Employer Liability and Risk Management in Constructive Dismissal Claims

Introduction

Constructive dismissal, also referred to as constructive discharge, occurs when an employee resigns because the employer’s actions (or inaction) have made the work environment intolerable or has breached fundamental terms of the employment contract.^[1] In such situations, the resignation is not truly voluntary, although the employer does not directly terminate the employee’s employment, their conduct however effectively leaves the employee with little or no reasonable choice but to leave.

Constructive dismissal differs from wrongful termination in both cause and legal characterization. Constructive dismissal arises when an employer’s conduct causes a fundamental breach to the employment relationship by creating intolerable or hostile working conditions that effectively compel the employee to resign. In contrast, wrongful termination occurs when an employer expressly ends the employment relationship in a manner that breaches the express or implied terms of the employment contract.^[2] This can include actions such as failing to give the contractually required notice, not paying owed benefits, or failing to follow the employer’s stipulated disciplinary or procedural requirements agreed upon before dismissing an employee. Conducts that amount to constructive dismissal, on the other hand, include significant changes to employment terms, non-payment or reduction of salaries, indefinite suspension without pay^[3], placing ridiculous and unreasonable work demands^[4] on employees, demotion without cause, failure to provide safe working environments,^[5] amongst others. Where an employee is compelled to resign due to the intolerable work environment created by the conduct of the employer, such employee is entitled to treat themselves as having been dismissed, and the

employer’s conduct is often referred to as a repudiatory breach of the employment contract.^[6]

LEGAL FRAMEWORK IN NIGERIA 

Constructive dismissal is recognized as a form of unfair termination in Nigeria when it is proven that the employer’s actions forced the employee to resign; consequently, various laws provide frameworks for addressing the concept. Some of these laws include:

• Common law: Constructive dismissal is a doctrine that is rooted in common law. Under common law, where a party commits a fundamental breach of contract, the other party may treat the contract as terminated and claim damages, underscoring the sanctity of agreements and contracts as expressed in the Latin maxim Pacta sunt Servanda. In the context of employment, the employer, having failed to be bound to the contractual agreement by breaching fundamental terms, entitles the employee to treat the contract as terminated and claim damages as a result.

• International Standards: The concept of Constructive dismissal is rapidly gaining prominence in international law. In MS. F.L. v. ITU^[7], the Administrative Tribunal of the International Labour Organization defined constructive dismissal in the following words:

“Constructive dismissal denotes a situation in which an organization engages in conduct such as to indicate that it no longer considers itself bound by the fundamental terms of the employment contract with the consequence that, if the employee then terminates the contract, he or she is entitled to relief on the basis that the organization wrongfully terminated the contract.”

The Termination of Employment Convention of 1982 (C158) adopted by the International Labour Conference on 2nd June 1982^[8], also protects against unfair and unjust workplace dismissals.

• Case law: Nigeria lacks specific provisions covering constructive dismissal in the Labour Act 2004^[9]. However, the concept has been acknowledged and applied in numerous legal cases. The National Industrial Court in Nigeria, in its decisions, has recognized and applied the concept of constructive dismissal in deserving cases. The court in MISS EBERE UKOJI V. STANDARD ALLIANCE LIFE ASSURANCE CO. LTD^[10]. held thus-

“Globally, and in labour/employment law, constructive dismissal, also referred to as constructive discharge, occurs when an employee resigns because his/her employer’s behaviour has become intolerable or heinous or made life difficult that the employee has no choice but to resign. Given that the resignation was not truly voluntary, it is in effect a termination. In an alternative sense, constructive dismissal or constructive discharge is a situation where an employer creates such working conditions (or so changes the terms of employment) that the affected employee has little or no choice but to resign. Thus, where an employer makes life extremely difficult for an employee, to attempt to have the employee resign, rather than outright firing the employee, the employer is trying to create a constructive discharge. The exact legal consequences differ from country to country but generally, a constructive dismissal leads to the employee’s obligations ending and the employee acquiring the right to seek legal compensation against the employer. The employee may resign over a single serious incident or a pattern of incidents, generally, the employee must have resigned soon after the incident.”

In ENGINEER GODWIN OKPIAVBE v. COMMUNICATION CLEAN ENERGY TECHNOLOGY OGUA ENERGY^[11] The National Industrial Court shed further light on what amounts to constructive dismissal. In Paragraph 38, A. A. ADEWEMIMO J. explained as follows:

“The allegation levied against the defendant is forced resignation and in employment law this is tantamount to constructive dismissal. Constructive dismissal arise when an employee is forced to resign or leave the

employment, as a result of serious breach of contract, bullying, unfair treatment, stoppage or reduction of wages, etc.”

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