What is Constructive Dismissal?

Constructive dismissal refers to a situation in which an employee resigns in response to their employer’s conduct. In this situation, the employer has created such an intolerable working environment, either through a single serious event or a series of smaller events, that the employee has no option but to resign. The employer’s behaviour must be a breach of the employment contract and make continuing to work for the employer impossible.

It is important to note that not every unpleasant or difficult situation in the workplace entitles an employee to resign and claim constructive dismissal. 

Basic principles 

The employer must be in serious breach of contract. A breach of contract can be one serious incident or a series of smaller incidents that accumulate overtime, ending with a ‘final straw’ incident.

The employee must resign promptly, and in response to the employer’s breach of contract.

The employee must prove that the employer has acted in breach of contract. 

The employee must show that that the employer’s conduct is more than unreasonable – the distinction is often a narrow one, and the employee must show that the employer’s conduct was intentional or likely to destroy trust and confidence.

Examples of breach of contract

1. A breach of the implied term of trust and confidence such as:

• Harassment, discrimination, bullying, or any other behaviour that is illegal or unethical and creates a hostile working environment 
• Breach of employee’s duties under legislation such as the Equality Act 2010, or Employment Rights Act 1996 
• Making the job impossible; 
• Treating an employee unfairly and differently relating to pay and bonuses; 
• Invitation to resign 
• Operating a corrupt business

2. Breaches of other implied terms of the employment contract, such as:

• duty to take reasonable care of health and safety of the employee; 
• prompt redress of grievances; 
• duty of confidentiality;
  
• negative comments about the employee; 
• duty to provide work. 

Note that such breaches will often amount to a breach of the overriding implied term of trust and confidence.

3. Breach of written terms of the employment contract. For example, significant changes to working conditions without a good business reason, or which the employee cannot be expected to comply with. This can include changes to hours of work, job duties, work location or a reduction in pay or benefits. The changes must be substantial.

It is important to note that the above are just examples and will not always give rise to an entitlement to resign and claim constructive unfair dismissal.

How much might my constructive dismissal claim be worth?

Wrongful dismissal

 The employee resigns without notice, such a claim will be for notice pay.

Constructive unfair dismissal

• Constructive unfair dismissal does not mean unfair in the moral sense but legally unfair.
• Where the employee has at least two years’ service, the employee can claim constructive unfair dismissal. 
• In exceptional circumstances, an employee will be able to claim automatic constructive unfair dismissal with less than two years’ service, for example if the employee has been subject to a detriment for making a protected disclosure (commonly known as ‘whistleblowing’).
• The compensation for a claim will be a basic award (which is calculated the same way as statutory redundancy pay) and compensation for future loss of earnings (currently capped at the lesser of 12 months pay or £115,115 (from April 2024)
• The employee’s actual compensation will be for the amount of time they were, or are likely to be, out of work. There are also other factors that may reduce the award or, where there is a failure by the employer to comply with the grievance process set out in the ACAS code of practice, increase it by up to 25% (within the cap). 
•  In the exceptional cases of automatic unfair dismissal, the compensation for future loss of earnings will not be capped at £105,707 e.g. if the breach of contract relates to a detriment suffered by the employee for making a protected disclosure (i.e. whistleblowing) or is discriminatory.

Unlike wrongful dismissal, the employee may resign with or without notice.

What practical steps can I take to improve my chances of winning a claim for constructive unfair dismissal?

Raising a grievance 

In most cases, an employee should raise a grievance with their employer whilst reserving their legal rights to bring a claim for constructive unfair dismissal, and preferably before resigning. It is important to note that the employer cannot ‘cure the breach of contract’. All it can do is put forward proposals to encourage the employee to waive the breach and remain in employment. If the employer fails to do that, the employee may resign.

What evidence do I need to prove constructive dismissal? 

Proving constructive dismissal can be a complex process and specific evidence required will depend on the circumstances of each case. However, some types of evidence that may be helpful in proving constructive dismissal include:

1. Documentation of employer’s behaviour sent to the employee: This could include emails, letters, or written statements detailing the employer’s behaviour or the changes to working conditions. It is important not to take confidential information belonging to an employer;

2. Witness statements: Statements from co-workers; supervisors; or other individuals who have witnessed the employer’s behaviour;

3. Personal records: It is important to keep notes of matters as they occur, this will include dates, times, and descriptions of the behaviour i.e., a diary.

4. The employment contract: The terms of the employment contract, including nay promises made by the employer, can be used to support a claim that the employer breached the employment contract.

Settlement

Legal proceedings are a last resort, and it is often possible to settle a potential claim for constructive unfair dismissal before resignation, or before commencing legal proceedings.

As the employee must apply for ACAS Early Conciliation before bringing an employment tribunal claim, a settlement can often be reached via ACAS. It is important to note that ACAS do not give legal advice, take sides or make any judgments. They are there to assist the parties reach a settlement if both parties want to engage in the process.

Alternatively, an employment lawyer can assist. An employment lawyer can advise about the strength of a claim and what will be a reasonable settlement. Knowing the strength of the claim can help the employee reach a reasonable settlement in negotiation. An employer lawyer can also assist in negotiation by putting forward the employee’s case in legal terms to demonstrate how exposed the employer is to a claim, and to explain how the settlement figure put forward is reasonable.

What are the time limits for constructive unfair dismissal?

There are strict time limits to adhere to. The time limit to bring a claim for constructive unfair dismissal expires three months less one day from the last date of employment.

An employee must apply for ACAS Early Conciliation before the time limit expires. If it does not, it will not be able to bring a claim for constructive unfair dismissal in the employment tribunals.

It is important to take legal advice about time limits including that the matters giving rise the potential constructive unfair dismissal may give rise to an alternative ‘action short of dismissal’ claim that may entitle the employee to an award of compensation for injury to feelings. This will be the case where there has been unlawful discrimination or detriments/victimisation such as for making a protected disclosure (whistleblowing). Such claims will have different, earlier time limits.

Article by

Louise Maynard

Our expert employment law solicitors all have many years’ experience advising individuals who are in your position. We will be able to guide you through the process and to help you secure the best possible outcome.

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Disclaimer 

The above provides a general overview relating to constructive dismissal and is not intended nor construed as providing specific legal advice. Constructive unfair dismissal is a complicated legal claim. An individual should take legal advice from an employment lawyer if they believe their employer has behaved in such a way that entitles the employee to resign and bring a claim for constructive unfair dismissal.

This article is for information purposes only and is correct at the time of publication. It does not constitute legal advice.

17.04.23