Constructive dismissal compensation in the UK is calculated in the same way as unfair dismissal.
Constructive dismissal can be a complicated and stressful experience for employees in the UK. It occurs when an employee resigns from their job due to their employer’s breach of contract or conduct that makes it impossible for them to continue working. If you are in this situation, it’s crucial to understand your rights and the compensation you may be entitled to. In this article, we explain the difference between unfair dismissal and constructive unfair dismissal and explain how this may impact your response to the situation.
With this knowledge, you can make informed decisions about your next steps and ensure that you receive fair compensation for your experience. So, let’s get started and explore what you need to know about constructive dismissal compensation in the UK.
Constructive Dismissal v Unfair Dismissal
Constructive dismissal is defined as when the employee terminates their employment contract, with or without notice, when they are entitled to terminate it without notice, by reason of the employer’s conduct.
Constructive dismissal arises when the employer commits a “fundamental” breach of contract and this causes the employee to resign. We have more details on constructive dismissal HERE.
The key difference between “unfair dismissal” is that with constructive dismissal the employee resigns and with an unfair dismissal the employer dismisses the employee. In a constructive dismissal claim, the burden of proof is on the employee, in an unfair dismissal claim, the burden of proof is on the employer.
Both claims require at least 2-years of continuous service as an employee.
Types of compensation for constructive dismissal
As stated above, constructive dismissal compensation in the UK is calculated in the same way as unfair dismissal. We have another article setting out the main compensation you can claim in an unfair dismissal case HERE.
The two main types of compensation most commonly pursued are:
Basic award:
This is a statutory award calculated based on the employee’s age, length of service, and weekly pay.
Compensatory award:
This is an award for any losses suffered as a result of becoming unemployed. The compensatory award covers financial losses such as loss of earnings, pension, and benefits. The compensatory award is subjected to a statutory cap, which is the lowest of either the relevant annual cap or 52 weeks of gross pay. For April 2023/24, the cap is currently £105,707.
If You Think There Has Been A Constructive Dismissal – What Should You Do?
If you think there has been a fundamental breach of contract, then you should take advice (as quickly as possible) and stay employed – we cover this in more detail HERE.
The key point here is to:
Don’t resign. Take advice. Act quickly.
Don’t Resign
If you remain employed, you are in a much stronger position to negotiate. This means you may have the chance the negotiate an exit, which means you can exit on your terms (controlling things like the reference and what your employer can or cannot say about you when you leave) and obtain compensation now (rather than waiting for a lengthy claim at the Employment Tribunal to conclude).
Take Advice
If you take professional advice, you will understand (1) if there has been a fundamental breach of contract (you do not want to learn this after already resigning, in case you were wrong) and (2) you can obtain advice on how to exit on the best terms possible (you will give yourself the best chance to leave on the best terms possible (more money and a better reference, for example).
Act Quickly
If you wait too long, you run the risk of losing the constructive unfair dismissal claim (if you wait too long, you may waive the fundamental breach of contract).
If you wait too long, you may weaken your argument to negotiate an exit or lose the constructive unfair dismissal claim altogether.
Constructive Dismissal UK Compensation – Tips
Here are some tips to maximise the chances of obtaining more compensation:
- Don’t resign, take advice, and act quickly. You are often more likely to get a better outcome if you follow these steps.
- At the outset, decide if you want to stay employed (and fix the issues) or leave with compensation.
- Before taking advice, have your evidence ready (or at least a clear timeline to explain what has happened and when). Obtaining evidence is important, but don’t breach any internal rules/terms of your contract in the process (for example, forwarding emails from your work email to your personal email may seem like a good idea, but this may lead to disciplinary action.
- Understand the monetary value of your employment and not just your salary (don’t forget things like any benefits, bonuses, car allowance, commissions, pension, shares, etc).