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Constructive dismissal – a guide

Redmans is an award-winning firm of specialist employment law solicitors, acting for UK employees and senior executives. We are one of the only law firms in the UK that specialises solely in employment law and we have a very high success rate (usually without the requirement to issue an Employment Tribunal claim).

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If you’re being treated unreasonably at work then you may have a claim for constructive dismissal – find out more about the law & practice relating to constructive dismissal and your rights below

What is constructive dismissal?

Constructive dismissal is a legal term – it happens where an employer has seriously breached an employee’s contract of employment, with this serious breach entitling the employee to resign from their employment. Even though the employee has resigned they are in these circumstances treated as having been “dismissed”.

It can be difficult for a person who is not legally trained to understand how a resignation can amount to a “dismissal” – the key information that you need to focus on is that it is your employer’s unreasonable conduct (the “constructive” part) has led to your dismissal (the “dismissal” part). If you resign as a result of your employer’s conduct then the law treats your resignation as a type of unfair dismissal by your employer (hence the name “constructive unfair dismissal”).

As detailed below, you need to show not only that your employer is behaving unreasonably but that

  1. Its unreasonable behaviour has fundamentally breached a term of your contract of employment;
  2. That you have resigned as a result of the breach(es); and
  3. That you have no delayed in resigning from your employment

It is quite often the case that the unreasonable treatment by your employer is not a one-off serious breach of your contract (for example, failing to pay you your wages) but a continuous pattern of behaviour which, taken together, amount to a breach of contract – for example, this could be persistent bullying or harassment in the workplace. If there is such a continuing pattern of behaviour by your employer then this is known as a ‘last straw’ breach.

Examples of potential claims for constructive dismissal

Examples of situations where you may have a claim for constructive dismissal include:

  • Withholding your salary, even if for good reason and to a small extent;
  • Reducing your salary without your consent, or threatening to reduce your salary;
  • Demoting you without good reason or in breach of contract;
  • Changing your job duties, whether this is removing some duties or demanding that you perform new ones;
  • Discriminating against you;
  • Failure to deal with a grievance that you have submitted;
  • Failing to deal with an appeal that you have submitted (for example, an appeal against a grievance or disciplinary outcome);
  • Failure to deal with a disciplinary process fairly and competently;
  • Dealing with you unfairly while you are on sick leave;
  • Giving you an excessive workload;
  • Creating an intolerable working environment for you (for example, the use of bad language, forceful management styles, and abusive behaviour);
  • Giving you a bad reference;
  • Your colleagues making negative comments about you;
  • You are being forced to work in breach of health and safety rules;
  • If your colleagues have been harassing you or bullying you at work;
  • Your employer making unfair findings about you or reporting you to a regulatory without good reason (or giving you an opportunity to respond)

Please note that the above list is not exhaustive.

What is the difference between constructive dismissal and unfair dismissal?

An “unfair dismissal” occurs when your employer dismisses you in an unfair way (click here to read more about unfair dismissal). There are five “potentially fair reasons” for dismissal and the “unfairness” in your dismissal might be because an unfair procedure was used and/or because your employer made an unreasonable decision to dismiss.

A “constructive dismissal” occurs where you are forced to resign from your job because of serious breaches of contract by your employer which has made your continued employment unsustainable. Although in law this situation is termed a “dismissal” it is in practical terms a resignation.

Is it easy to make a claim for constructive dismissal?

The short answer is that it very few constructive dismissal claims are “easy” – even if you have a potentially strong claim for constructive dismissal the process of bringing a claim in the Employment Tribunal, and the time involved in doing so, can be difficult and stressful.

In order to bring a claim for constructive dismissal you must meet certain criteria:

  1. You must have been continuously employed by the same employer for two years or more (unless the claim falls within one of the exceptions, for example if you have blown the whistle or have been discriminated against – this is dealt with in more detail below);
  2. You must be able to show that your employer has fundamentally breached an express or implied term of your contract of employment (for example, discriminating against you could be a breach of the implied term of mutual trust and confidence in your contract of employment);
  3. You must show that you have resigned from your employment as a result of the breach (and must not delay in doing so)

In some cases it will be obvious that your employer has breached your contract – for example, where your employer has withheld your wages or sexually harassed you.

In other situations it may not be so clear that there has been a breach of contract – your employer may have acted in an unreasonable fashion towards you but you will need to show that this behaviour was so unreasonable that your continued employment was untenable – the exact legal test is that “whether, looking at all the circumstances objectively, that is from the perspective of a reasonable person in the position of the innocent party, the employer has clearly shown an intention to abandon and altogether refuse to perform the contract“.

You are best advised not to resign without taking legal advice first. You may otherwise lose an important tactical advantage against your employer, and also put at risk any subsequent tribunal claim. We can advise you of the best way forward, and will consider a no win-no fee funding arrangement.

What steps should I take in order to successfully bring a constructive dismissal claim?

It is recommended that you take the following steps when looking to bring a constructive dismissal claim:

  1. Try and resolve your problems in your job without resigning;
  2. Lodge a grievance complaining about the conduct in question;
  3. Complying with the grievance procedure;
  4. Appealing against the grievance outcome, where appropriate

These are explained in more detail below.

Try and resolve your problems without resigning

This may seem like counter-intuitive guidance, given that you are looking for advice on how to bring a constructive dismissal claim, but it may be the case that you are able to resolve the problems that you are experiencing at work without having to resign from your job – you can either do this informally, by having a chat with your line manager or another senior manager to try and find some resolution, or, alternatively, you can try and resolve your complaints formally via your employer’s formal grievance process.

Lodging a grievance

It is almost always recommended that you submit a formal grievance before taking any step to resign from your employment – a failure to lodge a formal grievance might damage a potential constructive dismissal claim and would, generally, be in breach of the ACAS Code of Practice on Disciplinary and Grievance Procedures (“the ACAS Code”).

The reasons why it is recommended that you submit a formal grievance before resigning are as follows:

  • It allows your employer to address the complaints that you are raising and potentially take steps to remedy them or apologise;
  • It could allow you to resolve your situation with your employer without recourse to legal action; and
  • If you don’t submit a formal written grievance then any compensation that you win in a claim for constructive dismissal might be reduced to reflect the fact that you did not follow the ACAS Code

The above applies even if you have no intention of remaining in your job once you have submitted the grievance – the submitting of the grievance can be an important tactical step in terms of both negotiating an exit from your employer (see below) and/or pursuing a claim for constructive dismissal in the Employment Tribunal.

Do I need to comply with my employer’s grievance process?

You should normally take reasonably practicable steps to comply with your employer’s grievance procedure otherwise, as above, it may prevent a successful outcome to the grievance and/or mean that you are breaching the ACAS Code.

However, your employer must be reasonable in their approach to the grievance process and, if they act unreasonably, they may be in breach of the ACAS Code themselves (leading to a potential ‘uplift’ in the value of the compensation that you may seek in a constructive dismissal claim. Equally, if your employer acts unreasonably in the grievance process then it might give you further grounds (or, at the least, evidence) for your claim for constructive dismissal.

Should I appeal the outcome of my grievance?

Again, the answer is generally ‘yes’ – it’s generally a good idea (for the reasons detailed above) to appeal the grievance outcome even if you have no intention of staying at your employer and/or the outcome of your appeal is, to your mind, a foregone conclusion.

What do I need to show to win my constructive dismissal claim?

You will need to show the following to succeed with a claim for constructive dismissal

  • That you are an employee;
  • That you have continuous employment with the same employer for two years or more;
  • That your employer has breached your contract of employment;
  • That the breach of your contract was fundamental in nature;
  • That you resigned because of (or at least in part due to) the breach;
  • That you did not delay too long in resigning from (and therefore waive the breach)

This is explained in more detail below.

That you are an employee

You need to be an employee to bring a claim for constructive dismissal – you can’t bring such a claim if you are a “worker” or a “contractor”.

That you have continuous service of two years or more

You need to have two years’ continuous service with your employer in order to be able to bring a claim for constructive dismissal against your employer. If you have less than two years’ continuous employment then you may have other types of claim that you can assert, depending on your circumstances – these include, for example, a claim for detriment/dismissal due to “whistleblowing” or, further, a claim for discrimination. Neither of these two types of claim require you to have two years’ continuous employment.

If you've worked at your employer for less than two years

If you have less than two years’ continuous employment you probably can’t make a constructive dismissal claim, except in a few situations.

You don’t need to have worked for your employer for 2 years if your claim is because of:

  • a reason that’s always ‘automatically unfair’ (also referred to as ‘whistleblowing’)
  • Discrimination

Automatic unfair dismissal

It’s always ‘automatically unfair’ if you had to resign due to being treated unfairly in a way that amounts to a breach of contract because you:

  • are pregnant or on maternity leave
  • have asked for your legal rights at work, eg to be paid minimum wage
  • took action about a health and safety issue
  • work in a shop or a betting shop and refused to work on a Sunday
  • are a trade union member and took part in trade union activities including official industrial action or you were acting as an employee representative
  • have reported your employer for wrongdoing, which is called whistleblowing

Discrimination

You can make a constructive dismissal claim if you resigned because your employer discriminated against you.

It might be discrimination if you were treated unfairly because you are or are seen to be:

  • pregnant or on maternity leave
  • from a particular race, ethnicity or country
  • married or in a civil partnership
  • a man or a woman
  • disabled
  • lesbian, gay, bisexual or trans (LGBT)
  • have a particular religion or set of beliefs
  • older or younger than the people you work with

That your employer has breached your contract of employment

You will need to show that your employer has breached an express or implied term of your contract of employment.

Classic examples of a breach of contract are outlined above, but include:

  • Withholding your salary, even if for good reason and to a small extent;
  • Reducing your salary without your consent, or threatening to reduce your salary;
  • Demoting you without good reason or in breach of contract;
  • Changing your job duties, whether this is removing some duties or demanding that you perform new ones;
  • Discriminating against you; and
  • Failure to deal with a grievance that you have submitted

That the breach of contract is fundamental

The courts have held (in Eminence Property Developments Ltd v Heaney [2010] EWCA Civ 1168) that the test for whether a breach of contract is fundamental is “whether, looking at all the circumstances objectively, that is from the perspective of a reasonable person in the position of the innocent party, the contract breaker has clearly shown an intention to abandon and altogether refuse to perform the contract”.

What you will therefore need to show is that your employer has acted in a manner which clearly shows that it does not intend to continue to comply with important terms of your contract of employment.

That you have resigned because of your employer’s breach of contract

You will need to show that you have resigned wholly or partly because of your employer’s fundamental breach of contract. Should you resign from your employment because of your employer’s fundamental breach of contract it is therefore very important to ensure that you tell your employer in writing why you are resigning – be as clear and precise as possible, and link the reason for your resignation to the breach of contract.

That you did not delay in resigning from your job

This is very important: you must not leave too long a period between when the breach of contract occurs and when you resign, otherwise your employer will argue that you have ‘affirmed’ the contract and waived the breach (which would defeat your claim for constructive dismissal). You must therefore take reasonably prompt steps to resign once the breach of contract has occurred (more than a few weeks’ delay may be too long a period in certain circumstances).

Can my employer defeat my constructive dismissal claim by upholding my grievance or apologising?

The short answer to this is “no”, your employer can’t defeat your constructive dismissal claim by upholding a grievance that you have submitted or apologising to you because of the conduct in question – to put it another way, your employer cannot ‘cure’ the breach by attempting to undo what has already been done.

How do I resign from my job?

Resigning from your job is quite simple: you just need to let your employer know that you are leaving your job. It is recommended, as detailed above, that if you want to pursue a claim for constructive dismissal against your employer then you should also submit a resignation letter.

Do I need to give my reasons for resigning in my resignation letter?

As detailed above, if you want to bring a claim for constructive dismissal against your employer (or you want to try and increase your chances of negotiating an exit package) then you normally should put your reasons for resigning in writing in a letter (the resignation letter). The letter doesn’t need to be long or complicated: it just needs to precisely set out what has caused you to resign from your job.

Do I need to make it clear that I am resigning to claim constructive dismissal?

You don’t need to state this and, usually, it is recommended that you normally do not say this: telling your employer that you are resigning to claim constructive dismissal might cause your employer to become overly defensive or to instruct lawyers to look to defend your claim. On the other hand, telling your employer that you are resigning to claim constructive unfair dismissal might cause your employer to be more keen on settling your case (as they might think that there is a greater risk of being sued by you).

Should I work my notice period or resign immediately?

This will depend on your circumstances, and there is no ‘hard and fast’ answer to this question.

It is normally the case that if your contract has been fundamentally breached by your employer then you should usually resign without notice, otherwise you may be taken to have affirmed the contract (i.e. confirmed that you wish to continue with the contract) (Cockram v Air Products plc [2014] ICR 1065 (EAT)see our analysis of this case here). However, subsequent case law has suggested that providing that an employee makes their objection to what has been done to them by the employer “unambiguously clear” then you should not necessarily be taken to have affirmed the contract; what will constitute an affirmation of the contract will depend on the facts of each case, and will depend upon:

  • What has happened to you;
  • The length and circumstances of the delay; and
  • Whether you have made your concerns about what has happened to you “unambiguously clear”

We recommend that you take legal advice on your position to avoid any problems with your constructive dismissal claim.

What is the impact on my restrictive covenants if I have been constructively dismissed?

If your employer has seriously breached your contract of employment then you will generally be released from any restrictive covenant in your contract of employment (such as non-compete covenants, non-solicitation covenants etc.).

What compensation can I win in a constructive dismissal claim?

There are two types of award that you can receive if you succeed with a constructive dismissal claim:

  1. Basic award (which is equivalent to a statutory redundancy payment);
  2. Compensatory award (which is comprised of loss of earnings, loss of bonus and/or commission, loss of pension, as well as the loss of other financial benefits)

Negotiating an exit if you’ve been constructively dismissed

If you believe that your employer is breaching your contract of employment then it is normally advisable to see if you can negotiate an exit package (via a settlement agreement) before you resign from your employment.

If you have grounds to bring a claim for constructive dismissal then a successful exit negotiation would normally result in you receiving a sum of compensation for the termination of your employment. It is common for a settlement package to be offered by an employer if you have filed a grievance for a number of reasons, not least the fact that once you have formally filed a grievance with your employer there is a strong chance that the relationship with your employer has broken, or will break, down; this is regardless of the outcome of the grievance process.

Negotiating an exit package in these circumstances is a highly strategic situation and one that normally requires a delicate tactical touch – the success of the exit package negotiations will depend upon how you approach the negotiations and the potential strength of your claim. We therefore recommend that you seek legal advice on the strength of your claim, the potential value of your exit package, and on the approach that you should take to the negotiations; equally, seeking legal advice will allow you to avoid missteps in the negotiations which could weaken your exit negotiations.

We have advised thousands of clients on exit negotiations where they have had no choice but to seek an exit package or resign as a result of their employer’s conduct, and we have a strong track record with producing positive results. As part of the settlement terms we will ensure that, as well as receiving financial compensation, that appropriate non-financial terms are agreed such as:

  • The provision of an agreed reference to prospective employers;
  • Mutual confidentiality clauses; and
  • ‘Non-derogatory’ clauses which prevent your employer from ‘bad-mouthing’ you

Please see our article on key clauses in settlement agreements for further details on what should normally be drafted into a settlement agreement

How long do I have to bring a claim for constructive dismissal in the Employment Tribunal?

If you wish to bring a claim for constructive dismissal then you should normally issue an Employment Tribunal claim within three months less one day from the date that you left employment.

Before you bring a claim in the Employment Tribunal you will normally need to go through the ‘ACAS Early Conciliation process’ and obtain an ACAS Early Conciliation certificate. Please click here for a link to the ACAS website.

The deadline for submitting your claim in the Employment Tribunal will normally be extended by the period of time that you were in the ACAS Early Conciliation process for (this can be a complicated calculation, however, and we recommend that you seek legal advice on this).

If you do not obtain an ACAS Early Conciliation before issuing your claim in the Employment Tribunal then the Employment Tribunal will normally not accept your claim. This step is therefore very important.

Are there any steps I need to take before submitting a claim for constructive dismissal to the Employment Tribunal?

As detailed above, it is normally recommended that you do the following before issuing a claim for constructive dismissal in the Employment Tribunal:

  1. File a formal written grievance complaining about the behaviour that you have been subjected to;
  2. Try and negotiate an exit package;
  3. Go through the ACAS Early Conciliation process and obtain an ACAS Early Conciliation certificate

How do I submit a claim for constructive dismissal to the Employment Tribunal?

There are a number of options available for filing your claim for constructive dismissal with the Employment Tribunal, as follows:

  1. Issuing your claim form online (using this Government website);
  2. By posting the ET1 claim form to the Employment Tribunal; or
  3. By hand-delivering the ET1 claim form to the Employment Tribunal

You cannot issue an Employment Tribunal claim via fax or email. The most common method is online submission of the ET1.

Our analysis of claims for constructive dismissal in the Employment Tribunal

  • Failure to relocate sexual harasser left employee no choice but to resign (Miss S Stretch v Ballymore Construction Services Ltd ET3202196/2019) – in this case the Employment Tribunal ruled that Ms Stretch had been sexually harassed by a colleague and that her employer had failed to take steps to prevent Ms Stretch from having to work with her harasser (our analysis here)
  • Employment Tribunal finds that failure to carry out recommendations of occupational health report was discriminatory (Miss C Robinson v Mind Monmouthshire Ltd – ET/1600412/2018) – in this case the Employment Tribunal upheld an employee’s claims for disability discrimination, constructive unfair dismissal, and victimisation after her employer failed to carry out the recommendations of an occupational health report (our analysis here)
  • Tribunal finds that pregnant woman was discriminated against after unfair criticism made of her work (Miss N Grant v Hunter Price International Ltd and Others ET/2410479/2018) – in this case the Employment Tribunal held that the Claimant had been constructively dismissed, discriminated against and victimised after being subjected to intense pressure by employer (our analysis here)

Call Redmans today to discuss your employment law matter

Call Redmans on 020 3397 3603 or email us at enquiries@redmans.co.uk to discuss your employment law matter.

Alternatively, you can call Chris Hadrill, the partner responsible for the employment department, on 020 3397 3601 or email him at chadrill@redmans.co.uk.

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