ACCA Corporate and Business Law (F4) Certification Practice Exam

Constructive dismissal refers to a situation where an employee resigns from their position as a direct result of the employer's conduct, which has made the working environment unbearable or intolerable. This could involve actions such as a significant reduction in responsibilities, a hostile work environment, or a failure to address harassment or discrimination effectively.

In such cases, although the employee has technically resigned, the circumstances surrounding their decision are such that the resignation is viewed as a dismissal in the eyes of the law. This legal perspective protects employees from being forced into resignation due to their employer's unreasonable behavior, allowing them to claim remedies as if they had been wrongfully dismissed.

Other options presented do not fit the definition of constructive dismissal. Dismissal for misconduct involves a direct termination by the employer based on the employee's actions, while an employer terminating due to budget cuts reflects an employer's choice rather than a situation created by an adverse work environment. A temporary layoff is a different employment arrangement, typically not involving resignation or an unbearable work situation.