Constructive dismissal overview

Thu 28 September 2023

What is constructive dismissal and what are the legal grounds for resigning?

Work is a big part of our lives and stress and worry about finances mean that many employees stay in job roles where they aren’t happy. Constructive dismissal arises where things go farther than just unhappiness, so that the employee considers themselves to have been put in an untenable position and must resign.

Constructive dismissal is a form of unfair dismissal claim available to employees who have 2 years continuous employment with an employer. To successfully claim constructive dismissal the employee must resign without giving notice and prove that he or she had legal grounds to do so because staying in the role was untenable.

There are generally 2 types of scenarios that can result in employee’s resigning and claiming constructive dismissal :-

Where the employer seeks to unilaterally and significantly change the employee’s terms and conditions without clear contractual rights to do so. The most clear and obvious examples would be a reduction in pay, reduction in hours, significant change of role or demanding that the employee works in a different location some way away; or
The employee is placed in an impossible position due to harassment, bullying, intimidation or discrimination.

For many employees, the dilemma of whether to resign with the risk of not finding alternative employment quickly and having to start an Employment Tribunal claim which will take some months to proceed, is extremely difficult.

The dilemma is increased because there is a need to act fairly quickly in resigning where the employer is fundamentally breaching the employment contract, in the ways described at 1. above. Continuing to stay in employment, even whilst protesting, where an employer has fundamentally changed your contract terms is generally inconsistent with being put in the position where you feel you have no choice but to resign.

Where you feel that your future employment is untenable because of the way you are treated in the workplace, the position is often different and this is where strategy and timing can become really important.

When resigning may not be the best option

If things have happened or are continuing to happen in the workplace which are impacting your mental or physical health, the employer has a duty of care towards you. If things have got to a point where you no longer feel you can continue in the work environment and may have to resign, your options in this awful scenario are often better than based on a clear attempt by the employer to change your contract.

Resigning and claiming constructive dismissal solves some problems for employers. You are out of the workplace, meaning they don’t have to deal with what has been happening to you, you are likely short of money and the employer doesn’t pay you anymore. The employer is in a strong position to negotiate some form of pay off, on it’s terms, at the best time for the employer, at any time leading up to the hearing of any Employment Tribunal constructive unfair dismissal claim you start.

However, If you don’t resign, the employer has an ongoing problem, especially if you raise a grievance also and are potentially signed off from work for medical reasons. An employer will, at this point, often recognise that there will be an ongoing employment problem which could last for quite a few months, with you remaining as a very unhappy employee, entitled to all your contractual rights to payment if you do not resign, leaving the employer with an ongoing problem and uncertain financial implications.

There are some potential risks to you as employee if you do not get your strategy and timing right, as at some point, you may need to resign to successfully claim constructive dismissal and you will probably need to raise a grievance.

A very common outcome where the employee is able to take the initiative as above is to negotiate a mutual severance package, known as a settlement agreement.