If an employee resigns because of a fundamental breach of their employment contract then they may be able to bring a claim for unfair constructive dismissal.
What is constructive dismissal?
Constructive dismissal results from a serious or repudiatory breach of the terms of an employment contract by an employer. The employee resigns as a result of the breach, generally leaving straight away, without working out their notice.
The breach could be of an express contract term, such as holiday entitlement, or an implied term such as mutual trust and confidence. It could be a single event or the cumulative effect of a series of events.
Who can claim constructive dismissal?
An employee who feels that they have no alternative but to resign because of their employer’s actions and the fundamental breach of contract is entitled to bring a claim if they can demonstrate that the breach was sufficiently serious.
Examples of actions which could amount to a fundamental or repudiatory breach include:
- Harassment or bullying
- Reducing someone’s wages without consultation or failing to pay them
- Substantially changing the nature of a job
- Demoting someone for no justifiable reason
- Unfair or unreasonable disciplinary action
- Unfounded allegations of poor performance
- Requiring someone to work in breach of health and safety conditions
- Stressful working conditions that have not been addressed
An employee should ideally first have raised a formal grievance, which would give the employer the chance to try and resolve the dispute. If a formal grievance is not raised, then if the matter proceeds to an employment tribunal there is a chance that any damages could be reduced by up to 25 per cent.
When does constructive dismissal occur?
When an employee has been employed continuously for a period of at least two years and they can show that their position has been made untenable because of the breach they are entitled to bring a claim.
They need to act without delay, otherwise it could be implied that they have accepted the breach. In any event, the claim should be commenced by the employee within three months of them leaving.
How is constructive dismissal proved?
It is not particularly easy for an employee to prove constructive dismissal and claims heard by an employment tribunal do not often succeed, but a claim could still be problematic for an employer.
The employee will need to show that there was a fundamental breach of their employment contract, not just a minor one.
As well as breach of express terms of the contract, such as not paying someone, a serious breach of an implied term could constitute constructive dismissal. For example, conduct that seriously damages the trust and confidence between employer and employee.
Can constructive dismissal be claimed after redundancy?
If an employee is going through the redundancy process or working out their notice period, they may still be able to claim constructive dismissal if the terms of their contract are breached.
It is important to follow the correct procedure when making someone redundant or an employee may be able to bring a claim for unfair dismissal. For more information about how to make redundancies, see our article Making an employee redundant.
How our specialist solicitors can help your business
We can help you manage your employees so that you are protected against claims of unfair or constructive dismissal.
Our qualified employment solicitors can also help you defend unfair or constructive dismissal claims. We will be there every step of the way, including, if necessary, at a tribunal.
Expertise for employers
Starting employment: contracts and policies
During employment: handling staff problems
Common issues raised by staff
- Bullying and harassment
- Constructive dismissal
- Family rights and flexible working
- Holiday and working time