Bridge HR articles

What is constructive dismissal?                                        

It is a claim for unfair dismissal albeit one which an ex-employee can bring against their ex-employer in the Employment Tribunal following their resignation in response to alleged poor treatment of them by their employer that they argue amounts to a fundamental breach of contract, thus entitling them to leave and consider themselves dismissed.  

What does the ex-employee have to prove to succeed?

Quite a lot! These are often complex claims that require swift legal advice at an early stage to avoid expensive claims to defend.

1. The ex-employee has to have resigned in direct response to the poor treatment they alleged took place.
2. He or she has to satisfy an Employment Tribunal that the ex-employer had committed a serious breach of their contract of employment, this is not trivial but rather so bad that the employee is entitled to consider they are no longer wanted in their employment.
3. They have to satisfy the Tribunal that their resignation was a consequence of that breach that they identify.
4. They have to satisfy an Employment Tribunal that they had resigned without unreasonable delay, for example, resigning many months after the alleged poor treatment does not suggest it was bad enough for them to have to leave.
   
   

Does the breach have to be of a term in the written contract?

No, it can be but it does not have to be an express term, for example, if the employer has a term that it will pay the employee by the end of the month, it would be a breach of that written term in the contract if the employer failed to pay the employee.

But often these claims are brought on the basis that the ex-employer had breached the term implied in law that it has a duty of mutual trust and confidence or loyalty and good faith to employees.

Is any breach of contract sufficient to succeed in a claim?

No, the wording is that it has to be a fundamental breach, that is so serious that the employee is entitled to resign in response.

In the above example, if the employer pays the employee on 1^st September rather than 31^st August, this is a breach of contract but it would be unlikely to be considered fundamental. However, if the employer, after chasing by the employee, openly fails or refuses to pay the August wages without justification, that would more likely be considered fundamental, entitling the employee to resign in response.

Does the employee have to give notice of the resignation?

No, the wording of the legislation refers to the employee being entitled to resign with or without giving notice.

Often, an employee will be so distraught by what they see as a serious breach that they feel they have no option but to resign without notice - their position has become untenable.

This is not without risk in that the ex-employer would be entitled to argue that the ex-employee had breached the contractual obligation to give notice too.

What happens to the other terms of the contract, for example, non-compete restrictions protecting the employer’s business?

If the employer has fundamentally breached, then it is likely that they cannot enforce the terms of the contract against the employee, thus the employee could be free to compete. However, this will turn on the facts and we advise always getting advice before assuming anything here.

What if there is a sequence of ongoing conduct by the employer that the employee feels they can no longer tolerate?

There has to be a fundamental breach but, together with a one-off incident, case law also shows that this can be cumulative, and there can be cases where a final act – known as ‘the last straw’ – justifies the resignation taking into account previous conduct leading up to that final incident.

Does the employee have to raise a grievance before resigning and bringing this claim?

No, however, there may be circumstances where they should indeed do so to protect their legal position, which then requires the employer to handle that complaint and may also give the employer a chance to try to resolve the issues to avoid claims.

For example, if the employee thinks they are being bullied by another employee and resigns because of it, the employer could argue it had no knowledge of this and thus, had not committed any fundamental breach.

If the employee in that situation raises a grievance and believes the employer is failing to address it properly, leaving their position untenable, that could then potentially amount to a fundamental breach of the duty of loyalty and good faith and/or of the grievance procedure too.

Why is it called constructive unfair dismissal when it is not a dismissal but is a resignation?

Good question. It would be clearer and a more accurate approach to the English language if it was called what it is, namely a resignation, perhaps calling it a “justified resignation” claim.

But don’t blame us lawyers, our job is to advise on the law, we do not have the power to make laws! That is down to Parliament.

What should anyone thinking of resigning and bringing such a claim or alternatively facing such a claim or the threat of one do?

The obvious answer to this is: Take legal advice, it is not a straightforward area of law and the costs of getting it wrong are often high.

Shaun Pinchbeck has had over 30 years’ experience advising on these cases and can be contacted via shaun@bridgeehr.com