Constructive illegal dismissal

Following a recent decision of the Supreme Court, the forced resignation of an employee, i.e., being pushed to resign from work due to a hostile work environment, may be described as constructive illegal dismissal.

The case involved an employee of a car dealership who, after bringing a lawyer to his meeting with management in connection with disciplinary actions earlier imposed on him, became the subject of unsavory remarks by its president.

From then on, his sales accounts were taken away without any explanation, was given a low performance evaluation for failure to meet sales quotas and was transferred to another unit.

After submitting his resignation, “he was treated like a stranger-criminal and was subjected to undue harassment” and his last pay did not include his 13th month pay and earned commissions.

The complaint for illegal dismissal he had filed against the company was upheld by the court. As a result, the company was ordered to pay him unpaid wages, separation pay, unpaid commissions and exemplary damages.

The court ruled that “… actions demonstrating extreme dislike and hostile behavior, such as demotion, uttering insulting words, and apathetic behavior toward an employee, constitute constructive illegal dismissal when such actions cause the employment conditions to be so unbearable that there is no other choice but to resign.”

The employer was found to have created the conditions and circumstances that convinced the employee that it was in the best interests of his mental and physical well-being to terminate his employment.

It is common knowledge in labor circles that when an employer wants to get rid of an employee for one reason or another, but does not have legal grounds to do so or is averse to going through the required disciplinary process, it makes the employee’s life at the work place difficult by, for example, assigning additional work without commensurate compensation, giving inconvenient work hours or making a big fuss over minor lapses at work.

On the surface, those actions may not look unusual in the operation of any business and may be considered as inherent to management prerogatives.

But the underlying objective of those actions is to make the employee uncomfortable or feel harassed in the workplace that he or she is forced to resign in order to maintain his or her sanity.

The need to maintain mental health trumps the financial losses that are expected to arise from the resignation.

Unless the employer has a collective bargaining agreement or policy that provides for separation pay for resigned employees who have worked for a certain period of time, that employee can expect to receive only his or her last salary.

The employer would keep its fingers crossed that he or she would not contest his or her dismissal due to lack of financial resources since engaging the services of a lawyer for that purpose does not come cheap.

In the instant case, the court’s evaluation of the complaint was made easy by the fact that there was a paper trail or documentary evidence that showed the employer had committed acts of harassment that pushed the employee into quitting his job.

That strengthened the employee’s case and made short shrift of the arguments the employer raised to justify its actions against him. It helped also that there is a long standing doctrine in law that in case of doubt in labor cases, the doubt should be resolved in favor of labor.

The court’s recognition of the concept of constructive illegal dismissal sends a strong message to employers who may be inclined to do something similar to what the employer in this case did.

If they do, they risk being ordered to pay huge amounts of money to the illegally dismissed employee, including payment of exemplary damages as what happened in this case. That can burn a big hole in the employer’s pocket.

Note that exemplary damages are not standard in labor cases. If awarded, it is meant to send a message to employers against committing the same offense.