A constructive dismissal occurs where the employer does not dismiss the employee, but the employee resigns and can show that they were entitled to do so by virtue of the employer’s conduct. That is to say, that the employer commits a fundamental breach of contract.

An employer who has committed a fundamental breach of contract cannot cure it by subsequent actions. There is case law, however, to suggest that if an employer attempts to rectify matters that this can amount to an invitation to the employee to affirm the contract, even though the employee has no obligation to do so.

An employee may also be justified in resigning if the employer indicates that he intends to commit a fundamental breach. This is sometimes described as threatened or anticipatory breach.

(1) For the purposes of this Part an employee is dismissed by his employer if (and, subject to subsection (2) … only if) −

(c) the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct.

— A Statutory Definition from Section 95(1)(c) of the Employment Rights Act 1996 (ERA 1996)

What Is Required For a Constructive Dismissal Claim?

There are three components required for a claim of constructive dismissal:

a.) Repudiatory breach on the part of the employer;

b.) The employee deciding to accept the breach and treat the contract as at an end. The employee must resign in response to the breach;

c.) The employee must not delay too long in accepting the breach.

It is Important to Reduce Delay 

Regarding delay, the following case law is of assistance:

 In W E Cox Toner v Crook, a delay of seven months fatally undermined a director’s constructive dismissal claim, even though, for much of the time he had “protested vigorously” about allegations by his fellow directors that he had acted irresponsibly and “in gross dereliction” of his duties as a director. In Quigley v University of St Andrews UKEATS/0025/05, the EAT held that the time it took to see a solicitor did not justify the employee’s delay in resigning. The EAT was unsympathetic to the employee’s argument that he needed legal advice before deciding whether to resign.

Does The Employee Receive Compensation? 

An employee who can prove he/she was constructively dismissed will be entitled to compensation for unfair dismissal as well as damages for breach of contract.

Under the ‘last straw’ doctrine, an employee can resign in response to a series of breaches of contract or a course of conduct by their employer which, taken cumulatively, amounts to a breach of the implied term of trust and confidence. In essence, this can mean that the final act or ‘last straw’ could be something quite trifling, but it is enough to ‘break the camel’s back’ as it were.

Follow Internal Procedures

It is significant that, if an employee is considering resignation, he/she should submit a formal grievance to the employer to ascertain whether the matter can be resolved internally to remove the need for resignation and Tribunal action. Should the employee fail to do this and then seek to progress to Tribunal, The Acas Code of Practice on Disciplinary and Grievance Procedures  gives tribunals a discretion to increase or reduce awards by up to 25% where the employer or employee unreasonably fail to comply with the Acas Code.

In practice, constructive dismissal cases tend to be more difficult to argue than if the employer has terminated the employee’s employment and the employee brings a claim for unfair dismissal. This is largely because the employee decides to make a bold decision to leave, which must be justified in the terms set out above. In addition, when the employee resigns, he/she of course waives any entitlement to wages.

Best advice is ordinarily for the employee to exhaust all internal procedures and grievance procedure – resignation should always be a last resort. This point is made all the more pressing given that as of July 2013 a Claimant now has Tribunal fees to pay in taking matters forward.

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