Constructive dismissal impacts employees and employers, with many essential questions being asked by those affected. In this article we explore the most frequently asked questions.

What is constructive dismissal?

A constructive dismissal is where an employer has breached the employment contract, which entitles the employee to resign and treat themselves legally as dismissed.

Can you still be liable for unfair dismissal if you have not dismissed the employee?

If the employee wants to claim unfair dismissal, the employee must show that they have been dismissed, which can be a constructive dismissal and therefore the employer does not need to have “pulled the trigger”.

Resigning is a crucial element of a constructive dismissal, and the employee must resign because of the breach. The breach does not have to be sole or principal cause of the resignation, but it does need to be one of the reasons.

What action by an employer can justify an employee walking away?

The classic test is that the breach must be one that is significant, going to the root of the contract, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract (lawyers call this a “repudiatory breach”).

As follows are some examples of breaches that are likely to entitle the employee to resign and claim constructive dismissal:

  • Failing to pay the employee or decide, without discussion, to reduce pay.
  • Forcing a complete change of the employee’s duties.
  • Forcing the employee to change work location to somewhere that is not within reasonable commuting distance of their home.

Does the contractual term need to be written down in the contract in order for it to be breached?

Contractual terms can be implied which means they are not written down but have an equal legal weight. This can occur when something is done over a long period of time, so that through custom and practice, it becomes an implied contractual term. For example, a bonus which is not contained in the written contract but has been paid regularly over the course of a number of years.

Many constructive dismissal claims are also built around the breach of what is known as the implied term of mutual trust and confidence.

The definition of a breach of trust and confidence is where the employer has:

  • Acted in a manner either calculated or likely to destroy or seriously damage the implied term of trust and confidence; and
  • The employer does not have reasonable and proper cause for acting in that way.

What can be classed a breach of the implied term of mutual trust and confidence?

Here are some examples of where a breach of the implied term can occur:

  • Failing to provide proper consideration of an employee’s grievance. This might include failing to adequately investigate, providing an outcome which isn’t supported by the facts, or even by failing to independence in the investigation or decision making (Note that some allowances are made for smaller employers with more limited resources).
  • Suspending an employee, even on full pay, without being able to show at the very least that this has been seriously considered and preferably having found solid evidence of the need to suspend. Suspension should never be a knee-jerk reaction to allegations.
  • Bullying or abuse by managers, or where co-workers have been bullied or abused, a failure by the managers to do anything about this behaviour.
  • Discrimination and harassment including unwanted sexual advances, again especially if management fails to adequately address the issues when they are raised.
  • Failing to provide a reasonable adjustment for a disabled employee.

What is the last straw?

An employee can resign after a series of breaches of their contract, where the last event is not itself necessarily serious, but is the “straw that broke the camel’s back”. In circumstances like this, the whole series of events can be looked at cumulatively, although the last straw must add something to the breach despite not needing to be significant. The question asked is: did the employer’s actions as a whole breach the implied term of mutual trust and confidence?

There are some key points to bear in mind, the last straw:

  • Cannot be completely trivial.
  • Does not need to be the same as the events earlier in the series.
  • Usually consists of blameworthy or unreasonable conduct by the employer, but does not have to be.
  • Must have some element of objective harm. Even if the employee thinks the action undermined trust and confidence, if the Tribunal finds it did not, it cannot be the last straw.

What does an employee’s resignation need to say / does a reason need to be given?

The employee has no obligation to say why they are resigning. It is often helpful to them if they do so, but not having stated the reason for resignation would not be fatal for them bringing the claim. This can be the case if the employee’s resignation is caused by sensitive issues to them wish they do not wish to discuss.

After a breach, how long does the employee have to resign?

An employee has a reasonable time to resign, they do not need to do so immediately, but if they wait too long, this may be fatal to their constructive dismissal claim.

There is no precise answer as to how long the delay needs to be to defeat a claim. It is completely dependent on the facts. Some things that will be taken into account in deciding whether the breach has been waived and the contract affirmed are:

  • Has the employee continued to protest at the breach before resigning?
  • Have they acted in a way consistent with having accepted the breach?
  • How serious was the breach?

If an employee waives or ignores the breach by the employer, this means they affirm the contract, in other words they show that they intend to continue in employment despite the breach. This is completely fatal to a constructive dismissal claim.

How do employers avoid unwittingly dismissing their staff?

It is no doubt easier to avoid committing an express breach of contract. Employers should be conscious of what is contained in the employee’s contract of employment and avoid taking actions which would breach those terms. This includes both terms that are written down in the original physical contract, but also those that have become an implied contractual right as discussed above. If in doubt as to whether your actions may be a breach of contract, seek our advice.

In relation to the implied duty of mutual trust and confidence, to ensure you are discharging this duty employers should always treat employees with respect and patience. For example, even if a complaint appears to have no merit whatsoever, the employer should at least initially treat the complaint completely seriously and handle in accordance with the organisation’s policies and procedure and the Acas guidance.

If an employee brings a grievance after leaving, do we still need to deal with it?

It is quite common for employees to resign and subsequently bring a grievance, perhaps after having realised that they should have done this before resigning to comply with the Acas code relating to grievances.

There is no definitive legal rule or guidance which dictates that employers need to follow their grievance procedure in relation to grievances raised post-termination of employment. However, there are risks with not doing so. There is authority here which has found that an employee’s compensation should be uplifted because the employer did not deal with a grievance raised post-termination in accordance with the Acas guidance.

There are also strong practical reasons why an employer would deal with the post-termination grievance. For example, speaking with the employee at this stage could be an opportunity to resolve concerns and avoid subsequent legal action. This may in turn protect the employer’s reputation by ensuring that an employee leaves satisfied that their concerns have been heard. If an employer is not interested in avoiding legal action, valuable insight could be gained into the employee’s potential legal arguments / evidence, allowing the employer to get its “ducks in a row” before a claim is issued.

Deciding whether to hear a post-termination grievance will be a balancing exercise as to the likelihood of a potential claim and the burden on the employer’s resources of hearing the post-termination grievance. If the employer decides to hear the post-termination grievance it should seek legal advice and be careful with its response since this response will form a crucial part of any subsequent Employment Tribunal proceedings.

For further information on constructive dismissal, please contact our Employment team on 01392 210700 or email enquiries@stephens-scown.co.uk.