Constructive Dismissal: Legal Advice for Employers

A constructive dismissal occurs when an employee resigns in response to their employer’s fundamental breach of contract, such as unfair treatment, sudden changes to their role, or an unsafe working environment. Although the resignation is voluntary, it is treated in law as a dismissal caused by the employer’s conduct.

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Constructive dismissal claims can be disruptive, costly, and damaging to an employer’s reputation. At Franklins Solicitors, we help businesses understand their responsibilities, reduce legal risk, and respond decisively when a claim is made.

What is Constructive Dismissal?

Constructive dismissal is not defined by a specific act, but rather by the overall conduct of the employer. It arises when:

  1. The employer commits a fundamental breach of the employment contract (express or implied terms);
  2. The employee resigns in response to that breach;
  3. The resignation is prompt, without significant delay.

Constructive dismissal is governed by Section 95(1)(c) of the Employment Rights Act 1996, which defines dismissal to include a situation where an employee “terminates the contract under which he is employed in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct.”

Examples of Employer Conduct That May Trigger a Claim

While each case turns on its facts, common allegations that form the basis of constructive dismissal claims include:

  • Unlawful demotion or change in duties
  • Sudden and unjustified pay cuts
  • Failure to investigate grievances
  • Bullying or harassment by managers or colleagues
  • Unsafe or toxic working conditions
  • Unreasonable disciplinary action
  • Ignoring flexible working agreements
  • Unlawful deductions from wages
  • Forcing a return to the office without proper consultation

Importantly, the breach may relate to express contract terms (such as job title, pay, or place of work) or to implied terms, such as the duty to maintain mutual trust and confidence.

What Must an Employee Prove in a Constructive Dismissal Claim?

To succeed in a tribunal, the employee must demonstrate that:

  1. A fundamental breach occurred – The employer’s actions or omissions were serious enough to destroy the employment relationship.
  2. They resigned because of that breach – The breach must be the principal reason for the resignation.
  3. They did not delay in resigning – Continuing to work for an extended period after the breach may indicate acceptance of the conduct.

Employees must also have at least two years’ continuous service to bring a claim (with some exceptions, such as whistleblowing or discrimination cases).

Risks to Employers

If a tribunal finds in favour of the employee, the consequences may include:

  • Compensation awards for loss of earnings and benefits
  • Damage to your organisation’s reputation
  • Increased scrutiny of HR policies and internal procedures
  • Increased employee turnover or union activity

Tribunal outcomes can also be influenced by whether the employer followed the Acas Code of Practice on Disciplinary and Grievance Procedures. A failure to follow this guidance may result in an uplift of up to 25% in any compensation awarded.

How Employers Can Prevent Constructive Dismissal Claims

Prevention is always preferable to litigation. We support employers in minimising the risk of claims by helping to:

  • Maintain clear and legally compliant employment contracts
  • Train managers in appropriate conduct and fair treatment
  • Ensure internal grievances are handled fairly and promptly
  • Communicate changes to duties or terms with proper consultation
  • Keep clear records of decisions and employee interactions
  • Carry out investigations into workplace complaints
  • Promote a respectful and inclusive work environment

    How Franklins Solicitors Can Help

    If you suspect an employee may resign due to dissatisfaction, or if they already have, we provide prompt and pragmatic legal advice. Our services include:

    • Early legal intervention to de-escalate workplace disputes
    • Advice on internal processes, including grievance and disciplinary responses
    • Defence against tribunal claims for constructive dismissal
    • Assistance in resolving disputes via settlement agreements
    • Training and HR policy reviews to prevent future incidents

    We represent employers at every stage of the dispute resolution process, from internal communications to employment tribunals.

    Why Choose Franklins for Employment Law Advice?

    • Experienced in employer-side defence of constructive dismissal claims
    • Commercial, jargon-free advice with a focus on outcomes
    • Responsive support in time-sensitive situations
    • Comprehensive risk prevention strategies and documentation audits
    • Trusted by employers across the private and public sector

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    Frequently Asked Questions about Employment Law

    What is constructive dismissal in the context of UK employment law?

    Constructive dismissal occurs when an employee resigns because they believe their employer’s conduct has breached important terms of their employment contract, making it impossible for them to continue working. A constructive dismissal occurs where the employee resigns in response to conduct by the employer that amounts to a repudiatory breach of contract.

    What are some examples of constructive dismissal cases?

    Examples may include significant changes to an employee’s role without consent, bullying or harassment, withholding pay without reason, or forcing the employee to accept unreasonable changes to working conditions.

    How can an employee file a constructive dismissal claim?

    To establish constructive dismissal, an employee must be able to show that they resigned in response to the relevant breach. It’s advisable for them to seek legal advice before proceeding.

    What are the time limits for filing a constructive dismissal claim?

    Typically, the claim must be made within three months less one day of the date of resignation. However, it’s crucial to check specific time limits as they can vary depending on the case.

    What penalties can employers face if found guilty of constructive dismissal?

    Once a tribunal has held that an employee has been constructively dismissed, it will have to assess the loss for which the employer is responsible. The possible heads of loss in any claim are usually based on damages for breach of contract, compensation for unfair dismissal, discrimination and extend to injury to feelings.

    What are the risks associated with the tribunal process?

    Risks include financial costs, damage to reputation, and the potential impact on staff morale. It can also be a time-consuming process.

    Contact the Franklins Employment Law team

    If you have any questions about employment law, please don’t hesitate to contact our team of experts who are on hand and ready to help you.