What is Constructive Dismissal, is it an “Unfair” Dismissal and Should I Resign?

Partner Sue Dowling, head of our Employment Law team, explains constructive dismissal, the grounds for an “unfair” dismissal and whether an employee should resign on such a basis.

What is constructive dismissal?

When an employee is dismissed by an employer – either without notice (called a “summary” dismissal) or with notice (or a payment in lieu of notice) – this will be an actual or express dismissal, bringing the contractual relationship to an end. Termination (or dismissal) by the employer giving an employee notice (or with a payment in lieu) or resignation (where the employee choses to give the employer notice that he/she will be leaving) are the most common ways employment relationships come to an end.  

A ”constructive” dismissal is a concept which has developed in employment law and draws a distinction from an “actual” dismissal by an employer.  Such a dismissal will occur where the employer does not actually dismiss the employee but by its conduct, the employee is in effect entitled to resign, so finds him/herself in a position tantamount to being expressly dismissed. For the purposes of bringing a potential claim for compensation for unfair dismissal, a forced resignation, amounting to a constructive dismissal, will still qualify as a “dismissal” under the Employment Rights Act 1996. 

What happens next?

Where an employee finds him/herself in a situation entitling him/her to resign on the basis of a constructive dismissal, frequently s/he will accept the employer’s breach(es) of contract immediately, leaving the organisation without serving out his/her notice period, bringing the employment relationship to an abrupt end. 

However, an employee may decide to work out his/her notice period and provided s/he does not affirm the employment contract, the constructive dismissal will still take effect at the end of the notice period. It is crucial to understand that unreasonable conduct by an employer in itself and/or even a breach of contract by the employer may well not entitle an employee to resign on the basis of a constructive dismissal.  

Case law has established that only certain behaviours (in fundamental breach of contract)  will be sufficiently serious to amount to a constructive dismissal:

“If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed."

In reality, it is rarely desirable (from an employee’s perspective) to rely on the concept of “constructive dismissal”  as this places additional burdens on the employee, in relation to bringing any potential claim for compensation for unfair dismissal, and as he/she will typically have left the organisation, their departure may have weakened the employee’s negotiating position. 

Seeking employment law advice

Before considering whether or not you have been subjected to behaviour which in itself, or taken with a series of previous acts by your employer, may entitle you to resign on the basis of a forced resignation, and whether this is the best action for you to take, we would strongly recommend that you first obtain specialist employment law advice.    

It is also important to understand that there is no rule that a “constructive dismissal” is automatically an “unfair dismissal”, leading to the possible recovery of compensation for this claim.   A constructive dismissal claim invariably involves consideration of the terms of the contract (frequently including the implied term of trust and confidence) and common law principles relating to the interpretation of those terms, in the factual matrix.   Unfair dismissal claims involve different considerations as set out in the Employment Rights Act 1996. Whilst in many situations a constructive dismissal will be found to be an unfair dismissal, this cannot be taken as guaranteed.

If you have been subjected to any of the following behaviour(s) by your employer (or by fellow colleagues for whom your employer is liable), you may wish to take specific employment law advice before deciding how best to protect your interests.

Possible examples of constructive dismissal

Please note that the following are only some examples and should not be taken to be an exhaustive list of misconduct giving rise to a potential claim of constructive dismissal. Further, each case in any event will turn on its own particular facts:

• Has your salary been reduced by your employer without any consultation with you?
• Have your duties been significantly changed from those set out in your contract or those you have been undertaking, without any consultation with you?
• Have you been subjected to unlawful discrimination on grounds of sex/race/disability or one of the other “protected characteristics” as defined in the Equality Act 2010? [Dave – please insert link to unlawful discrimination page here, thanks]
• Has your employer failed to give you a reasonable opportunity to obtain redress in relation to a grievance?
• Have you been subjected to a manifestly unreasonable suspension from your workplace?
• Have you been subjected to an excessive workload notwithstanding the employer being aware that your health is suffering and you need support?
• Have you been subjected to an intolerable working environment; been subjected to harassment, verbal or physical abuse and/or bullying?
• Has your employer treated you in such a way to suggest that it no longer will be bound by your contract of employment?
• Has your employer acted in such a way that destroys trust and confidence in your employment relationship?

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.