Constructive Dismissal: The Ultimate Employer and Employee Guide
Constructive dismissal is a complex but crucial area of employment law that every employee and employer should understand. Not least because it is a serious breach of contract under UK law.
For employees, knowing their rights is essential to ensure they aren’t forced to resign due to unfair treatment. For employers, understanding constructive dismissal is crucial to avoid unintentional breaches that could lead to costly claims.
In this guide, we’ll cover all aspects of constructive dismissal. Employers will learn best practices to maintain a fair and compliant workplace, while employees will gain insights into what to do if they have a claim.
What is constructive dismissal?
- Persistent failure to pay wages on time
- Physical assault or threats of violence at work
- Unjustified demotion or reduction in responsibilities
- Unsafe working conditions or failure to uphold health and safety standards
- Significant changes to working hours without consultation or agreement
- Ongoing bullying, harassment, or discrimination
- Sudden changes to job roles or responsibilities without employee consent
- Retaliation for reporting misconduct or raising concerns in the workplace
- Failure to make reasonable adjustments for employees with protected characteristics (e.g. disabilities).
Difference between unfair and constructive dismissal
Unfair dismissal and constructive dismissal are distinct types of claims under UK employment law. While both see employment ending under undesirable circumstances, the reasons, legal requirements, and implications differ.
The table below sets out the key differences between unfair dismissal and constructive dismissal.
| Unfair Dismissal | Constructive Dismissal | |
| Definition | Employer directly terminates employment without fair reason or procedure. | Employee resigns due to employer’s serious breach of contract. |
| Initiation of termination | Employer initiates dismissal. | Employee initiates resignation. |
| Reasons for claim | Failing to provide valid reasons for dismissal and/or inadequate procedure. | Harassment, drastic job changes, unpaid wages, retaliation, etc. |
| Burden of proof | Employer must prove fair grounds for dismissal and show procedures were followed. | Employee must prove employer’s actions breached the contract. |
| Legal framework | Governed by the Employment Rights Act 1996. | Based on breach of employment contract terms. |
4 common examples of constructive dismissal
Constructive dismissal cases can take many forms. Next are several common scenarios that employees may encounter and employers should work to avoid.
Unilateral role changes
When employers make unilateral changes to an employee’s role, such as increasing workload, changing job responsibilities, or relocating the position without consultation, it can be a breach of employment contract.
Such changes can leave employees feeling undervalued, overburdened, or even misled about their role, creating grounds for a constructive dismissal claim if the changes are severe or ongoing.
Examples:
- An employer repeatedly increases an employee’s workload without offering additional support or fair compensation, causing the employee to experience stress and eventual burnout.
- An employer unilaterally decides to relocate an employee to a different branch or city, without discussing the decision or obtaining the employee’s consent, disregarding their original contract terms.
- A manager significantly alters the scope of an employee’s responsibilities without prior notice or agreement, moving them away from tasks they were initially hired to perform.
What employers can do to prevent a constructive dismissal claim
- Communicate adjustments to job roles transparently. Clearly explain the reasons behind any changes to roles or responsibilities and ensure employees understand the rationale.
- Discuss potential role changes with the employee before implementation and seek their input or agreement, particularly for significant shifts in responsibility or location.
- Ensure any major changes are discussed openly and documented in writing, with both parties agreeing to the new terms.
- Regularly assess employee workloads and provide support to prevent burnout, especially if responsibilities expand or shift.
Persistent bullying or harassment
Bullying or harassment that goes unaddressed by management can create a hostile work environment, leading employees to feel unsafe, undervalued, or unfairly targeted.
Persistent harassment, even if not directly from management, may lead to a constructive dismissal claim if the employer fails to intervene and resolve the issue, creating intolerable working conditions.
Examples:
- An employee repeatedly reports instances of bullying from a colleague, but management takes no action. As the hostile behaviour continues, the employee feels compelled to resign due to the unaddressed harassment.
- An employee is subjected to regular, unwarranted criticism by a supervisor, often in front of colleagues. The public nature of the criticism undermines their confidence, leading to a hostile work environment.
- An employer tolerates discriminatory jokes or behaviour within the team, which is reported by affected employees but left unaddressed, resulting in feelings of alienation and distress for those impacted.
What employers can do to prevent a constructive dismissal claim
- Establish and communicate clear anti-harassment policies.
- Develop a zero-tolerance policy for harassment and discrimination, making expectations clear to all employees and management.
- Set up a simple, secure process for employees to report harassment without fear of retaliation, with designated personnel handling complaints confidentially.
- Managers should avoid public criticism or targeting of employees and instead handle performance issues privately and professionally.
- Take reported issues seriously and address them promptly, using professional mediation if necessary to ensure a respectful workplace.
- Set clear guidelines for response times and resolution processes for complaints, keeping employees informed about how their concerns are being managed and resolved.
Withholding of resources or support
If an employer consistently denies employees the resources necessary to perform their job effectively, it can lead to unmanageable stress and frustration, potentially justifying a constructive dismissal claim.
Examples:
- An employee is repeatedly denied access to software, tools, or training critical to their role, preventing them from fulfilling their responsibilities.
- Management fails to provide necessary staffing or coverage for high-demand roles, leaving employees overburdened and unable to meet performance expectations.
- An employer ignores repeated requests for resources, such as adequate equipment or workspace, resulting in employees being unable to meet basic job requirements.
What employers can do to prevent a constructive dismissal claim
- Ensure employees have access to adequate resources and support, particularly in demanding roles.
- Respond promptly and positively to requests for assistance or resources.
- Conduct regular check-ins with staff to identify and address any resource gaps that may impact their performance.
Creating an unsafe working environment
Employers are legally responsible for maintaining a safe workplace. When employers disregard health and safety regulations or ignore employee concerns about hazards, they place staff at risk.
A consistently unsafe environment can become a constructive dismissal case if employees feel compelled to leave due to neglected safety concerns.
Examples:
- An employee reports faulty equipment that poses a risk of injury, but the employer fails to repair or replace it. After repeated reports without action, the employee resigns due to the unsafe conditions.
- A hazardous substance is present in the workplace, and employees express concerns about exposure. The employer neglects to take corrective action, prompting employees to resign due to the threat to their health.
- The employer disregards legal requirements for safety protocols, such as proper ventilation or protective equipment, and employees feel unsafe continuing in their roles.
What employers can do to prevent a constructive dismissal claim
- Address health and safety issues promptly, ensuring that any hazards reported by employees are investigated and resolved.
- Conduct regular safety inspections and audits to proactively identify and mitigate potential risks.
- Provide safety training and resources to all employees and ensure robust safety protocols are followed at all times.
- Encourage employees to report safety concerns without fear of retaliation and establish clear channels for reporting and addressing issues.
Who can make a constructive dismissal claim?
If the working conditions have become intolerable or your employer has taken actions that drastically alter your role or working environment, you may be entitled to pursue a constructive dismissal claim.
Quick constructive dismissal eligibility check
To be eligible, you must:
- Be classed as an ’employee’ rather than a ‘worker’. Independent contractors and agency staff cannot make a constructive dismissal claim.
- Have worked with the company continually for at least two years apart from in certain circumstances (see below for details).
- Make the claim within three months minus one day from either:
- the last day of your notice period or
- the day of resignation if you didn’t work your notice.
Exceptions to the two-years’ service rule
In some cases, employees can claim constructive dismissal with less than two years’ service. Here are examples where exceptions may apply:
- Discrimination: If an employee resigns due to discrimination based on a protected characteristic (e.g. race, sex, disability, age, religion, sexual orientation), they may bring a constructive dismissal claim without the need for two years of service.
- Health and safety concerns: Employees who are penalised for raising health and safety concerns, can claim constructive dismissal regardless of their length of service.
- Whistleblowing: Employees who resign due to retaliation after whistleblowing on illegal or unethical practices are protected under whistleblower laws and can claim constructive dismissal with less than two years’ service.
- Maternity and parental rights: If an employee experiences mistreatment or detriment related to pregnancy, maternity leave, paternity leave, or adoption leave, they may have grounds for a constructive dismissal claim without the two-year requirement.
- Exercising statutory rights: Other reasons for resignation are considered automatically unfair under UK law, such as being penalised for exercising your legal rights (e.g. asking to be paid the minimum wage).
Who can’t make a constructive dismissal claim?
- In most cases, police officers and armed forces personnel in the UK cannot make a constructive dismissal claim in the same way civilian employees can. However, they do have access to alternative grievance mechanisms.
- If you are participating in a legal strike, your employment rights are largely protected during the strike period. However, if the strike is unofficial, claiming constructive dismissal can be challenging because your participation could be viewed as a breach of contract on your part.
- If you work on a fishing vessel and are paid by sharing the profits rather than receiving a regular wage or salary, you are generally not considered an ’employee’ in the legal sense. This distinction has implications for those hoping to make claims related to unfair or constructive dismissal.
How to make a constructive dismissal claim
If an employee feels compelled to resign and believes their case meets the standards needed for a constructive dismissal claim, taking the correct steps is crucial.
For employers, understanding these steps can help in preparing for a potential claim and prevent issues in the future.
| What employees should do | What employers should do | |
| STEP ONE: Document incidents thoroughly | Keep clear records of all relevant incidents, including dates, communications, descriptions, and witnesses. | Encourage open communication, address concerns as they arise, and document responses to employee complaints to show issues are being handled responsibly. |
| STEP TWO: Raise a formal grievance | Before resigning, consider raising a formal grievance to give your employer a chance to address the issue. | Take grievances seriously, document all responses, and investigate any claims thoroughly. |
| STEP THREE: Seek legal advice | Consult an employment solicitor before resigning to understand your rights and assess the strength of your case. | Seek legal guidance if a grievance or complaint suggests the potential for a constructive dismissal claim. |
| STEP FOUR: Negotiate a settlement | Enter into negotiations to resolve the dispute. This might involve inform, formal and Acas dispute resolution. Before filing the formal claim, it’s often advisable for employees to send a “without prejudice” letter to their employer to support these discussions. | If an employee signals the possibility of a constructive dismissal claim, initiating or participating in settlement discussions may be an effective way to resolve the dispute early. |
| STEP FIVE: File a claim | A constructive dismissal claim must be filed within three months of your resignation date. This time limit is strict; missing it can disqualify the claim from being heard by an employment tribunal. | Act quickly to gather documentation and seek advice if a claim is filed to prepare for a tribunal or settlement discussions. |
JARGON BUSTER – WITHOUT PREJUDICE LETTER
Sending a without prejudice letter also gives the employer a final opportunity to address the issue before formal proceedings, possibly resulting in a settlement. The term “without prejudice” means anything discussed or offered in the letter cannot be used as evidence at a tribunal, allowing for open discussion and negotiation.
Employment settlement via employment tribunal
When an employment dispute reaches the point of a constructive dismissal claim, it’s crucial both employees and employers consider the best path for resolution.
While many cases proceed to an employment tribunal, this process can be lengthy, costly, and stressful for everyone involved. In most cases, early settlement is a more beneficial way to resolve employment disputes.
Direct negotiation between parties
As a first step, employees and employers can engage in direct negotiations to resolve the dispute. Using an employment solicitor is recommended to stop the situation from escalating and to ensure a fair resolution.
At this stage, employees may choose to send a ‘without prejudice’ letter to their employer, outlining their concerns and willingness to settle.
Settlement agreement
If an agreement is reached, both parties can sign what’s called a ‘settlement agreement‘.
A settlement agreement is a legally binding document where the employee agrees to waive any future claims in exchange for compensation or specific terms. A solicitor must advise the employee on this agreement for it to be legally valid.
Acas early conciliation process
The Acas early conciliation process is a mandatory step before filing a claim with the employment tribunal. Early conciliation is a free and confidential service.
If both parties agree to settle, they’ll sign a legally binding agreement. This settlement resolves the dispute, preventing the need for further legal action.
The early conciliation process lasts up to one month, with an option to extend for an additional two weeks if both parties agree. If no agreement is reached, Acas will issue an early conciliation certificate, allowing the employee to proceed with their tribunal claim.
How can an employee prove constructive dismissal?
- Evidence of contract breach: Employees must prove the employer’s actions breached the employment contract (including implied terms of mutual trust and confidence).
- Unreasonable working conditions: Employees must show the employer’s conduct was unreasonable and that a reasonable employee in the same position would also find it intolerable.
- Prove resignation was unavoidable: Employees must demonstrate they resigned promptly in response to the breach. They should also highlight attempts to resolve issues before resigning, as this strengthens the claim that resignation was a last resort.
How can an employee prove constructive dismissal?
- Evidence of contract breach: Employees must prove the employer’s actions breached the employment contract (including implied terms of mutual trust and confidence).
- Unreasonable working conditions: Employees must show the employer’s conduct was unreasonable and that a reasonable employee in the same position would also find it intolerable.
- Prove resignation was unavoidable: Employees must demonstrate they resigned promptly in response to the breach. They should also highlight attempts to resolve issues before resigning, as this strengthens the claim that resignation was a last resort.
FACT CHECK
If you remain in your role despite your employer’s actions and later resign for a different reason, it will not be considered constructive dismissal.
How can an employer defend against allegations of constructive dismissal?
Employees bear the burden of proving they have been constructively dismissed. To defend against such claims at a tribunal, employers should:
- Show there was no breach of contract: Employers should provide evidence that the employment relationship was maintained in accordance with the agreed-upon terms and conditions.
- Prove the employee agreed to any changes in the contract: Employers should document instances where the employee explicitly agreed to any changes in their role, hours, location, or responsibilities, demonstrating that any alterations were consensual rather than imposed.
- Demonstrate a constructive working relationship: Employers should show that a positive and supportive working environment was encouraged and maintained, highlighting policies, procedures, or feedback that support this claim.
- Show the resignation was not due to the alleged breach: If possible, employers should present evidence that the employee’s resignation was for reasons other than the alleged contract breach, undermining the basis of the claim.
- Prove the employee accepted any alleged misconduct by their employer: If any issues were previously raised, provide documentation that shows the employee accepted or moved past these incidents without resigning immediately, indicating that they may not have felt the conditions were intolerable.
How can an employer prevent constructive dismissal claims?
In most employment law cases, prevention is better than cure. Employers can take proactive steps to maintain a fair, transparent, and compliant workplace, which not only reduces the risk of constructive dismissal claims but also fosters a more positive working environment.
Here are key practices for prevention:
- Keep records of all changes and complaints discussed with employees
Documenting all changes to job roles, working hours, and any other contractual terms, as well as recording complaints and discussions related to employee concerns, is essential.
These records provide evidence of clear communication and fair treatment, which can be invaluable in defending against future claims. - Keep evidence that reasonable efforts are being made to maintain the relationship
Show a commitment to fostering a constructive relationship by documenting steps taken to support employees, such as offering resources, addressing concerns, and providing a positive work environment. This evidence can be crucial in demonstrating the employer’s good faith. - Ensure employees have agreed to modifications in writing
If any modifications to an employee’s job role, hours, or location are necessary, obtain the employee’s agreement in writing. This protects both parties and serves as proof that any changes were mutually accepted, not imposed unilaterally. - Adopt an open-door policy to discuss grievances
Encourage employees to raise any concerns or grievances in a safe, supportive environment by establishing an open-door policy. Regularly check in with staff to identify and address issues before they escalate, fostering transparency and approachability. - Prevent escalation by addressing concerns immediately
Take employee concerns seriously and address them as soon as they arise. Immediate, proactive responses to grievances reduce the likelihood of issues worsening and provide employees with confidence that their employer values their wellbeing and input.
Winning a constructive dismissal case
If an employee wins a constructive dismissal claim at an employment tribunal, they could be entitled to specific remedies, including:
- Financial compensation: The most common remedy for a successful constructive dismissal claim is financial compensation.
- Reinstatement: Reinstatement involves restoring the employee to their original position with the same terms and benefits. While very rare in constructive dismissal cases, an employment tribunal can order reinstatement if deemed appropriate and if the employee wishes to return.
- Re-engagement: This places the employee in a similar role within the organisation, but may involve a different position or location. This is also unusual in constructive dismissal cases as the relationship between the employee and employer is often irreparably damaged, but may work in large organisations.
Constructive dismissal payouts
In cases of successful claims, constructive dismissal payouts may cover loss of earnings, legal fees, and sometimes additional damages.
Compensation varies widely based on factors like salary, length of employment, and emotional distress. Typical payouts range depending on the complexity of the case and the specific damages experienced.
There are two elements to a constructive dismissal payout:
- Basic award
Calculated similarly to statutory redundancy pay, the basic award considers the employee’s age, length of service, and weekly pay (capped at the statutory maximum). The basic award compensates the employee for the job loss itself.As of 6 April 2024, the maximum total payout is £21.000. The level of potential award changes annually. - Compensatory award
This award addresses the actual financial losses suffered as a result of the constructive dismissal, such as loss of earnings, benefits, and other perks associated with the position. It may cover:- Loss of wages: Including past and potential future lost income due to the dismissal.
- Loss of benefits: Such as pension contributions, health insurance, or bonuses.
- Costs incurred in job search: Like training expenses, travel for interviews, or job search assistance.
The compensatory award amount depends on factors such as the employee’s length of time unemployed, efforts to find a new job, and any other income received since the dismissal. This award is subject to a statutory cap.
As of 6 April 2024, the maximum total payout is one year’s salary, or £115,115 – whichever is lower (except in cases of discrimination or whistleblowing, where no cap applies). The level of potential award changes annually.
- Compensation for injury to feelings
If the constructive dismissal involved discrimination or harassment, the tribunal may award compensation for injury to feelings. This award recognises the emotional and psychological impact of the employer’s actions and is typically divided into three “bands” based on severity:The level of potential award changes annually. For claims presented on or after 6 April 2024, the bands are as follows:- Lower band for relatively minor instances of discrimination or harassment: £1,200 to £11,700
- Middle band for more serious cases: £11,700 to £35,200
- Upper band for the most severe cases: £35,200 to £58,700, with the most exceptional cases capable of exceeding £58,700.
QUICK WARNING
If an employee doesn’t attempt to resolve the issue via their employer’s grievance procedure before resigning, or otherwise fails to follow the Acas Code of Practice, the court could deduct 25% from any successful constructive dismissal claim.
Constructive dismissal FAQs
Constructive dismissal occurs when an employer’s actions significantly breach the employment contract, forcing the employee to resign.
Prove a clear breach of contract, show intolerable conditions, and demonstrate that resignation was the only option.
Generally, employees need two years of service to file a constructive dismissal claim, but exceptions apply for serious breaches, like discrimination. Likewise, there is no two-year qualifying period for whistleblowers.
Find out more about when it’s safe to dismiss an employee with less than two years’ service here.
Payouts vary, generally ranging from a few thousand to tens of thousands, based on lost wages, emotional distress, and legal fees.
Yes, if there’s sufficient evidence of a contract breach and intolerable working conditions you might be able to sue your employer for constructive dismissal. Check out our quick constructive dismissal eligibility check to find out more.
In most cases, you can’t claim constructive dismissal if you have been fired. But you might have a claim for unfair dismissal. We can advise on whether you have an employment claim against your employer.
Begin by documenting incidents, raise a grievance, consult an employment solicitor, and file within three months of resigning.
Contact our constructive dismissal solicitors today
Our specialist employment lawyers are proficient in all types of dismissal claims – including unfair dismissal, wrongful dismissal, and constructive dismissal cases. On hand to help resolve your employment dispute or answer your dismissal queries, no matter how complex the issues are, please do not hesitate to get in touch.
With strict time limits to enter into Acas early conciliation, if you want to start a constructive dismissal claim, you should do so today.
For your free consultation, call our employment solicitors today on 020 7467 3980 or complete the enquiry form on this page.