Constructive Dismissal: What Actually Counts (And What Doesn't)

An employee walks out, and two weeks later a CCMA referral arrives claiming constructive dismissal. The first thing most employers say is: nobody dismissed him, he resigned. That instinct is right, and it is also not a defence on its own. South African law treats certain resignations as dismissals, and the question is never whether the employee was unhappy. It is whether you made staying impossible, and whether they had any other way out.

What the law actually says

Section 186(1)(e) of the Labour Relations Act defines a dismissal to include the situation where an employee terminated employment, with or without notice, because the employer made continued employment intolerable. That is the whole statutory definition. Everything else — the test, the threshold, the defences — comes from how the Labour Court and Labour Appeal Court have applied it over nearly three decades.

The critical procedural point in your favour: in an ordinary dismissal, the employee proves there was a dismissal and then you carry the onus of proving it was fair. In constructive dismissal, the employee must first prove that a dismissal happened at all. Until they discharge that onus, you are not defending fairness — you are simply saying there was nothing to be fair about. Commissioners sometimes forget this. Your representative should not.

The four things the employee has to prove

The Labour Appeal Court in Pretoria Society for the Care of the Retarded v Loots and later in Solid Doors v Commissioner Theron settled the elements. An employee claiming constructive dismissal must show all of the following, not some of them:

• They actually resigned or terminated the contract. Being placed on suspension, being transferred, or being unhappy is not a termination. Something must have ended the employment relationship at the employee's hand.
• Continued employment had become objectively intolerable. Not unpleasant, not unfair, not disappointing — intolerable, measured against what a reasonable person would endure, not against how sensitive this particular employee is.
• The employer caused the intolerability. A toxic client, a difficult spouse, a long commute or a colleague acting on their own frolic will not qualify unless you knew about it and did nothing.
• Resignation was the only reasonable option left. This is where most claims die. If a grievance procedure existed and was never used, if a transfer was offered and refused, if there was a functioning HR channel the employee never approached, the claim usually fails.

What is not constructive dismissal

Employers panic at the phrase, and often settle claims that would have failed. The following, on their own, have repeatedly been held not to make employment intolerable:

• Being charged with misconduct and required to attend a disciplinary hearing — even where the employee believes the charges are unfounded. The hearing is the forum to say so.
• Being suspended on full pay as a precautionary measure while an investigation runs.
• Being placed on a performance improvement plan, or receiving critical feedback, or receiving a valid written warning.
• A lawful instruction the employee dislikes, or a change in duties that falls within the contract.
• A manager with a blunt or abrasive style, absent a sustained pattern of abuse that you were told about and ignored.
• General unhappiness about pay, promotion, or the direction of a restructure.

What does cross the line

The claims that succeed almost always have one feature in common: the employer was told, and the employer did nothing. Conduct that regularly meets the threshold includes a unilateral cut in pay or a demotion imposed without agreement or a fair process; sustained harassment, bullying or racial or sexual conduct that was reported and not investigated; stripping an employee of all meaningful duties to push them out; and threatening criminal charges or blacklisting unless the employee goes quietly.

The Supreme Court of Appeal in Murray v Minister of Defence framed it usefully: the enquiry is whether the employer, without reasonable and proper cause, conducted itself in a way calculated or likely to destroy the relationship of trust and confidence. That is a conduct test aimed at you, not a mood test aimed at the employee.

Your grievance procedure is the defence

If there is one paragraph to take from this article, it is this one. The single most effective answer to a constructive dismissal claim is a documented grievance procedure that the employee either never used, or used and had properly addressed. Arbitrators ask the same question every time: why did you not raise it?

That defence only works if the procedure is real. It must be in writing and issued to staff, it must name a person to receive a grievance who is not the person complained of, it must have timeframes, and every grievance must generate a written outcome. A policy nobody has seen, or a grievance that was lodged and never answered, converts your best defence into the employee's best evidence. If you are not confident your policies would survive that scrutiny, that is a conversation worth having before a claim arrives, not after.

The "resign or we charge you" trap

Offering an employee the chance to resign instead of facing a disciplinary hearing feels merciful and efficient. It is one of the most common routes into a constructive dismissal or forced-resignation finding. Presented with a choice between resigning and being charged, an employee can credibly argue there was no real choice at all, and that the resignation was obtained under duress.

If you have grounds to charge someone, charge them and run a proper hearing. If the employee independently offers to resign, take it in writing, in their own words, and do not sweeten it with a threat. The moment your side of the conversation includes the word "otherwise", you have handed over the case.

What to do the day a resignation letter arrives

Most constructive dismissal cases are won or lost in the week after the resignation, long before anyone thinks about the CCMA. Treat every resignation that contains a complaint as a live risk, not as paperwork.

• Read the letter for allegations, not just for the notice period. Any mention of treatment, victimisation, harassment or being forced out is a grievance in disguise.
• Acknowledge in writing, and where there are allegations, say expressly that you do not accept them and that you invite the employee to lodge a grievance so the matter can be investigated.
• Offer to hold the resignation in abeyance pending that process. An employee who declines a genuine offer to investigate has badly damaged the "no reasonable alternative" element.
• Run an exit interview and keep the record. A signed exit form citing a better offer elsewhere is powerful evidence six months later.
• Preserve the file — emails, warnings, grievance records, minutes, pay history. Do not let a departing manager clean out a mailbox.

If it is referred to the CCMA

The employee has 30 days from the date the resignation took effect to refer an unfair dismissal dispute; later referrals need condonation, which is not automatic. The matter goes to conciliation and, if unresolved, to arbitration — unless the reason alleged is automatically unfair, such as a protected disclosure or discrimination, in which case it heads for the Labour Court.

The exposure at arbitration is compensation of up to 12 months' remuneration for an ordinary unfair dismissal, and up to 24 months where the dismissal is automatically unfair. Reinstatement is rarely ordered in constructive dismissal cases for the obvious reason that the employee has already said the workplace was intolerable. Because the employee carries the onus, these are cases worth defending on the merits rather than settling reflexively — but only if your documents support you. Our other employer guides cover the discipline and record-keeping that make that possible.

Frequently asked questions

Can an employee claim constructive dismissal if they resigned with proper notice?

Yes. Section 186(1)(e) covers termination with or without notice. Serving notice does weaken the argument that conditions were so intolerable the employee could not stay another day, and arbitrators do weigh it, but it is not a complete answer on its own.

Does an employee have to lodge a grievance before claiming constructive dismissal?

There is no absolute statutory requirement, but it is close to decisive in practice. The employee must show resignation was the only reasonable option. Where a workable grievance procedure existed and was never used, that element usually fails — unless the employee can show that using it would have been futile, for example because the grievance would have gone to the very person responsible.

How long does an employee have to refer a constructive dismissal to the CCMA?

Thirty days from the date the resignation took effect. Out of time referrals require an application for condonation, which the employee must justify on the degree of lateness, the explanation, and the prospects of success.

Is a demotion or a pay cut automatically constructive dismissal?

Not automatically, but a unilateral reduction in remuneration or status, imposed without agreement and without a fair process, is one of the strongest grounds an employee can have. If a change to terms is genuinely necessary, consult, record the agreement, and get it signed.

What can it cost us if we lose a constructive dismissal case?

Compensation of up to 12 months' remuneration for an unfair dismissal, or up to 24 months where it is found to be automatically unfair. Add the cost of representation and management time, and the fact that an adverse award becomes a template every future claimant will use against you.

This article is general information on South African labour law and is not legal advice on your specific situation. Speak to us about your facts.