Constructive dismissal is a significant concept in UK employment law that arises when an employee resigns due to their employer’s conduct. In such cases, the employer’s actions, or inactions, are so severe that they amount to a fundamental breach of contract, effectively forcing the employee to leave.
The complexities surrounding constructive dismissal can present challenges for both employees and employers. For employees, it involves recognising whether their resignation is legally justified and whether they can substantiate a claim through appropriate evidence. For employers, it’s about understanding their legal obligations, creating a compliant workplace culture, and avoiding actions or oversights that could inadvertently result in claims.
Navigating these situations requires expert insight and careful handling. That’s where Kingfisher Professional Services comes in. With years of experience in employment law and HR consultancy, we support businesses and individuals alike in addressing constructive dismissal fairly and legally, while helping to prevent disputes before they arise.
What is Constructive Dismissal?
Definition and Legal Basis
Constructive dismissal occurs when an employee feels they have no option but to resign due to their employer’s conduct. This must be more than a disagreement or minor issue, the behaviour must amount to a serious breach of the employment contract, making continued employment untenable.
According to the Employment Rights Act 1996, Section 95(1)(c), an employee is considered dismissed if they terminate their contract without notice due to the employer’s conduct.
At the core of most constructive dismissal cases is the implied term of mutual trust and confidence. Employers are expected not to act in a way that destroys this trust. Any behaviour that undermines this fundamental element of the employment relationship, such as unfair treatment, dishonesty, or failure to support an employee facing harassment, can give rise to a claim.
Common Examples
- Unilateral Changes: Changing an employee’s role, pay, benefits, or hours without consultation or consent can be seen as altering the fundamental terms of the contract.
- Failure to Address Bullying or Harassment: Employers have a duty of care to provide a safe and respectful working environment. Ignoring complaints can amount to a breach of this duty.
- Unsafe Working Conditions: Failing to uphold health and safety obligations may not only breach trust but also constitute a statutory violation.
- Demotion or Downgrading: Demoting an employee without justification or bypassing disciplinary processes can amount to a constructive dismissal.
- Non-Payment of Wages: Repeated late payments, deductions without explanation, or non-payment can breach the contractual obligation to pay wages.
Each of these examples can amount to a breach of contract if they fundamentally change the agreed terms or undermine the employee’s dignity and trust in the employer.
Employee’s Guide to Constructive Dismissal Claims
Eligibility Criteria
To bring a claim for constructive dismissal, an individual must usually:
- Have at least two years of continuous service with the employer. Exceptions apply where the resignation is linked to automatically unfair reasons such as discrimination, whistleblowing, or asserting a statutory right.
- Be classified as an employee rather than a freelancer, contractor, or worker under UK employment law definitions.
- Resign in direct response to the employer’s conduct. The resignation must be prompt and clearly linked to the specific breach; delays may be interpreted as acceptance of the behaviour.
Employees should also consider whether their resignation might appear disproportionate or unreasonable, as tribunals will examine the facts of each case.
Steps to Take Before Resigning
Before resigning, employees should take the following essential steps:
- Document Everything: Maintain detailed records of all relevant events, including dates, descriptions, witness names, emails, messages, or meeting notes. These records can provide crucial evidence at tribunal.
- Raise a Formal Grievance: Following the company’s grievance procedure shows the employee made efforts to resolve the issue internally. It also puts the employer on notice and gives them an opportunity to address the concerns.
- Seek Legal Advice: Constructive dismissal claims are legally complex. Employees should consult a solicitor or employment law advisor to determine whether their situation meets the legal threshold.
By acting methodically, employees strengthen their credibility and improve their chances of a successful claim.
Initiating a Claim
If internal processes fail and resignation becomes unavoidable, the next steps include:
- Start ACAS Early Conciliation: This is a mandatory step before proceeding to an employment tribunal. ACAS (Advisory, Conciliation and Arbitration Service) aims to resolve disputes through free, impartial mediation.
- Submit a Claim in Time: The tribunal claim must be lodged within three months less one day of the effective resignation date. Missing this deadline could invalidate the claim.
- Prepare for Tribunal: If early conciliation fails, the case will proceed to a tribunal hearing. The employee must show there was a fundamental breach and that the resignation was a reasonable response.
Legal representation and good documentation are invaluable at this stage.
Compensation and Remedies
Employees who succeed in proving constructive dismissal may receive:
- Basic Award: This is calculated based on age, length of continuous service, and gross weekly wage, and is capped by statutory limits.
- Compensatory Award: Designed to cover actual losses suffered as a result of the dismissal, including lost earnings, pension contributions, and future job prospects. There is a statutory cap unless the dismissal was due to whistleblowing or discrimination.
- Additional Awards: If the constructive dismissal is linked to discrimination or whistleblowing, there may be no cap on compensation and additional damages may be awarded.
Tribunals also have the discretion to order reinstatement or re-engagement, though these outcomes are less common.
Employer’s Guide to Preventing Constructive Dismissal Claims
Maintaining trust and confidence is essential for employers who wish to avoid constructive dismissal claims. At the heart of the employment relationship lies the expectation that employers will act fairly, honestly, and in good faith. One of the key elements in maintaining this trust is clear and transparent communication. Employers should always be open and honest with employees, particularly when it comes to decisions that may impact their roles or job security. Sudden or unexplained changes can lead to confusion, resentment, and ultimately claims of unfair treatment.
Creating and sustaining a respectful workplace culture is equally important. Employers should lead by example, modelling inclusive behaviour and actively promoting equality. Any form of harassment or discrimination should be addressed immediately and decisively. A respectful environment fosters loyalty and reduces the risk of disputes escalating.
In addition, it is crucial for employers to respond promptly and effectively to complaints. When employees raise concerns, they should feel heard and supported. Ignoring or downplaying grievances can be interpreted as a breach of trust, potentially leading to legal action. Timely and thorough responses demonstrate that the employer takes their obligations seriously and values employee well-being.
Trust is ultimately built on consistency, integrity, and accountability. Employers who embody these principles are not only better positioned to defend against claims but also create a more engaged and motivated workforce.
Implementing Changes Lawfully
Business needs sometimes require contractual adjustments, but these must be managed lawfully:
- Consultation is Key: Speak with employees in advance of any changes. Explain the rationale and allow time for feedback.
- Obtain Written Agreement: Any change to terms and conditions should be confirmed in writing and signed by the employee.
- Consider Alternatives: Where changes are contentious, consider whether adjustments or compromise can meet both parties’ needs.
Rushing or imposing changes unilaterally can lead to costly legal disputes and damaged morale.
Handling Grievances and Disputes
A strong internal grievance procedure is one of the most effective tools for preventing escalation:
- Accessible Policy: Ensure your grievance procedure is easy to understand, regularly communicated, and easily accessible.
- Impartial Investigation: Assign a neutral party to investigate complaints thoroughly. Avoid conflicts of interest or assumptions.
- Resolution and Follow-Up: Conclude investigations with a formal response and take any required corrective action. Follow up with the employee to ensure resolution.
Train managers and supervisors on how to respond to grievances sensitively and in line with legal obligations.
How Kingfisher Professional Services Can Assist
Kingfisher Professional Services offers comprehensive and tailored support to help employers navigate complex employment issues, including constructive dismissal. Our services include:
- Expert Employment Law Advice: Practical guidance on interpreting the Employment Rights Act 1996, with actionable advice specific to your business.
- Support with Grievances: We assist with managing internal disputes, conducting impartial investigations, and resolving employee complaints before they escalate.
- Manager Training: Custom workshops to equip your managers with the knowledge and confidence to handle sensitive issues, communicate changes, and respond to grievances effectively.
- Contract and Policy Review: We ensure that your employment contracts and workplace policies are compliant, clearly drafted, and minimise the risk of legal claims.
By partnering with Kingfisher, businesses can stay ahead of employment law challenges, protect their reputation, and create a positive work culture that attracts and retains top talent.
Conclusion
Constructive dismissal is a legally complex and emotionally charged issue that requires careful navigation. Employees must be confident that their resignation stems from a genuine and serious breach of contract, supported by evidence and grounded in their employment rights. At the same time, employers need to remain vigilant about how their workplace decisions, policies, and behaviours can impact staff morale and compliance with employment law. Even unintentional actions, if perceived as undermining trust, can have serious consequences.
It’s clear that prevention is always preferable to litigation. Fostering an open, respectful, and transparent workplace culture is the first line of defence. Addressing grievances promptly and properly, communicating clearly during times of change, and ensuring policies are not just well-drafted but actively upheld, all contribute to reducing risk.
At Kingfisher Professional Services, we understand the stakes involved in these situations. Our team combines in-depth knowledge of UK employment law with practical HR expertise to deliver real results. Whether you’re an employer looking to reduce your risk exposure, a manager needing support through a grievance investigation, or an employee unsure of your rights and next steps, we’re here for you.
We don’t just provide legal guidance – we partner with you to create solutions that are compliant, commercial, and tailored to your organisation’s needs. With Kingfisher’s expert support, you can navigate the complexities of constructive dismissal with confidence and clarity. Get in touch today to protect your people, your reputation, and your business.