Constructive dismissal: Everything you need to know

If an employer makes a job untenable for an employee, they're effectively forcing that person to resign against their will. This is known as ‘constructive dismissal’. The employer might simply stop paying the employee, cut their support, or even bully them.

By doing these things, the employer effectively ‘forces out’ the employee in a serious enough way that the employee can take them to court. It’s a roundly difficult position to put someone in – but luckily, people affected can take legal action and get compensation. 

Even if you work for the best people ever. Even if you run the best company in the world, you should get your head around constructive dismissal, how it comes about, and what happens next. 

Here’s what you need to know. 

What is constructive dismissal? 

The last time you used the word ‘constructive’ at work was probably when you gave, or received, ‘constructive criticism’. However, the ‘constructive’ in constructive dismissal has nothing to do with the ‘constructive’ in constructive criticism.

In this case, we’re talking about the word as a specifically legal term. ‘Constructive’ when used as legal jargon mean that something isn’t stated explicitly.

In the case of constructive dismissal, the dismissal doesn’t actually happen. Instead, an employer makes a work environment so bad that an employee sees no other choice but to resign. The employer hasn’t said the words, but they’ve as good as dismissed an employee.

It’s an awful thing to happen – but that’s why it’s good that it has a legal definition. Constructive dismissal exists as a legal concept to prevent companies from forcing individuals out of jobs.

The official definition of constructive dismissal

The Employment Rights Act 1996 has this definition for constructive dismissal: “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.”

The important thing to note here is that though the employee is the one to terminate the contract, it’s the employer’s conduct that created the need to leave, and the employee is not in the wrong. 

What are other types of dismissal?

You might have heard of constructive dismissal before. It’s perhaps more likely you have heard of unfair dismissal, which happens more often. Then again, what about wrongful dismissal? They all sound vaguely similar (and not much fun) but they’re all different terms, and it helps to know them all. 

1. Wrongful dismissal

Wrongful dismissal is dismissal that is in breach of your contract. For example, it may state in your contract that you need a month’s notice to be dismissed. If you’re asked to leave without the proper notice period, this is wrongful dismissal.

2. Unfair dismissal

Unfair dismissal is dismissal that breaches certain statutory rights. These are things that aren’t necessarily written into your contract. You won’t have it in your contract that you can’t be dismissed for, e.g. applying for parental leave, but the government have protected your right to keep your job even if you announce a pregnancy. 

3. Constructive dismissal

In constructive dismissal, the employee terminates the contract, not the employer. Although it is different again from the examples above, unfair dismissal has some overlap with constructive dismissal. You may see news articles where employees have sued for ‘constructive unfair dismissal’.

What can be classed as constructive dismissal?

Constructive dismissal cases are often difficult to understand, as they can have long backstories, and often require a working knowledge of the industry, or workplace, involved.

If an employee is constructively dismissed, it means that they have found it impossible to perform their job in their workplace. 

It’s a serious matter.

An employee might consider the following grounds for constructive dismissal:

• They haven’t been paid.
• They have been severally demoted, or had their pay cut.
• They are being bullied or victimised by their employer or colleagues.
• They are forced to work in an unsafe environment.
• In some way the trust and confidence of the employee in their workplace had been eroded.

This last one is key: every contract between an employer and employee is built on mutual trust and confidence. If this confidence can be proven to have been eroded in some way by the employer’s actions: (by ignoring complaints, criticising the employee in front of their subordinates, or by harassment or swearing), then there might be a case for constructive dismissal. 

Grounds for constructive dismissal

Though they seem long, contracts can never cover everything. There can be an ‘implied breach’ of contract, if, say, an employer discriminates against a worker, or asks a worker to do their job in unsafe conditions. Though discrimination or unsafe work probably aren’t in the contract, in both these cases, there is an implied breach of contract involved. The employee finds themselves in an untenable position at work, and can still make a case for constructive dismissal.

Constructive dismissal can be the result of a single incident, or a series of incidents that lead up to a ‘last straw’: both are valid. 

It’s important to note that constructive dismissal doesn’t occur very often. It’s a really serious matter; not just an instance of an employer behaving unreasonably. For a case of constructive dismissal to hold up in a tribunal, there has to have been a proven breach of contract. 

How does constructive dismissal happen? 

• Ideally, the employee and employer should talk whenever there’s a serious issue, and try and fix problems before resorting to constructive dismissal. Employees can also lodge a grievance against their employer in an attempt to address big problems. However, unfortunately some things can’t be resolved.
• If there’s a case for constructive dismissal, the employee need to resign promptly from the role, and can leave immediately without notice. However, they can stay on ‘under protest’ if they need to look for another job. 
• If the employee chooses to stay in the role, the employer might have grounds to use this against them. For example, the company could say that, by staying in the role, the employee implicitly accepted their treatment. For this reason, the government advises that employees who want to make a case for constructive dismissal leave their role promptly.
• Constructive dismissal has a qualifying period: an employee has to have been working for at least one year 11 months and three weeks at the company to have a case. There are a few exceptions to this, but in most cases, two years’ service is needed.
• The employee must claim constructive dismissal at the time of departure. If they don’t, their case may not hold up against a tribunal. For this reason, many sites suggest seeking legal advice before leaving the company. Employees can consult the Citizens Advice Bureau, or a trade union, if they are a member of one.
• The employee has to bring their case to an employment tribunal within three months of leaving their place of work, or within three months of their last pay check.  

How can you prove constructive dismissal?

The Citizens Advice Bureau can offer help on claiming constructive dismissal. It’s up to the employee to prove their case. This is different from unfair dismissal, where it’s up to the employer to disprove the charges brought against them.

A case needs to be built to be brought to an employee tribunal. A lawyer, union or a local Citizens Advice can help. To prepare the case, the following pieces of evidence may be called upon:

• Record of incidents – The dates, times and places of incidents that lead up to the dismissal.
• Witness statements – Colleagues can provide evidence to support the case.
• Supporting documents – official records, like paychecks, can prove missing payments, or instances where the employee has been underpaid.

Constructive dismissal compensation: What happens next?

Just like for unfair dismissal, employees can claim for loss of wages and future wages, including loss of benefits like medical insurance. They can also claim for loss of pension and loss of statutory rights. 

Avoiding constructive dismissal

It goes without saying, really, that employers should avoid constructive dismissal at all costs. This means: treating all employees fairly, thinking twice before changing work expectations without a contract, and keeping abreast of statutory rights. A working contract is invaluable for any employment, and keeping up to date with employee rights is crucial. 

… All things considered, we much prefer constructive criticism to constructive dismissal.