What is constructive dismissal, and how does it work in NZ?
Central Otago's employment relationships often move fast - seasonal work, tight teams, and high-pressure periods can mean things go from fine to untenable quickly. Both employers and employees often ask the same question: can someone resign and still bring a claim, or can conditions become so bad that a resignation counts as a dismissal?
That question sits at the heart of constructive dismissal, and it comes up regularly across our Cromwell, Wānaka and Alexandra employment files.
The short answer
Constructive dismissal is when an employee resigns, but the law treats it as a dismissal because the employer's conduct left the employee with no real choice. It is raised as a personal grievance under the Employment Relations Act 2000.
When the law will treat a resignation as a dismissal
Following the Court of Appeal's approach in Auckland etc Shop Employees IUOW v Woolworths (NZ) Ltd, this applies where:
- The employee had no real option but to resign.
- The employer deliberately set out to force the resignation.
- The employer breached good faith or the employment agreement, causing the resignation.
We commonly see this where an employer ignores repeated complaints during a busy vintage or ski season, or lets conditions become untenable.
Why these claims are hard to win
The burden sits with the employee to show resignation was the only realistic option - unlike an ordinary dismissal, where the employer must justify its actions. For employees, resigning in the heat of the moment can weaken a claim; get advice first. For employers, this higher bar is no excuse for inaction - a documented pattern of ignored complaints can still meet it.
The 90 day rule
An employee generally has 90 days from the issue arising (or becoming aware of it) to raise a grievance. Missing this window requires the employer's consent, or ERA leave, granted only in exceptional circumstances - giving employers more certainty once it passes, but underscoring the need to act early.
What you can do right now
Employees feeling pushed out should keep a written record and raise concerns in writing before resigning, if safe to do so. Employers should respond to complaints properly and promptly - inaction is one of the clearest routes to a successful claim.
Where a lawyer helps
The judgment call is usually about timing and evidence - whether the threshold is met, and whether resigning (or acting) now gives the stronger position. Early advice changes the outcome for both sides. If you're facing this situation, whether as an employee or an employer, our employment law team at Checketts McKay Law can help you work through your options before you act.
Quick questions
Do you have to be fired to raise a personal grievance? No - if the employer's conduct left the employee no real choice, the resignation can be treated as a dismissal.
How long do you have to act? Generally 90 days from the issue arising or becoming known, whichever is later.
Can an employer just deny it happened? They can dispute it, but the employee still carries the burden of proof. Evidence and timing matter for both sides.
By Karleigh Hoera, Senior Associate and Emma Tompkins, Solicitor. August 2026.