Constructive Dismissal for Employers

Constructive dismissal is when an employer has committed a sufficiently serious breach of contract that the employee’s only option is to resign in response to the employer’s conduct or treatment. The employee may then bring a claim against the employer at the Employment Tribunal.

Since constructive dismissal can have significant legal and financial implications for employers, it is advisable to follow best practices to reduce the risk of having to defend such claims.

In this guide for UK employers, we explain the fundamental legal aspects of constructive dismissal, with practical guidance on how to deal with constructive dismissal claims and how to reduce the risk of these claims arising.

 

Section A: Fundamentals of Constructive Dismissal

 

Unlike a traditional dismissal, where the employer directly terminates the employment, constructive dismissal is initiated by the employee, who feels they have no choice but to resign due to the employer’s actions.

 

1. What is Constructive Dismissal?

 

Constructive dismissal occurs when an employee resigns due to their employer’s conduct, which has made their working conditions intolerable. This can include breaches of contract, unfair treatment, or significant changes to their job without consent.

In legal terms, constructive dismissal refers to when an employee resigns in response to a repudiatory breach of the employment contract by the employer. The act or omission by the employer has to be sufficiently serious to justify the resignation. It can also be due to a series of acts or omissions, which, taken together, amount to a repudiatory breach and the last act or omission triggering the resignation (‘the last straw’).

An employee can resign on notice and does not necessarily have to resign straight after the employer’s breach. The employee is also permitted to continue working until they have a new job, as long as they have made it clear that they are working under protest and the breach is not accepted. However, any significant delay by the employee could be deemed to waive the breach.

Constructive dismissal is classed as a dismissal under unfair dismissal legislation. This means an employee with qualifying service may make constructive unfair dismissal claims and wrongful dismissal claims despite having resigned.

Constructive dismissal does, however, differ to unfair dismissal, with the latter relating to situations where the employer can show neither good reason for the dismissal nor that they have followed a fair and lawful dismissal process.

 

2. Legal Framework in the UK

 

In the UK, constructive dismissal is governed by the Employment Rights Act 1996.

For a claim to be considered constructive dismissal, the following conditions must be met:

 

a. A fundamental breach of contract by the employer: This breach can be a single serious incident or a series of less significant incidents that cumulatively amount to a serious breach.

b. The breach must be a direct cause of the resignation: The employee must resign promptly in response to the breach without condoning the employer’s behaviour by continuing to work under the same conditions for an extended period.

c. The resignation must be without undue delay: Any significant delay between the breach and the resignation may be interpreted as the employee accepting the breach, thus weakening their claim.

 

The breach of contract can be explicit, such as failing to pay wages or implied, such as undermining trust and confidence in the employer-employee relationship. Employment tribunals assess these claims on a case-by-case basis, considering the specific circumstances and evidence presented.

 

3. Who Can Claim Constructive Dismissal?

 

Claims for constructive unfair dismissal can only be made by those with employee status and at least two years’ continuous service at the time they resigned. If the dismissal is deemed automatically unfair or due to discrimination, the two-year qualifying period does not apply.

Employees have only 30 days less one day of the contract ending to bring a claim. This is the case for most tribunal claims, where there is a three-month time limit for an employee to submit a claim. However this time limit may be paused if Early Conciliation is taking place. Early Conciliation is the first step in making a claim to an Employment Tribunal and provides an opportunity for the situation to be resolved without the need to go before the tribunal.

If the case progresses to an Employment Tribunal hearing, an employee would need to prove that the reason for the resignation was that the actions of their employer were so serious that the employee had no choice but to resign.

 

4. ‘Automatically Unfair’ Claims

 

Employees who have resigned as a result of being subjected to treatment that is deemed automatically unfair may be able to claim for constructive dismissal without requiring two years of continuous service.

The following behaviours and treatment could be classed as automatically unfair:

 

a. The individual is pregnant or on maternity leave

b. They have asked for their legal rights at work, e.g. to be paid minimum wage

c. They took action about a health and safety issue

d. They work in a shop and refused to work on a Sunday

e. They are a trade union member and took part in trade union activities including official industrial action or they were acting as an employee representative

f. They have reported the employer for wrongdoing (whistleblowing)

 

If the employee resigns after 2 years’ service, it would also be automatically unfair if the reason for terminating the contract was because the business was transferred to another employer or they failed to declare a spent conviction.

 

5. Constructive Dismissal due to Discrimination

 

Employees are protected under the Equality Act from discrimination relating to a protected characteristic. If the employee’s resignation was because the employer discriminated against them, they may be able to bring a constructive dismissal claim against the employer.

It could qualify as discrimination if the employee was treated unfairly because they are or are seen to be, or they are associated with someone who is seen to be:

 

a. pregnant or on maternity leave

b. from a particular race, ethnicity or country

c. married or in a civil partnership

d. a man or a woman

e. disabled

f. lesbian, gay, bisexual or trans (LGBT)

g. have a particular religion or set of beliefs

h. older or younger than the people they work with

 

6. Legal Implications of Constructive Dismissal Claims

 

Constructive dismissal claims can lead to various legal consequences for employers. If an employee successfully proves their claim, the employer may face the following repercussions:

 

a. Compensation Awards: The primary consequence of a successful constructive dismissal claim is the obligation to pay compensation to the employee. This can include both basic and compensatory awards. The basic award is calculated based on the employee’s age, length of service, and weekly pay, while the compensatory award covers financial losses incurred by the employee due to the dismissal, such as lost wages and benefits.

 

b. Reputational Damage: Legal disputes, especially those that result in a tribunal decision against the employer, can damage the organisation’s reputation. Negative publicity can impact recruitment, customer trust, employee morale, and the overall perception of the organisation.

 

c. Injunctions and Other Legal Orders: In some cases, courts or tribunals may issue injunctions or other legal orders requiring employers to take specific actions or cease certain behaviours. These can include reinstating the employee or rectifying the breach of contract.

 

7. How Much is Compensation for Constructive Dismissal?

 

Compensation for constructive dismissal is made of two parts; a basic award and a compensatory award.

The basic award is set is as follows:

 

a. One and a half week’s pay for each year of employment if you are aged 41 and above.

b. One week’s pay for each year of employment if you are aged 22-40.

c. Half a week’s pay for each year of employment if you are under the age of 22.

 

Calculations can apply for up to a maximum of 20 years’ continuous service. The level of pay will usually be set at the employee’s normal weekly gross pay at the time of your resignation, up to the relevant maximum threshold.

The maximum compensation limit for unfair dismissal is £115,115 as of April 2024. This is in addition to the basic award cap, which is £21,000 (30 weeks’ pay subject to the limit on a week’s pay).

In most cases, constructive dismissal claims do not make it to the tribunal but instead are settled with a compromise agreement. It is important for employees to understand the amount they could potentially be awarded by the tribunal to gauge the level of an acceptable offer.

The compensatory award is set to award employees where it is ‘just and equitable’ based on specific losses arising as a result of their employer’s actions. Types of losses that could be claimed include:

 

a. loss of wages including contractual and non-contractual benefits where applicable

b. loss of future wages

c. loss of statutory rights

d. loss of pension

 

If the employee’s claim is successful, the tribunal will assess their total loss, and their earnings from alternative employment during the notice period should be taken into account against sums already received from the employer, such as pay in lieu of notice or enhanced redundancy payments.

The tribunal has the power to reduce both the basic award and the compensatory award if the employee’s conduct contributed to the situation, or where an employer can show that even if they had followed a correct process, the decision to dismiss would still have been the same.

 

Section B: Common Issues Leading to Constructive Dismissal Claims

 

Behaviour that is ‘unreasonable’ would not in and of itself be sufficient to meet the threshold or to allow an employee to resign and claim constructive dismissal. The employer’s behaviour has to be so serious that it amounts to a fundamental breach of the employee’s contract of employment, rendering it untenable to continue.

Examples of common issues resulting in constructive dismissal claims include:

 

1. Poor Working Conditions

 

Poor working conditions are a significant cause of constructive dismissal claims. Employees are entitled to a safe and healthy working environment, and failure to provide this can result in a breach of their rights. Examples include:

 

a. Health and Safety Breaches: Employers must comply with health and safety regulations. Failing to address hazards, provide necessary safety equipment, or ensure a safe workplace can force employees to resign.

 

b. Unsanitary or Hazardous Work Environments: Conditions such as inadequate ventilation, poor lighting, excessive noise, or unsanitary facilities can make the workplace intolerable.

 

c. Overworking and Unreasonable Hours: Imposing excessive workloads or unreasonable working hours without adequate breaks can contribute to a stressful and unhealthy work environment.

 

2. Breach of Contract

 

A breach of contract occurs when an employer fails to adhere to the terms agreed upon in the employment contract. This can take various forms, including:

 

a. Non-Payment or Late Payment of Wages: Consistently failing to pay wages on time or withholding pay can be a breach of the employment contract.

b. Failure to Provide Agreed Benefits: Not providing benefits promised in the contract, such as bonuses, pensions, or healthcare, can lead to a constructive dismissal claim.

c. Breach of Implied Terms: Breaching implied terms of the contract, such as the duty of mutual trust and confidence, can be grounds for constructive dismissal. This includes actions that undermine the employee’s trust in their employer.

 

3. Unfair Treatment or Harassment

 

Unfair treatment or harassment in the workplace can create an intolerable environment for employees. This includes:

 

a. Discrimination: Treating employees unfairly based on race, gender, age, disability, or other protected characteristics is not only illegal but can also lead to constructive dismissal claims.

b. Bullying and Harassment: Persistent bullying, harassment, or intimidation by colleagues or supervisors, especially if the employer fails to address it, can force an employee to resign.

c. Retaliation: Retaliating against employees for raising concerns or complaints about workplace issues can breach the duty of trust and confidence, leading to constructive dismissal.

 

4. Changes in Job Roles or Responsibilities Without Consent

 

Significant changes to an employee’s job role or responsibilities without their consent can be a breach of contract. Examples include:

 

a. Demotion or Reduction in Responsibilities: Demoting an employee or significantly reducing their responsibilities without a valid reason or agreement can undermine their position and lead to resignation.

b. Relocation: Forcing an employee to relocate without prior agreement, especially if it causes significant inconvenience, can result in a constructive dismissal claim.

c. Changes in Working Hours or Conditions: Unilateral changes to working hours, shift patterns, or other fundamental aspects of the job without consulting the employee can create an intolerable working environment.

 

Section C: Requirements for a Constructive Dismissal Claim

 

Constructive dismissal is generally recognised as being difficult for employees to prove due to the strict requirements that must be established.

There are three mandatory requirements for a claim for constructive dismissal are:

 

a. There must be an actual or anticipatory breach of contract by the employer which is a fundamental or repudiatory breach, ie one that goes to the root of the contract so as to be sufficiently serious to justify the employee’s resignation.

b. The employee must resign in response to the breach, rather than for some other reason.

c. The employee must not delay too long in terminating the contract in response to the employer’s breach, otherwise the employee may be regarded as having elected to affirm the contract and the right to accept the employer’s breach would be lost.

 

When bringing a claim for constructive dismissal, the burden of proof is on the employee to prove that the legal tests have been met.

Constructive dismissal cases are frequently dismissed by tribunals because the employee has been unable to provide a sufficient body of proof to evidence the breach or where the employee has been deemed to have accepted the employer’s behaviour over a prolonged period of time.

Some breaches will be easier to establish than others. A pay dispute, for example, can be evidenced by payslips and bank statements. Breaches relating to trust and confidence, however, can be more challenging to prove and may require the support of emails, text messages, witness statements and any notes you may have taken relating to relevant events, incidents or conversations.

Substantial evidence will be needed to support any case and prove that the breach was fundamental to the contract of employment and left the employee with no alternative but resignation.

The employer can then look to defend their case, which may mean arguing that there was no breach at all and the resignation was voluntary or that any breach was not sufficiently severe to justify resignation or constitute constructive dismissal and that they behaved in a reasonable manner.

 

1. Fundamental Breach of Contract by the Employer

 

Fundamental breaches of contract can relate to either express or implied contractual terms. An example of breach of an express term could be when the employer significantly reduces the employee’s pay without agreement, while breach of an implied term could include the duty to maintain trust and confidence. In the case of the latter, for a claim for constructive dismissal to succeed, the employee has to show that the employer has acted without reasonable and proper cause in a way that could or is likely to destroy or seriously damage the relationship of trust and confidence between them.

The test for the tribunal is objective; when determining if the employer’s conduct constitutes a fundamental breach of the contract of employment, the range of reasonable responses test would not be relevant.
A breach of the implied duty to maintain trust and confidence will always constitute a fundamental breach, meaning the employer’s conduct will have to be extremely serious before a breach of the implied duty can be established.

Whether other breaches of contract will amount to fundamental breaches will depend on the specific circumstances of each matter.

For example, case law shows an employer’s failure to deal with an employee’s grievance or to address it within a reasonable timeframe has also been found to constitute a fundamental breach of an implied duty. However, this requires the employee to properly raise and express their grievance to their employer.

 

2. The ‘Last Straw’ Doctrine

 

By law, the employer’s breach does not have to be limited to a one-off or single action, omission or incident to constitute a fundamental mental breach as the basis of constructive dismissal. It can be that the employer has repeatedly breached the contract term(s) in minor ways, but the effect of all of the breaches taken together constitutes a sufficiently serious breach.

This is referred to as the ‘last straw’ doctrine, whereby the employee endures a series of ‘minor’ actions or omissions by the employer and finally resigns in response to the last straw.

For instance, it would constitute a contractual breach if the employer once paid the employee a week late, but it is doubtful that this would be significant enough to warrant the employee’s right to resign. However, if the employer makes late salary payments multiple times, this pattern of late payments together could constitute a breach that makes it difficult for the employee to continue working for the employer, thereby justifying the resignation.

 

3. The Employee Must Have Resigned

 

Constructive dismissal claims require the employee to have resigned, and the resignation must have been in response to the employer’s fundamental breach. In practice, it may not always be clear if and when the employee actually resigned.

By way of example, if the employer says to the employee to “quit or be sacked”, and the employee responds that they will resign, the employer’s words are likely to be taken by the tribunal as an ultimatum that has the effect of terminating the employment. In this case, the dismissal is likely to be considered as express dismissal rather than a constructive dismissal.

If ambiguous language is used to end a contract of employment, such as when the word “notice” may have more than one meaning, or when an employee gives notice of leaving one department to join another with the same employer rather than of terminating employment entirely, the tribunal should consider how a ‘reasonable’ listener would have understood the ambiguous language in the specific circumstances. Later events can be used to help with the interpretation of the wording provided they do not signify a change in opinion and are genuinely helpful in explaining what happened.

The question of what a reasonable employer may have comprehended does not arise when a person uses clear-cut ‘resignation’ language that the employer can understand. Arguments based on what a reasonable employer could have thought cannot be used to override the natural sense of the words and the fact that the employer understood them to signify that the employee was leaving. It is not appropriate to use a person’s non-disclosed purpose when establishing what their intended meaning is when they use language.

A party cannot often claim that straightforward language used to end an employment contract did not mean what it seemed to imply. However, various cases suggest that there may be “special circumstances,” such as words spoken in the heat of the moment or under emotional stress, where those words can be withdrawn if they are done so promptly. When there are exceptional circumstances, an employer should wait a fair amount of time before accepting a resignation at face value because new information may surface that makes it questionable as to whether the resignation was truly meant and may be presumed.

A resignation can also be communicated on the employee’s behalf through an intermediary, such as a solicitor or union representative to the employer, provided clear language is used.

 

4. Resignation in Response to the Breach

 

Even if the employer has fundamentally breached the terms of the contract and the employee has validly resigned, there can only be a constructive dismissal if the resignation was in response to the breach.
Specifically, a resignation would not be deemed to be in reaction to a fundamental breach if the employee believes that their employer would later repudiate the contract, but such action has not yet been taken by the employer.

In practice, it can be challenging to tell the difference between an employer’s anticipatory breach of a contract and actions that do not constitute an anticipatory breach but give rise to an employee’s reasonable belief that the employer would break the contract in the future. The former might serve as justification for a constructive dismissal, but not the latter.

Similar to how an employee cannot use conduct that occurs after resignation to support a claim of constructive dismissal, post-resignation conduct could not have been a fundamental breach because the contract had already been terminated by the resignation (if it was tendered without notice), and in any case, it could not have been any part of the reason for resignation because the conduct had not yet occurred.
If an employee resigned for more than one reason, rather than focusing on which one was the ‘main’ reason, they would need to show that at least one of the reasons related to a fundamental breach. In other words, rather than being the effective reason or the major cause of the employee’s departure, a fundamental breach by the employer must be a factor.

The employee is not obliged to provide the employer with the reason for their resignation at the time they resign. Similarly, there is no obligation for an employee to raise a grievance about the employer’s conduct before resigning, but this gives rise to an argument that compensation should be reduced because the employee failed to comply with the requirements of the ACAS Code to raise the objectionable conduct in advance of resignation that is being relied on as having amounted to a fundamental breach.

 

5. Resigning Without Notice

 

Ordinarily, employees are required to give and work the correct notice when resigning from their job.

In a constructive dismissal scenario, however, where the employer has seriously breached the terms of the employment contract, it is usually justifiable for the employee to resign without giving the requisite notice.
This means they may resign with or without notice, but they should be entitled to resign and terminate their contract without notice.

Should they work their notice period, it may be reasonable for the employer to consider this as proof that the employee has consented to the breach and affirmed their contract by remaining an employee.

 

6. Does the Employee need to Raise a Grievance First?

 

Employees and employers are expected to try to resolve disputes informally and internally before pursuing a tribunal claim.

Depending on the circumstances, it may be appropriate for the employee to raise a grievance and give the employer the opportunity to respond and take action.

The employee may send a ‘Without Prejudice’ letter detailing the contractual breach(es) and reasons for the complaint and inviting the employer to rectify the situation before the employee feels forced to resign.

This provides the employer with the opportunity to address the situation. If the employee is unwilling to respond to any attempts to settle the matter amicably, or an agreement cannot be reached, then the employee will either have the choice of returning to work or to resign and then pursue a case for constructive dismissal.

 

7. Employee’s Duty to Mitigate

 

Employees are under a duty to mitigate their losses by making reasonable efforts to try to find new work as soon as they resign.

Even if the employee’s actual loss of earnings is much higher, the tribunal is likely to only award them loss of earnings for one month after the dismissal, for instance, if it determines that they should reasonably have found another job within a month of their dismissal at the same pay as their prior position.

The employer has the burden of proving the employee’s failure to mitigate. The employee does not need to provide evidence that what they did was appropriate; it just needs to be proven that they behaved in an unreasonable manner. Being reasonable and not acting unreasonable are two different things. Facts determine what is reasonable or unreasonable. The tribunal’s judgement ultimately determines whether or not the employee acted unreasonably, although the employee’s opinions and wishes can be taken into consideration. Since the employee is the one who suffered a wrong, the tribunal would not impose an overly strict standard.

Only after the dismissal has become effective does the need to mitigate become applicable. Therefore, declining a proposal made before the actual dismissal will not be considered a failure to mitigate, although it could, in appropriate circumstances, amount to contributory fault.
A refusal to accept an offer of work from the dismissing employer made after the dismissal will not necessarily be a failure to mitigate. The treatment of the employee or the circumstances of the dismissal may make it reasonable for the employee to refuse such an offer.
Instead of calculating a percentage reduction, as in the case of contributory fault, when the tribunal finds that an employee failed to mitigate their loss, it should determine when the employee would have found employment if they had taken the necessary steps and what their pay rate would have been in the new position.

The totality of the facts will determine whether a claimant failed to mitigate their loss by taking a position at a lesser salary level. After a protracted period of unemployment, it could be unreasonable for an employee to refuse to accept a reduced rate of compensation.

An employee may not necessarily be being ‘unreasonable’ if they become self-employed or start their own business, depending on their personal situation and the employment options available. When an employee has reasonably attempted to mitigate their losses by starting a new business, they would be entitled to reimbursement for the startup costs; nevertheless, any profits made during the relevant time should be subtracted from the compensatory award.

It may even be reasonable for an employee to retrain for a different type of job or to pursue higher education in mitigation.

As the employer is responsible for demonstrating a failure to mitigate, they should look into relevant websites and credible sources to determine whether any acceptable job openings have occurred during the employee’s unemployment. Copies of these job postings may be presented by the employer as evidence at a remedy hearing, and the claimant may be questioned in cross-examination on positions that were open but not pursued.

 

8. Unfair Constructive Dismissal

 

Under the statutory requirements of s.98 Employment Rights Act 1996, the tribunal must not only establish constructive dismissal; it must also determine if the dismissal was unfair. This can quickly become problematic – both for the parties and the tribunal – to identify the reason for the dismissal when it was not the employer who ultimately terminated the contract. However, this remains a requirement to be determined.

In practice, this means that even if the employer asserts there was no constructive dismissal, it still has to state its position as to the fairness of the dismissal within its ET3 form, on a without prejudice basis. The burden is also on the employer to prove that dismissal was for one of the five potentially fair grounds for dismissal.

 

Section D: How to Deal with Constructive Dismissal Claims

 

If an employee resigns and threatens or submits a constructive dismissal claim, the employer will need to act quickly and methodically to gather all the required facts, and understand their legal position and options, to mitigate the potential risks of defending a tribunal claim.

 

1. Identify Breaches of the Employment Contract

 

The first step is to identify the exact terms of the employment contract that the employee claims were breached. This could involve changes in job responsibilities, working conditions, incidents of harassment, or a breakdown in mutual trust.

Next, assess whether this constitutes a fundamental breach of the employment contract. Is the alleged breach significant enough to undermine the core of the employment relationship, making it untenable for the employee to continue working?

 

2. Defending a Claim

 

After establishing the main aspects of the employee’s case, you need to formulate a strategy to challenge the claim. The primary areas of challenge are typically:

 

a. That the employer did not breach the contract as alleged.

b. That the employer’s actions (or lack thereof) were not severe enough to constitute a material breach of contract.

 

Once the defence strategy is outlined, it must be documented in the defence form, known as an ET3, which is then submitted to the Employment Tribunal. The ET3 must be filed within 28 days from the date the employer received the claim form, and this can be done online.

 

3. Documentation and Evidence

 

It is crucial to compile detailed written records of all relevant communications, incidents, and significant events related to the employee. This includes emails, meeting notes, and any other documentation pertinent to the case, as these will form the foundation of the documentary evidence in the employer’s defence.

Employers who follow a fair and reasonable procedure when dealing with an aggrieved employee can rely on the documentary evidence generated during that process if a claim arises.

Comprehensive grievance procedures, supported by detailed policy documentation on issues such as workplace discrimination, bullying, and harassment, are essential. Robust policies not only demonstrate an employer’s commitment to fair treatment and legal compliance but also help to mitigate the risk of constructive dismissal claims.

 

4. Take Legal Advice

 

To understand your options and ensure you follow a lawful procedure, take professional advice on how to deal with any constructive dismissal claim.

Contact our employment law specialists for guidance on your specific circumstances, such as the potential risks and liabilities you face, and the strategies to challenge any such claim.

We also offer mediation services to facilitate a resolution without the need for formal legal proceedings.

 

Section E: How to Reduce the Risk of Constructive Dismissal Claims

 

Preventing constructive dismissal claims is a proactive process that requires a combination of well-developed HR policies, regular training, and fostering a culture of open communication.

And since prevention is better than cure, employers should consider early intervention when dealing with dissatisfied employees. Encouraging open communication in the workplace can lead to addressing concerns before they escalate. This may involve internal mediation or other alternative dispute resolution methods, which can resolve issues without the need for the employee to pursue legal action.

 

1. Responsibilities of Employers to Prevent Constructive Dismissal Claims

 

Employers have a legal and ethical responsibility to create a supportive and lawful work environment. Key responsibilities include:

 

a. Adhering to Employment Contract Terms: Employers must strictly adhere to the terms and conditions outlined in employment contracts. Any changes to job roles, responsibilities, or conditions should be mutually agreed upon and properly documented.

b. Ensuring Health and Safety: It is the employer’s duty to provide a safe and healthy working environment. This includes complying with health and safety regulations, conducting regular risk assessments, and addressing any hazards promptly.

c. Preventing Discrimination and Harassment: Employers must enforce policies that prevent discrimination, harassment, and bullying in the workplace. They should ensure that all employees are treated fairly and respectfully.

d. Providing Fair Compensation and Benefits: Employers must ensure timely and accurate payment of wages and provide any agreed-upon benefits. This includes adhering to minimum wage laws and contractual obligations related to bonuses, pensions, and other perks.

 

2. Develop and Implement Robust HR Policies

 

HR policies form the foundation of a fair and compliant workplace. They set clear expectations for behaviour, outline procedures for addressing issues, and ensure that both employees and employers understand their rights and responsibilities.

 

a. Clear and Comprehensive Policies: Develop policies that cover all aspects of employment, including health and safety, anti-discrimination, harassment, grievance procedures, and disciplinary actions. Ensure these policies comply with UK employment laws and best practices.

b. Regular Reviews and Updates: Regularly review and update HR policies to reflect changes in legislation, organisational structure, or workplace dynamics. This ensures that policies remain relevant and effective.

c. Accessible Documentation: Make sure that all HR policies are easily accessible to employees. This can be achieved through an employee handbook, the company intranet, or regular communication from HR.

d. Consistent Enforcement: Enforce HR policies consistently across the organisation. Inconsistent application can lead to perceptions of unfairness and increase the risk of disputes.

 

3. Regular Training for Managers and Staff

 

Training is essential to ensure that all employees understand HR policies and know how to apply them in their daily work. It also equips managers with the skills to handle issues effectively and maintain a positive workplace environment.

 

a. Induction Training: Provide comprehensive induction training for new employees, covering all relevant HR policies and procedures. This sets the tone for expected behaviour and compliance from the outset.

b. Ongoing Training Programmes: Implement regular training for all employees to reinforce understanding of policies and update them on any changes. Topics should include diversity and inclusion, health and safety, conflict resolution, and legal compliance.

c. Management Training: Offer specialised training for managers on leadership skills, effective communication, handling grievances, and conducting performance reviews. This helps managers support their teams better and address issues before they escalate.

d. Scenario-Based Training: Use scenario-based training to provide practical examples of how to handle various workplace situations. This helps employees and managers apply their knowledge in real-life scenarios.

 

4. Encouraging Feedback and Open Communication

 

Creating a culture of open communication and encouraging feedback are crucial for identifying and resolving issues early, preventing them from escalating into constructive dismissal claims.

 

a. Honest Communication

Constructive dismissal claims often hinge on the alleged breach of the implied duty of trust and confidence. Employers must show that they had reasonable and proper cause for their actions. Ensuring that employees are informed about the reasons behind decisions affecting their employment can reduce the risk of litigation. Transparent communication regarding changes to an employee’s role or terms and conditions can serve as evidence to counter claims that the employer undermined trust.

 

b. Open Door Policy: Implement an open-door policy that encourages employees to voice their concerns and share feedback with management without fear of retaliation. This fosters trust and transparency.

 

c. Regular Feedback Mechanisms: Establish regular feedback mechanisms, such as employee surveys, suggestion boxes, and town hall meetings. This provides multiple channels for employees to express their views and concerns.

 

d. Responsive Management: Ensure that management is responsive to feedback and takes action to address issues promptly. Acknowledge feedback, communicate actions taken, and follow up to ensure issues are resolved satisfactorily.

 

e. Anonymous Reporting Options: Provide options for anonymous reporting of serious concerns, such as harassment or unethical behaviour. This ensures that employees feel safe reporting issues without fear of repercussions.

 

f. Regular Check-Ins: Conduct regular check-ins with employees through one-on-one meetings or team discussions. This helps to build rapport, understand employee sentiments, and address any emerging issues early.

 

Section F: Summary

 

Proactive measures are essential in creating a supportive and lawful workplace. Employers should continuously review and improve their policies, training programmes, and communication channels to ensure a positive environment for all employees.

Tribunal claims can become costly to manage and can result in significant compensation payouts. If your organisation is facing a potential claim for constructive dismissal, take legal advice to help you assess the merits of the complaint and the potential strategies open to you to deal with the claim and minimise risk exposure.

 

Section G: Need Assistance?

 

DavidsonMorris’ employment law specialists offer support to employers on all aspects of workforce management and workplace dispute resolution. We provide specific advice on constructive dismissal matters, providing an assessment of the issue and full consideration of the options open to you. Constructive dismissal claims are typically complex. Given the many factors to consider and the sensitivities of the issues typically involved, we recommend taking early advice to understand your rights and the options open to you to ensure your best interests are protected.

Contact our employment lawyers for advice and guidance on any aspect of constructive dismissal.

 

Section H: FAQs on Constructive Dismissal

 

What is constructive dismissal?
Constructive dismissal occurs when an employee resigns due to their employer’s behaviour, which has fundamentally breached their contract or created an intolerable working environment. This can include actions like unilateral changes to job roles, harassment, or poor working conditions.

 

What can be classed as constructive dismissal?
If an employer does not terminate the employment contract but commits a fundamental, actual or anticipatory breach of it, entitling the employee to resign, and the employee, without delaying too long, resigns in response to that breach, that resignation may amount to a constructive dismissal.

 

Is constructive dismissal hard to prove?
It is generally acknowledged that it is difficult for employees to prove constructive dismissal at tribunal. Substantial evidence is required and in most cases, the matter is settled before the tribunal.

 

What is the maximum payout for constructive dismissal?
From 6 April 2024, the statutory cap on compensation for unfair dismissal is £115,115 or 52 weeks gross salary, whichever is the lower.

 

How can employers prevent constructive dismissal claims?
Employers can prevent constructive dismissal claims by developing robust HR policies, providing regular training for managers and staff, fostering open communication, and addressing employee concerns promptly and effectively.

What are the legal consequences of a constructive dismissal claim?
Legal consequences can include compensation awards to the employee, reputational damage to the business, and potential legal costs. Employers may also be required to rectify the breaches that led to the claim.

What should an employer do if faced with a constructive dismissal claim?
Employers should acknowledge the complaint, conduct a thorough internal investigation, document all findings and actions, and seek legal advice if necessary. Addressing the complaint promptly and fairly can help mitigate further issues.

Why is it important to conduct an internal investigation?
An internal investigation helps uncover the facts surrounding the complaint, ensures fairness, prevents the escalation of disputes, and can reveal broader issues within the organisation that need to be addressed.

When should employers seek legal advice in constructive dismissal cases?
Employers should seek legal advice when the complaint involves serious allegations such as discrimination or harassment, if there is a risk of legal action, in complex cases, or when preparing for an employment tribunal.

What are common causes of constructive dismissal claims?
Common causes include poor working conditions, breaches of contract, unfair treatment or harassment, and unilateral changes to job roles or responsibilities without employee consent.

How can clear communication and documentation help prevent constructive dismissal claims?
Clear communication ensures that employees understand changes and expectations, while thorough documentation provides a record of all actions and decisions. This transparency can prevent misunderstandings and provide evidence in case of disputes.

What are some best practices for maintaining a positive workplace environment?
Best practices include promoting work-life balance, fostering a positive culture, providing training and development opportunities, implementing clear policies, responding to complaints promptly, and conducting regular feedback and reviews.

What are the benefits of regular training for managers and staff?
Regular training ensures that all employees are aware of HR policies, understand how to apply them, and are equipped to handle workplace issues effectively. It also helps in maintaining compliance with employment laws and fostering a positive work environment.

How can employers encourage feedback and open communication?
Employers can encourage feedback and open communication by implementing an open-door policy, providing regular feedback mechanisms such as surveys and meetings, ensuring management is responsive, offering anonymous reporting options, and conducting regular check-ins with employees.

 

Section I: Glossary

 

Constructive Dismissal: When an employee resigns due to their employer’s conduct, which has fundamentally breached their employment contract or created intolerable working conditions.

Employment Tribunal: An independent judicial body in the UK that resolves disputes between employers and employees, including claims of unfair dismissal, discrimination, and constructive dismissal.

Breach of Contract: Occurs when one party fails to fulfil their obligations under the terms of a contract. In employment, this can include non-payment of wages, changes to job roles without consent, or failure to provide a safe working environment.

Burden of Proof: In constructive dismissal cases, the burden of proof lies with the employee. They must demonstrate that the employer’s conduct constituted a fundamental breach of contract and that this breach directly led to their resignation.

Causation: The breach by the employer must be the primary reason for the employee’s resignation. If the employee resigns for unrelated reasons, a claim of constructive dismissal will not succeed.

Compensation Award: Financial compensation ordered by a tribunal or court to be paid to an employee who has suffered loss or damage due to their employer’s actions. This can include both basic and compensatory awards.

Discrimination: Unfair treatment of employees based on characteristics such as race, gender, age, disability, religion, or sexual orientation, which is prohibited under employment law.

Duty of Mutual Trust and Confidence: This implied term in every employment contract requires both parties to treat each other with respect and fairness. Examples of breaches include unjustified demotions, unwarranted disciplinary actions, or creating a hostile work environment.

Fundamental Breach of Contract: A fundamental breach of contract is an act by the employer that strikes at the heart of the employment relationship. This can include violations of express terms, such as failure to pay wages, or implied terms, like the duty of mutual trust and confidence.

Harassment: Unwanted behaviour that creates a hostile, intimidating, or offensive work environment for an employee. This can include bullying, verbal abuse, or unwelcome physical contact.

HR Policies: Guidelines and procedures established by an organisation to manage its employees. These cover areas such as recruitment, training, health and safety, discrimination, and grievance handling.

Implied Terms: Terms that are not explicitly stated in an employment contract but are assumed to be included. These often include the duty of mutual trust and confidence between employer and employee.

Mutual Trust and Confidence: An implied term in employment contracts that requires both employer and employee to act in a manner that does not destroy the relationship of trust and confidence between them.

Open Door Policy: A workplace policy that encourages employees to speak freely with management about any concerns or suggestions without fear of reprisal.

Reasonableness of Resignation: The employee’s resignation must be a reasonable response to the employer’s breach. This is assessed objectively, considering whether a reasonable person in the same position would have felt compelled to resign.

Repudiatory Breach: A repudiatory breach is a severe breach of contract that entitles the innocent party (the employee) to consider the contract terminated. In the context of constructive dismissal, it is the employer’s conduct that constitutes this breach, allowing the employee to resign and claim constructive dismissal.

Retaliation: Adverse actions taken by an employer against an employee for engaging in legally protected activities, such as reporting harassment or discrimination.

Settlement: An agreement reached between an employer and employee to resolve a dispute without proceeding to a tribunal or court. Settlements often involve compensation and other terms agreed upon by both parties.

Timing of Resignation: The timing of the resignation is crucial. Employees must act swiftly following the breach. Prolonged continuation in the role may suggest acceptance of the employer’s conduct, thereby undermining the claim.

Unilateral Changes: Changes made by an employer to the terms and conditions of employment without the consent of the employee. These can include changes to job roles, working hours, or location.

Whistleblowing: Reporting by an employee of illegal, unethical, or unsafe practices within the organisation. Employees are protected by law from retaliation for whistleblowing.

Work-Life Balance: The equilibrium between an employee’s work responsibilities and personal life. Promoting work-life balance can lead to increased job satisfaction and reduced stress.

Workplace Culture: The environment created by the beliefs, behaviours, and values shared by members of an organisation. A positive workplace culture can enhance employee morale and productivity.

Workplace Environment: The physical and psychological conditions in which employees work. A healthy workplace environment is safe, supportive, and conducive to productivity.

 

Section J: Additional Resources

 

UK Government – Constructive Dismissal:
https://www.gov.uk/dismissal/unfair-and-constructive-dismissal

 

ACAS (Advisory, Conciliation and Arbitration Service) – Constructive Dismissal:
https://www.acas.org.uk/constructive-dismissal

 

CIPD (Chartered Institute of Personnel and Development) – Constructive Dismissal:
https://www.cipd.co.uk/knowledge/fundamentals/emp-law/dismissal/constructive-factsheet

 

Employment Tribunal – How to Respond to a Claim:
https://www.gov.uk/employment-tribunals/respond-to-a-claim