Constructive Dismissal: The Facts

Employment law can be extremely complicated, but all SMEs should make themselves aware of the facts surrounding constructive dismissal if they want to avoid forking out for damages and a dent in their reputation.

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What is constructive dismissal?

Constructive dismissal occurs when an employee resigns from their position due to their employer seriously breaching their contract of employment. If this is the case, the employee has the right to make a constructive dismissal claim against their employer.

Employees who would be eligible to make such a claim may have experienced the following:

  • Bullying or harassment at work which was not stopped by the employer
  • Unreasonable changes made to the hours or location of their work
  • Demotion
  • Refusal of pay

How is it different to unfair dismissal or wrongful dismissal?

Constructive dismissal has one substantial difference – the employee resigns as a last resort, rather than being sacked by their employer.

Constructive dismissal comes about when an employee is essentially forced out of their job against their will due to the behaviour or conduct of a colleague, superior or entire company.

Like wrongful dismissal, constructive dismissal is centred around contractual breaches: it is important to note that the employment contract must be breached in order for a constructive dismissal claim to be instigated. An employee who resigns for a reason unrelated to their contract will not be able to claim for constructive dismissal.

When can a constructive dismissal claim be made?

In order for an employee to make a constructive dismissal claim against a business, they must be able to prove that they have followed correct protocol.

Most businesses have in place a grievance procedure, so in the event that an employee believes that their contract is being breached for whatever reason, they should follow this as a first port of call.

The employee also needs to resign immediately if they intend to make a claim – if they are still working at the company then they have legally ‘affirmed the breach’, meaning they have accepted the conditions they are working in and thus cannot make a constructive dismissal claim.

Usually, a claim for constructive dismissal will only be upheld if an employee has worked at the company for at least two years. Exceptions to this rule will be made if the employee felt forced to resign due to being discriminated against due to one of the seven ‘protected characteristics. These are age, disability, gender reassignment, race, religion, sex, sexual orientation, marriage and civil partnership, and pregnancy and maternity as stated in the Equality Act 2010.

Claiming constructive dismissal

Before claiming constructive dismissal, it is advisable to seek legal help. There are also certain evidence employees should strive to keep if they know their employer is in breach of contract:

  • A record of all grievances raised
  • Copies of any examples of breach of contract, such as emails containing harassment or bullying
  • A copy of their resignation letter, which should outline that they are resigning as a last resort due to the employer’s breach of contract

In most cases there is a three-month time limit on putting a claim for constructive dismissal forward. Anything brought forward against the employer after this time period may be rejected by the courts.