Constructive Dismissal: What employees need to know
What is constructive dismissal?
Constructive dismissal occurs when an employee is forced to resign due to their employer's conduct. The conduct will amount to a breach of the contractual terms of their employment contract.
Examples of conduct
Examples of conduct that may give rise to constructive dismissal include refusing to pay wages, demotion, or a significant change in the job description. For instance, if an employer demotes an employee to a lower position or makes significant changes to their duties without the employee’s agreement, this could be a fundamental breach of contract.
The breach can be a single serious incident or a series of incidents that amount to a breach of the employment contract.
The key element of constructive dismissal is that the employer's conduct breaches an essential term of the employment contract and that breach gives the employee no other alternative but to resign.
Reason and timing of the resignation
To establish constructive dismissal, the employee must show that the conduct was a fundamental breach of the employment contract and that they resigned because of the employer's conduct.
Additionally, the employee must act quickly and not continue working for an unreasonable period after the employer's conduct occurred. If the employee does not act quickly, they may be considered to have accepted the breach.
If the employee is forced to resign due to their employer’s conduct, the employee should make it explicitly clear that the reason they are resigning is because of the employer’s conduct.
Raising a grievance
It may seem somewhat confusing that an employee should act without delay and yet it is then recommended that the employee raises a grievance.
Although raising a grievance is not compulsory, by doing so the employee is giving the employer an opportunity to address the complaint and respond. Of course, this is circumstantial since, in some situations, it may be considered highly unreasonable for an employee to submit a grievance.
Constructive Dismissal and Settlement Agreements
In circumstances where the employee is certain of a complaint for constructive dismissal and deems that the relationship has broken down irretrievably, the employee could request a protected conversation with the employer.
This is usually recommended after the employee has submitted a grievance as it places the employee in a better bargaining position.
If the employee wishes to terminate the contract of employment, by requesting a protected conversation off the back of submitting a grievance, the employee could agree to terminate the contract of employment under the terms of a settlement agreement.
If the employee can prove constructive dismissal, they may be entitled to claim compensation for any financial losses they have suffered as a result of the employer's conduct. The claim may include loss of earnings.
It is also worth noting that the employment tribunal can reduce awards by up to 25% where either the employer or employee fails to comply with the ACAS Code of Practice including a failure to raise or respond to a grievance.
It is important to note that constructive dismissal cases can be challenging to prove, and the burden of proof is on the employee. Therefore, before resigning, the employee should try to resolve the situation through their employer's grievance procedure or seek legal advice.
In conclusion, constructive dismissal occurs when an employer's conduct is so serious that it breaches a key term of the employment contract, forcing the employee to resign.
Employees who believe they have been constructively dismissed should act quickly by raising a grievance and seeking legal advice.
How we can help
At Winston Solicitors our employment department can provide advice and guidance with potential claims for constructive dismissal. Contact us today.