Constructive dismissal is where an employer has committed a sufficiently serious breach of contract that the employee’s only option is to resign in response to the employer’s conduct or treatment.
Employees are advised wherever possible to take professional guidance on their circumstances before resigning. Constructive dismissal is recognised as being difficult for employees to prove to the tribunal. Claimants are also under a duty to mitigate their losses, and such will be required to find new work as soon as they resign. Understanding if other routes are available to you could help to resolve the issue in a different way while protecting your best interests.
Am I eligible to claim constructive dismissal?
Constructive dismissal is narrow in scope, and applies only in limited circumstances.
You will need to show:
- Your employer has committed a serious breach of contract,
- You felt forced to leave because of that breach, and
- You have not done anything to suggest that you have accepted their breach or a change in employment conditions.
You will need to show that you resigned because of a serious breach of a contract term by your employer. This could involve either:
- Breach of an express contractual term eg failure to pay wages, failure to follow an internal policy correctly; or
- Breach of an implied term of contract eg failure to take reasonable steps to protect the health, safety and welfare of employees
You might be able to make a claim for constructive dismissal if you resigned because your employer:
- Allowed others to bully or harass you at work
- Made unreasonable changes to how you work, for example by forcing you to work longer hours
- Demoted you without reason
- Refused to pay you
- Failed to ensure a safe working environment
- Withdrew contractual benefits eg company car
- Failed to address stress at work
- Failed to make reasonable adjustments where you have a disability
The breach of contract can relate to a single serious incident or a series of incidents that are sufficiently serious when taken together.
Your resignation must have been the reason for your resignation and when notifying of your resignation, you should state that you consider yourself as being “constructively dismissed”.
In most cases, you will need to have been employed by the employer for at least two continuous years on the date of your resignation. The two-year rule will not apply if your resignation was due to a reason that would be deemed ‘automatically unfair’ or due to discrimination.
Strict time limits apply. You have only 30 days less one day of your contract ending to start a claim. You must also first notify ACAS under early conciliation before you can start a claim.
How is constructive dismissal different from unfair dismissal?
While constructive dismissal relates to an employee feeling forced to resign because of their employer’s conduct, unfair dismissal applies where the employer cannot show good reason for the dismissal or they have failed to follow a fair and lawful formal disciplinary or process in dismissing the employee.
Can I resign without giving notice?
Ordinarily, employees are required to give and work the correct notice when resigning from their job.
In a constructive dismissal scenario, however, where the employer has seriously breached the terms of the employment contract, it is usually justifiable for the employee to resign without giving the requisite notice.
This means you may resign with or without notice, but you should be entitled to resign and terminate your contract without notice.
Should you work your notice period, you could face a challenge from your employer that you would have consented to your employer’s breach and affirmed your contract by remaining an employee.
What is ‘automatically unfair’ treatment?
If you have resigned as a result of being subjected to treatment that was automatically unfair, you may be able to claim for constructive dismissal.
The following behaviours and treatment would be classed as automatically unfair:
- You are pregnant or on maternity leave
- You have asked for your legal rights at work, eg to be paid minimum wage
- You took action about a health and safety issue
- You work in a shop and refused to work on a Sunday
- You are a trade union member and took part in trade union activities including official industrial action or you were acting as an employee representative
- You have reported your employer for wrongdoing (whistleblowing)
If you have 2 years or more service at the time your contract ends, it would also be automatically unfair if you were dismissed because the business was transferred to another employer of you failed to declare a spent conviction.
How do I make a claim for constructive dismissal?
Where possible, employees are encouraged to try and resolve workplace disputes informally with their employer, or through the organisation’s internal grievance procedures.
A common, pragmatic approach where the employee and employer cannot resolve the situation is to agree a negotiated exit with a financial settlement for the employee.
Resigning should always be considered a measure of last resort. Where possible, you should take legal advice before you hand in your notice.
Where there is an incident involving conduct or treatment by your employer that equates to a breach of contract, you should resign as soon as possible to avoid your employer arguing that you had ‘accepted’ the breach. You should set out your reasons for leaving in a resignation letter. If you have resigned due to constructive dismissal you should be able to take your employer to the employment tribunal.
Can I claim constructive dismissal due to discrimination?
Employees are protected under the Equality Act from discrimination against them that relates to a protected characteristic.
As such, it could qualify as discrimination if you were treated unfairly because you are or are seen to be, or you are associated with someone who is 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
- lesbian, gay, bisexual or trans (LGBT)
- have a particular religion or set of beliefs
- older or younger than the people you work with
If your resignation was because your employer discriminated against you, you may be able to bring a constructive dismissal claim against your employer.
How much is compensation for constructive dismissal?
Compensation for constructive dismissal is made of two parts; a basic award and a compensatory award.
The basic award is set is as follows:
- One and a half week’s pay for each year of employment if you are aged 41 and above.
- One week’s pay for each year of employment if you are aged 22-40.
- Half a week’s pay for each year of employment if you are under the age of 22.
Calculations can apply for up to a maximum of 20 years’ continuous. The level of pay will usually be set at your normal weekly gross pay at the time of your resignation, up to the prevailing maximum threshold (£525 per week as at August 2019). The maximum amount for a basic award is £15,240.
In most cases, constructive dismissal claims do not make it to the tribunal but instead are settled with a compromise agreement. It is important for employees to understand the amount they could potentially be awarded by the tribunal to gauge the level of an acceptable offer.
The compensatory award is set to award employees where it is ‘just and equitable’ based on specific losses arising as a result of their employer’s actions. Types of losses that could be claimed include:
- loss of wages including contractual and non-contractual benefits where applicable
- loss of future wages
- loss of statutory rights
- loss of pension.
Assuming you win your case, the tribunal will assess your total loss, and your earnings from alternative employment during the notice period should be taken into account against sums already received from your employer, such as pay in lieu of notice or enhanced redundancy payments.
The tribunal has the power to reduce both the basic award and the compensatory award if your conduct contributed to the situation, or where an employer can show that even if they had followed a correct process, the decision to dismiss would still have been the same.
How can I prove constructive dismissal?
If you are bringing a claim for constructive dismissal, the burden will be on you to prove that the legal requirements have been met. Your evidence will need to counter this and support your case that the breach was fundamental to your contract of employment, leaving you with no alternative than resignation.
Constructive dismissal cases are frequently dismissed by tribunals because the employee has been unable to provide a sufficient body of proof to evidence the breach or where the employee has been deemed to have accepted the employer’s behaviour over a prolonged period of time.
You will need to clearly identify and prove the specifics of how and you’re your employer breached a serious or fundamental term of your employment contract, known as a repudiatory breach.
There are many circumstances where constructive dismissal could be shown to apply. Some examples include:
- A complete change in the work you are undertaking without sufficient notice or training
- Stress at work that has not been effectively addressed or resolved
- Harassing or bullying at work
- Unexpected reductions in pay, or not being paid when expected, without any reasonable explanation or notice
- Demotion without good cause
- Unfair and unfounded allegations of poor performance
- Unreasonable disciplinary procedures; especially when they are for so-called offences not covered in any employee handbook
- Forcing staff to work in breach of health and safety laws, potentially risking their own health
Some breaches will be easier to establish than others. A pay dispute, for example, can be evidenced by payslips and bank statements. Breaches relating to trust and confidence, however, can be more challenging to prove and may require the support of emails, text messages, witness statements and any notes you may have taken relating to relevant events or incidents or conversations.
Your employers may argue either that there was no breach at all and the resignation was voluntary, or they could suggest that any breach was not sufficiently severe to justify resignation or constitute constructive dismissal and that they behaved in a reasonable manner.
Should I raise a grievance first?
Employees and employers are expected to try and resolve disputes informally and internally before pursuing a tribunal claim.
Depending on the circumstances, it may be more appropriate to consider raising a grievance to raise the issue and enable your employer the opportunity to respond and take action.
Taking professional legal advice will help you understand your options and the course of action you are expected to take before resorting to a tribunal claim.
For example, it may be advisable to send a ‘Without Prejudice’ letter detailing the contractual breach(es) and reasons for the complaint and inviting the employer to rectify the situation before the employee feels forced to resign.
This provides the employer with the opportunity to address the situation. If the employee is unwilling to respond to any attempts to settle the matter amicably, or an agreement cannot be reached, then the employee will either have the choice of returning to work or to resign and then pursue a case for constructive dismissal.
Should you be unwilling to respond to your employer’s efforts to resolve the issue, or an agreement cannot be reached, you will either have the choice of returning to work – negating any future potential to bring a case for constructive dismissal – or to resign and pursue a case for constructive dismissal.
Do you need help with Constructive Dismissal?
DavidsonMorris’ team of employment law specialists offer support and advice to employees facing difficulties in the workplace. Constructive dismissal is a highly technical area and given the many factors to consider and the complexities and sensitivities of the issues typically involved, we recommend taking early advice to understand your rights and the options open to you to ensure your best interests are protected. Contact our employment lawyers for advice and guidance on any aspect of constructive dismissal.