Constructive dismissal when does it apply?

1. What is Constructive dismissal?

Constructive dismissal has not been defined under the Kenyan Employment Act 2007. However, the Cambridge University dictionary defines constructive dismissal as “actions taken by an employer that intentionally make working conditions for an employee difficult or unfair so that the employee feels forced to leave their job”.  The Black’s Law Dictionary (9th Edition)  also defines constructive dismissal as “A termination of employment brought about by the Employer making the employee’s working conditions so intolerable that the employee feels compelled to leave.”

To further interpret constructive dismissal we shall look at the case of Nathan Ogada Atiagaga versus David Engineering Limited (2015) eKLR, “where Nathan Ogada(claimant)  claims that on July 2007 he was employed by the Respondent as a Supervisor at a salary of Kshs.64, 000.00 per month which was increased to Kshs.88, 100.00. On 2^nd December 2013, the Claimant resigned from his position and gave notice of 2 months after noting several problems in late payments of salaries; working hours; medical cover; safety at work; among other concerns. The late payment of salaries made working conditions very harsh leading to the Claimant resigning which is tantamount to constructive dismissal. “

The Judge in the case defined constructive dismissal as “Constructive dismissal occurs when an employee resigns because their employer’s behaviour has become so intolerable or made life so difficult that the employee has no choice but to resign. Since the resignation was not voluntary, it is a termination in effect. For example, when an employer makes life extremely difficult for an employee to force the employee to resign rather than outright firing the employee, the employer is trying to affect a constructive discharge. The Court awarded him Compensation awarded at Kshs.1,057,800.00;”

Constructive dismissal is the only form of termination that allows an employee who voluntarily resigns from employment to sue an employer for wrongful termination of employment. The court in the case of  Godfrey Allan Tolo v Tobias O. Otieno & another [2022] Eklr stated that “ For constructive dismissal to be inferred, the employee must have resigned within a reasonable time from his employment, with or without notice as a result of the employer’s hostile treatment or hostile working conditions at his workplace. The employer must also not have expressed the desire to terminate the employee.”

2. Examples of constructive dismissal

1. Unilaterally varying the contract of employment
2. Non-payment of salary or delay of salaries
3. Indefinite suspension without pay of salary
4. Not being assigned duties by the employer
5. Being overworked by employers
6. Negative discrimination against the employee
7. Mistreatment by the employer such as verbal abuse directed to the employee.

3. What happens when a constructive dismissal suit is filed against an employer?

Where courts or the Labour Office have made a finding as to the existence of constructive dismissal, they have not shied away from awarding damages and other remedies to the affected employee as against the employer, including the wages which the employee could have been entitled to had he been granted adequate notice of termination as prescribed under the Employment Act 2007 or the Employment Contract. 

In the case of D.K Njagi Marete versus Teachers Service Commission, (2013) eKLR, the court stated as follows:

“What remedies are available to the Employee? This Court has advanced the view that employment remedies, must be proportionate to the economic injuries suffered by the employees. These remedies are not aimed at facilitating the unjust enrichment of aggrieved employees; they are meant to redress economic injuries in a proportionate way.”

4. Remedies granted by the court in cases of constructive dismissal.

There are mostly three remedies for this, reinstatement, re-employment, and compensation. Section 49 of the Employment Act 2007 sets out in detail the remedies that one is entitled to if they are constructively dismissed, wrongfully dismissed or terminated from employment unfairly and in particular:

1. The wages which the employee would have earned had the notice period which they were entitled to has been issued as per the contract.
2. The proportion of wages due for the period of time for which the employee worked if the employee was dismissed before the completion of a period for which a wage is payable.
3. Payment for any other loss, resulting out of the dismissal, suffered between the date of dismissal and date of expiry of the period notice is required either statutorily or contractually. 
4. Payment of equivalent the salary for a given number of months but capped as twelve (12) months.
5. Reinstatement of the employee with benefits as if the person had not been terminated.
6. Reengagement in work comparable to which the employee used to do prior to the dismissal earning the same wage.

Principles the Court follows to ascertain constructive dismissal and award damages

Before the court can grant any remedies there are certain factors it takes into consideration. Below, we shall analyze The court of appeal case of Coca-Cola East and Central Africa Limited versus Maria Kagai ligaga, (2015) eKLR, to understand better. 

Coca-Cola and Maria entered into a contract of employment dated 30th July, 2005 whereby the Maria assumed duty as the Human Resource Manager with effect from 1st September 2005. The station of duty of Maria was Nairobi, Kenya.

The employer/employee relationship between the Coca-Cola and Maria was pleasant until December 2008 when the Coca-Cola relocated the Maria and her whole family to Kampala-Uganda. In January 2009, within one month of being deployed to Kampala, Coca-Cola verbally advised Maria to relocate to Mozambique. Before Maria could travel to Mozambique, she was relocated to Nairobi from February to April 2009. During this period, Maria stated that due to lack of work or duties, she was frustrated and demoralised. She was then relocated to Nyeri Town in Kenya with effect from 1st April, 2009; no clear duties were assigned to her. Thereafter, Coca-Cola relocated Maria to work in Kisii and Kisumu towns with effect from 1st June, 2009; Maria reported to work at Kisumu but on 3rd June, 2009, she was asked to leave Kisumu without any consultation. Aggrieved, Maria informed Coca-Cola, as her employer, that she has been left with no work or duties to perform thus causing her harassment, frustrations, inconvenience, anxiety, mental and emotional distress and embarrassment.

From these facts, Maria contended that Coca-Cola as her employer was in breach of contract and violated its own Work Place Rights Policy as well as local and international labour regulations. Maria stated that upon being recalled to Nairobi from Kisumu and with no clear job assignment, she wrote a letter dated 5th June, 2009 to Coca-Cola expressing her fears that she had no work to do and that the state of affairs was causing her emotional distress.

From this case, the court set out the legal principles for determining constructive termination and the principles are as follows:

1. What are the fundamental or essential terms of the contract of employment?
2. Is there a repudiatory breach of the contract’s fundamental terms through the employer’s conduct? A repudiatory breach is a breach of contract that goes to the very core of the contract and gives the innocent party the right to treat the contract as being disregarded and entitles the innocent party to refuse to be bound by its terms.
3. The conduct of the employer must be a fundamental or significant breach going to the root of the contract of employment or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract. An objective test is to be applied in evaluating the employer’s conduct.
4. There must be a causal link between the employer’s conduct and the reason for the employee terminating the contract i.e., causation must be proved.
5. An employee may leave with or without notice so long as the employer’s conduct is the effective reason for termination.
6. The employee must not have accepted, waived or conducted himself to be estopped from asserting the repudiatory breach; this means the employee must within a reasonable time terminate the employment relationship pursuant to such breach.
7. The burden to prove repudiatory breach or constructive dismissal is on the employee.
8. Facts giving rise to repudiatory breach or constructive dismissal are varied.”

From the above-mentioned principles, the court of appeal ruled in favour of Maria stating that “The Appellant (Coca-Cola) in this dispute appears to us, to have been an employer who created an intolerable work environment, fundamentally breached the contract of employment through sheer professional incompetence, rather than through any deliberate acts of coercion, threats or duress. This is what constitutes constructive dismissal. Indeed, the concept demands that the employee initiates the termination and does so within a reasonable time after the trigger. Further, the appellant has not demonstrated to us how the trial court abused its discretion or if the court misdirected itself in any way. We decline to interfere with the order that the appellant is to pay the respondent (Maria) nine (9) months’ salary. The awarded sum of Kshs.6,416,406 (six million, four hundred and sixteen thousand four hundred and six only) is however subject to all relevant statutory deductions being made. “

In conclusion.

One important point to note is that the employee might think that the reason behind the resignation was the employer but it is very difficult to prove it in a court of law. Hence, if the employee does not have any substantial evidence against the employer, it would be tough to prove it.If your evidence is not substantial then there is a good chance that the employer would be given the benefit of the doubt. If you do have a case for constructive dismissal, you should leave your job immediately – your employer may argue that, by staying, you accepted the conduct or treatment.