Constructive Dismissal - What is it?

Peninsula Team

March 17 2013

Constructive dismissal arises when an employee feels forced to resign from their employment due to the conduct of their employer. The name, therefore, is slightly misleading because no ‘dismissal’ in its normal sense occurs. The employer’s conduct is regarded as a breach of the fundamental principles of the employment contract and can include, for example,:
  • refusal to pay wages;
  • failing to ensure mutual trust and confidence is maintained;
  • failing to allow an employee to take the legal amount of holiday entitlement;
  • refusing access to a pension scheme;
  • changing workplace location without suitable notice and contractual provision.
In order to bring a claim for constructive dismissal three main elements must be established by the employee; (1) that the employer seriously breached one or more fundamental terms of the employment contract (a repudiatory breach), (2) due to that breach the employee promptly resigned, and (3) the employee did not waive the breach by continuing in their employment as normal. There is no requirement for a repudiatory breach to be one serious violation of a contract term; an amalgamation of smaller breaches may be enough. However Western Excavating (E.C.C.) Ltd. v Sharp in 1978 confirmed that merely unreasonable conduct on behalf of the employer, such as refusing an advance of holiday pay, may not be considered a breach of fundamental contract terms. It is also possible for employers to end up liable for constructive dismissal claims without any direct action. Insults and jibes between colleagues deemed as bullying or harassment may be considered as being carried out by the employer; especially where issues are raised and not followed up. Logan v Celyn House Ltd in 2012 confirmed that when deciding whether the breach of contract is a reason for the employee’s resignation, it does not need to be their primary motivation. However, the employee must consider they have no possible option other than to resign. Generally employers will have grievance policies in place; by ensuring awareness of these procedures employees are likely to feel that a means of addressing their issue and alternatives to resigning are available to them. In the event that grievance measures are started, employers can reduce the possibility of claims for constructive dismissal by following procedures. A willingness to deal with matters pre-breakdown can be beneficial to employers; however, this should not be confused with a belief that fundamental wrongs can always be rectified. Following Bournemouth University Higher Education Corp v Buckland in 2010, it was established that actions taken after a breach of contract will not generally cure the breach, therefore employers are encouraged to follow established procedures in the first instance. An employee with at least 1 year’s/2 years’ service (depending upon start date) can bring a constructive dismissal claim to tribunal. To reduce the likelihood of constructive dismissal actions it is beneficial for employers to ensure they are aware of the terms of their employees’ contracts and avoid any actions which could potentially cause as irreversible breakdown in the employer-employee relationship. For any further clarification, please call our 24 Hour Advice Service on 0844 892 2772. by Nicola Mullineux

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