Feeling compelled to resign due to your employer’s conduct? If you have at least 2-years of continuous service as an employee, then you may have been constructively dismissed or be in a “constructive dismissal” situation. If you are still employed, you may be in a good position to negotiate a lucrative exit. If you have already resigned, you may be eligible to present a claim for constructive unfair dismissal and pursue compensation.
This guide will explain your rights, identify indicators of constructive dismissal, and provide practical advice for the next steps to take.
- Constructive dismissal occurs when an employee resigns due to the employer’s fundamental breach of contract.
- A constructive dismissal claim involves a fundamental breach of contract, that (without delay) caused the employee to resign, with claims to be filed within a strict three-month less one timeframe.
- If you have not yet resigned, please don’t yet, but take immediate advice on your situation.
- Strategies for a stronger constructive dismissal case include documenting evidence of breaches, carefully crafting a resignation letter, considering the possible impact on future employment, navigating settlement negotiations, and understanding potential financial compensation.
Understanding Being Constructively Dismissed
Constructive dismissal arises when an employee feels compelled to resign because of their employer’s actions. This is distinct from standard dismissal as it results from the employee’s decision to leave due to the employer’s conduct, rather than being directly terminated by the employer. Some examples of conduct that may amount to a fundamental breaches of contract to be constructively dismissed are:
- failure to pay salary
- unilaterally reduction in salary
- discriminatory conduct
- breach of contract
- demotion without cause
- significant changes to job duties or working conditions
- failure to address a grievance
- poor handling of a disciplinary
- poor handling of performance issues
- excessive workload
- detriments because of whistleblowing
- intolerable working environment
- poor handling of sickness absence
Grasping the concept of constructive dismissal is pivotal for identifying potential violations of your employment rights, enabling you to oppose unlawful practices and pursue legal redress, such as negotiating an exit or claiming constructive dismissal. It will also enable the gathering of evidence to prove constructive dismissal, or making successful constructive dismissal claims.
So, what implications does it have for you as an employee? Simply put, if your employer’s actions amount to a fundamental breach of contract and (without delay) caused you to resign, there’s a chance you could make a case for constructive dismissal. Further, if you have not already resigned, you may be in a strong position to negotiate an exit, meaning you can avoid lengthy litigation and pursue your dream role with financial security.
Identifying a Fundamental Breach in Your Employment Contract
A fundamental breach in an employment contract is a serious breach of a term that is essential to the contract and has the potential to undermine the entire employment relationship (we have given some examples above). Please note, you must have been an employee for at least 2-years before being eligible to claim constructive dismissal.
If you have less than 2-years of service, where you have not been constructively dismissed, there may still be other claims.
The Legal Test for a Constructive Dismissal Claim
Proving a case of constructive dismissal requires demonstrating that:
- There was a fundamental (often referred to as a repudiatory) breach of the contract by the employer
- The breach caused your resignation
- There was not a delay in your resignation (otherwise you may have been deemed to have affirmed the breach)
Establishing each element above can be complex. You should also be cautious as (generally speaking) constructive dismissal claims can be tricky to establish and the employee bears the burden of proof.
If you think your employer has committed a fundamental breach, don’t resign, take advice, and do so quickly. You don’t want to wait too long (and be deemed to have affirmed the breach) or to resign to hastily when there was not actually a fundamental breach of contract.
Taking Action: Steps to Claim Constructive Dismissal
As stated (but worth repeating) if you think there has been a fundamental breach of contract, don’t resign, take advice, and do so quickly.
If you remain employed and can evidence a fundamental breach of contract, you may be in a strong position to negotiate an exit where you can leave the company on your terms with financial compensation. This is often an advantageous position over claiming at the employment tribunal.
Some other steps to improve your position are set out below.
Documenting Employer Failures
The initial phase in establishing a constructive dismissal case is compiling evidence of your employer’s failings. This entails logging any major contract breaches by your employer. You must be mindful not to breach any internal policies when doing so, which is why we recommend keeping your own log in the form of a timeline. For example, we often see employees forwarding work emails to their personal email in breach of an internal policy, which may result in disciplinary action.
Decide What You Want To Do
When considering if you have been constructively dismissed, it is important to think about whether you want to stay with the company or leave.
If you want to stay, it may be best to consider how best to resolve the issues at work and move forward.
If you want to leave, you can take advice on negotiating an exit on the best terms possible (for example, leaving with a reference and financial compensation so you can pursue a better role elsewhere).
Writing a Resignation Letter with Care
Your resignation letter forms a crucial part of your constructive dismissal claim. Commonly, people present constructive dismissal claims complaining of serious mistreatment, yet the resignation letter is positive and thanks the employer for all they have done for them and describes how great their time with the company was (this is not helpful).
The resignation letter in this situation needs to be well crafted and make specific reference to the fundamental breach of contract that caused the resignation.
Timing Your Tribunal Claim
Timing matters when lodging an employment tribunal claim for constructive dismissal. You must commence Early Acas Conciliation within 3 months less one day from the date the employment ended (other claims may also have different time limits).
When Early Acas Conciliation ends, there is also a specific time frame to present the Tribunal claim, see our Time Limit Calculator for further guidance.
Strategies to Strengthen Your Constructive Dismissal Case
Constructing a robust constructive dismissal case calls for a tactical approach. It makes sense to have a plan that is based on what you want to achieve. The plan will be different if you want to stay employed and fix the issues versus if you want to leave the business.
The exact tactics to deploy will vary depending on the situation, for example, your length of service, position, size of the company and the type of breach.
Securing legal advice could considerably improve your position. A legal professional can:
- Offer advice on whether you have been constructively dismissed or not
- Help you plan the next steps and explain the best tactical approach
- Guide you through the legal process
- Assess your case’s merit
- Help gather evidence
- Negotiate a settlement
- Help you resolve the problems so you can stay employed and move forward
- Take your case to the Employment Tribunal.
Navigating Settlement Agreements
Settlement agreements are often part of the resolution process in constructive dismissal cases. These agreements outline the terms of the settlement, including the compensation amount and any confidentiality clauses.
The negotiation process involves several steps, including:
Receiving an invitation to a meeting
Engaging in discussions at the meeting
Receiving a written offer
Engaging in further negotiation and counter-offers
Finalise the agreement in a settlement agreement (which must be signed off by an independent lawyer to be binding).
Understanding this process can help you navigate settlement agreements effectively and maximize your potential compensation.
Impact on Post-Termination Restrictions and Future Employment
Constructive dismissal can have implications on post-termination restrictions and future employment opportunities. For instance, in the event of constructive dismissal, your employer may not be able to enforce any post-termination restrictive covenants, such as non-compete clauses against you (this is a complex area so professional advice is recommended).
Unfair Dismissal and Constructive Dismissal Overlap
There is often confusion between unfair dismissal and constructive unfair dismissal.
Both are types of unfair dismissal claims under the Employment Rights Act 1996 and require at least 2-years of continuous service as an employee.
Unfair dismissal is when the employer terminates the employment relationship (so dismissing the employee). At the Tribunal, the employer must show there was a fair reason for the dismissal and therefore bears the burden of proof.
Constructive unfair dismissal is when the employee resigns. At the employment tribunal, the employee must show that there was a fundamental breach of contract that caused them to resign and therefore bears the burden of proof.
The compensation that is recoverable in both cases is essentially the same.
Financial Aspects of Constructive Dismissal Claims
Understanding the amount of compensation that is available after being constructively dismissed is key. There is often a misunderstanding on what can and cannot be claimed.
We cover what compensation can be claimed in other articles.
In conclusion, understanding your rights in a constructive dismissal claim is paramount. From recognising a fundamental breach in your employment contract to taking action and navigating settlement agreements, each step is crucial in this complex process. By equipping yourself with knowledge and seeking professional advice, you can navigate this challenging situation with confidence. Remember, you have the right to stand up against unfair treatment in the workplace.
Constructively Dismissed – Frequently Asked Questions
What is an example of constructive dismissal?
An example of constructive dismissal is when an employee (with at least 2 years of continuous service) resigns due to bullying, unreasonable changes in work conditions, demotion, or serious breaches of their employment contract by the employer. This could include situations where the employer allows bullying or harassment, makes unreasonable changes to the employee’s work, or fails to pay the agreed amount without a valid reason. If there has been a fundamental breach of contract, for there to be a constructive dismissal claim, the breach must (without delay) have caused the employee to resign.
What evidence do I need for constructive dismissal?
You’ll need to prove that your employer seriously breached your contract and that you resigned in response to it to make a successful claim for constructive dismissal. It’s important to gather evidence of the breach and your resignation.
What happens if you win a constructive dismissal case?
If you win a constructive dismissal case, you may be entitled to compensation. The amount will depend on various factors.
What steps should I take to claim constructive dismissal?
At least initially, don’t resign, take advice, act quickly!
Otherwise, see our other tips above.