Constructive dismissal is the label given to the situation where an employee resigns (so there is in fact no actual ‘dismissal’ that takes place) when the employee feels he has no other alternative. It usually results from actions of the employer which the employee feels are a fundamental breach of contract to which there can be no other alternative but to resign.
The employee has to show that the employer is guilty of conduct going to the root of the contract of employment (i.e. not a minor breach). The breach can be an actual breach of contract or a breach of an implied term e.g. support, payment etc. If the employer has committed this breach, the employee is entitled to treat himself as discharged from any further performance.
This case, Western Excavating v Sharp, is the leading case on the subject setting out the test for a good constructive dismissal claim.
Mr Sharp asked for three hours off one afternoon but this was refused. He went anyway. He was dismissed the next day, however, on review, this sanction was revoked and replaced by 5 days’ unpaid suspension. Sharp asked for an advance in holiday pay but this was refused, as was a request for a loan. He then resigned.
Sharp claimed constructive dismissal but was not successful. The Court looked at whether any of the employer’s actions could be deemed to have been in breach of the contract of employment, and found that they could not.
The case determined that, in order to claim constructive dismissal, the employee must establish:
- That there was a fundamental breach of contract on the part of the employer;
- That the employer’s breach caused the employee to resign;
- That the employee did not delay too long before resigning, thus affirming the contract and losing the right to claim constructive dismissal
If an employee were to delay before resigning, it may be seen by the tribunal that it wasn’t a resignation in resistance of the act relied on by the employee. Alternatively, the tribunal may decide that the fact that the employee remained in employment for some time after the ‘breach’, that the employee cannot have deemed it sufficiently serious as to terminate the employment.
A claim for constructive dismissal will be made to the tribunal as a claim for unfair dismissal, and carries the same compensatory award e.g. maximum one year’s salary, subject to an overall cap of £74,200.