What is Constructive Dismissal?
Constructive dismissal is a common type of claim brought before employment tribunals.
Constructive dismissal occurs where an employee resigns as a result of their employer having breached their employment contract, which causes the employee to reasonably believe that continuation of employment is impossible.
What is constructive dismissal? Grounds for a constructive dismissal claim
Not every breach of contract will entitle an employee to resign and claim constructive dismissal. The breach must have been substantial, and a direct cause of the resignation.
The breach of contract can also result from either a single event, a series of events, or a failure to act.
There is no exhaustive list of breaches, with each case to be taken on its own facts. Examples of grounds for constructive dismissal could include:
- Failure to pay salary.
- A serious change in the employee’s employment contract imposed without the employee’s agreement, such as changing their working location.
- Refusal by an employer to rectify issues in the employee’s working environment, such as making them work in dangerous conditions.
- Lack of support to resolve difficult work situations for example failing to intervene if the employee has been subject to harassment, bullying, victimisation, humiliation or discrimination.
What is constructive dismissal? Employee considerations
The employee must show three things for a constructive dismissal claim:
- the employer has committed a repudiatory breach of contract;
- the employee has resigned their position because of the breach; and
- the employee did not affirm the contract by accepting the breach.
If an employee wishes to resign as a result of their employer’s significant breach of duty, they must do so without unreasonable delay.
Claims for constructive dismissal must be lodged in the tribunal within three months less one day of the last day of employment.
For employees, it’s generally accepted that resigning and claiming constructive dismissal is a high-risk course of action. Only around 5% of only around 5% of claims of constructive dismissal succeed in the employment tribunal, which means these cases are hard to win.
There are two main reasons for this:
- Evidence. The claimant will be expected to evidence that the breach was so significant and the resulting working conditions or environment became absolutely intolerable that resignation was the only reasonable course of action. Proving this to the tribunal is difficult. The claimant will also need to demonstrate they have mitigated their loss, by keeping records of efforts to find a new job following the resignation.
- Deemed acceptance. It’s important the employee does not delay before resigning, or do anything that would lead the tribunal to conclude the employee had ‘accepted’ the breach and/or changed basis of employment.
The employee’s actions will be scrutinised should they choose to proceed with a claim for constructive dismissal. For example, was a grievance submitted to the employer about the breach(es) before resignation?
As such it is advisable to seek professional legal advice to explore your options and the merits of any potential claim.
What is constructive dismissal? Employer considerations
Faced with a claim for constructive dismissal, the employer will need to show two things:
- there was no breach at all, or
- any breach was not sufficiently severe, and the employer acted reasonably and fairly in the circumstances.
The tribunal will look at a range of factors in making their decision, applied against the ACAS Code of Conduct.
The ‘band of reasonable responses’ test will be used to consider whether the behaviour of the employer fell within expected reasonable responses of a reasonable employer in a similar situation.
The employer organisation will also be looked at – relevant internal processes and procedures at the time of the breach and resignation; the profile of organisation – does it have extensive resources at its disposal?
Again, experienced legal advice is essential early in the matter to ensure all relevant evidence is collated in advance of any tribunal action.
Constructive dismissal outcomes
The majority of constrictive dismissal claims are concluded before reaching the tribunal, generally through use of a settlement agreement.
If however the case does proceeds to tribunal, and after hearing all evidence the employee is judged to have been justified in resigning from their position, the dismissal will be deemed unfair, and the employee awarded compensation. The level of compensation will be determined by the maximum of either
It is essentially the amount lost in earnings after the resignation, capped at either one year’s salary or the prevailing maximum amount, whichever is greater.
In accordance with the ACAS Code of Practice, tribunals can adjust awards up or down by up to 25% on a discretionary basis. This will be dependent on the facts of the case. For example, where the tribunal considers either the employer or employee unreasonably failed to follow the Acas Code of Practice
If however the tribunal finds there was no breach, or the employer acted reasonably, or the breach was not significant enough, the dismissal will be deemed fair and the employee will have lost the claim.
Why you should take advice on constructive dismissal from employment law solicitors
The above information is for guidance only.
Seeking advice on options can help making the best decision.