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As an employer, you may have experience bringing your employee’s employment contracts to an end by dismissing them or making them redundant. However, there are times when you may not want your employees to leave your business. Rather, your employees may feel forced to bring their own employment contract to an end. This can be due to a fault on your behalf and is termed in employment law as constructive dismissal. You should be aware of what this means and the circumstances of when this can occur.
To help, this article will explain constructive dismissal and situations that might give rise to this. It will also explain when an employee may bring a claim for constructive unfair dismissal in an employment tribunal, and how to avoid a claim.
What Does Constructive Dismissal Mean?
Constructive dismissal is when your employee feels forced to end their employment contract with you. It can result from you breaking their employment contract or failing to take action when you should have. Your conduct might be referred to as a ‘repudiatory breach’ or a fundamental breach.
Ultimately, your employees consider themselves dismissed due to your actions or failure to act. Importantly, constructive dismissal is not a result of your unreasonable behaviour.
What Actions Might Result in Constructive Dismissal?
Your employee might claim constructive unfair dismissal from their employment for:
- a fundamental breach of contract;
- where they anticipate you may breach the contract;
- breaching their trust, which could result in damage to their future career; or
- several actions you have taken where the final is seen as the “last straw.”
Additionally, constructive dismissal could be a result of you:
- paying an employee the incorrect wage many times with no fair reason or refusing to pay them;
- suddenly denoting them without good reason;
- alleging that they have performed poorly with no substantial grounds for claiming this;
- making unreasonable changes to their work schedule or place of work that are not agreed with them; or
- failing to make reasonable adjustments where required due to an employee’s disability, amongst other scenarios.
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What is a Constructive Dismissal Claim?
If you carry out actions that are considered a severe breach of the employment contract, your employee may make a claim against you. They can do this where they:
- can prove you seriously breached their employment contract;
- show their resignation is in response to the severe breach;
- have worked for you as an employee for at least two years;
- have not delayed resigning after the situation occurred. A delay can be evidence that they accepted your breach; and
- make a claim within three months from the date their employment ended. This date might be the final day of the notice period or if they did not give notice, the actual day they resigned.
Notably, the requirement that an employee must have worked in your business for at least two years is open to exceptions. For example, a court may overlook this element if the claim relates to discrimination.
How to Avoid a Constructive Dismissal Claim
Naturally, the obvious way to avoid a claim is to ensure you behave in a way according to your employee’s employment contract. However, when faced with a potential claim, there are some things you may do to resolve the issue before it amounts to a claim. These are as follows:
- encourage your employees to raise their concerns informally with you;
- have clear grievance procedures in place for your staff;
- investigate grievances as they arise;
- suggest a settlement agreement with your employee. This is an agreement on how to settle the issue or end the employment; or
- ensure your employment contracts, policies, procedures and terms and conditions are up to date, fair and comply with the law.
Once your employee has claimed you have seriously breached their employment contract, you cannot repair this. It is up to them to decide whether your behaviour forces them to resign or not.
Key Takeaways
Constructive dismissal is where your employee feels forced to resign due to your conduct. Likewise, they consider your conduct to amount to a serious breach of their employment contract. This can give rise to a constructive dismissal claim with an employment tribunal. You should, therefore, be aware of what constitutes conduct that could result in this, such as demoting your employee without good reason, not paying them correctly or allowing others to bully or harass them. Apart from avoiding such actions, there are other ways to prevent constructive dismissals, such as implementing suitable procedures for raising issues and dealing with these promptly.
If you need help preventing or managing employment-related claims in England and Wales, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Constructive dismissal is where your employee is forced to resign due to your conduct. Your conduct must amount to a severe breach of their employment contract, and their resignation must clearly be in response to this.
An employee may be able to claim constructive dismissal where they have worked for you for at least two years and are legally considered an employee. Further, they must do so within three months of their employment ending.
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