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Constructive Dismissal Guide

If you are unhappy with the way you are being treated at work and feel that your situation is no longer tenable, we can help.

We can also support you if you have resigned following a fundamental breach of your employment contract by your employer.  We regularly act for senior executives in financial services, insurance, professional services, the oil and gas industry and for NHS medical consultants who, for various reasons, feel they have been placed in a position where it is no longer possible to continue working for their employer.  We have solid experience of winning constructive dismissal claims and obtaining compensation so that our clients are able to move on with their reputation intact.

What is constructive dismissal?
Constructive dismissal is the term used where an employer behaves in a way that breaches an important term of the employee’s employment contract and the employee resigns as a result of that breach.  This conduct is often referred to as a ‘fundamental breach’.
Can I bring a constructive dismissal claim?

To be able to bring a constructive dismissal claim you must:

I.         be an ‘employee’ – this includes: CEOs, CFOs, Executive Directors, all employees and salaried partners.  Non-Executive Directors, workers, self-employed contractors and certain categories of employees such as members of the armed forces are not normally entitled to bring this claim; and

To be able to bring an unfair dismissal claim you must:

II.         have two or more years’ continuous service – there are limited exceptions to this requirement, for example where the fundamental breach by your employer is linked to your maternity or whistleblowing.

What conduct amounts to a ‘fundamental breach’ entitling me to resign and claim constructive dismissal?

There is no exhaustive list of behaviour but it can include breach of an express or implied term of your employment contract.

In many cases, employees rely on a breach of the implied term of mutual trust and confidence; this is a resignation because the employer has behaved in a way that has destroyed or seriously damaged the trust and confidence between them.  This does not cover all instances of poor treatment or unreasonable behaviour.

Examples of a ‘fundamental breach’ could include:

  • Reducing your pay or withdrawing a contractual benefit;
  • Removing your core duties or significantly changing your job role without your consent;
  • Subjecting you to a bullying or discriminatory working environment;
  • Poor handling of a grievance;
  • Inept handling of disciplinary matters e.g. suspending you without due cause, making a spurious allegation against you or giving you an unjustified warning; or
  • Subjecting you to an excessive workload which it is reasonably foreseeable will cause damage to your health.
Does the fundamental breach have to be a one-off incident?
No, the fundamental breach can be a continuing course of conduct which culminates in a “last straw”.  If you resign in these circumstances, the final incident does not in itself need to be a fundamental breach but it is, when taken together with the series of past incidents.
Should I raise a grievance?
You should initially raise your concerns about the treatment you have suffered with your employer.  This should be done in the form of a written grievance under your employer’s grievance procedure or the ACAS Code of Conduct on Disciplinary and Grievance Procedures.  Failure to do so may mean that any compensation you are awarded is reduced by up to 25%.
When should I resign?

You must ensure that you do not leave it too long before resigning. Any period more than 4 weeks may be risky.  The risk of not resigning promptly is that you may be taken to have accepted the breach meaning that you would lose your right to claim constructive dismissal.

If you are unsure about resigning right away, you may wish to buy more time by submitting your grievance and awaiting the outcome of the grievance procedure. You will still be able to resign at any point during the process and should, in any event, do so before the relevant time limit.

The period of time within which you must resign will depend on your personal circumstances and the nature of the breach.  For example, tribunals have in some cases allowed employees off sick more time to resign.

Do I need to work my notice?

If you resign without notice you may be able to claim your notice pay and walk free from post-termination restrictions in your employment contract.

For unfair dismissal purposes, you can resign with or without notice. You are not obliged to work your notice but you may elect to do so.

The risk of working your notice is that your employer may try to use this as evidence that you could not have considered the breach to be fundamental; otherwise you would have stopped working immediately.

How do I communicate my resignation?

Your resignation must be clear, unambiguous and communicated in writing.

Be measured in your tone and language and try to be as specific as possible about your reason(s) for leaving.  You should state that as result of your employer’s treatment you feel you have no option but to leave.

The wording of your resignation letter is very important as it will be integral documentary evidence should you decide to pursue a constructive dismissal claim.

Are there are any further steps I must take before submitting my constructive dismissal claim?

For an unfair constructive dismissal claim, you will be required to contact ACAS on 0300 123 1100 to find out you when need to begin Early Conciliation and to obtain an Early Conciliation Certificate, which is required before you can lodge a constructive dismissal claim at an Employment Tribunal. For more details, please see https://ec.acas.org.uk/

When you submit your ET1 claim form you will be required to pay a tribunal fee (current rates can be found on https://www.gov.uk/employment-tribunals/make-a-claim).

For a claim for notice pay, ordinarily you should write a letter to your employer explaining your claim before you litigate.

How long do I have to bring my claim in the employment tribunal?
A constructive dismissal claim must be brought within three months of the date of your employment ending, or a later date where the limitation date is affected by ACAS Early Conciliation.
What sort of compensation can I expect to receive?

If you succeed in your constructive dismissal claim, you can expect to receive your notice pay, freedom from post-termination restrictions and further compensation that consists of:

  • a basic award of up to £489 per week (increasing to £489 for dismissals after 6 April 2017) for each complete year you have worked multiplied by 0.5, 1 or 1.5 depending on your age; and
  •  a compensatory award which may include loss of earnings, bonus, shares, options, benefits, pension and losses for the hurt, distress and any personal injury caused.

Any compensatory award made will be subject to a statutory cap of £80,541 (which will increase to £80,541 for dismissals after 6 April 2017) or a year’s salary, whichever is lower.  You will be under a duty to mitigate your losses by taking reasonable steps to find a new job and successful mitigation of your losses will reduce the total compensation that you are entitled to.

What other claims may I have?

If your constructive dismissal is because you are whistleblower, or for a discriminatory reason you may have other employment tribunal claims and you could be awarded higher compensation than an ordinary constructive dismissal claim.

Am I now released from the post termination restrictions in my employment contract?

If your employer has fundamentally breached your employment contract, you will be released from any continuing obligations including your post termination restrictions.  The only exception would be if you then behaved in a way that affirmed the contract e.g. by working a period of notice, as this would mean the terms including the restrictions would continue to be enforceable.