‍Constructive dismissal occurs where an employee resigns because of a serious breach of contract by their employer. Unlike an ordinary dismissal, the employer does not expressly terminate the employment relationship; instead, the employee treats themselves as dismissed because of the employer's conduct.

To establish constructive dismissal, an employee must prove:

● the employer committed a repudiatory breach of contract;

● the employee accepted that breach and resigned; and

● the employee did not delay too long before resigning, otherwise they may be treated as having affirmed the contract.

Constructive dismissal does not automatically mean that an employee has been unfairly dismissed. If the employee has sufficient qualifying service, the tribunal must separately consider whether the dismissal was fair or unfair.

Understanding Constructive Dismissal

The Legal Definition

Constructive dismissal is defined by section 95(1)(c) of the Employment Rights Act 1996 (ERA 1996).

An employee is dismissed where:

"The employee terminates the contract under which they are employed, with or without notice, in circumstances where they are entitled to terminate it without notice because of the employer's conduct."

‍The term "constructive dismissal" is not contained in legislation. It describes a situation where the employer has committed a breach of contract so serious that the employee is entitled to treat the contract as terminated.

It is important to consider that the breach must be sufficiently serious to amount to a repudiation of the employment contract.

The employer does not need to intend to force the employee out. The question is whether the employer's conduct objectively demonstrates that it has breached a fundamental term of the contract.

Elements Required for a Constructive Dismissal Claim

‍A successful claim requires three elements.

1. Repudiatory Breach by the Employer

The employer must have committed a fundamental breach of contract.

‍The breach may arise from:

● a single serious incident; or

● a series of incidents which cumulatively amount to a breach.

The breach may involve:

● an express contractual term;

‍● an implied contractual term; or

● the implied duty of mutual trust and confidence.

You must consider that this is a significantly higher threshold than that of unfair dismissal, and employees have a tougher time proving these types of claims in an Employment Tribunal.

Breach of Trust and Confidence

The implied term of mutual trust and confidence is one of the most common foundations for constructive dismissal claims.

The employer must not act in a way that is likely to seriously damage or destroy the relationship of trust and confidence between employer and employee.

A breach of this implied term will generally be fundamental and capable of amounting to a repudiatory breach.

2. Acceptance of the Breach

An employer's breach does not automatically terminate the employment contract.

The employee must choose to accept the breach and bring the contract to an end.

‍The employee does not necessarily need to use specific wording when resigning, but their actions must clearly demonstrate that they are treating the contract as terminated.

3. Resignation in Response to the Breach

‍The employee must resign because of the employer's breach.

The breach does not need to be the only reason for resignation. It is sufficient that it played a part in the employee's decision.

In Nottinghamshire County Council v Meikle [2004] IRLR 703 the Court of Appeal confirmed that an employee may still succeed where other factors also contributed to their decision to resign.

Common Examples of Repudiatory Breach

Employers should be aware of conduct which may amount to constructive dismissal. ‍

Changes to Terms and Conditions

Unreasonable attempts to impose contractual changes, particularly where they undermine fundamental terms of employment, may amount to a breach.

Discrimination

Discriminatory conduct will often amount to a fundamental breach.

Examples include:

● reducing sick pay because of disability;

● refusing flexible working because of sex discrimination; or

● discriminatory treatment compared with colleagues.

Poor Disciplinary or Grievance Procedures

A failure to properly investigate complaints or disciplinary matters may breach trust and confidence.

In Gogay v Hertfordshire County Council [2000] IRLR 703 a suspension based on inadequate investigation was held capable of amounting to a breach of trust and confidence.

Performance Management

Introducing performance procedures without proper warning, consultation or evidence may seriously damage the employment relationship.

Failure to Pay Contractual Entitlements

Deliberately withholding wages, contractual sick pay or other benefits may amount to a fundamental breach.

Guidance for Employees

Should You Resign?

Employees considering constructive dismissal should take advice before resigning.

A resignation may be unsuccessful if:

● there was no fundamental breach;

● the employee delayed too long;

● the employee continued working without reserving their position; or

● the resignation was unrelated to the alleged breach.

Delay and Affirmation

An employee must not wait too long after the breach.

Continuing to work after a breach may suggest that the employee has accepted the situation and affirmed the contract.

‍However, delay alone does not automatically defeat a claim.

The tribunal will consider:

● why the employee delayed;

● whether they were trying to resolve matters;

● whether they were absent due to illness; and

● whether their conduct indicated they intended to continue the employment relationship.

In Chindove v William Morrisons Supermarket plc UKEAT/0201/13 the EAT confirmed that delay must be assessed by considering the employee's conduct rather than simply counting the number of days or weeks before resignation.

Resigning With or Without Notice

An employee accepting a repudiatory breach may resign without notice.

However, giving notice may create an argument that the employee affirmed the contract.

‍In Cockram v Air Products plc UKEAT/0038/14 the employee's decision to give substantially longer notice than required contributed to a finding that he had affirmed the contract.

Raising a Grievance

An employee does not have to raise a grievance before bringing a constructive dismissal claim.

However, employees should usually consider doing so because:

● it may give the employer an opportunity to resolve the issue;

● it may assist the employee's evidence; and

● failing to follow the Acas Code may result in a compensation reduction of up to 25%.

An employer cannot retrospectively cure a repudiatory breach.

In Buckland v Bournemouth University Higher Education Corporation [2010] EWCA Civ 121 the Court of Appeal confirmed that once a repudiatory breach has occurred, later conduct cannot undo it.

The "Last Straw" Doctrine

‍A constructive dismissal claim can arise from a series of incidents rather than one event.

The final incident may appear minor when considered alone but may form part of a wider course of conduct.

This is known as the last straw doctrine.

The Court of Appeal in Waltham Forest v Omilaju [2004] EWCA Civ 1493 confirmed that the final act:

● must contribute something to the breach;

‍● cannot be completely trivial; and

● must be viewed in the context of the previous conduct.

An entirely innocent act cannot become a last straw simply because the employee finds it upsetting.

Compensation and Remedies

A successful constructive dismissal claim may result in two separate types of compensation.

Wrongful Dismissal

The employee may recover damages for breach of contract.

This usually includes:

● notice pay;

● contractual benefits; and

● other losses arising from the breach.

Unfair Dismissal

Where the employee has sufficient qualifying service, they may also bring an unfair dismissal claim.

Compensation may include:

Basic Award

Calculated using:

● age;

● length of service; and

● weekly pay (subject to statutory limits).

Compensatory Award

Based on the financial losses caused by the dismissal.

The tribunal will consider:

● loss of earnings;

● efforts to find alternative employment;

● whether losses could have been avoided; and

● any contribution by the employee.

Guidance for Employers

Avoiding Constructive Dismissal Claims

Employers should recognise that constructive dismissal claims often arise from a breakdown in trust and confidence.

Risk can be reduced by:

● following fair procedures;

● consulting employees before making significant changes;

‍● investigating grievances properly;

● avoiding unnecessary disciplinary action; and

● ensuring managers understand contractual obligations.

Defending a Claim

Employers defending constructive dismissal claims may argue:

‍No Fundamental Breach

The employer may argue that:

● no contractual term was breached; or

● any breach was insufficiently serious to justify resignation.

Affirmation

‍The employer may argue that the employee accepted the situation by: ‍

● continuing to work;

● delaying resignation; or

● acting inconsistently with an intention to end the contract.

‍Resignation for Another Reason

The employer may argue that the employee resigned for reasons unrelated to the alleged breach.

Constructive Dismissal and Unfair Dismissal

A finding of constructive dismissal does not automatically mean unfair dismissal.

The tribunal must separately consider:

● the employer's reason for the dismissal; and

● whether the employer acted reasonably in the circumstances.

In Argos Ltd v Kuldo UKEAT/0225/19 the EAT confirmed that tribunals must conduct a separate fairness assessment after finding constructive dismissal.

Key Lessons for Employees

● Obtain advice before resigning where possible.

● Identify the specific contractual breach relied upon.

● Avoid unnecessary delay after the breach.

● Keep written evidence of incidents, grievances and communications.

● Consider whether a grievance is appropriate before resigning.

● Remember that constructive dismissal claims are difficult and require proof of a fundamental breach.

Key Lessons for Employers

● A constructive dismissal claim can arise even where an employer never intended to dismiss an employee.

● Poor handling of grievances, disciplinary matters and contractual changes can undermine trust and confidence.

● Once a fundamental breach occurs, later actions may not cure the breach.

● Employers should carefully document decisions and ensure managers understand the risks of conduct that may damage the employment relationship.

● Early resolution of workplace disputes can significantly reduce litigation risk.

This guide provides general information only and is not legal advice. Anyone considering a specific contract claim or counterclaim, whether an employer or an employee, should contact us here contact@gec-law.co.uk for legal advice.