You may have heard the phrase “constructive dismissal” but, do you really know what it means? What does constructive dismissal involve and what are the legal implications when someone makes a claim for constructive dismissal? It’s a notoriously complicated area but we attempt to provide some clarity for both individuals and employers with our quick guide to the basics of constructive dismissal.
What is “constructive dismissal”?
In a nutshell, constructive dismissal is a forced dismissal. However, the word “dismissal” is perhaps misleading as it is not a dismissal in the ordinary sense of an employer terminating an employee’s employment contract but, it requires the employee to resign, in response to a breach of contract by their employer. In summary, it occurs where an employer treats a member of staff so badly that the employment relationship is irretrievably broken and they are entitled to resign and treat themselves as having been constructively dismissed.
The employee must jump first…
The onus is on the employee to decide if they are going to resign. This is clearly a difficult decision as they will potentially be left without any income for a significant amount of time before their claim can be decided by a tribunal or a settlement can be agreed. In addition, it is for the employee to prove that their employer’s behaviour was so seriously detrimental that it amounted to a breach of contract, which entitled them to resign. It is not always easy, even for a lawyer, to be certain beforehand about whether a tribunal or court would rule in the employee’s favour. Thus the decision to resign should not be taken lightly or, ideally, before legal advice has been obtained.
Constructive dismissal can be unfair dismissal
Constructive dismissal is the label applied to the claim which is based on a breach of contract by the employer. Generally such claims are heard by the civil courts. However, if the employee satisfies the eligibility requirements, they can bring a claim of unfair dismissal as a result of being constructively dismissed. This is likely to be more advantageous in terms of costs as it is free to bring a claim in the employment tribunal but, not in the civil courts, where an application fee must be paid. The eligibility requirements are: two years’ service as an employee working under a contract of employment and the claim must be brought within three months of resigning. The compensation limit which applies in unfair dismissal cases will apply (generally, one year’s salary or, the cap, whichever is lower).
It’s a high hurdle for an employee to jump…
In order to show that someone has been constructively dismissed, certain legal requirements must be met:
Firstly, the employer must have seriously breached the employment contract in some way. This is often labelled as a “repudiatory” breach of contract. Minor breaches by an employer will not suffice. It must be something very serious in the context of the employment relationship. An example might be reducing pay or demoting an employee without agreement. Generally in constructive dismissal cases the employee will argue that it is the implied term of trust confidence which the employer has broken. There are no restrictions on how an employer might do this, an example might be speaking harshly to a member of staff in front of a customer.
Secondly, the employee must resign in response to this breach of contract, not for any other reason, and must do so without unreasonable delay.
Finally, the employee must not have done anything which indicates that they accept the breach by the employer, for example, carrying on working without stating they are doing so under protest and accepting pay for that work. If an individual effectively goes along with the situation without any complaint for a period of time, they may not be able to bring a claim for constructive dismissal. In these cases a tribunal may say that they have “let bygones be bygones” or, in more technical language, that they have waived the breach, or affirmed the contract in its new form.
And finally, don’t forget the “last straw” rule
Although one-off acts are usually the cause of constructive dismissal claims, a build-up of a number of more minor breaches by the employer can amount to a fundamental breach of contract (which entitles the employee to resign and claim constructive dismissal). In these cases, none of the individual actions needs to be so serious that it amounts to a repudiatory breach in itself, but a catalogue of more minor actions can be so that the final, minor act is said to be “the last straw” which drives the employee to resign . A tribunal will look at the facts as a whole.
How can we help you?
If you think you may have a constructive dismissal claim or need help formulating your claim to the employment tribunal, then talk to our employment law specialists today. We’ll help you figure out the best way forward for you.