Understanding constructive unfair dismissal: a guide for employers. Constructive unfair dismissal occurs when an employee resigns because their employer has breached a fundamental term of their employment contract, making it untenable for them to continue working. Whilst claims for constructive unfair dismissal are less common than actual unfair dismissal claims, and generally regarded as being more difficult for employees to bring successfully, it is still important for employers to understand the circumstances which could result in such a claim. Amber Fraser, a Solicitor in our Employment team, outlines the criteria and recent case law surrounding this type of claim, providing valuable guidance on what constitutes a breach of contract that might lead an employee to resign. By understanding these nuances, employers can better navigate potential claims and foster a respectful, contractually sound workplace environment. What are the essential criteria for a constructive unfair dismissal claim? There are various elements required for an employee to bring a constructive unfair dismissal claim under the Employment Rights Act 1996. These include the following: The employee must meet the eligibility criteria to bring a claim for unfair dismissal i.e. they must have 2 years’ continuous service (this will change once the provisions of the Employment Act are introduced in approximately 2 years’ time with the right not to be unfairly dismissed set to become a day one right at that time). The claim must be bought within the requisite time limit – 3 months from the date of the dismissal. The employee must prove that: the employer breached an express or implied term of the contract AND that they resigned as a direct result of that breach. The employee must terminate or give notice to terminate their employment within a reasonable time of the breach or in the case of a series of actions within a reasonable time of the last in the series – often referred to as ‘last straw’ dismissals. Any significant delay could undermine the claim as they may be deemed to have waived or accepted the breach. The tribunal will consider whether the employer’s actions were unreasonable. How serious does the breach need to be? The breach should involve a fundamental term of the contract. Common examples of what could constitute a breach for the purposes of a constructive unfair dismissal claim, include: An employee being bullied/discriminated against and/or the employer failing to address this. An employee raising a grievance that is simply ignored or alternatively where the employer fails to properly or fairly engage with it. The employer seeks to unilaterally change or vary one or more terms of the contract where there is no lawful basis to do so. There is a failure to pay some or all of the base or variable pay due (e.g. bonus commission etc). Case – Ms N Hanson (NH) V Interaction Recruitment Specialists Ltd (2024) The recent employment tribunal case of Ms N Hanson -v- Interaction Recruitment Specialists Ltd (2024), highlighted the tribunal’s approach to what may be considered a breach of contract for such claims. In this case, NH had resigned as a result of the new business owner ignoring her on 3 occasions when she greeted him. The tribunal held that repeatedly refusing to greet a member of staff, was likely to lead to a breach of the implied term of trust and confidence and upheld her claim. The tribunal held that, whilst this was not a fundamental breach, it was likely to be capable of contributing to such a breach. In this case there were also other factors that contributed to her resignation, such as ignoring her explanation she had been at a medical appointment and excluding her from salary increases paid to colleagues engaged in similar work. This case demonstrates that even somewhat ‘trivial’ actions by an employer can amount to or be capable of, being a breach of contract, leaving them exposed to claims of constructive unfair dismissal. Understanding the concept of constructive unfair dismissal is essential for employers looking to minimise legal risks and maintain a respectful workplace. Even minor actions, if seen as a breach of trust or confidence, can expose employers to claims. By recognising the elements that contribute to constructive dismissal and being mindful of interactions and responses to grievances, employers can help foster a supportive work environment and reduce the likelihood of such claims. How can Morr & Co help? If you require further assistance and advice on constructive unfair dismissal or have any questions about this article, please call our Employment team on 01737 854500 or email info@morrlaw.com. Disclaimer Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position. Authored by Amber Fraser Solicitor Message Tags Insights Corporate Insights On this page Contact our team today Contact Us
