Constructive Unfair Dismissal – Fast Facts

Many businesses have heard of constructive unfair dismissal but knowing what it is and where some of the more common risks lie are not always so well understood. Being mindful of these things can help you to protect your business, this will become more important than ever with the changes to unfair dismissal on the way under the Employment Rights Act 2025. 

Here are three fast facts your business will want to know:

1. What is constructive dismissal?
2. Is there a minimum length of service required for a successful claim?
3. Common ‘red flag’ situations

What is constructive dismissal?

In brief, constructive dismissal can happen where the employer does not formally terminate an employee’s employment, but behaves in a way that entitles the employee to resign and argue that they have effectively been dismissed because of the way they have been treated.

To establish a constructive dismissal, three key requirements must usually be met:

• The employer must have committed an actual or anticipatory breach of contract that is fundamental or repudiatory — something so serious that it goes to the root of the contract and justifies the employee’s resignation. 

Did you know? Employment tribunals also recognise the ‘last straw’ principle – this allows an employee to claim constructive dismissal based on a cumulative course of conduct over time. For example, where an earlier series of acts or omissions do not amount to a fundamental breach, but the addition of the last straw adds sufficient weight so that when taken together there is a repudiatory breach.

• The employee must resign in response to the breach, rather than for some other reason such as getting a better job

• The employee must resign within a reasonable timeframe otherwise they may be treated as having lost  the right to rely on the employer’s breach.

Is there a minimum length of service required for a successful claim? 

In most cases, a minimum length of service is required, currently it is two years. However, the qualifying period is changing. For ordinary unfair dismissals, or resignations in the case of constructive dismissal, that take effect on or after 1^st January 2027, the qualifying period is reducing to six months’ continuity of service.

It will mean that more employees will have protection from such treatment, and sooner, so businesses will need to be even more vigilant when it comes to treating employees appropriately and identifying and handling employee complaints promptly.

It is important to be aware that not all constructive unfair dismissal claims do require an employee to have a minimum length of service, ‘automatically’ unfair constructive dismissal claims do exist, these involve the employee’s treatment being related to a prohibited reason. For example, they are deliberately treated detrimentally because they have ‘blown the whistle’. These will continue to be a ‘day one’ claim’.

Common ‘red flag’ situations

A wide range of situations can lead employees to bring a constructive dismissal claim, although success will always depend on the specific facts. Some of the most common examples include:

• Unilateral changes to terms and conditions such as reducing pay or altering working hours
• Serious bullying with an employee arguing that they had to leave their job because of the way they were treated
• Failure to address grievances
• Placing an employee on short time working or lay-off and reducing their pay accordingly without a contractual right to do so 

Remember, it is important to remain alert and to seek advice before acting if you are dealing with a HR matter in your business.