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Constructive Dismissal

Constructive dismissal is when an employee quits their job because the employer has made working conditions so bad that staying in the job is no longer possible. This can happen if the employer makes big, unwanted changes to the job, cuts the pay significantly, or creates a hostile work environment.

Examples of behaviour that might lead to constructive dismissal
Significant Changes to Job Role

Significant changes to a job role involve altering an employee's duties, title, or responsibilities without their consent. When an employer unilaterally makes these changes, it can significantly impact the employee's role and work experience, often leading to dissatisfaction and potential claims of constructive dismissal if the employee feels that the changes make their position untenable.

Unfair Treatment or Harassment

Unfair treatment or harassment occurs when an employee is repeatedly subjected to bullying, harassment, or discrimination in the workplace. This ongoing mistreatment creates a hostile environment, which can significantly affect the employee’s well-being and job satisfaction, and may lead to claims of constructive dismissal if the employee feels they have no choice but to leave due to the unacceptable conditions.

Failure to Pay or Reducing Pay

Failure to pay or reducing pay happens when an employer either does not provide the agreed-upon salary to an employee or cuts their pay without a valid reason. Such actions can undermine the employee's financial stability and job security, potentially leading to constructive dismissal claims if the employee feels that the reduction or non-payment makes continuing in the job untenable.

Unsafe Working Conditions

Unsafe working conditions occur when an employer ignores health and safety concerns, resulting in a hazardous work environment. This neglect can put employees at risk and create a situation where continuing to work becomes unsafe, potentially leading to claims of constructive dismissal if the employee feels they must resign to protect their well-being.

The Legal Implications of Constructive Dismissal

Employees who believe they have been constructively dismissed may take legal action against their employer, claiming they were forced to resign due to a breach of contract. If the case is proven, the employer could face significant financial penalties, including compensatory damages for lost wages and benefits.


However, employers should not take comfort in this fact, the reputational damage and legal costs associated with a constructive dismissal claim can be substantial. This awareness can help employers take necessary precautions to avoid such situations.

The Impact of Constructive Dismissal on Businesses
Damaged Reputation

A company known for constructive dismissal practices will find it difficult to attract and retain top talent. Prospective employees are likely to be wary of joining an organization with a history of mistreating its workforce.

Financial Losses

Constructive dismissal can lead to costly legal battles, settlements, and compensation payouts. Moreover, the loss of experienced employees can disrupt productivity and hinder the company's ability to achieve its goals.

Decreased Employee Morale

Witnessing a colleague being forced to resign due to a toxic work environment can create a sense of fear and insecurity among the remaining employees. This understanding can foster a more empathetic and supportive workplace culture.

Preventing Constructive Dismissal
Clear Communication

Establishing clear communication involves creating channels where employees can openly raise concerns or grievances without fear of retaliation. This ensures that issues are addressed promptly and fairly, fostering a supportive work environment where employees feel valued and heard.

Fair and Transparent Policies

Implementing fair and transparent policies means establishing clear and consistent guidelines regarding employee rights, responsibilities, and expectations. These policies should be easily accessible to all employees, ensuring everyone understands their roles and the standards they are expected to meet.

Prompt Resolution of Conflicts

Addressing conflicts and grievances promptly and impartially involves investigating allegations of harassment or discrimination thoroughly and taking appropriate action. This approach ensures that issues are resolved effectively and fairly, maintaining a positive work environment and upholding employee trust.

Regular Training for Managers and HR Professionals

Equip your managers and HR team with the knowledge and skills to handle employee relations effectively. Regular training on employment law, conflict resolution, and leadership can help prevent situations that might lead to constructive dismissal. Empowering your leadership team with these tools is crucial for maintaining a supportive and legally compliant workplace.


Maintain a Positive Work Environment

Cultivate a workplace culture that prioritizes respect, inclusivity and open communication. Encourage employees to voice their concerns and address any issues promptly. A positive work environment not only reduces the risk of constructive dismissal but also enhances overall job satisfaction and productivity.

Regularly Review Workplace Policies

Regularly review and update your workplace policies to ensure they are in line with current laws and best practices. This includes policies related to harassment, discrimination and employee conduct. Clear, updated policies provide a framework for both employees and employers to understand their rights and responsibilities.

Disclaimer: This article and all information in it is provided for general informational purposes only. It does not, and is not intended to, constitute legal or tax advice. You should consult with a qualified legal or tax professional for advice regarding any legal or tax matter and prior to acting (or refraining from acting) on the basis of any information provided on this website.

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