Constructive dismissal: Common-law duties

I undertook, when I started this series, to reflect on precedents set as "justifiably constructive," to help individual workers, employees not classified as workers under the Industrial Relations Act, trade unions, employers and managers (where owner/employers are not managers), on the often confusing approaches to the constructive dismissal concept.

To do so, given space limitations, I will start with Industrial Court awards and leave those of the Appeal Court for a separate study.

Among the charges regarded as "justifiably constructive" in precedent are:

– Employer acted unreasonably

– Employer was guilty of abusive or unacceptable conduct, eg immoral or illegal acts

– Employer is guilty of contractual repudiation

– There was an unjustified or unreasonable change in job obligations not agreed to by both parties

– There was an unjustified change in the employer’s positive obligations

– There was an unreasonable insistence by one of the parties of the performance or lack of performance of an aspect of the job that may have been or is now becoming unsafe or a danger to the health or welfare of the employee

– Repeated prior intention to claim unreasonableness – there was no indication of a previous acceptance of a change in responsibilities

– There was a breach by the employer of a fundamental term of the contract or an implication that such a breach was about to occur

– Under some circumstances, an insistence on a change in the employee’s place of work has been considered appropriate

– A change in the remuneration calculation or an implied change in the employee’s remuneration.

Mainly, if there is evidence of an unreasonable or unjustified change in the employer’s common-law obligations without the knowledge, agreement or consent of the employee, there may be grounds for a claim of constructive dismissal.

In September 2005, the Industrial Court delivered an award in a dispute between the Seamen and Waterfront Workers Trade Union (SWWTU) and PLIPDECO on the subject of constructive dismissal in which it set a precedent that has been used as one of two in court approaches ever since.

Constructive dismissal has, in custom and practice, been defined as a situation where an employer’s conduct is adjudged so unreasonable as to leave an employee with no alternative other than to resign.

It is also judged by what is known as "the contract test."

Selwyn’s Law of Employment (Section 8.52) goes further and includes the following: "The test for constructive dismissal is to be determined by the contract test: Did the employer’s conduct amount to a breach of contract which entitled the employee to resign?"

The distinction is a fine one, but there is an important difference to be observed. An unreasonable act by an employer may not necessarily go to the core of the contract.

As in most industrial relations cases, the judgement will perforce examine the common-law obligations – obligations, unless otherwise explicitly excluded, which place duties on both employer and employee – usually orally expressed, beginning with the words: “Duties of ….”

– Duties of co-operation: A positive obligation to take all those steps, by both parties, which are necessary to achieve the purposes of the employment relationship, material and psychological conditions, duty to pay reasonable wages, duty to work, to obey reasonable orders, etc.

– Duties of care: The duty of employers to take reasonable care for the safety and health of their employees in the course of their employment, and duties of employees to exercise reasonable care and skill in the performance of their duties.

– Duties of fidelity: A term implied in every contract of employment that both parties (including management employees) serve honestly and faithfully (property handling, not serving competition, not breaching confidentiality, etc)

These contractual obligations exist in every contract, whether the employee is a member of a recognised trade union or not.

In the SWWTU vs PLIPDECO case referred to above, a female tally clerk became ill with bronchitis. Her doctor’s certificate said she should avoid smoky, dusty environments and not work in an environment that included excessive dust and chemicals.

Although she complained to HR and wrote to the company president about this, requesting a transfer, she got no response and continued to work there until the bronchitis worsened and she resigned. There was no dispute about these facts.

The dismissal case itself, however, went to court and the company claimed no matter where she worked as a tally clerk on the port, working in the entire area would be dusty, and she knew that when she accepted the job in the first place, adding that her request was just not feasible

The union countered that there were air-conditioned offices where clerical work was done and jobs there were within her classification, and although the work there was not tallying, she could be trained to do it.

The court agreed with the union and ruled that the company failed in its common-law duty to provide a safe place for the employee to work. It had not consulted with her doctor as to the level of dust she could tolerate, and it failed to offer her an adequate respiratory mask once her condition was known.

The court held it was a breach "going to the root" of her contract and that PLIPDECO had not acted reasonably in response to the employee’s complaints.

It found she had been "constructively dismissed" in circumstances that were harsh and oppressive, or not in accordance with the principles of good industrial relations.

Compensation was ordered equivalent to a year’s wages.