Unlike straightforward dismissals (e.g. wrongful dismissal or unfair dismissal), where an employer terminates the employment, constructive dismissal occurs when an employee feels forced to resign due to their employer’s serious breach of contract.
Whether you are an employee experiencing a toxic work environment or an employer looking to avoid potential claims, understanding the legal framework of constructive dismissal is essential. In this article, we unpack what constructive dismissal means, how it differs from other types of dismissal, and the legal steps involved in bringing or defending such a claim.
What is Constructive Dismissal?
Constructive dismissal occurs when an employee resigns because their employer has fundamentally breached their employment contract.
This breach does not need to be explicitly stated in the contract. Employment contracts include both express terms (e.g. pay, working hours, job duties) and implied terms, such as the employer’s duty not to destroy mutual trust and confidence.
However, a breach must be serious enough to destroy the trust and confidence necessary for the employment relationship.
Examples of such breaches include:
- A fundamental change in the terms of the contract, such as cutting pay without consent
- Persistent harassment or unfair treatment which goes unaddressed
- Unreasonable disciplinary action
- Forcing an employee to relocate without an agreement
- Failing to deal with grievances fairly or promptly
It is important to note that resigning in response to minor issues or personal dissatisfaction with the job will not usually meet the legal threshold.
What to Do If You Think You’ve Been Constructively Dismissed
If you believe your employer has breached your contract seriously enough to justify resignation, follow these steps carefully to protect your rights:
- Try Informal Resolution First: Before resigning, consider discussing your concerns informally with your manager or HR. Sometimes issues can be resolved without escalating matters.
- Raise a Formal Grievance: If informal talks don’t work, submit a formal grievance outlining your complaints. This creates an official record and gives your employer a chance to address the issue.
- Seek Legal Advice Early: Consult an employment law specialist before resigning. They can assess your situation, advise on the strength of your case, and guide you on the best next steps.
- Consider Mediation or ACAS Early Conciliation: Mediation or ACAS Early Conciliation can help resolve disputes without going to a tribunal. Early Conciliation is a mandatory step before most tribunal claims.
- Resign Promptly and Carefully: If you decide to resign, do so promptly after the breach and clearly state your reasons in your resignation letter. This strengthens your claim.
- Submit Your Claim Within Time Limits: Remember, you usually have three months minus one day from your resignation or the end of your notice period to file a claim with an Employment Tribunal.
The Legal Test: Succeeding in Constructive Dismissal Claims
To succeed in a claim for constructive dismissal at an Employment Tribunal, an employee must usually prove four key elements:
- There was a fundamental breach of contract by the employer.
- The employee resigned in response to that breach.
- The employee did not delay too long in resigning.
- The employee had at least two years' continuous service, unless the claim also includes discrimination or automatic unfair dismissal (e.g. for whistleblowing or pregnancy-related issues).
Examples of Constructive Dismissal Scenarios
Let us consider some practical illustrations:
- An employee is told their salary will be reduced by 20% due to “business needs”, without discussion or consent. This could be a breach of the implied term of mutual trust and confidence.
- An employee raises repeated complaints of bullying by a manager, and the company fails to investigate. The employer’s inaction may constitute a breach.
- A long-serving employee is suddenly moved to a junior position without explanation. This could be a breach of the implied term of respect and fair dealing.
Each case depends on its facts and whether the breach was sufficiently serious to justify resignation.
The Resignation Letter: Why It Matters
The resignation letter is often a key piece of evidence. To strengthen a constructive dismissal claim, the resignation should:
- Be made promptly after the breach occurs
- Clearly state the reason for resignation
- Refer to the specific incidents or treatment prompting the resignation
- Confirm that the employee views the conduct as a repudiatory breach of contract
Failing to do so can weaken a case or suggest the resignation was voluntary rather than forced.
Compensation and Remedies
If the claim is successful, the Employment Tribunal may award:
- Basic Award: Calculated similarly to redundancy pay (based on age, salary, and length of service)
- Compensatory Award: Covers financial losses, including lost earnings, benefits, and future loss of earnings
There is a statutory cap on the compensatory award (as of 2025, £115,115 or 52 weeks’ pay, whichever is lower), though there are exceptions in cases involving whistleblowing or discrimination.
The Tribunal can also recommend that the employer re-engage or reinstate the employee, although this is rare in constructive dismissal cases.
Alternative Routes and Early Resolution
Employees are encouraged to try to resolve issues internally before resigning or submitting a claim to the Employment Tribunal. This may involve:
- Filing a formal grievance
- Engaging in mediation
- Seeking advice from ACAS (Advisory, Conciliation and Arbitration Service)
ACAS Early Conciliation is a mandatory step before submitting most claims to the Employment Tribunal. It provides both parties with an opportunity to settle without resorting to litigation.
Employees should be mindful of the strict time limits for bringing a claim at the Employment Tribunal. Generally, a constructive dismissal claim must be lodged within three months minus one day from the effective date of termination. Contacting ACAS for Early Conciliation pauses the limitation period during the conciliation process, allowing additional time to explore a resolution.
If you are attempting to resolve matters while still employed, it is also important to be aware that if an employee continues in their role for a significant period after the employer’s conduct, without objecting or raising concerns, an Employment Tribunal may find that the conduct was accepted. This is known as affirmation of the contract, and it can affect the strength of a constructive dismissal claim.
Thus, while internal resolution, such as filing a grievance, is often a positive step, employees should carefully consider how long they remain in their position following any alleged breach. Delays or silence may have legal consequences, particularly if there is no clear objection to the employer’s conduct.
Defending a Constructive Dismissal Claim
From an employer’s perspective, defending a claim often involves demonstrating that:
- There was no breach of contract.
- The employer acted reasonably and in line with its policies.
- The employee resigned for personal reasons unrelated to any breach.
- The employee accepted the employer’s conduct by remaining in the role for too long after the alleged breach.
Maintaining clear records, dealing promptly with grievances, and documenting performance concerns are key to mitigating risks.
Your Legal Support: How We Can Help
Whether you believe you have been constructively dismissed or you are an employer facing a potential claim, it is vital to carefully consider the fairness and legality of the circumstances involved. Understanding what amounts to constructive dismissal and the serious consequences of mishandling such situations can help protect your rights and minimise legal risks.
Whichever side of a constructive dismissal dispute you are on, our experienced Employment Law solicitors are ready to provide clear legal advice and robust representation throughout the process. From assessing the strength of your case to guiding you on the best steps to take, we are here to support you.
For confidential advice tailored to your situation, please contact us today by emailing info@witansolicitors.co.uk.
FAQ
How long do I have to bring a constructive dismissal claim?
You generally have 3 months minus one day from the effective date of termination (usually your last working day) to submit a claim to the Employment Tribunal.
What if I continue working after the breach without complaining?
Continuing to work without raising concerns may be seen as accepting the employer’s conduct (called affirmation), which can weaken your claim.
Can I claim constructive dismissal if I have less than two years’ service?
Usually, you need at least two years’ continuous service to claim constructive dismissal, unless your claim involves discrimination, whistleblowing, or other automatically unfair reasons.
What is a settlement agreement, and how does it affect my claim?
A settlement agreement is a legally binding contract where you agree to end your employment on agreed terms, usually including compensation. Signing one prevents you from making a constructive dismissal claim.
What should I include in my resignation letter if I’m claiming constructive dismissal?
Your letter should clearly state that you are resigning due to your employer’s serious breach of contract, specify the incidents or conduct that led to your decision, and confirm that you view this as a repudiatory breach.
