Constructive Discharge In A Nutshell

Constructive discharge – also referred to as constructive termination or constructive dismissal – is a situation where an employee is forced to resign because of the company’s conduct. 

Understanding constructive discharge

Constructive discharge occurs when an employee is forced to resign due to their employer’s inappropriate conduct.

In the United States and many other jurisdictions, constructive discharge is essentially a form of involuntary termination.

Whilst it appears that the employee has resigned voluntarily, a hostile work environment created by the employer forces them to leave. In this situation, the employee resigns because they feel there are no viable alternatives.

Hostile work environments contravene employment contracts and/or common law and tend to be characterized by:

  • Bullying or sexual harassment from superiors or colleagues (and the failure by the company to manage or address it).
  • Poor treatment, such as unreasonable demotion or punishment. 
  • Removal of access to equipment, materials, or tools.
  • Underpayment of entitlements, such as a reduction in salary to below mandated levels or a decrease in the number of work hours, and
  • Serious concerns over workplace safety.

Legal implications for constructive discharge

There is no specific law forbidding constructive discharge per se.

But since the legal definition of the practice depends on a violation of labor laws, constructive discharge is de facto illegal and can form the basis of legal action on the employee’s part.

For a constructive discharge to qualify in the legal sense, it must pass a three-part test developed by the Equal Employment Opportunity Commission (EEOC). In short, the three parts include:

  • Working conditions such that a reasonable person in the employee’s position would also have found intolerable.
  • Intolerable working conditions that were the direct result of discriminatory conduct against the employee, and
  • The employee’s involuntary resignation that was caused by the intolerable working conditions.

Constructive discharge examples

To conclude, we’ll discuss some hypothetical examples of constructive discharge in the workplace.

Example 1 – a start-up company

James joins a new tech start-up as its fourth employee. The three other employees are childhood friends and also the company’s founders. 

James is set to be paid after his first month of work, but two weeks go by without payment. Upon raising the issue, James is told that money is tight and is the company is actively trying to secure seed funding. 

Another fortnight passes and James has still not been paid. In the office, he overhears one of the founders discussing how he is going to spend his salary for that month and concludes that he is the victim of unfair treatment. 

He is forced to leave the company soon after to find paid work elsewhere.

Example 2 – feedback on the leadership team

When employees are offered the chance to provide feedback on the leadership team, Rachel completes the survey with some constructive criticism for one individual in particular and how they could better manage others.

The day after, leaders react badly to the survey, band together, and take retaliatory action against Rachel. It starts when the management team does not greet Rachel as she arrives at work and then continues in the morning meeting where they avoid asking for her input. 

Weeks later, Rachel is overlooked for a promotion despite being the most qualified and senior employee. Ultimately, Rachel’s exclusion from operations becomes untenable and she is forced to resign. 

Key takeaways

  • Constructive discharge occurs when an employee is forced to resign due to their employer’s conduct. In the United States and many other jurisdictions, constructive discharge is essentially a form of involuntary termination caused by a hostile work environment.
  • Hostile work environments contravene employment contracts and/or common law and tend to be characterized by bullying, harassment, unreasonable demotion or treatment, no access to materials, tools, or equipment, a lack of workplace safety, and underpayment of entitlements.
  • There is no specific law forbidding constructive discharge, but if hostile work environments have violated labor laws, then constructive discharge is de facto illegal and can form the basis of a wrongful termination lawsuit. 

Additional Related Concepts

Agile Leadership

Agile leadership is the embodiment of agile manifesto principles by a manager or management team. Agile leadership impacts two important levels of a business. The structural level defines the roles, responsibilities, and key performance indicators. The behavioral level describes the actions leaders exhibit to others based on agile principles. 

Adaptive Leadership

Adaptive leadership is a model used by leaders to help individuals adapt to complex or rapidly changing environments. Adaptive leadership is defined by three core components (precious or expendable, experimentation and smart risks, disciplined assessment). Growth occurs when an organization discards ineffective ways of operating. Then, active leaders implement new initiatives and monitor their impact.

Delegative Leadership

Developed by business consultants Kenneth Blanchard and Paul Hersey in the 1960s, delegative leadership is a leadership style where authority figures empower subordinates to exercise autonomy. For this reason, it is also called laissez-faire leadership. In some cases, this type of leadership can lead to increases in work quality and decision-making. In a few other cases, this type of leadership needs to be balanced out to prevent a lack of direction and cohesiveness of the team.

Distributed Leadership

Distributed leadership is based on the premise that leadership responsibilities and accountability are shared by those with the relevant skills or expertise so that the shared responsibility and accountability of multiple individuals within a workplace, bulds up as a fluid and emergent property (not controlled or held by one individual). Distributed leadership is based on eight hallmarks, or principles: shared responsibility, shared power, synergy, leadership capacity, organizational learning, equitable and ethical climate, democratic and investigative culture, and macro-community engagement.


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A RASCI matrix is used to assign and then display the various roles and responsibilities in a project, service, or process. It is sometimes called a RASCI Responsibility Matrix. The RASCI matrix is essentially a project management tool that provides important clarification for organizations involved in complex projects.

Organizational Structure

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Tactical Management

Tactical management involves choosing an appropriate course of action to achieve a strategic plan or objective. Therefore, tactical management comprises the set of daily operations that support long strategy delivery. It may involve risk management, regular meetings, conflict resolution, and problem-solving.

High-Performance Management

High-performance management involves the implementation of HR practices that are internally consistent and aligned with organizational strategy. Importantly, high-performance management is a continual process where several different but integrated activities create a performance management cycle. It is not a process that should be performed once a year and then hidden in a filing cabinet.

Scientific Management

Scientific Management Theory was created by Frederick Winslow Taylor in 1911 as a means of encouraging industrial companies to switch to mass production. With a background in mechanical engineering, he applied engineering principles to workplace productivity on the factory floor. Scientific Management Theory seeks to find the most efficient way of performing a job in the workplace.

Change Management


TQM Framework

The Total Quality Management (TQM) framework is a technique based on the premise that employees continuously work on their ability to provide value to customers. Importantly, the word “total” means that all employees are involved in the process – regardless of whether they work in development, production, or fulfillment.

Agile Project Management

Agile Management
Agile Project Management (AgilePM) seeks to bring order to chaotic corporate environments using several tools, techniques, and elements of the project lifecycle. Fundamentally, agile project management aims to deliver maximum value according to specific business priorities in the time and budget allocated. AgilePM is particularly useful in situations where the drive to deliver is greater than the perceived risk.

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