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Constructive Dismissal

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Constructive Dismissal

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Constructive dismissal arises where an employee resigns due to an employer’s repudiatory breach of the employment contract. This can amount to a breach of an express term of the contract of employment or a breach of the implied term of ‘trust and confidence’. An employee may terminate their own contract of employment, with or without notice, due to their employer’s conduct.

Employees must have at least two years’ service on the date of termination to bring a general unfair dismissal claim. However, there are a number of unfair dismissal claims where an employee does not need to have any minimum qualifying period of service, such as where the dismissal is deemed automatically unfair. Examples of this include dismissal for health and safety reasons, as a result of whistleblowing, or where there has been discrimination on the grounds of a protected characteristic (see our page on Discrimination ) Please speak to our experts for further details on when these exemptions may apply. 

Definitions

It is not enough for the employee to show that the employer’s conduct has been unreasonable, it must amount to a fundamentally breach of the express or implied terms of the employment contract. This can include:

  • Allegations of poor performance which are unfounded
  • A unilateral significant reduction of salary, or the threat of a reduction
  • Being demoted without good reason
  • A complete change to the job role
  • Being forced to work in breach of health and safety regulations
  • Reporting an employee to a Regulator without foundation, or failing to give an opportunity to respond
  • Disciplinary proceedings which are wholly unreasonable
  • Harassment or bullying
  • Overworking or unaddressed stress due to work
  • Discrimination
  • Failing to make reasonable adjustments if you have a disability

Whilst each of these acts on its own may amount to a fundamental breach, often there is a continuing pattern of behaviour or incidents which, taken as a whole, amounts to a breach of contract.  This can give rise to a ‘final straw’ which leads the employee to resign. While this final incident may in itself be insubstantial, it must flow from the previous acts to show a course of conduct indicating the employer no longer intends to be bound by the contract of employment.

An employee must resign in response to a breach, and remaining in employment for a period afterwards could be seen to be an ‘affirmation’ of the breach and an intention to remain bound by the contract. We would advise you take early legal advice prior to resigning your employment in these circumstances.

How an employee can succeed in a constructive dismissal claim:

In constructive dismissal claims the burden of proof falls on the employee, who must show that the employer has fundamentally breached the contract of employment and entitled the employee to resign. This differs to unfair dismissal claims where the employer needs to prove that there has been a fair dismissal.

How an employer can defend a constructive dismissal claim:

An employer must provide clear factual evidence that alleged behaviour was not in breach of contract, did not amount to a reason sufficient to entitle the employee to resign or that the employee affirmed the breach.

Claims vs Grievances:

It is recommended, and expected under the ACAS code of practice, that employees lodge a formal grievance against employers in constructive dismissal claims before taking steps to resign. The reason for this is that it gives the employer an opportunity to resolve the dispute. The failure to lodge a grievance before resigning also means an employment tribunal can reduce any compensation awarded by up to 25%. This is of course complicated by the requirement to resign in response to the breach. We would advise early advice is taken if a potential situation of constructive dismissal arises.

How much can be claimed

If successful in a claim for unfair dismissal an employee can claim a basic award which is calculated in a similar way to a statutory redundancy payment, based on a formula that takes account of age, length of service and the amount of a week’s pay (subject to a statutory cap). A compensatory award can also be claimed based upon financial losses cause by the unfair dismissal. The maximum compensatory award is the lower of 52 weeks’ pay or £89,493 . This will rise to £93,878 3 on 6 April 2022. It is also possible for an employee to seek reinstatement or re-engagement, instead of monetary compensation.

General time limit:

Time limits in the Employment Tribunal are very strict. You have 3 months less one day from the date of termination of employment in which to bring a claim. All time limits are subject to the rules on the automatic extension of time for ACAS early conciliation. Speak to our experts if you have concerns regarding time limits.

Constructive dismissal complaints are complex and early advice should be sought, prior to resigning. Our Head of Employment Law, Colin Davidson, has extensive experience in constructive dismissal claims, including securing positive judgment of constructive dismissal for a senior technician and negotiating a favourable settlement prior to remedy hearing.

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