PLEASE NOTE: This page is intended to give general information about the law but is not intended as legal advice and you must not rely on it as such, nor is any liability accepted if you do rely on it. The law may change from time to time and we cannot include all elements of the law and its application in this summary. For further advice relating to your circumstances, please contact us.
What is a constructive dismissal?
A constructive dismissal claim is a kind of unfair dismissal claim. It occurs when an employee resigns in response to their employer’s fundamental breach of contract.
It is necessary to prove all of the following to establish a case of constructive dismissal:
A repudiatory breach of the employment contract by the employer. This means that the employer has breached the contract in a fundamental way that goes right to the heart of the contract.
An election by the employee to treat the contract as at an end by accepting the employer’s breach. Essentially, the employee must resign in response to the breach.
The employee must not overly delay in accepting the breach – if the employee waits too long, they will be taken to have accepted the breach by continuing to work under the contract of employment.
Unless the breach is significant and either goes to the root of the contract or shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, it will normally fall short of being a repudiatory breach. Not all unreasonable behaviour by an employer will be grounds for constructive dismissal.
An employee may find themselves wishing to resign in response to a series of breaches of contract or a course of conduct by their employer which, taken cumulatively, amounts to a breach of the implied term of trust and confidence. This is known as “the last straw doctrine” because often the final incident in the chain is in itself insubstantial, but is sufficient to render the whole series of incidents as a breach of the implied term of trust and confidence. The test, viewed objectively, is whether the course of conduct showed that the employer had, over time, demonstrated an intention to no longer be bound by the contract of employment.
What might constitute a fundamental breach?
Matters which may constitute a repudiatory breach include:
Salary – an employer will usually be found to be in repudiatory breach where it unilaterally reduces an employee’s salary or commission for whatever reason and by whatever amount.
Significant change to duties without agreement – changing an employee’s duties whether by removing existing duties or initiating new ones is likely to constitute a repudiatory breach.
Demotion (save where permitted by the contract or by agreement).
Bullying or harassing treatment.
Failure to address a grievance- it is an implied term that employees are entitled to have the time to redress any grievance raised.
Inept handling of disciplinary matters – where the suspension or allegation is manifestly unreasonable, particularly so if the accusation is of a serious nature.
Excessive workload – where causing stress and/or damage to health and such stress/damage was reasonably foreseeable.
The breach in itself does not automatically bring the contract to an end, rather the employee must respond to the breach by electing to treat the contract as being at an end – i.e. resigning, with or without notice.
Finally, the employee must decide without unnecessary delay whether they are going to bring the contract to an end. Provided the employee makes clear their objection to what is being done, they are not to be taken to have affirmed the contract by continuing to work and draw pay for a limited period of time after the breach, even if their reason for this is to have time to find alternative work. The employee must resign in response, at least in part, to the employer's fundamental breach of contract, but it does not have to be the only cause of the resignation.
Options other than constructive dismissal
Constructive dismissal claims are often difficult to win, and they are risky because an employee has to resign in order to bring the claim. There are often other options open to an employee, such as negotiated exit agreements which may give better and more certain results. However, an employee should seek advice at an early stage regarding their options – the best negotiating position for an employee is likely to be when they are still in employment.
Similarly, employers who identify difficult work relationships should attempt to address these reasonably and at an early stage. Employers should ensure that internal procedures are followed properly in order to minimise the risk of employment tribunal claims.
Constructive unfair dismissal claims are subject to the same continuous service requirement as a “normal” unfair dismissal claim, so an employee must have two years of continuous service to bring a claim unless one of the “automatically unfair” dismissal provisions applies or the conduct is discriminatory (in which case a discrimination claim may be possible).
A claim for constructive dismissal must be notified to ACAS within three months of the last day of employment. Strict deadlines apply after that and the employee will always have at least one month from the date of issue of the ACAS Early Conciliation Certificate in order to submit their claim to the Employment Tribunal.
We can help employers and employees with potential constructive dismissal issues and we can advise on all practical options.