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Understanding Constructive Dismissal

Feb 4

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monitor with 'i quit' on it

This type of dismissal is different from a regular dismissal where the employer takes the initiative to end the employment. Instead, constructive dismissal arises when an employee feels compelled to resign due to their employer’s conduct.


What is Constructive Dismissal?


In legal terms, constructive dismissal occurs when an employer’s actions or behaviour force an employee to resign from their job. The resignation is considered involuntary as it results from the employer’s failure to uphold the terms of the contract. The key point here is that the employer's actions must be such that they breach the employment contract in a significant way and the employee resigns because of this breach.

An Judge in Western Excavating (ECC) Ltd v Sharp [1978] QB 761 said:


"If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed."


Some examples of employer behaviour that could lead to constructive dismissal include:


  • Serious breach of contract: If an employer fails to honour the terms of the employment contract such as by cutting an employee’s pay or significantly changing their job duties without consent.


Example: An employee has a contract stating that they will work 37.5 hours per week at a salary of £25,000. However, the employer unilaterally reduces the salary to £20,000 per year without the employee’s consent or a formal agreement. This constitutes a serious breach of contract under UK law as the employer is not honouring the agreed terms.


In Foley v. Post Office [2000] IRLR 827 (CA) it was clarified that an employer's conduct must be such that it undermines the contract of employment, and the employee's resignation must be a direct response to that breach.


  • Harassment or bullying: If an employee faces a hostile work environment due to bullying, harassment or discrimination and the employer does not take adequate steps to address it.


Example: An employee is subjected to racial abuse and offensive comments by a colleague. Despite raising a formal grievance, the employer fails to take adequate action to investigate or stop the harassment. Under UK law, the employer has a duty to prevent harassment under the Equality Act 2010 and failure to address this situation could lead to legal action for failing to provide a safe and respectful workplace.


  • Failure to provide a safe working environment: If an employer fails to ensure that the workplace meets health and safety standards causing an unsafe or dangerous environment.


Example: An employee working in a factory reports that the machinery has faulty safety equipment and that the floor is slippery with water and oil. The employer does not address these issues or provide adequate training or personal protective equipment (PPE). Under the Health and Safety at Work Act 1974, the employer is legally obligated to provide a safe working environment.


  • Unreasonable changes to job terms: If an employer makes significant changes to the employee’s role, location or working conditions without their agreement, this may also constitute constructive dismissal.

man looking at paper

Example: An employee is hired as a customer service representative based in the company’s office in Manchester. After a year, the employer forces the employee to move to a different role as a call handler with a salary reduction and no prior discussion. Additionally, they are moved to a different location in Birmingham. The employer is making significant changes to the employee's role without agreement, which could force the employee to resign.


The employee must prove that the employer's actions made it impossible for them to continue in their role. It is not enough for the employee to simply feel dissatisfied or unhappy; the employer’s actions must constitute a fundamental breach of the contract.


How to Claim Constructive Dismissal Under UK Employment Law


If you believe you have been constructively dismissed, understanding how to claim can be crucial to securing compensation or a resolution. 


1. Assess the Situation


Before taking any action, assess whether the situation truly constitutes constructive dismissal. Consider the following:


  • Has the employer’s conduct been so severe that it has fundamentally breached the terms of your employment contract?


  • Have you tried to resolve the issue through informal discussions or grievance procedures with your employer?


  • Did you resign due to the breach or was your resignation voluntary?


2. Try to Resolve the Issue Internally


Employees are encouraged to attempt to resolve workplace disputes internally. This can involve:


  • Raising a formal grievance: If you believe you’ve been treated unfairly or unlawfully, you should raise a grievance with your employer. This gives the employer a chance to address the issue.


  • Engage in dialogue: Sometimes, informal communication between the employee and employer may resolve the issue before it reaches formal procedures.


If internal efforts fail and the employer’s actions do not change, then you may have grounds for constructive dismissal.

dice with faces

3. Resign Within a Reasonable Timeframe


One critical aspect of a constructive dismissal claim is that the employee must resign as soon as possible after the breach occurs. If you wait too long to resign, it could be argued that you have accepted the employer’s behaviour and therefore, cannot claim constructive dismissal.


The resignation should be clear and final. If you choose to leave, make sure you provide a formal resignation letter that states your reasons for resigning, which will support your case if you decide to take legal action.


In Auto Cubes (UK) Ltd v. Hogg [2001] ICR 607 (CA) The Court of Appeal ruled that an employee must act quickly and not wait too long before resigning to avoid waiving the breach.  Mr. Hogg was able to successfully claim constructive dismissal because he resigned soon after the employer made significant changes to his terms of employment


4. Gather Evidence


To support your constructive dismissal claim, you will need evidence of the employer’s conduct. This could include:


  • Correspondence such as emails, letters or messages that show the employer’s failure to adhere to the contract.


  • Witness statements or testimonies from colleagues who may have witnessed inappropriate behaviour or breaches.


  • Documentation of any complaints you made or grievances you raised.


The stronger the evidence you have, the more likely your claim will succeed.


5. File a Claim with an Employment Tribunal


If informal resolutions or internal grievance procedures do not work and you decide to pursue a claim, you can file a complaint with an employment tribunal. Claims must be made within three months minus a day of the date of resignation or the breach of contract.


In your tribunal claim, you will need to:


  • Clearly outline the breach of contract or misconduct by your employer.


  • Show that you resigned as a result of the employer's actions and explain why you felt you had no choice.


  • Present evidence to support your case.


The tribunal will then decide whether the dismissal was indeed constructive and whether you are entitled to compensation or other remedies.


What Compensation Can You Claim for Constructive Dismissal?


If you win a constructive dismissal claim, you may be entitled to compensation. This may include:


Basic Award: A lump sum calculated based on your age, length of service (up to maximum of 20 years) and weekly salary (at the date of writing (February 2025), it is capped at £700 per week).

 

Compensatory Award: Compensation for loss of earnings and benefits up to a maximum of £115,115 (or 12 months' salary, whichever is lower).

 

Interest: Can be added to the compensatory award.


Conclusion


Constructive dismissal can be a complex issue in employment law and it’s important for employees to understand their rights. If you believe your employer’s actions have forced you to resign, taking legal advice from an Employment Solicitor to consider the right steps to address the situation and claim compensation can help protect your interests.

 

Call a specialist employment lawyer  


Magara Law is an employment law firm in Bicester, Banbury, Reading and Paddington, London, and services clients nationwide. 


For more information or to contact our employment law team at Magara Law, call 01869 325 883 or email roy@magaralaw.co.uk.





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