Constructive Dismissal

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Constructive Dismissal

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In this article we look at debunking some common constructive dismissal myths.

How many times has an employer said – “I’m worried that they might resign and claim constructive dismissal?”

Similarly, how many employees have bragged – “they can’t do that – I’ll take them for constructive dismissal”

I’ve lost count so let’s shatter some myths about constructive dismissal.

What is constructive dismissal?

Constructive dismissal occurs where an employee is forced to leave their job against their will because of the employer’s actions. More specifically, constructive dismissal is proved by the employee showing that their decision to resign was a direct response to either a fundamental breach of an express term of the contract or a breach of the implied terms of mutual trust and confidence.

Extreme examples of constructive dismissal would be a decision by the employer to unilaterally reduce an employee’s salary without any discussion or consultation and the reduction is immediate. Or, a contractual benefit is withdrawn with no notice – for instance a Company car.

Is it difficult to prove?

Yes – it can be and the decision to resign and claim constructive dismissal is high risk for an employee. It is not an easy case to prove unless the employer’s actions have been quite extreme and without discussion.

What actions might constitute constructive dismissal?

  • A significant and immediate reduction in salary or hourly rate with hardly any consultation, notice or discussion
  • Taking away a contractual benefit – such as a Company car with no discussion about replacing the car with a cash alternative
  • Demotion – immediate, unjustified demotion without explanation and salary reduction.

Or, an employee may have raised a grievance or complaint about race/sex discrimination, sexual harassment or perhaps bullying and the employer disregards the allegations, sweeps them under the carpet or fails to investigate them and the employee believes that their only option is to resign because the situation is untenable and intolerable.

Is there a connection between claiming constructive dismissal and working your notice?

Yes – in an indirect way – the concept behind claiming constructive dismissal is that the employer has committed a fundamental breach of contract which makes it almost impossible or untenable for the employee to stay in the business. So, if an employee resigns and then proceeds to work out a period of notice, especially if it is a long notice period, it is reasonable to say that by staying in the business, they have weakened their argument for constructive dismissal.

So, timing is quite important with claiming constructive dismissal – arguably, it’s about immediacy. The employee may have a greater chance of success if they resign immediately at the point at which they believe the employer has committed the breach of contract – however, from an employee’s perspective, this is also very high risk.

Similarly, an employee who tries to claim constructive dismissal merely because the employer wants to initiate a discussion with an employee about changes to their terms and conditions  is unlikely to be successful but if the employer changes the terms and conditions without discussion, consultation or notice, the employee is likely to have a stronger case.

“I’ve been demoted – that’s constructive dismissal”

Not necessarily – it is quite feasible for an employee to be removed of some responsibility – such as managing a team – but this does not necessarily mean that the employee has been demoted. The word demotion is a matter of interpretation – an employee may have responsibility removed but their salary and terms and conditions remain unchanged.

Similarly, people who resign and try to claim constructive dismissal because they perceive they have a less important job title will have a greater chance of success if they can show that they have been adversely financially impacted by the change. The perception of a less important job title may affect their ego and status but that won’t guarantee success in a claim.

What are the critical factors in successfully claiming constructive dismissal?

So, if an employee is to have a chance of success in a Tribunal with a constructive dismissal claim, the employee will need 2 years service (except in a discrimination case) and will need to

  • show the employer has breached the contract and that the breach is so serious that it is fundamental
  • demonstrate that the breach forced the employee to resign and the employee should not delay in resigning.

Finally the employee will have to convince a Tribunal that the employer acted unreasonably and that the employee was justified in their action.

In summary, it is so easy for an employee to brag that they will leave and claim constructive dismissal but this is not without considerable risk. Similarly, it is easy for an employer to be concerned and worried about the risk of an employee resigning and claiming constructive dismissal.

However, constructive dismissal remains a very difficult case to prove, can be costly, high risk and the chances of success are not high.

 

Adrian Berwick provides HR support to businesses and if you want help dealing with a difficult issue, contact Adrian on 07885 714771 or adrian@abhrsolutions.co.uk

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