What is constructive dismissal in New Zealand and how do you prove it?

Last updated: 8 September 2026 | Written by Andy Bell, Partner, Lane Neave

Constructive dismissal in New Zealand is where an employee resigns, but the law treats the resignation as a dismissal because the employer’s conduct caused it. To prove it, the employee must show one of three things: the employer gave an ultimatum to resign or be dismissed; the employer followed a course of conduct with the dominant purpose of forcing a resignation; or the employer breached a duty (such as good faith, the employment agreement, or health and safety) in a way that made resignation reasonably foreseeable. The employee must also show the breach actually caused the resignation.

The test comes from the Court of Appeal in Auckland Shop Employees Union v Woolworths (NZ) Ltd [1985] 2 NZLR 372 and Auckland Electric Power Board v Auckland Provincial District Local Authorities Officers IUOW [1994] 2 NZLR 415. The burden of proof sits with the employee, and the threshold is higher than for an ordinary dismissal. Constructive dismissal claims are common: the Employment Relations Authority’s 2025 annual report records 408 of them among 1,680 unjustified dismissal claims. The ones that succeed usually involve unpaid wages or a clear breach of duty rather than a campaign of pressure.

If you succeed, the resignation is treated as an unjustified dismissal and the usual remedies apply: lost wages, compensation for humiliation, and in rare cases reinstatement. You have 90 days from your resignation to raise a personal grievance. The single most important piece of advice in this area is also the simplest: take advice before you resign, not after.

What are the three categories of constructive dismissal?

New Zealand courts recognise three situations in which a resignation becomes a dismissal.

1. Resign or be fired

The employer tells the employee, expressly or in substance, that if they do not resign they will be dismissed. The employee resigns to avoid the dismissal on their record. This is the clearest category and the easiest to prove if it is in writing.

2. A course of conduct designed to force resignation

The employer deliberately makes the employee’s position untenable with the dominant purpose of getting them to leave. This category requires proof of the employer’s purpose, which is hard. Courts look for a pattern: exclusion, removal of duties, unwarranted performance management, or repeated unfair treatment that only makes sense as a push toward the door.

3. Breach of duty making resignation foreseeable

The employer breaches a duty it owes the employee, and it was reasonably foreseeable that the employee would resign as a result. No intent is required. The breach can be of the employment agreement (for example, not paying wages), the statutory duty of good faith under section 4 of the Employment Relations Act 2000, or the duty to provide a safe workplace. In Auckland Electric Power Board, a meter reader was repeatedly sent into areas with dangerous dogs, his safety concerns were ignored, and he was warned he faced consequences if he refused. The Court of Appeal held his resignation was a constructive dismissal.

Most successful claims in recent years fall into the third category. Unpaid wages is the most common trigger. In Morgan v JML Construction Ltd [2026] NZERA 547, an employee who went five weeks without pay resigned and succeeded, receiving $18,000 in compensation plus arrears.

What does “reasonably foreseeable” mean?

The Authority asks whether, looking at all the circumstances, there was a substantial risk that the employee would resign because of the employer’s conduct. The employer does not need to have wanted the resignation. It needs to have acted in a way that a reasonable employer would recognise was likely to drive the employee out.

Ordinary workplace friction does not meet the standard. Being managed firmly, being given honest feedback, being declined a pay rise, or working under a manager you dislike are not breaches of duty. The conduct must be serious enough to amount to a repudiation of the employment relationship. Resigning in the middle of a disciplinary process, before the employer has made a decision, is a common way to lose a claim that might otherwise have had merit. Bullying at work can found a category three claim, but only where the employer knew about it and failed to act.

Did the employer’s conduct actually cause the resignation?

Causation is where many claims fall over. The employee must show that but for the employer’s breach, they would not have resigned. If the real reason was a new job, a relocation, or a decision made months earlier, the claim fails even if the employer behaved badly. In Chief of New Zealand Defence Force v Darnley [2022] NZEmpC 4, the employer had sent a preliminary decision letter that read as predetermined, which was a breach. But the employee had already accepted another job before she resigned, so the breach did not cause the resignation. The Employment Court overturned the Authority’s constructive dismissal finding and awarded $6,000 for the disadvantage instead, reduced for her own contribution.

Timing is critical. In Sanders v Hamilton City Council [2026] NZERA 517, the employee complained of a bullying manager, but that manager had left 14 months before the resignation. The constructive dismissal claim failed, although the employee received $18,000 for unjustified disadvantage. In Mowat v Christchurch Boys’ High School [2025] NZERA 855, a resignation nine months after the investigation the employee complained about was held not to be a constructive dismissal.

A long gap between the employer’s conduct and the resignation tells the Authority that the conduct was not the operative cause. The “final straw” doctrine allows an employee to rely on a series of incidents culminating in one last event, but the last event must be connected to the pattern and the resignation must follow promptly.

Notice what happened in Sanders and Mowat. The constructive dismissal claims failed, but the employees still recovered $18,000 and $25,000 for unjustified disadvantage because of what the employer did before they resigned. A claim for unjustified disadvantage does not depend on proving the resignation was a dismissal, and it is often the stronger claim.

What if I resigned in the heat of the moment?

A resignation given in anger or distress is still a resignation if a reasonable employer would have understood it that way. In Urban Décor Ltd v Yu [2022] NZEmpC 56, the Employment Court applied an objective test and confirmed, following Vermeulen v Mikes Transport Warehouse Ltd [2021] NZEmpC 197, that employers are not automatically obliged to offer a cooling-off period.

The Court’s position is that clear words of resignation can be accepted, and an employer that does so is not obliged to offer a cooling-off period. A careful employer will often still confirm in writing that the resignation was intended, because that costs nothing and avoids argument. If you have resigned in the heat of the moment and regret it, retract in writing immediately and seek advice the same day. The earlier you retract, the better your position.

How does the Employment Relations Amendment Act 2026 affect constructive dismissal claims?

The 2026 amendments came into force on 21 February 2026 and change three things. Our article on the Employment Relations Amendment Act 2026 covers the full set of changes.

High earners

Employees whose total remuneration is $200,000 or more can no longer bring a personal grievance for unjustified dismissal, subject to a transitional period until 21 February 2027 for existing agreements. Constructive dismissal is pleaded as an unjustified dismissal under section 103(1)(a). On the face of the Act, a high earner who resigns because of the employer’s breach loses the constructive dismissal route, although unjustified disadvantage, breach of contract and discrimination claims remain. No Authority decision has yet tested this point, and it will be argued.

Contributory conduct

Under new section 123B, if the employee’s own conduct contributed to the situation and amounted to serious misconduct, no remedy is available. Under section 123C, lesser contributory conduct removes reinstatement and compensation for humiliation, and lost wages can be reduced by up to 100 percent. An employee who resigns claiming constructive dismissal, but who was themselves the source of the workplace breakdown, now faces a much harder path to any award.

Process defects

Section 103A(5), as amended in 2026, provides that a dismissal is not unjustified solely because of process defects that did not cause actual unfairness. The word “minor” was removed. In many category three claims the employer’s process is the breach (a predetermined outcome, information withheld, a flawed investigation), so procedural failures still matter. What has changed is that a defect which caused no real unfairness will no longer carry a claim on its own.

“Constructive dismissal is the claim clients most often think they have and least often actually have. The law does not protect people from unhappy workplaces. It protects them from employers who breach their obligations in a way that leaves no reasonable choice but to leave. The difference between those two things is usually a paper trail: did you raise the problem in writing, and what did the employer do about it?” Andy Bell, Partner, Lane Neave (Legal 500 Asia Pacific Recommended Lawyer)

Does a 90-day trial period stop a constructive dismissal claim?

Yes, in most cases. An employee dismissed during a valid 90-day trial period cannot bring a personal grievance for unjustified dismissal, and since the 2026 amendments cannot bring a disadvantage grievance relating to the dismissal either. Constructive dismissal is a form of unjustified dismissal, so a valid trial period will usually block it. If you are inside a trial period and thinking of resigning because of how you are being treated, take advice first. A grievance for unjustified disadvantage about the treatment itself, raised while you are still employed, may be the only route open to you. Our article on how the 90-day trial period works explains when a trial period is valid.

What should I do before I resign?

If you are thinking about resigning because of how you are being treated, the steps you take before you go will decide whether you have a claim afterwards.

1. Raise the problem in writing. Set out what is happening, why it is a breach of your agreement or of good faith, and what you want done about it. This creates the record and gives the employer the chance to fix it, which the law expects.
2. Use the employer’s process. If there is a complaints or grievance procedure in your agreement or policies, follow it. An employee who resigns without giving the employer a chance to respond undermines the foreseeability and causation arguments.
3. Take advice before resigning. A lawyer can tell you whether the conduct meets the threshold, and often the better strategy is to stay, raise a personal grievance for unjustified disadvantage, and let the employer decide whether to dismiss you. A dismissal is far easier to challenge than a resignation.
4. See your doctor if your health is suffering. Sick leave with a medical certificate gives you time and documents the effect of the conduct. Keep the employer informed.
5. Keep records. Emails, messages, meeting notes and a dated diary of events are the evidence the Authority will rely on.
6. If you do resign, say why in writing. A resignation letter that states you are resigning because of the employer’s specific conduct, and that you consider it a constructive dismissal, preserves your position. A “thank you for the opportunity” resignation letter is very hard to walk back.

How long do I have to make a claim, and what can I get?

You must raise a personal grievance with the employer within 90 days under section 114 of the Employment Relations Act 2000. The period runs from the date the dismissal took effect or came to your notice, whichever is later. If you resigned with immediate effect, that is the day you resigned. If you worked out a notice period, it is the last day of employment. Do not rely on the later date; raise the grievance as soon as you can. A grievance is raised by telling the employer, in writing, what happened and that you consider it a constructive dismissal. You do not need to file anything with the Authority to stop the clock. Our personal grievance service for employees covers how we run these claims.

If the claim succeeds, remedies under section 123 include reimbursement of lost wages, compensation for humiliation, loss of dignity and injury to feelings under section 123(1)(c), and in some cases reinstatement. The Employment Court’s compensation bands, updated in GF v Comptroller of New Zealand Customs Service [2023] NZEmpC 101, are: band one up to $12,000 for low-level harm; band two from $12,000 to $50,000 for moderate harm; and band three above $50,000 for severe harm. The same decision confirmed that tikanga values such as whanaungatanga and manaakitanga inform what good faith requires of an employer, which is relevant to whether an employer’s conduct breached its duties. In 2025, Authority compensation awards ranged from $1,000 to $105,000, and around 40 percent were $20,000 or less.

If the conduct you are complaining about is happening inside a disciplinary or investigation process, our article on what happens in a workplace investigation explains what a fair process looks like, and our constructive dismissal guide is available as a download.

Key takeaways

• Constructive dismissal requires an ultimatum, a deliberate campaign, or a serious breach of duty. Ordinary unhappiness does not qualify.
• You must prove the breach caused the resignation. Resign promptly after the conduct, and say why in writing.
• Do not resign without advice. Staying and raising a grievance is often the stronger position.
• The 2026 amendments raise the bar further. High earners may be excluded, and your own conduct can eliminate remedies.
• The 90-day clock starts when the dismissal takes effect, usually the day you resign or your last day if you work out notice.

Frequently asked questions

Can I claim constructive dismissal if I resigned in anger?

Possibly, but the Employment Court applies an objective test: would a reasonable employer have understood you to be resigning? If so, the resignation stands unless the employer’s conduct in the lead-up meets the constructive dismissal threshold. Retract in writing immediately if you did not mean it.

How long do I have to raise a constructive dismissal grievance in NZ?

Ninety days from the date the dismissal took effect, under section 114 of the Employment Relations Act 2000, which is usually the day you resigned or your last day at work if you worked out notice. You raise it by notifying the employer in writing. Late grievances need the employer’s consent or leave from the Authority, which is only granted in exceptional circumstances.

How much compensation do you get for constructive dismissal in NZ?

It depends on the harm. The Employment Court’s bands are up to $12,000, $12,000 to $50,000, and over $50,000. Lost wages are claimed separately. Since 2026, any contributory conduct on your part can reduce or eliminate these remedies.

Does the $200,000 threshold stop high earners claiming constructive dismissal?

Constructive dismissal is a form of unjustified dismissal, which the Employment Relations Amendment Act 2026 removes for employees earning $200,000 or more in total remuneration. Existing agreements are protected until 21 February 2027. High earners retain claims for unjustified disadvantage, breach of contract and discrimination.

Should I resign or wait to be dismissed?

In most cases, wait. A dismissal must be justified by the employer under section 103A. A resignation must be proved to be a constructive dismissal by you, and the threshold is high. Take advice before deciding.

For employees: personal grievance services. For employers: employment law services for employers.

Andy Bell is a Partner at Lane Neave, an employment lawyer who has practised in New Zealand for over 20 years, acting for employers and employees in the Employment Relations Authority and Employment Court. He is a Recommended Lawyer in the Legal 500 Asia Pacific and a Recommended Employment Lawyer in Doyle’s Guide 2026.

Last updated: 8 September 2026