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Constructive Dismissal: What It Actually Means Under The Ghanaian Law

Introduction:

Employment is regarded as the most fundamental aspect of a person’s life because the provision of one’s basic needs depends on it. Generally, a contract of employment legally binds an employer and employee and it is expected that both parties go by the terms of the contract. Many employers sometimes go contrary to the terms of the contract and most employees simply bow to the whims and caprices of their employers because they simply have to keep up with it to earn their daily bread.

Some employees may know the labour laws in Ghana have some remedies for them but deliberately do not act for fear of being fired or victimize at the workplace. This is not surprising considering the high level of unemployment in Ghana. Other employees are just oblivious of what the law says when an employer unilaterally alters the terms of the employment contract or frustrate them until they resign from their work. This article seeks to discuss the law of constructive dismissal under the Ghanaian law and the remedies available to aggrieved employees.

What Is Constructive Dismissal?

Constructive dismissal is a term applied to resignation by an employee in circumstances such that he or she is entitled to terminate the contract without notice because of the employer’s conduct[1]. This occurs when the employer significantly alters the terms of an employee’s contract of employment which the employee does not consent to, either explicitly or implicitly. In addition, where the employer creates circumstances in the workplace which makes the continuation of the employment relationship unbearable for the employee, to such an extent that the employee has no other alternative than to resign, the employee would be deemed to have been constructively dismissed.The Court held in the case of Potter v New Brunswick (Legal Aid Services Commission)[2] that constructive dismissal can take two forms: that of a single unilateral act that breaches an essential term of the contract, or series of acts taken together, shows that the employer no longer intended to be bound by the contract. 

Examples of constructive dismissal include the following: 

  • The employer demoting an employee or reducing the employee remuneration;
  • The employer refusing by words or conduct, to allow the employee to fulfil the conditions of employment such as locking an employee out of the building or removing supporting staff;
  • The employer abusing or harassing the employee;
  • The employer giving the employee the choice of accepting the fundamental change or being fired;
  • Inconvenient geographic transfer;
  • Any act by the employer that would set the employee up to fail at their job;
  • The employer harassing or abusing an employee;
  • Failing to correctly address  and investigate  grievances;
  • Creating promotion or pay raise obstacles;
  • Suspending or excluding an employee without a solid, or proven reason;
  • Refusal to intervene in cases of harassment at the workplace. 

What It Means Under The Ghanaian Law

The Labour Act, 2003[3], does not expressly state constructive dismissal but the court held in the case of Jonathan Ago Adjei& ors vs GCB Bank Limited[4], that Section 63(3) of the Labour Act, 2003[5] makes provision for constructive dismissal. This section provides that where an employee is unfairly terminated with or without notice to the employer, and the employee terminates the contract of employment because of ill-treatment of the employee by the employer looking at the circumstances of the case then it is deemed that the employee has been constructively dismissed.  Furthermore, an employee is deemed to be constructively dismissed according to Section 63(3) of the Labour Act if the employer has failed to take action upon repeated complaints of sexual harassment of the employee at the workplace. 

In the case of Jonathan Ago Adjei& ors vs GCB Bank Limited[6], the Court of Appeal overturned the decision of the High Court because it was found that the ill-treatment of the appellants led to their resignation. The facts of the case are that, the appellants were engaged by the respondents as temporary employees for a period of five years. The appellants in the course of their employment received letters from an employment agency engaged by the respondents that they had been offered a contract appointment for a period of six months by the employment agency and they have been assigned to the respondents. In sum, the letter sought to change the employment status of the appellants from temporary employees of the Respondent to temporary employees of the employment agency. The appellants sued inter alia for unlawful termination but the respondent contended that the appellants on their volition resigned from their employment thus have no cause of action against them. Judgment went against the appellant at the trial court but the Court of Appeal overturned the decision of the trial court. The Appeal Court held that the appellants were compelled because they had been made worse off by the Respondent when they tried to transfer them to an employment agency after enduring an inordinately long period of employment as temporary workers with the Respondents. Thus it would be deemed that the Appellants were constructively dismissed.

The case of  Dr. Kwame Owusu vs Fairfax Oil Services Ltd& anor[7] is also another case where an employee succeeded in an action of constructive dismissal because the employer unilaterally altered the terms of the employment contract. The Plaintiff contended that, the defendant’s director convened a meeting at which he asked the Plaintiff to work for four months without the payment of salaries.  The explanation given to the Plaintiff was that the 1st defendant company was going through financial hardship and was unable to pay salaries for the four months.  According to the Plaintiff, the 1stdefendant’s director, at the said meeting indicated that anyone unwilling to work without pay for the said period could resign or leave the employment of the 1st defendant. According to the plaintiff,  he rejected the proposal and refused to work for four months without pay.  The Plaintiff further stated that at the close of the meeting he was given a document headed “Mutual Abrogation of Contract”.  This document, according to the Plaintiff, was intended to terminate his contract of employment with the 1st defendant.  The Plaintiff refused to sign the document. The issue in contention was whether or not the contract of employment of the plaintiff was constructively terminated by the defendants. It was held that the 1st defendant constructively terminated the employment of the plaintiff with its own actions. This is because the 1st defendant attempted not to pay the plaintiff for four months which was a fundamental change to a clause in the contract of employment. In addition, it was also held that the “Mutual Abrogation Contract” which was given to the plaintiff to review and sign, constitute an act by the employer giving the employee the choice of accepting the fundamental change or being fired under the cloak of “mutuality”. 

In determining if an employee has been constructively dismissed by an employer, the burden rests on the employee to establish that he or she has been constructively dismissed. The burden will rather be on the employer if the constructive dismissal arises as a result of a suspension of the employee by the employer.This is because the employer would have to prove if the suspension was reasonable and justifiable. 

An employee who would like to succeed in an action of constructive dismissal must first prove that an express or implied contract term has been breached and then prove that the breach is detrimental to the employee. An express or implied term of a contract term would be deemed as breached if the employer unilaterally change the terms of the contract, and the change substantially alters an essential term of the contract as was the case of Dr. Kwame Owusu vs Fairfax Oil Services Ltd& anr[8].  Furthermore, the court would look into whether at the instance the breach occurred, a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were changed substantially. How substantial the term of the contract that is breached, is of great significance to determine whether an employee has been constructively dismissed. In the case of Potter V New Brunswick (Legal Aid Services Commission)[9], it was held that a breach that is minor but argued to be a substantial change to an essential term of the contract does not amount to constructive dismissal.

An employee who is successful in proving that he has been constructively dismissed is entitled to damages. Damages may be awarded to put the employee in a position he would have been had the employer performed its obligation in accordance with the contract of employment. The measure of damages is the quantum of what the aggrieved party would have earned from his employment during such reasonable period, determinable by the court, after which the employee should have found alternative employment[10]. The Court would also consider all the circumstances of the case before they will award fair and reasonable damages. 

The court when considering damages in the case of Dr. Kwame Owusu vs Fairfax Oil Services Ltd& anr[11] for example, considered the circumstances surrounding the constructive dismissal of the employment of the Plaintiff. It also considered the nature of the plaintiff’s profession and even the financial status of the defendant company as at the time of the termination before the Plaintiff was awarded with damages. 

What Employees And Employers Must Know

It is worthy of note that an employee who consents to or acquiesces to a unilateral change of the terms of contract of his or employer cannot claim constructive dismissal. This is because it would be deemed that the employee has waived his rights to claim for constructive dismissal. Moreover, in determining whether the employee has been constructively dismissed depends on the facts of the case hence one cannot just generalize. The reason it is advisable to consult a good employment/labour lawyer when situations of these nature arise. 

Employers should avert their minds to the rational of the Labour Act 2003[12] when making decisions against their employees. In the case of Jonathan Ago Adjei& ors vs GCB Bank Limited[13], the Court speaking through Poku-Acheampong, J.A. outlined the three major objectives of the Labour Act, 2003[14]. They are:

  • to determine the legal relations that should exist at the workplace between employers and workers;
  • to make labour relations predictable and;
  • to ensure that there is harmonious workplace relations to enhance productivity, profitability at the workplace and job creation. 

Employers should bear this in mind when making decisions affecting employee so they avoid being sued for constructive dismissal. If a term of a contract of employment needs to be changed especially, if it would substantially alter the contract of employment, a prior notification to the employee needs to be done. Most importantly there must be consent from the employee that he/she has accepted the changes and this consent should preferably be in writing for proper documentation. The best option in my view is to consult a good employment/labour lawyer on the best possible solution in order to avoid suits of constructive dismissal. 

Conclusion

In conclusion, where there are substantial changes in the terms of the employee’s contract of employment which the employee does not consent to either explicitly or implicitly, then the employee is deemed to have been constructively dismissed. In addition, series of acts taken together, to show that the employer no longer intends to be bound by the contract of employment could constitute constructive dismissal. Section 63(3) of the Labour Act, 2003[15] makes provision for constructive dismissal. If one is successful that he was constructively dismissed, he or she could recover damages for breach of contract of employment. The Court in assessing damages for the aggrieved employee would measure the quantum of what the aggrieved party would have earned from his employment during a reasonable period determined by the Court.


[1]Robert Upex,The law of Termination of Employment (5thedn, Sweet and Maxwell 1997)130

[2][2015] 1 SCR 500

[3] Act 651

[4]Civil Appeal No. 1/01/2018 dated 21 March 2019

[5]Ibid(n3)

[6]Ibid(n4)

[7]Suit NO. CM/0051/16 dated 8 February 2018

[8]ibid 

[9]Ibid(n2)

[10]Ashun v Accra Brewery Ltd[2009] SCGLR 81

[11]ibid(n7)

[12]Ibid(n3)

[13]ibid(n4)

[14]ibid(n1)

[15] Ibid(n3)

Yaw Marfo Amankwah

6 thoughts on “Constructive Dismissal: What It Actually Means Under The Ghanaian Law

  1. Very clear statement of the position of the law on the issue. I’ve enjoyed reading it . I truely wish my Institution’s Legal Office wakes up to this and properly advice the power that be in our system.

  2. May CEO be kept in the dark from such good stuffs so that plaintiffs shall be awarded big damages all the time. Some employers are simply sick.

  3. please from what I read, the constructive dismissal is there for aggrieved employees, is there any past case where the court rule against the employee and have to pay damages to the employer?

  4. I was terminated whiles on maternity leave and there was a section in my contract which says Employment at will, meaning an employee can resign at anytime and vise visa. I was not able to take any action because of that clause. Please do you I have a case?

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