What is Constructive Dismissal?
Constructive Dismissal is where an employer has committed a serious breach of contract, entitling the employee to resign in response to the employer’s conduct. The employee is entitled to treat him or herself as having been “dismissed” and the employer’s conduct is often referred to as a “repudiatory breach”.
It is not enough to show merely that your employer has behaved unreasonably. There must be a fundamental breach of an express contractual term, or the implied term of “trust and confidence”. Furthermore, you must have left because of the breach, and you should make it clear when you resign that you regard yourself as having been “constructively dismissed”.
It may not just be one incident that amounts to a breach of contract by your employer. Sometimes there is a continuing pattern of behaviour or incidents which, taken as a whole, amounts to a breach (even though they may not in isolation). However the ‘last straw’ which leads you to resign must contribute to the previous acts, so that together they all add up to a breach of trust and confidence.
You do need to be careful not to be seen to have waived any breach by your employer. This can happen where there is a long delay in lodging a grievance or resigning. This could especially happen if you are off on long term sickness, where you are more likely to delay taking any steps in relation to a breach by your employer. A waiver could also be anything else which signals an acceptance of the breach (such as an email which says you are happy with changes to your contract).
It is possible for you to continue to work ‘under protest’ following a breach by your employer, and to reserve your rights in relation to a constructive dismissal claim. However, there will come a point in time where you must either affirm the contract and continue working, or accept the breach and resign.
Examples of claims that can be made for Constructive Dismissal
Examples of breaches of contract by an employer entitling an employee to claim constructive dismissal include:
- a unilateral significant reduction of your salary, or the threat of a reduction ;
- being demoted without good reason;
- allegations of poor performance which are unfounded;
- disciplinary proceedings which are manifestly unreasonable;
- a complete change in the nature of your job;
- harassing or bullying ;
- stress at work, that has not been properly addressed;
- failing to make reasonable adjustments where you have a disability;
- being forced to work in breach of health and safety laws.
How easy is it to claim for constructive dismissal?
You must have been continuously employed with the same employer for a period of 23 months and 3 weeks (and not already be under notice which expires before 2 years) in order to bring a claim. This is unless your case falls within one of the few exceptions where no minimum service is required (i.e. where it relates to discrimination).
If you can show that your employer has fundamentally acted in a way that makes your position untenable and goes to the root of your employment relationship, your claim may well succeed. You should note that the onus is on you to prove that your employer was in breach. This differs from unfair dismissal claims where your employer has to prove that there has been a fair dismissal.
Certainly the examples listed above are capable of amounting to a good claim. Many cases will be obvious, and others will be more of a grey area. Yes, your employer may have behaved badly, but was it so bad to amount that it makes your ongoing position untenable? If the matter reached the tribunal stage, it will be determined on its own facts, and what is considered reasonable.
Lodging a grievance
It is recommended, and expected under the ACAS code of practice, that employees lodge a formal grievance against employers in constructive dismissal claims before taking any steps to resign. The reason for this is that it gives your employer an opportunity to resolve the dispute. The failure to lodge a grievance before resigning also means an employment tribunal can reduce any damages you are awarded by up to 25%.
You don’t have to lodge a grievance though, and in some cases, it is tactically best not to do so. This is especially where the relationship has broken down to such an extent that you don’t wish to work for your employer whatever the outcome of the grievance. A tribunal would understand this.
The lodging of a grievance (and the content of it) is also an important consideration in relation to any negotiations of an exit with a financial lump sum and a job reference, which is a far more preferable outcome (see below).
Can my employer defeat my constructive dismissal claim by upholding my grievance or by simply apologising?
No. If your employer has already breached your contract by its actions, it is not possible to “cure” such a breach by attempting to make amends or undo what has been done. You therefore have the right to choose whether to treat the breach as terminating the relationship or not.
As mentioned above, however, you do have to be careful not to be seen to waive the breach by either accepting it or by not objecting to it. If this happens, it is likely to hamper your ability to then claim constructive dismissal.
Do I need to specify that I am claiming constructive dismissal when I resign?
Yes, preferably, as it will look rather odd if you don’t state clearly why you are resigning, and that you are claiming constructive dismissal. It could also work against you in subsequent tribunal proceedings, or when trying to reach a settlement when you are having to explain a blank resignation letter.
It is far better to fully state why you consider you have been unfairly treated and why your employer has breached your contract. If you have lodged a grievance beforehand, the reasons why you are not happy will have been set out there, but they should still also be addressed at the point of resignation too.
You should also not be tempted to write glowing words about your employer when you resign on the basis of a constructive dismissal, or say anything like “I’ve really enjoyed working with the company”. This is not in the spirit of someone who considers that they have been forced out, and could work against you at a later date.
What is the impact on my restrictive covenants if I make a claim for constructive dismissal?
If you can show that you have been constructively dismissed, you may be released from the post-termination restrictions in your contract of employment (such as not working for a competitor, or contacting your employers customers). This is because the very nature of a constructive dismissal claim means that there has been a fundamental breach of contract by your employer, who cannot then rely on that contract in the future.
This may be very welcome where you have been forced out of your job, and don’t want to be hampered in moving to a new employer or dealing with old clients, because of contractual restrictions. It doesn’t mean an automatic passport, though, just because you are claiming constructive dismissal (without the matter first being determined by an employment tribunal). It might work if your claim is strong enough and your employer acknowledges this- or can be persuaded to do so. If not, legal steps could be taken to prevent you from breaching your covenants. It is always best to take legal advice before putting yourself in a position of a potential breach.
Negotiating an exit
There may well be the option of securing a negotiated exit with your employer, and this will depend on the strengths of your claim and the factual circumstances.
Assuming you have a good legal basis for a constructive dismissal claim, a successful negotiation (as an alternative to bringing a claim) would usually result in your receiving a lump sum financial package for giving up your employment rights. This happens frequently in employment situations, not least because by the time a grievance is formally lodged, the reality is that the relationship is likely to have broken down in any event.
This is a highly tactical situation and not one that should be adopted without you being aware of all your legal rights, including what type of settlement is possible, and ensuring that settlement terms are binding. It is for this reason that it is usually far better to have legal representation in negotiating a severance, so that you do not say or do the wrong thing which could put the possibility of a settlement at risk.
We have successfully negotiated thousands of settlements where employees are faced with the dilemma of not being able to continue working for their employer, and wanting to make a constructive dismissal claim. Once a resolution is reached with your employer, we always ensure that part of the settlement terms will include an agreed job reference and appropriate non-derogatory clauses, so you are not bad-mouthed in the future.
What is the time period to make a employment tribunal claim?
The process for claiming constructive dismissal should commence within a period of 3 months less 1 day from the date that you have left employment. This is usually the last date that you were paid. However before the tribunal will accept the claim, it needs to be lodged with ACAS as a preliminary step under their “early conciliation scheme“.
If I can’t claim constructive dismissal, because I have been employed less than 2 years, is there any other claim I can make?
Although you cannot bring a constructive dismissal claim in the absence of two years’ service, you may be able to make a wrongful dismissal. This is a breach of contract claim, and usually limited to only your notice period. This is because you would be resigning immediately in response to your employer’s breach, and therefore without working your notice. The period which reflects your notice then becomes the main part of your claim for wrongful dismissal.