Constructive Dismissal – Involuntary Resignation by an Employee

What is constructive dismissal?

Constructive dismissal is an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely; or when there is a demotion in rank and/or a diminution in pay; it exists when there is a clear act of discrimination, insensibility or disdain by an employer, which makes it unbearable for the employee to continue his/her employment.[1] Constructive dismissal is, therefore, a dismissal in disguise.[2]

Here, the resignation is considered involuntary as the employee is basically left with no choice but to give up the employment due to discriminatory acts on the part of the employer. This is significant because when an employee is considered to have been constructively dismissed, he/she is entitled to the same reliefs as when an employee is illegally dismissed. The reliefs are found in Art. 294 of the Labor Code:

Art. 294. Security of tenure.

… An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

May any difficulty brought by the employer upon the employee constitute constructive dismissal?

No. In Philippine Span Asia Carriers Corporation v. Pelayo[3], the Supreme Court (SC) reiterated that not every inconvenience, disruption, difficulty, or disadvantage that an employee must endure sustains a finding of constructive dismissal.

There, the Court cited another case wherein the employee claims that her employer uttered harsh words. In disagreements, strong words may sometimes be used by the employer to convey his/her expectations or by the employee to describe the conditions of his/her work. However, the Court said, when these strong words from the employer happen without palpable reason or are expressed only for the purpose of degrading the dignity of the employee, then a hostile work environment will be created. In a sense, the doctrine of constructive dismissal has been a consistent vehicle by this Court to assert the dignity of labor.[4]

What then is the test before we can say that there is constructive dismissal?

The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances.[5] As it is a dismissal in disguise, the employee is not outrightly dismissed by the employer but the latter employs acts which make it difficult for the employee to stay and continue his/her employment.

What are some examples of the employer’s acts which constitute constructive dismissal?

The following instances were held by the SC as constituting constructive dismissal:

i. Subjecting the employee to indignities, humiliation, and bullying[6];


ii. Imposition of hostile and unreasonable working conditions by the employer[7]; and


iii. Transferring employees to far-off provinces after their refusal to sign an agreement with the employer reducing their benefits.[8]

Is constructive dismissal the same as illegal dismissal?

No, they are not the same. Illegal dismissal is readily shown by the act of the employer in openly seeking the termination of an employee while constructive dismissal, being a dismissal in disguise, is not readily indicated by any similar act of the employer that would openly and expressly show its desire and intent to terminate the employment relationship.[9] Both, however, provide for the same reliefs which is provided in Art. 294 of the Labor Code as mentioned above.


[1] Torreda v. Investment and Capital Corporation of the Philippines, G.R. No. 229881, September 05, 2018. [2] McMer Corporation, Inc. v. National Labor Relations Commission (NLRC), G.R. No. 193421, June 4, 2014. [3] G.R. No. 212003, February 28, 2018. [4] Id. [5] Supra, note 2. [6] Ico v. Systems Technology Institute, Inc., G.R. No. 185100, July 9, 2014. [7] Supra, note 2.

[8] Star Paper Corporation v. Espiritu, G.R. No. 154006, November 2, 2006. [9] Supra, note 1.

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