Constructive Dismissal Advice Guide for Employers

Constructive dismissal is a term in employment law. It describes when employees are forced to resign in the event that an employer has breached the contract and undermined the employment relationship.


James Rowland

Commercial Director James leads Account Management, Sales and Marketing at Neathouse Partners.


02 April 2019


16 July 2024
2 min read

Constructive Dismissal

Constructive dismissal describes when employees resign in response to a serious breach of contract by their employer which undermines the employment relationship. If the employee has sufficient length of service, they can then pursue a claim for unfair dismissal.

Claims for constructive dismissal are often hard to win. However, if the employee is successful and also claims unfair dismissal, they will normally be awarded compensation. The amount of compensation can be just as high as for a typical unfair dismissal situation where an employee has been dismissed by their employer.


Is constructive dismissal the same as unfair dismissal?

There is often confusion between the two terms, however, constructive dismissal is not the same as unfair dismissal.

Firstly, unlike an unfair dismissal, a constructive dismissal does not occur as a result of an employer dismissing an employee. Rather, the employee is resigning as a result of a serious breach of contract.

Sometimes, instead of relying on a single breach of contract, an employee may argue that the cumulative effect of several smaller breaches amounts to a serious breach, this is known as the “last straw” argument.


What leads to a constructive dismissal?

There is a variety of circumstances that might lead to filing a constructive dismissal claim against an employer. They include the following:

  • Demotion without reason;
  • Pay reduction without reason or consultation;
  • Unsubstantiated poor performance reviews;
  • Failing to deal properly with a grievance;
  • Unjustified disciplinary action;
  • Health and safety concerns;
  • Neglect of harassment and bullying in the workplace.

When a complaint is made, an employment tribunal investigates the listed breach of the employment contract. These claims have to both be serious and made soon after the inciting factor to justify the claim.


About the constructive dismissal process

In order to be eligible to file a claim on the grounds of constructive dismissal, the employee making a claim has to have been working for the employer for at least two years. There are exceptions to this, for example, if the employee has been treated badly for raising health and safety concerns.

The claim is overseen by an employment tribunal, who decides on the validity of the claim. If the claim is successful, compensation is paid by the employer.


Constructive dismissal compensation

The amount of compensation an employee can win can be affected in a variety of ways; many of them weighed and considered similarly as they would be in an unfair dismissal case.

The tribunal will look at the length of the employment relationship, the weekly pay of the employee, any loss of net earnings before, during, and after employment, overtime, bonuses, other earnings and so on.

All of these are likely to be calculated into the level of compensation. Constructive dismissal claims can be just as costly as a typical unfair dismissal case based on an employer’s dismissal of an employee.


Need advice with a constructive dismissal claim?

If an employee is making a case that unlawful behaviour has caused a breach in contract, forcing them to resign and to seek compensation, then having an expert on your side can help.

Get in touch with the employment law & HR experts at Neathouse Partners. Amongst all our services, we provide employment law advice for all industries and business sizes.

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