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Constructive Dismissal

What is Constructive Dismissal?

An employee is entitled to pursue a claim for constructive dismissal if they resign from their employment as a direct result of a fundamental breach of contract by their employer. Such a breach of contract can occur in two main ways.

The first is a one off, fundamental and substantive breach. This occurs where there is one incident that is so serious, the employee feels that they were left with no option other than to resign from their employment. An example of this would be a substantial reduction in an employee’s pay without any prior consultation or agreement.

The second way an employee’s contract can be fundamentally breached is by their employer committing a series of breaches with the last breach being the breach that causes the employee to resign. In this case, each individual breach may not be sufficient to justify resignation but when all of the breaches are viewed together they are of such magnitude that the combination of them justifies resignation. In such a case it is vital that the employee keeps a clear ongoing record of each breach. The employee will require to prove that the employer’s behaviour has been ongoing for some time and it is very difficult if not impossible to do so without such a record being kept.

How does an Employee succeed with a Constructive Dismissal claim?

In order to succeed with a constructive dismissal claim, the employee must satisfy a three stage test. As we have outlined above, they must firstly demonstrate that there was a fundamental breach of contract.

Secondly, the employee must show that the breach of contract caused them to resign either in the case of a one-off fundamental breach or in the case of the last breach of a series of breaches. A claim for constructive dismissal is unlikely to succeed if the breach of contract that led to the resignation occurred months before the resignation itself. In that case a Tribunal is likely to find that even if there was a breach that would have justified resignation at the material time by delaying the employee has accepted the breach and therefore is not entitled to claim that they were constructively dismissed.

Finally, the resignation must occur immediately after the breach of contract or at the very least as soon as possible after it. An employee can continue to work following a breach and seek to claim they were constructively dismissed as long as they advise their employer that they are working under protest. If for example an employee’s contract has changed fundamentally and they disagree with that, rather than resign immediately they would be entitled to work under protest until any grievance they have raised regarding the issue has been dealt with. If the grievance does not resolve the position to the employee’s satisfaction they would then be entitled to resign having duly worked under protest prior to that date.

The complexities of a Constructive Dismissal claim

A claim for constructive dismissal is vastly different to a claim for unfair dismissal. In an unfair dismissal claim, the employer will normally accept that the employee was dismissed and as a result the onus then falls on to the employer to demonstrate that the dismissal was fair. In the case of a constructive dismissal claim the onus is on the employee to firstly establish that there was a dismissal and secondly that the dismissal was unfair.

The mere fact an employer has acted unreasonably does not mean that a Tribunal will find that the behaviour on the part of the employer was sufficiently serious to justify the employee resigning. Resignation from employment is a significant step and not one that should be taken lightly. The Tribunals are of the view that if somebody resigns from their employment they should have very good reasons for doing so. It is crucial therefore that employees always seek advice before resigning from employment.

David M Hutchison
Senior Associate – Employment Law

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