FAQ’s: Constructive dismissals

By Anthony Wolny | 24th September 2018 | 11 min read

In order to constitute a ‘fair’ dismissal, an employer in the UK must show that it is due to one of five specific reasons. They must also ensure that they have acted fairly and reasonably in carrying out the dismissal. However, in today’s precarious, evolving business environment, workplace conflicts and disputes are becoming ever more common.

According to Personnel Today, unfair dismissal continues to be one of the most common types of employment tribunal claim pursued by UK employees – a report from the Tribunal Service stated that employment tribunals received a total of 46,300 unfair dismissal claims between 2011 and 2012.

The UK also ranks as the third worst country for employee protection, according to the Organisation for Economic Co-operation and Development (OECD)’s survey of 30 countries and 10 emerging economies.

What defines constructive dismissal?

Essentially, constructive dismissal occurs when an employee decides to terminate their employment with an employer in response to their treatment of them. Although no official dismissal has actually taken place, the emphasis is placed upon the employer treating the employee sufficiently badly that the employee is entitled to regard themselves as having been dismissed. Essentially, the employer is viewed as having ‘breached’ the terms of their employment contract.

Are there any examples of constructive dismissal?

There is no exhaustive list of conduct or behavior that could amount to a breach of contract – one singular, serious breach, or a pattern of more minor actions or incidents, may result in a constructive dismissal claim. Common types of breach could include:

  • Non-payment in salary, either in part or full
  • Sudden demotion without good reason
  • Unreasonable changes to working practices (e.g. sudden change of location or working hours)
  • Refusal by an employer to make reasonable adjustments for a disability
  • Being asked to ignore health and safety issues or work in dangerous situations without adequate protection
  • Failure by an employer to address bullying or harassment in the workplace
  • Unfounded allegations of misconduct or poor performance

What must an employee prove to claim constructive dismissal?

The employee must show that they have resigned in response to a fundamental breach of contract by their employer. The Employment Rights Act 1996 states that if an employee terminates their contract in circumstances in which they are entitled to do so without notice, due to an employer’s misconduct, then their termination constitutes a dismissal.

Sometimes the conduct will be the breaching of an express term of the contract of employment, such as the right to be paid a certain amount on a set date. More commonly, it will be that the employer’s behaviour has breached the term of mutual trust and confidence that is implied in all contracts of employment. Essentially, the term requires employers to refrain from conducting themselves in a manner that is likely to destroy or seriously damage the relationship of trust and confidence between employer and employee. This could include isolating the employee, humiliating them in front of others or falsely accusing them of misconduct.

What is the difference between constructive and constructive unfair dismissal?

The distinction between constructive dismissal and unfair dismissal. Constructive dismissal is essentially a breach of contract claim – this means that the only damages available to the employee claiming are those sums which are due to them under the terms of their employment contract. If they have resigned without notice, this will usually be made up of their notice pay or any other contractual benefits due. They do not need any length of service to claim constructive dismissal.

An unfair dismissal, on the other hand, is a statutory claim which, in most circumstances, can only be claimed an employee with two or more years of service. Often, these employees will combine their constructive dismissal claim with an unfair dismissal claim – providing the term ‘constructive unfair dismissal.’ If a tribunal finds the employer liable for constructive dismissal, the finding of unfair dismissal is likely to follow.

Is it easy to bring a claim for constructive dismissal?

Constructive dismissal is actually far more difficult to prove than many employees think. Firstly, they must prove that a fundamental (rather than minor) breach of contract has occurred on the part of the employer.

The employee must also be able to prove that their decision to terminate their employment was in response to the specified breach, and not, for example, because they have found a better job. An employment tribunal must also be satisfied that the employee did not delay too long after the incident in resigning. A tribunal will usually expect an employee to have tried to resolve the complaint through their official grievance procedure before deciding to resign.

How would a claim be started for constructive dismissal?

The employee will be likely to make the first move in any constructive dismissal scenario. You should be aware that they do not legally have to inform you of their intentions to claim, and most legal firms would advise against you trying to ‘manage out’ an employee to avoid having to pay out a settlement figure during an employment tribunal.

The employee will have to put together a ‘without prejudice letter,’ which should set out the fundamental breach or breaches of contract that they consider their employer to have committed. The letter should outline the actions that will be taken should the employee have to resign – essentially, the letter is provided prior to the employee resigning, giving the employer time to try and rectify the issue. If this still cannot be resolved effectively, then the employee will proceed to suing for unfair dismissal, and the case will be heard at an employment tribunal.

Could an ex-employee still bring a constructive dismissal claim against me?

Constructive dismissal usually occurs following a fundamental contractual breach by an employer, who cannot then rely on the terms of that contract going forward.

Therefore, if an employee can prove that they have been constructively dismissed, they may not be bound by any post-termination restrictions in the contract, such as restrictive covenants preventing the employee from contacting the employer’s clients or suppliers.

If an employee wishes to avoid contractual restrictions, perhaps because they are joining a competitor or supplier firm, then may assert constructive dismissal after their official dismissal or leaving date. 

Are there any signs for constructive dismissal that I should be aware of?

Be watchful for any recent grievance claims, or complaints surrounding bullying or harassment. Depending on the content and tone of the claim, this may indicate that an employee could be considering asserting constructive dismissal if they later choose to resign from their position. Other indications could include reopening old complaints to show a history of old breaches of contract, uncharacteristically taking notes during meetings or events, or explicitly spelling out the reasons for resigning in a letter.