What is constructive dismissal?

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Constructive dismissal is a type of dismissal claim where your employer has breached your employment contract, and as a result, you feel you have no other option but to resign from your job.

Each situation is very different, but some common reasons for constructive dismissal include employers breaching contract terms relating to failure to pay wages, changing of working hours or holiday allowance.

What is constructive dismissal

Meanwhile, some people might feel the need to resign after suffering from discrimination, bullying or victimisation at work. In some cases, you may feel the need to resign if your work fails to adhere to safety protocol or is outside of good industrial practice.

We have rounded up everything you need to know about constructive dismissal and how to make a claim:

What is the difference between unfair dismissal and constructive dismissal?

Constructive dismissal is when you are forced to resign in response to your employer’s conduct. Although it’s referred to as a “dismissal” in law, it is in practical terms a resignation.

Meanwhile, unfair dismissal is when you have been sacked unlawfully. This is usually because either one of the 5 fair reasons for dismissal does not apply, or there has been a failure of process, or it is not reasonable for you to have been dismissed.

How do I claim constructive dismissal?

To make a constructive dismissal claim, there are various legal requirements you should consider:

You must have been continuously employed by your employer for two years at the point of resignation.
You must also be able to show that your employer has committed a fundamental breach of contract (often also referred to as a “repudiatory breach” of contract) and it is for this reason you have no option but to resign.
No delay in resignation following the fundamental breach that has been committed. Whilst there is no fixed timescale stipulated by the law for this, case law has evolved that this should really be no more than a week from the breach. If you wait too long then your employer may be able to argue that you have waived the right to claim constructive dismissal and that your delay means you have, legally speaking, accepted the breach and decided to continue with your employment nonetheless.

Resignation information

Before you resign and claim constructive dismissal, it is expected that you raise a grievance with your employer to give them a chance to resolve the matters at hand.

If you do not lodge a formal grievance before resigning, any damages awarded to you at the Employment Tribunal can be reduced by up to 25%, for failure to follow the ACAS code.

Resignation letter

If the grievance has not been resolved, employees are expected to make it clear to their employer why they have resigned.

Sadly, we have seen many cases for constructive dismissal where the claimant would have a potentially excellent claim, but has failed to make any reference to the alleged breach in their resignation letter.

Reasons for constructive dismissal

You might be able to claim constructive dismissal if you resigned because your employer:

Allowed people to bully or harass you at work
Made unreasonable changes to how you work, for example by forcing you to work longer hours
Demoted you
Refused to pay you
Didn’t make sure your working environment was safe
Took away benefits your contract says you get, like your company car
Didn’t give you the support you needed to do your job

Who can make a constructive dismissal claim?

you have ’employee’ employment status
you’ve worked for your employer for 2 years

How can I prove constructive dismissal?

To prove constructive dismissal, you need to do the following:

You need to identify contractual term and prove it exists

For example, you need to prove that the breach you are referring to is specified in your contract.

If the breach involves an express term (an express term is a specific provision in a contract that has been agreed by both parties), you will need to offer an example of the document containing the relevant term.

This may be written in an employment contract, bonus scheme, job description or handbook.

If you are relying on the implied term of trust, this is accepted to exist in every employment contract.

Prove your employer has fundamentally breached the contract

You will need to prove your employer has breached the contract. In some cases, it may be a ‘he said she said’ scenario. However, having concrete evidence can help with your claim.

Types of evidence

Communications – eg. E-mail, text messages, WhatsApp
Wage slips
Diary entries
Eye witness accounts
Rotas

You need to show you have responded to the breach within a reasonable period of time

For constructive dismissal claims, it needs to be proven that you resigned from your job after the breach, and not for any other reason. You should resign promptly following the breach to demonstrate you resigned for this reason.

How much can I claim for constructive dismissal?

The compensation sums below apply if there was a tribunal award. However, by seeking legal advice and using a solicitor, the majority of cases don’t go as far as tribunal proceedings.

Many constructive dismissal cases are capable of being settled, and a lump sum can be negotiated based on the figures below.

Compensation for constructive dismissal if awarded by an employment tribunal is made up of a basic award and a compensatory award.

Basic award

The basic award is a statutory award that involves multiplying the relevant factors of the length of continuous service (up to a maximum of 20 years), your age and a week’s pay (as at the effective date of termination) as follows:

One and a half week’s pay for each year of employment after age 41
One week’s pay for each year of employment between ages 22 and 40
Half a week’s pay for each year of employment under the age of 22

The weekly pay which will be used to work out the redundancy payment will usually be your normal weekly gross pay at the time you were dismissed up to the maximum limit which is £700 from 6th April 2024).

A week’s pay does not usually include overtime pay. The maximum basic award payment you can receive is £21,000.

A tribunal may reduce the basic award if it finds that your conduct before dismissal (or before notice of dismissal), was such that it would be just and equitable to reduce it- even if your conduct had not contributed to the dismissal.

Compensatory award

In addition to the basic award, in a tribunal, the often, larger compensatory award will then be considered.

The maximum amount that you can be awarded as compensation for constructive dismissal is presently the statutory cap of £115,115 or 52 weeks gross salary- whichever is the lower.

This is in addition to the basic award which can be ordered by the Tribunal of up to a maximum of £21,000.

How much will I be awarded?

The Employment Rights Act states that this will be “such amount as the Tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal insofar as that loss is attributable to action taken by the employer”.

What are the main heads of losses that be claimed under a compensatory award?

Loss of wages – Including benefits such as company car, and private health insurance. You can also include a claim for your loss of bonus or commission if you reasonably expected to receive this, even if such payments were discretionary
Loss of future wages
Loss of statutory rights (it takes 2 years before you have unfair dismissal protection, or you can qualify for a redundancy payment)
Loss of pension

Why should I use a solicitor for my constructive dismissal claim?

By using an experienced employment solicitor, we can assist with your claim and guide you through the legal jargon and process. If you are in a situation where you feel that resigning is your only option, having a specialist by your side can put your mind at ease.

In many cases, by using a solicitor, the claim will be settled before it goes to a tribunal, and we can fight for the compensation you deserve.