Constructive Dismissal & Resignation Advice

Constructive dismissal arises when an employee has no choice but to resign because of the behaviour of their employer. This will still count as a “dismissal”.

What is constructive dismissal?

When employer behaviour triggers a resignation from an employee, this result is considered a fundamental breach of the employee’s contract for which justice can be sought. Although it is necessary to ensure the employee did not ‘affirm’ the contract beforehand, which is the act of signing an agreement consenting to the employer’s behaviour which promoted the resignation.

Another act of affirmation could be that the employee delayed acting on the breach of contract before resigning, which may cause an Employment Tribunal to decide the contract has been affirmed and that the breach is acceptable.

In most cases, an employee will need to have been employed for two continuous years with an employer before they can claim for constructive dismissal. However, there are special circumstances in which this is not the case, such as where the employee has been dismissed as a result of an act of whistleblowing or a case based on discrimination.

A fundamental breach of contract

A fundamental breach of contract is a key component for constructive dismissal and it covers a wide range of situations. This breach depends predominantly on the conditions set out by the employment contract (the ‘express’ terms), as well as the relationship of trust and confidence between employer and employee (‘implied’ terms).

It is usually easier to prove a breach of an express term than an implied term. Circumstances of this kind can include where an employer takes away benefits set out in a contract, such as the entitlement to medical insurance.

This will also apply to other conditions, such as the removal of job responsibilities set out in the contract, enforcing a pay cut, enforcing an unjustified suspension, carrying out a disproportionate disciplinary procedure, failure to provide safe working conditions, or preventing the chance for employees to obtain a grievance redress.

However, a breach of implied terms can still be proven, and any act made in bad faith, from which the employee-employer relationship of trust and confidence is broken without good reason, will most likely qualify.

Other acts of bad faith that may constitute a breach of the trust and confidence inherent in an employer-employee relationship includes meting out humiliating discipline to an employee in front of subordinates, the use of obscene language in their presence, or giving unjustified warnings(s) intended to dishearten the employee and influence them into resigning.

Resigning for constructive dismissal

One of the most important steps for an employee who intends to resign on grounds of constructive dismissal must take is to first inform the employer of the breach of contract. If this is not done the right to claim is lost and the breach is legally acceptable. There must have been a breach before the resignation is tendered or there can be no constructive dismissal.

The resignation letter of an employee looking to make a claim of constructive dismissal at the Employment Tribunal should include a statement in which the employee explains how they feel they have no other choice but to resign. It is also a good idea for an employee to give the employer clear reason(s) for their resignation.

In an instance where the breach of contract consists of a series of events or conducts, these actions can be grouped together to form a fundamental breach of contract, even if the last incident does not count as a fundamental breach on its own.

The ACAS Code of Practice on Discipline and Grievance Procedures requires any grievance to first be raised with an employer in written form. Although failure to do this will not prevent a claim from reaching an Employment Tribunal. Where an employee should have complied with the Code but has not, any compensation they are awarded at the end of the Tribunal process may be reduced by up to 25%.

When there has been a serious breach of contract and an employee cannot continue working, they may not be required to work their notice period. However, it is important to seek legal advice before deciding not to work the notice period.

Procedure for claiming constructive dismissal

Once an employee has notified their employer of the grievance in writing, the employer must schedule a meeting in which the grievance is discussed; unless both employer and employee mutually decide to progress without the need for a meeting.

Once the meeting has taken place, the employer must make the employee aware of what his or her decision is regarding the grievance, and what the next steps will be should the employee want to appeal the decision. There may also need to be another meeting, after which a final decision is usually reached.

An Employment Tribunal claim for constructive dismissal must be enacted within three months less one day from the contract breach, or act of wrongful dismissal, in order for the grievance to be heard by an Employment Tribunal. This must be done regardless of internal grievance procedures or time spent following the ACAS Code of Practice on Discipline and Grievance Procedures.

If the claim totals more than £25,000, the Employment Tribunal cannot hear it and the case will need to go to a County Court where there are different time limits. Advice on how to proceed with a case worth more than £25,000 should be taken from an employment law specialist.

There may also be different rules for a claim in which the events concerned happened prior to, or was ongoing through, the date of 6th April 2009.

An award for constructive dismissal

Unless statutory redundancy pay has been paid (in which case there will be no basic award), the basic award is calculated as:

£430 per week for each year of employment x 0.5, 1 or 1.5, depending on the age of the employee.

A compensatory award can also be made and this will amount to:

Up to £72,300, based on the employee’s losses and taking into account the steps the employee took to find another job and minimise their losses during the time he or she was unemployed after dismissal.

Seeking legal advice about constructive dismissal

If you have resigned on grounds of constructive dismissal and there has been a breach of your employment contract, it is beneficial to get some legal advice from an employment law expert. They can advise you as to whether you should bring a claim for constructive dismissal to the Employment Tribunal or County Court and provide you with some tailored guidance on proving constructive dismissal. The Nationwide Employment Lawyers team can support you with your dismissal claim and ensure your best interests are protected at all times.