What is constructive dismissal?
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Constructive dismissal is the term used where an employee resigns in response to their employer’s conduct in breach of an important term of their employment contract. This can be a breach of an express or an implied term. An example of breach of an express term would be where the employer fundamentally changes an employee’s duties without being contractually entitled to do so. Implied terms are incorporated into every employment contract by law. Breach of the implied term of mutual trust and confidence is often relied on by employees where the relationship between them and their employer has irrevocably broken down.
Where an employer has breached an important express or implied term of the employment contract, an employee is entitled to treat him or herself as having been “dismissed”. The employer’s conduct is often referred to as “a repudiatory breach”.
For a constructive dismissal claim to succeed, the employee needs to show that:
- Their employer was in repudiatory breach of the employment contract;
- They resigned in response to that breach; and
- They did not delay too long before resigning in response to their employer’s breach. If the employee continues working for any length of time without leaving they are likely to lose their right to treat the contract as breached and will be regarded as having chosen to “affirm” the contract.
It is important to note that it may not be just one incident that amounts to repudiatory conduct; sometimes it is a series of incidents or pattern of behaviour which, taken as a whole, amounts to such conduct. In these circumstances the tribunal may consider that any previous breaches of contract that may have otherwise been waived by the employee should be treated as revived and as part of a continuing course of conduct.
Compensation for constructive dismissal
If you can establish that you were constructively dismissed, the tribunal will assess the loss that you have suffered. You may receive compensation for:
- Breach of contract; and
- Unfair dismissal.
Breach of contract claim
If you resign without giving notice, the tribunal will consider what loss you have suffered as a result of your employment contract terminating without notice. The compensation for that loss will be designed to put you in the financial position you would have been in had you been dismissed in accordance with your contract. This means that you would be entitled to your net pay and the value of any benefits that you would have received had you worked through your notice period.
Unfair dismissal claim
Compensation for unfair dismissal is usually only available to employees who have worked for their employer for at least two years.
The tribunal will consider whether your dismissal was fair or unfair and in doing so will look at a range of factors including the reason for your dismissal and whether your employer acted reasonably. In practice it will be very difficult for an employer to show that it acted reasonably if it has in fact breached a term of your employment contract, making it more likely that your dismissal will be judged unfair.
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There are five potentially fair reasons for dismissal
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- This could be a single act of misconduct or a series of less serious acts
- Capability or qualifications. This includes poor performance, ill-health and formal qualifications
- This includes workplace closure, business closure, or reduced need for employees
- Where continuing to employ the employee in the position they hold would contravene a statutory restriction (for example, because of their immigration status)
- “Some other substantial reason” (SOSR). This is a catch-all category of potentially fair reasons that do not fall under the other categories. For example, this category may include dismissals for failure to agree to changes to terms and conditions, pressure from third parties such as clients, and business reorganisations falling short of a genuine redundancy situation.
