What is Constructive Dismissal?

We’re often asked by clients about the risk of an employee making a claim for constructive dismissal, and there seems to be some misunderstanding among managers and business leaders regarding what could give rise to such a claim.

Firstly, for an employee to make a claim for constructive unfair dismissal, they need at least two years of service (unless the claim involves one of the automatically unfair reasons, such as discrimination, whistleblowing, etc.).

Secondly, for an employee to claim constructive dismissal, they must resign in response to a “repudiatory breach of contract” by their employer. This means the employer’s actions must be so severe that they effectively destroy the ongoing contractual relationship. The breach can be a serious, one-off incident or a series of less serious events, with the final act being the “last straw” that justifies the employee’s resignation and grounds for a tribunal claim.

If an employee delays in resigning after the breach, this could be seen as them “affirming” or accepting the breach, which may undermine their constructive dismissal claim.

Interestingly, only 5% to 10% of constructive dismissal claims succeed at tribunals, highlighting the need for strong evidence that resignation was the only viable option.

Below are examples of what could be considered a repudiatory breach:

 ❌ Reducing an employee’s pay unilaterally

❌ Changing an employee’s contractual duties without consent

❌ Discrimination

❌ Not addressing a grievance

❌ Poorly handling disciplinary matters

❌ Giving an excessive workload to an employee, causing foreseeable damage to their health

❌ Creating an intolerable working environment

Employers should not let the fear of a constructive dismissal claim prevent them from managing employee performance and conduct. Provided they act reasonably and lawfully, addressing issues with staff is highly unlikely to result in a successful claim.