Understanding Constructive Dismissal

Those in the manufacturing industries with employees need to have at least a basic knowledge and understanding of the many areas of employment law likely to touch upon their day to day activities and relationships with staff. Of the almost countless areas of employment law relevant to the day to day running of the business, constructive dismissal is often an allegation raised by disgruntled and departing employees. This article will provide a concise definition of constructive dismissal and what an employee must establish in order to succeed with such a claim.

In what circumstances could an employee allege constructive dismissal?

The Employment Rights Act 1996 states that an employee will be constructively dismissed if “the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct”.

An Employment Tribunal would need to consider the following:

• Was there a repudiatory (serious) breach of contract by the employer;
• Did the employee resign (with or without notice) in response to that breach;
• Did the employee delay before resigning: delay might be interpreted as the employee affirming the contract (waiving the breach), meaning they lose the right to claim constructive dismissal.

Serious breach of contract by an employer may involve a breach of an express term (for example unjustified demotion or reduction in pay), alternatively breach of what is known as an implied term of the contract, frequently the implied term of mutual trust and confidence. Activity that can be cited as evidence of the employer breaching this implied term could include: 

1. Bullying
2. Failing to support an employee or provide adequate resources for performance of the job
3. Victimising or targeting employees
4. Making false allegations relating to conduct, including serious allegations such as theft or violence (including conducting a sham disciplinary)
5. Harassing or humiliating employees
6. Generally pursuing a campaign intended to “manage out” the employee.

Breach of an express term of the contract (such as failure to pay) is usually relatively clear cut and easy to prove. Conduct which might establish breach of the implied term of mutual trust and confidence can be more difficult to identify; furthermore, not all such conduct, in isolation, will be sufficiently serious to constitute serious breach of contract. Frequently an employee will need to establish and rely upon a “course of conduct” which taken cumulatively amounts to a repudiatory breach. This could be several incidents of bullying or other conduct, with the last act of the employer being the “last straw” justifying a constructive dismissal claim.

Delay in responding to an employer’s breach of contract can defeat a constructive dismissal claim, as the employee may be deemed to have waived the breach and affirmed his/her employment contract. However, in a recent Court of Appeal case (Kaur v Leeds Teaching Hospitals NHS Trust) the Court decided that despite an employee apparently affirming his contract (by, for example, continuing to work), a subsequent act by the employer was capable of being viewed as continuation of a prior “course of conduct”; thereby reviving the employee’s right to terminate by relying upon the totality of the conduct to establish a serious breach and therefore constructive dismissal.

The law in relation to constructive dismissal can be complex and cases often extremely fact sensitive. Employers should therefore be alert to the concept of constructive dismissal and when it may be relevant in the case of individual employees. Seeking early advice is often key to reducing the likelihood of a constructive dismissal claim, or at least limiting exposure as regards any eventual settlement or Tribunal award.

Please contact David Dixey of Holmes & Hills LLP on 01376 320456 for employment law advice.