Constructive dismissal

What causes constructive dismissals?

There are several incidents which lead to a claim for constructive dismissal. And employees can suffer from one experience or a continuing pattern of them.

Common constructive dismissal examples include:

Workplace practices

• Making unreasonable changes to work conditions.
• Mismanaging misconduct grievances (like bullying, discrimination, and assault).
• Failing to provide a healthy and safe working environment.
• Setting an excessive workload or unreasonable deadlines.

Payment

• Failing to provide wages at all.
• Reducing payment for unfair reasons.
• Failing to pay wages outlined in an employment contract (for verbal and written agreements).

Employment status

• Demoting without fair reasons.
• Taking disciplinary action without justification.

What is a repudiatory breach?

A repudiatory breach is a legal violation that is so serious it can render a contract useless and gives the innocent party the chance to terminate.

When an employee wishes to claim constructive dismissal, it’s typically done through the courts. An employment tribunal will need to see whether their resignation was caused by a ‘repudiatory breach’.

This employment contract breach is so significant that odds are heavily in favour for the employee’s reasons for resignation. It’s often called ‘going to the root of the contract’ in legislative terms.

When an employee feels the need to resign, the employment tribunal will closely examine all aspects of the claim. To prove constructive dismissal, they’ll need to show:

• An outline of the event.
• All appropriate evidence (like dates, documents, and witness accounts).
• How the event caused a repudiatory breach.

The employer’s repudiatory breach can relate to an express or implied term in their employment contract.

But mostly, an employment tribunal claim will consider if it was a repudiatory breach or a less significant violation.

How to manage constructive dismissals in the workplace

Constructive dismissals are normally raised by an employee. Such a breach may have occurred because they couldn’t deal with their employer’s conduct. Or they have decided to take this step as a final ultimatum.

Whatever their reasons are, you need to be able to spot the signs. Let’s look at how to manage constructive dismissals at work.

Acknowledge their resignation letter

The preliminary step the employee takes is providing a resignation or ‘without prejudice’ letter. The employee’s resignation letter may be given to their line managers or their employer.

You need to acknowledge the letter and ensure it includes all relevant information. For example:

• Present the breach: They need to highlight the extent of the grievance. This might be one serious breach or several relating ones.
• Share the reasons: They need to state what their reasons, feelings, and reactions were which led to the decision of leaving their job role.
• Provide evidence: They need to outline evidence for their case, through things like witness accounts or documents.

Remember, this isn’t an ordinary resignation, with a clean and isolated exit. The point of their resignation is to demonstrate an alleged fundamental breach of contract. And if nothing is done, then serious, legal consequences will follow.

In most cases, the employee will continue working under protest. This is to enforce change or vocalise injustice.

When an employee has taken these measures, it’s normally done with thought. They may have already planned an exit strategy, sought legal advice, and understood their rights to sue.

Manage the case internally

As mentioned before, even one employer’s breach can lead to a whole case for constructive dismissal. If an employee has an issue, it’s advisable to manage the formal grievance raised internally.

You need to have an appropriate grievance procedure in place, which deals with all kinds of workplace issues. Even if you don’t believe the employee’s allegations, you need to process their grievance seriously.

These kinds of complaints shouldn’t be ignored, or else employees will end up feeling undervalued and disrespected. Neglecting them will most likely lead to resignations and constructive dismissal. And it’s these types of cases that can be detrimental for your business production and reputation.

Check requirement measures

Of course, it’s important to care for the wellbeing of your staff. Especially if they’ve suffered so much that they felt the need to resign.

But you also need to protect the welfare of your business too. So, check whether the employee has met the requirements needed to raise a constructive dismissal claim.

Employees need to raise their claim within three months minus one day from their last day of employment. This can be:

• On the last day of their notice period.
• On the day they resigned (if a notice period isn’t required).

If there has been one fundamental breach of contract, then it’s reasonable for the employee to seek recompense.

If there have been several smaller contractual breaches, the employee may categorise this pattern of events as misconduct and start a case. Here, the employee shouldn’t wait longer than two months before starting their case and negotiations.

How much compensation does an employer need to pay?

The amount of compensation the employer needs to pay depends on individual constructive dismissal cases.

They should refer to financial penalties outlined in their dismissal guide. Here, the employer can determine how compensation is calculated and when it is awarded to the employee.

During an employment tribunal, if an employee wins their claim, they could receive one of two constructive dismissal compensation. These are:

Basic awards

This amount is worked out based on the employee’s:

• Age.
• Weekly gross pay (which is capped at £571).
• Years of service (which is capped at £17,130).

Compensatory awards

This amount is worked out based on the employee’s:

• One year’s salary or £93,878 (whichever one is lower).

This award is usually significantly higher than the basic amount. And it normally includes the full number of lost wages the employee suffered from.

Can an employer resolve the constructive dismissal claim informally?

Normally, when someone raises a grievance claim, it needs to be resolved appropriately. Sometimes, an employer can do this through informal methods, like a conversation or meeting.

However, when a constructive dismissal claim is raised, they normally involve a serious breach or complaint. Therefore, they need to go through the correct procedure for dealing with complaints in the workplace.

These are not the kind of grievances any employer can resolve by lending a sympathetic ear or by saying sorry.

Get expert advice on managing constructive dismissal with Employers Direct

It’s very important to deal with constructive dismissal claims in the workplace. They’re not always preventable and can come when you least expect them.

But if you proactively protect the wellbeing of your employees, you can assure these claims are minimised in the long run.

Employers Direct can help you manage constructive dismissals when needed. We provide free legal advice and will help you decide the best course of action. Contact us at 0800 152 2287 or click here.

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