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Breaches of duty may prove costly if a worker resigns

By Dean Kilpatrick, Associate

First published in The Press 23 June 2009

Employers might breath a sigh of relief when a worker resigns in acrimonious circumstances.  But while it seems that a problem has been solved, an even bigger one may have been created.

In any dismissal, the issue is whether the employer followed a fair process before taking action and was the action fair and reasonable?One of the more unusual circumstances, though, is when an employee raises a personal grievance after resigning -  claiming they were unjustifiably constructively dismissed.  The obvious question is how can employees claim they were dismissed if they resigned? 

Over the years the Courts have established some broad principles for this type of claim and noted that an employee can claim to be dismissed, even though they resigned, when:

1.    They are given a choice between resigning or being dismissed;

2.    An employer has followed a course of conduct with the deliberate and dominant purpose of coercing an employee to resign; and/or

3.    A breach of duty by the employer causes an employee to resign

Where issues have been raised about potential breaches of obligations, an employer should properly investigate the complaints and, if/where appropriate remedy any possible wrong doing. It could be all too easy to sweep the problem under the carpet in the first instance, but that could lead to a costly outcome down the track.

Take the recent case of Mitchell v Blue Star Print Group (NZ) Ltd, for example, where an employee successfully claimed he was constructively dismissed because his employer breached its obligations under the Health and Safety in Employment Act 1992. 

The employee claimed to have suffered from back and arm pains due to his heavy work load operating a guillotine.  He reported the injuries, completing an injury report and they were discussed at a health and safety meeting.  He also sought treatment and claimed the cost of the treatment through ACC.  The employer was notified of the workplace injury claim.  The employee also subsequently wrote to the employer saying that he had endured a lot of stress. He outlined a number of concerns including his struggle to keep up with the demands of the job, his lack of tea breaks, and having to absorb the work of a co-worker who had been reassigned to other duties. The employee said he had raised his concerns previously and that the job was taking a toll on his life. He gave the employer 14 days to remedy the issues raised. 

The man went on sick leave for three weeks but when he returned no changes had been made.  He balcked out on his second day back at work, hitting his head on the guillotine.  When the employee came to, he filled out an accident report telling a co-worker what had happened. He then left work and tried to drive home but blacked out again and had an accident. He was taken to hospital where he was deemed unfit to work for a month.  The employee subsequently sought ACC cover. The employer denied that he had suffered a workplace accident.

The worker said his employer failed to take steps to prevent harm occurring to him, that it failed to assist his recovery and that it took steps to stop entitlement to ACC.  Conversely, the employer claimed it did not know of the medical problems until the first injury report, that after being made aware it took all necessary steps to address the concerns raised, and that it allocated work reasonably.

The Court ruled that the man’s physical problems were caused by the employer.  It went on to note the employer had breached its obligations under Health and Safety in Employment Act to take all practicable steps to provide a safe work place.  The employer had also failed to act fairly and reasonably towards the employee.  The Court said the breaches by the employer were serious and it was entirely foreseeable the employee would resign as a result of them.  The employer’s failure to take steps to alleviate difficulties at work and lack of support led directly to the employee’s resignation.  The Court awarded $10,000 compensation to the employee.

Another employer fared better in a second recent case. In this instance, an employee claimed that he had been constructively dismissed after allegations of harassment were made against him.  The employee attended a staff Christmas function held at company director’s house.  After the party, the director’s assistant (and also his fiance) complained the employee put his arm round her waist and made inappropriate comments to her during and after function. 

During the investigation by the Employment Relations Authority, the employee claimed the director subsequently rang him at his home and threatened him with physical violence.  The director denied this, but he did notify the employee that a meeting would be held to discuss the alleged incident.  The employee resigned before the meeting was held and subsequently claimed that he was constructively dismissed.  There was a further matter of whether or not the employee had been issued with a warning in the past about this type of behaviour.

The investigation found he had not. However, he was told and he understood that his behaviour toward the assistant was inappropriate in the past.  The Authority preferred the director’s evidence that he did not threaten the employee with physical violence.   In making these findings, the Authority ruled that the employee was not  disadvantaged in his employment, nor was he constructively dismissed.  It said there was no breach of duty by the employer, but even if there was a breach, it would not have been sufficiently serious to have made resignation a foreseeable consequence.

The message in both these cases is clear: before an employee can successfully claim they have been constructively dismissed they have to show that the employer acted within the scope of one of the areas above.   However, employers should be aware that when an employee resigns in less than friendly circumstances, it may be useful to just confirm that this is actually what the employee really wants to do.

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

Dean Kilpatrick is an associate specialising in employment law at national and trans-Tasman firm Duncan Cotterill.D.Kilpatrick@DuncanCotterill.com