Constructive Dismissal
Could your resignation be deemed Constructive Dismissal?
Constructive Dismissal Employment Law
What is Constructive Dismissal?
Constructive Dismissal is a situation in which the employer commits a fundamental breach of contract, entitling and/or forcing the employee to resign as a response to their employer’s conduct. The employee becomes entitled to being seen as “dismissed”. Oftentimes the employer’s conduct is considered to be a “repudiatory breach”.
This is in contrast to an unfair dismissal which is a situation in which you have been sacked in a way deemed unlawful.
A fundamental breach of either an explicit term in the contract or the implied term of “trust and confidence” between both parties must occur. Proving that the employer has acted unreasonably is not enough.
Furthermore, the reason for resigning must be because of the breach, and it should be made clear by the employee when they resign that they regard themselves as having been “constructively dismissed”.
A breach of contract by your employer may not be caused by just one isolated incident. There may be a continuing pattern of behaviour or incidents which, taken as a whole, amount to a breach of contract. However, the ‘straw that breaks the camel’s back’ which prompts the employee to resign must contribute to the previous acts, so that together they all add up to a breach of trust and confidence between the two parties.
The burden of proof is on the employee to show that they resigned in response to a breach of contract so fundamental that they could not have been expected to continue working there anymore.
The employee must resign immediately and must not delay the notice period unreasonably, such that in Law they will be taken to have accepted the breach. As a rule of thumb, an employee should normally resign within about a week, although circumstances can vary enormously.
The employee must also be careful not to be seen to have waived the breach by the employer by other means such as an e-mail that says they are happy with the changes to the contract of employment.
Example Constructive Dismissal Claims
See below for example breaches of contract which are grounds for Constructive Dismissal claims:
- Receiving a reduction in pay, or not being paid at all;
- Being demoted without a justifiable good reason;
- Unfounded allegations of poor performance;
- Considerably unreasonable disciplinary proceedings;
- The nature of your job role has completely changed;
- Harassing or bullying;
- Stress at work, from being overworked or otherwise, that has not been addressed properly;
- The employer failing to accommodate your disability with reasonable adjustments;
- Being forced to conduct work that is breaching health and safety regulations or laws.
How easy is it to bring a claim for Constructive Dismissal?
You can only make a constructive dismissal claim if you’re classed as an employee and have been working for your employer for at least 2 years. You will need to prove that your relationship with your employer has become untenable.
Depending on the strengths and factual circumstances of your claim there may well be the option of securing with your employer a negotiated exit.
On the assumption that you have a good legal basis for a constructive dismissal claim, as successful negotiation (as an alternative to bringing a claim to the Employment Tribunal) would usually result in you receiving a lump sum financial package in exchange for giving up your employment rights.
Negotiated exits happen fairly frequently in employment situations because more often than not by the time a grievance has been formally lodged, the reality is that the working relationship will have broken down.
Negotiating an exit is a highly tactical process and not one that should be taken without being fully aware of all your legal rights, what types of settlement are possible and ensuring that the settlement terms are binding.
It is for these reasons that we suggest that it is far better to have legal representation when negotiating an exit so that nothing is said or done which could put the possibility of a settlement at risk.
Constructive Dismissal Compensation
Compensation for a successful constructive dismissal claim is made up of a basic award and a compensatory award. A basic award is calculated similarly to the statutory redundancy payment formula, and the compensatory award is calculated based on the money you have lost as a result of the constructive dismissal ordeal.
The compensatory award for constructive dismissal is capped at a maximum of 1 year’s salary or £80,541, whichever is lower.
You may also be able to claim for your notice period and your loss of statutory rights, as well as other claims.
Lodging a grievance
Under the ACAS code of practice, it is recommended and expected that before taking any steps to resign an employee lodges a formal grievance against their employers in constructive dismissal claims.
The reason for this is that it gives the employer an opportunity to resolve the dispute. The failure to lodge a grievance by an employee before resigning also means an employment tribunal can reduce any damages the employee is awarded by up to 25%.
In some cases it is tactically best not to lodge a grievance. This is especially pertinent where the working relationship has broken down to such an extent that the employee no longer wishes to work for the employer whatever the outcome of the grievance. A tribunal would understand this.
The contents, and lodging of a grievance is also an important consideration in relation to any exit negotiations with a job reference and a financial lump sum, which is by far a more desirable outcome.
Frequently Asked Questions
Can my constructive dismissal claim be defeated by my employer by upholding my grievance or simply apologising?
No, they cannot. If your contract was already breached by the employer through their actions, attempts at making amends or undoing the damage. Unless the breach has been waived by acceptance or by not objecting, then the employee has the right to choose whether they treat the breach as terminating the relationship or not.
When resigning do I need to specify that I am claiming constructive dismissal?
Preferably yes, as if you don’t state clearly why you are resigning, and that you are regarding yourself as being constructively dismissed it might look rather odd. Not declaring that you are claiming constructive dismissal could also work against you in subsequent tribunal proceedings, or when trying to reach a settlement and you are having to explain a blank resignation letter.
It is far better to fully state in your resignation letter why you believe you have been unfairly treated and how your employer has breached your contract. If, as recommended, you have lodged a grievance prior to your resignation, the reasons as to why you are not happy will have been set out there, but the should still also be addressed at this point.
You should also consider the tone of your resignation letter when resigning on the basis of constructive dismissal. Positive things such as “It has been a pleasure working with you” should not be said as it is not in the spirit of someone who believes they have been forced out of their job, and could work against you at a later date.
If I make a claim for constructive dismissal how will it affect my restrictive covenants?
You may be released from the post-termination restrictions in your contract of employment such as not being able to working for an industry competitor, or making contact with your employer’s clients, if you can show that you have been constructively dismissed.
This is due to the nature of a constructive dismissal claim, meaning that your employer who has fundamentally breached your contract, cannot then rely on that same contract in the future.
This may be music to your ears where you have been forced out of your job, and don’t want to be restricted when finding a new employer or contacting previous clients, because of contractual restrictions.
This is not an automatic ‘green light’ however, just because you are claiming constructive dismissal (without the claim first being determined by a tribunal).
It may work if you have a strong claim for constructive dismissal and your employer acknowledges this – or can be persuaded to believe the strength of your claim. If your employer will not acknowledge the strength of your claim, legal steps could be taken to prevent you from breaching your covenants.
As always with sityations such as this it is best to take legal advice before making any decisions which may put you in a potential breach of contract.
What is the difference between constructive dismissal and unfair dismissal?
Constructive dismissal is when you are essentially forced to quit your job because your relationship with your employer has become untenable. Whilst it’s referred to as a dismissal in law terms, it is more like a resignation in practice.
Unfair Dismissal is when you have been sacked in an unlawful way.
What are the 5 Fair Reasons for Dismissal?
There are five fair reasons for being dismissed from employment.
- Conduct/Misconduct
- Capability/Performance
- Redundancy
- Statutory illegality or breach of a statutory restriction
- Some other substantial reason (SOSR)
How to prove constructive dismissal?
We strongly advise in consulting an Employment tribunal specialist before making a claim, as proving constructive dismissal can be fairly difficult. Speaking to an employment specialist will help guide you on the whether or not your case is viable. See here to read more on how to prove constructive dismissal?
Negotiating an Exit
Negotiating an exit from the company, as the ACAS code of practice recommends and expects, should be preceded by the lodging of a formal grievance by the employees against the employers in their constructive dismissal claims prior to taking steps towards resignation.
Lodging the grievance would provide the employer with a chance to resolve the dispute amiably. An employment tribunal could reduce the potential damages awarded by up to 25% should the employee fail to lodge their grievance prior to resigning.
Not lodging a grievance could prove to be tactically best in certain situations. This is best kept in mind especially in cases where the working relationship deteriorated to the point where the employee would no longer want to work for the employer regardless of the grievance’s outcome. This would be understood in a tribunal.
The act of lodging a grievance, as well as its contents, is an important consideration in the process of negotiating an exit with a financial lump sum and a job reference – a far more preferable outcome.
What is the time period to make a employment tribunal claim?
If you desire to claim constructive dismissal, your claim should be commenced within 1 day less of 3 months from the date in which you have left your employment – this is oftentimes on the last date that you have been paid. Before the claim will be accepted by the tribunal however, it needs to be lodged with ACAS. This is a preliminary step under the “early conciliation scheme”
The Next Step
If you are looking for a No Win Fee Employment Law Solicitor to represent you, we need to assess the merits of your potential claim which we are normally happy to do free of charge.
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