A Guide to Constructive Dismissal – When can you resign and bring a claim against your employer?

What is Constructive Dismissal and when can you claim?
At Backhouse Solicitors we regularly see employees who wish to resign and bring a claim against their employer.  This comes under the heading of constructive dismissal.
Contrary to how it sounds, in cases of constructive dismissal, you as an employee are not actually dismissed by your employer.  What constructive dismissal means is that you resign, but you show that you were entitled or forced to do so by your employer’s conduct.  Here are some examples of difficulties at work which are caused by your employer and may mean you are eligible to claim:
  • not being paid your salary or wages
  • being demoted for no reason
  • being told to work unreasonable extra hours or else face termination
  • being bullied or victimised
Constructive dismissal involves a fundamental breach of contract on the part of the employer.  This breach can be actual (it has already happened) or anticipatory (you believe it is about to happen).  An anticipatory breach could be, for example, where your employer has told you that you will not be paid on the next payday.  If your employer withdraws an anticipatory breach before you accept it and resign then there is no breach and you won’t be successful if you try to claim.
A breach can also be a one-off occasion or a series of continuing events culminating in a “last straw”.  The “last straw” need not be a very serious event in itself, but must be enough to cause the whole series of events to be a breach.
Furthermore, it can be a breach of an express term in your contract, such as a change in your job description, or of an implied term.  Often the implied term will relate to the mutual trust and confidence between you and your employer.  So, if your relationship with your employer has completely broken down to the point that you feel you have to resign, you may well have a case for constructive dismissal.
What steps do you need to take?
If you intend to claim for Constructive Dismissal, it is very important that you do it correctly.  Many claims are unsuccessful because they don’t follow the steps outlined below.
  • You must be able to establish that there has been afundamental (also known as a repudiatory) breach of contract on the part of your employer
  • This breach must be sufficiently serious to justify your resignation – if in doubt take advice as the definition of sufficiently serious will depend on your job, your seniority and other factors
  • You should decide to accept the breach and treat your contract as though it is at an end – meaning, you need to resign
  • Your resignation should be prompt – if you stay for too long after the breach, your employer can argue that this counts as your acceptance of the treatment
  • You must lodge a claim for constructive dismissal at an employment tribunal within three months of the termination of your contract, but ideally as soon as possible
If at all possible, before you make a claim for constructive dismissal, you should raise a grievance with your employer to try to resolve matters internally.  Even if you have already resigned, you can write a letter to your employer setting out your grievance.  If your employer refuses to acknowledge your grievance or does not resolve the situation to your satisfaction, you can then lodge your claim for constructive dismissal.  The fact that you followed procedure and raised a grievance will go in your favour at an employment tribunal hearing.
Take Legal Advice!
We would strongly suggest that you take legal advice before taking the step to resign.  Constructive dismissal cases are high risk cases, coupled with the fact that you will be out of work without any income.  If you intend to claim state benefits, you may also find that you are unable to claim for a period of time because you resigned.
What kind of compensation could you be entitled to? 
If a tribunal holds that you have been constructively dismissed and that it was unfair, it will assess the loss for which your employer is responsible.  The aim of the tribunal will be to put you in the financial position you would have been in if your contract had been performed lawfully.
For example, if you resign without notice, then your damages should be equal to the value of your pay for your contractual notice period.  For dismissals/resignations after 29th July 2013 you can receive abasic award (a maximum of £13,500) and then a sum equivalent to your loss of earnings, called the compensatory award.  The maximum a tribunal can give as a compensatory award is a maximum of 12 months gross pay or £74,200, whichever is the highest.  This limit will increase on 6 April 2014 to £76,574.
In reality, in 2012 / 2013, the median award for unfair dismissal claims was £4,832.  Therefore, many compensatory awards are unlikely to be affected by the new limit.
How can we help? 
Here at Backhouse Solicitors, we understand how stressful it is when the relationship between employee and employer breaks down.  If you are an employee who feels forced into resigning by the behaviour of your employer, then don’t suffer in silence.  Please don’t hesitate to get in touch with us, and we can advise you about the best way to handle your situation.  You can:
We look forward to helping you.
Minal Backhouse