. Early guidance can help you assess the situation, review your obligations, and avoid missteps that may inadvertently escalate the issue. Bespoke employment law advice also supports the creation of a clear action plan, helping you to manage and document any employee concerns effectively and confidently.
• Provide evidence of grievance handling: When an employee raises a complaint or grievance, a robust process ensures their concerns are heard, addressed fairly, and resolved, if possible, to mutual satisfaction. Irish employers should maintain detailed records of every grievance, including timelines, communications, and the steps taken to investigate and resolve the issue. 
• Show reasonableness and justification: In the event of any actions that may be perceived as impacting an employee’s working conditions, employers must be able to show that their actions were reasonable and justified. For example, if changes to job roles, hours, or work locations were necessary, having clear, documented reasons behind each decision can help demonstrate that these actions were not arbitrary but driven by legitimate business needs.
• Provide evidence of easy access to the grievance procedure: Employers should maintain records of all updates to their grievance procedure and the communication of same to employees.  If an employee was unaware of the grievance procedure or if this was never issued or communicated to them, it can strengthen the merits of their claim.  Compensation for Constructive Dismissal

We’ve mentioned previously that recent constructive dismissals payouts have reached figures in the tens of thousands. Technically, if an employee is successful in their claim for constructive dismissal, they may be:

• Compensated for loss of earnings caused by the dismissal
• Placed back in their job under reinstatement
• Placed back in their job under re-engagement

Compensation, though, is by far the most popular remedy awarded by the WRC.  In terms of the maximum payout for constructive dismissal – successful claims are generally eligible to receive compensation not exceeding 104 weeks (2 years) remuneration. 

However, the Adjudication Officer will take into account the actual financial loss of the employee and will also assess the efforts they have gone to to mitigate the loss.

How Long Does a Constructive Dismissal Case Take?

Obviously, financial costs are not the only negative outcome of a constructive dismissal claim for an employer.  You’ve also got to take into account potential damage to reputation, impacts on employee morale, potential increased scrutiny from regulatory bodies and, of course, loss of productivity due to time and resources dedicated to defending against such claims. Think of time and costs associated with attending hearings, time off work for witnesses, professional representation, etc. 

The whole process can vary in length depending on the complexity of your case and the workload of the Workplace Relations Commission (WRC). Resolving a claim can take anywhere from a few months to over a year.

Protecting Your Business Against Constructive Dismissal Claims

In conclusion, constructive dismissal claims pose significant risks to Irish employers, including financial costs, reputational damage, and potential disruptions to productivity. By proactively addressing workplace grievances, maintaining fair practices, and fostering a positive work environment, employers can mitigate these risks and create a supportive atmosphere that values employee well-being

 At The HR Suite, we understand the importance of these proactive measures and are here to support you in navigating the complexities of constructive dismissal and other employment law challenges. Together, we can work to establish a culture of transparency, respect, and compliance, helping you build a resilient and compliant workforce – whether that is through HR training or employment law consultancy and advice.