Constructive Dismissal is where an employee resigns in response to an alleged breach of their Contract of Employment. All such contracts contain an implied term of mutual trust and confidence; most claims for Constructive Dismissal contain allegations that the employer has acted in a way to breach that term and that as a result their position was untenable.
Once Constructive Dismissal is established, an employee with 2 years’ service is likely to be able to claim Unfair Dismissal. With a median award of £7,521 in 2016/17, the prospect of an Employment Tribunal claim for Unfair Dismissal should not be taken lightly. Defending a claim takes up a great deal of management time not to mention legal costs.
Grievances can often be early notice that an employee is considering resigning and claiming Constructive Dismissal. However, it is wise to seek advice in any circumstances where an employee resigns on bad terms, particularly where they don’t have a job to go to.
If you do receive an Employment Tribunal claim for Constructive Dismissal or are contacted by ACAS in Early Conciliation, our wealth of experience in dealing with these claims means that we can assess the merits of defending or settling the claim and, if appropriate, assist you in presenting a robust defence.
It is usually possible to agree a fixed fee to give unbundled advice regarding an allegation of Constructive Dismissal or an Employment Tribunal claim. Where you want us to give open ended advice or represent you in proceedings, we will provide the best estimate we can and keep you fully informed about the costs you are likely to incur. Advice about grievances is included in our retainer offering for employment matters.
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FAQs about Constructive Dismissal
Who can claim Constructive Dismissal?
Any employee with 2 years’ service can claim Constructive Unfair Dismissal. Employees with less than 2 years’ service can still claim Constructive Dismissal, but their claim would be limited to payment for their notice period. Constructive Dismissal for an automatically unfair reason, such as because of pregnancy or leave for family reasons, health and safety or whistleblowing, has no qualifying period.
What are common reasons for Constructive Dismissal?
Constructive Dismissal can be claimed following a resignation in response to any fundamental breach of a Contract of Employment. Commonly, this relates to the implied term of mutual trust and confidence. Constructive Dismissal claims often relate to overwork or bullying causing stress at work, reductions in status by undermining employees, taking away responsibilities or outright demotion, or even something as fundamental as a pay cut. Discrimination claims often include claims for Constructive Dismissal as discriminatory conduct is often a fundamental breach of contract.
Can an employee claim Constructive Dismissal after working their notice?
It is a common misconception that an employee who has worked their notice cannot claim Constructive Dismissal. Working notice may be a relevant factor in determining whether the alleged breach of contract was so fundamental as to destroy mutual trust and confidence but there is nothing to prevent an employee who has worked notice bringing a claim for Constructive Dismissal, particularly where some or all of that notice is spent away from the workplace on sick leave, garden leave or holiday.
Can an employee claim Constructive Dismissal without raising a grievance?
Failing to raise a grievance can affect the amount of compensation payable to an employee but there is nothing to prevent a Constructive Dismissal claim where the employee has not raised a grievance. It might however be possible to defend a Constructive Dismissal claim where the employee has a dispute with a particular manager but hasn’t given the employer the opportunity to intervene in that dispute: it could be said that the mutual trust and confidence between employer (as opposed to manager) and employee was not destroyed. Conversely, the way senior management react in Grievance Procedures can add to an allegation that there is no longer any trust and confidence between employee and employer.
How much compensation is available for Constructive Dismissal?
Constructive Dismissal is compensated in the same way as Unfair Dismissal:
A Basic Award, calculated in the same way as a statutory redundancy payment.
A Compensatory Award, which compensates the employee for any financial loss. This is usually loss of earnings but might also include the costs of looking for work or setting up a new business. A payment is also made for loss of statutory rights. There is a statutory cap on the Compensatory Award of one year’s salary or £83,682, whichever is lower (except in health and safety or whistleblowing cases).