Understanding Constructive Dismissal: What Employees Need to Know

In the UK, employment laws are in place to protect employees and ensure they are treated fairly at work. This protection also extends to those who feel forced to resign because of their employer’s conduct. If you're an employee facing mistreatment and feel that resigning is your only option, you might be considering a constructive dismissal claim. This guide explains what constitutes constructive dismissal, who can make such a claim, and what you need to prove to win your case.

What Is Constructive Dismissal?

Constructive dismissal happens when an employer behaves in a way that forces the employee to resign. This could be due to a serious breach of the employment contract, or a series of actions that damage the trust and confidence between you and your employer.

Before making a decision to resign, it’s important to try and resolve the issue with your employer using their grievance procedure. If you don’t do this, and you later win a constructive dismissal claim, your compensation could be reduced by up to 25%. This is because the ACAS Code of Practice on Disciplinary and Grievance Procedures advises that you follow this process first.

Constructive Dismissal vs. Unfair Dismissal

Although both involve unfair treatment by an employer, constructive dismissal and unfair dismissal are different.

• Unfair dismissal occurs when your employer directly ends your employment without a valid reason or a fair process.
• Constructive dismissal, on the other hand, involves you resigning from your job because of your employer’s behaviour. To make a constructive dismissal claim, you must show that you were entitled to resign because of how your employer treated you.

Am I Eligible to Make a Constructive Dismissal Claim?

To make a constructive dismissal claim, there are some key eligibility requirements:

1. Employee status: You must be classified as an "employee" (not a worker or contractor).
2. Length of service: You typically need at least two years of continuous service with your employer.

However, there are exceptions. If your dismissal was due to reasons like discrimination or whistleblowing, you may be able to bring a claim even if you’ve worked for less than two years.

The Time Limit for Making a Claim

It’s crucial to act quickly if you think you’ve been constructively dismissed. You have three months minus one day to file your ET1 Claim Form with an employment tribunal. This deadline starts from:

• The last day of your notice period, or
• The day you resigned if you didn’t serve any notice.

Acas early conciliation may extend the deadline but it is important to take advice on this at an early stage. 

How Do I Prove Constructive Dismissal?

To successfully claim constructive dismissal, you need to show that:

1. Your employer breached your contract in a serious way.
2. You accepted this breach (meaning you didn't continue to work as if nothing happened).
3. You resigned because of the breach – your resignation must be directly linked to the employer’s behaviour.

Examples of what might constitute a serious breach include:

• Not paying you the salary you agreed upon.
• Demoting you without a valid reason.
• Making changes to your job that weren’t part of your contract.
• Allowing harassment or bullying at work.

What If My Employer Defends Themselves?

It’s important to remember that the burden of proof is on you, the employee. Your employer may argue in its defence that:

• There was no breach of contract. For example, there was a contractual right to make the change
• You agreed to the changes or actions they took by continuing to work without raising any concerns.
• You didn’t resign because of the breach – maybe it was for a different reason, like moving to a new job.

Even if the tribunal agrees that you were constructively dismissed, your employer might still try to argue that the dismissal was fair i.e., there was a fair reason and they acted reasonably in dismissing for that reason.

What Compensation Can I Receive?

If your constructive dismissal claim is successful, you could be entitled to two types of compensation:

1. A Basic award – This is calculated in the same way as statutory redundancy pay.
2. Compensatory award – This is meant to compensate for the financial loss you’ve suffered, such as lost wages and benefits. However, unless your dismissal was for an automatically unfair reason (like discrimination or whistleblowing), this award may be capped at the lower of the statutory cap or 52 weeks’ gross pay. 

In certain cases such as discrimination, you could also receive additional compensation for emotional distress, known as an "injury to feelings" award.

In Summary

Constructive dismissal claims are complex, and it’s important to understand both your rights and the steps you need to take if you're thinking of resigning due to your employer’s behaviour. Ideally, it is better to take advice before resigning. If you're facing a situation where constructive dismissal may apply, it's crucial to document everything and seek advice to understand your options. You may also want to explore resolving issues through your employer's grievance procedure before taking the step of resigning.

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Article by

Sally Eastwood

Senior Associate

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Disclaimer 

The above provides a general overview of areas in employment law and is not intended nor construed as providing specific legal advice.  This article is for information purposes only and is correct at the time of publication. It does not constitute legal advice.

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