Constructive Dismissal vs Actual Dismissal

The legal difference between actual dismissal (employer terminates) and constructive dismissal (employee resigns due to employer's repudiatory breach) under the Employment Rights Act 1996.

Overview

Dismissal under the Employment Rights Act 1996 encompasses both the straightforward case where an employer terminates the contract (actual dismissal) and the less obvious case where an employee resigns in response to a fundamental breach of contract by the employer (constructive dismissal). Both forms of dismissal can ground an unfair dismissal claim — but constructive dismissal carries an additional evidential burden: the employee must show the employer committed a repudiatory (fundamental) breach and that they resigned in response to it, without affirming the breach by delay. The distinction matters because the procedural and evidential requirements differ, and employees who resign without meeting the constructive dismissal threshold risk being treated as having voluntarily left employment — losing both their unfair dismissal claim and any contractual entitlements.

Side-by-Side Comparison

Actual Dismissal (ERA 1996 s.95(1)(a))

Time: ET claim: 3 months less 1 day from EDT (subject to ACAS Early Conciliation)

Pros

Clear termination event — the date of dismissal (Effective Date of Termination, EDT) is straightforward to establish
No need for the employee to prove a repudiatory breach — the act of termination is the dismissal
Statutory minimum notice under ERA 1996 s.86 applies unless gross misconduct justifies summary dismissal
Time limit for ET claim runs clearly from the EDT

Cons

Employer bears the burden of showing a potentially fair reason (ERA 1996 s.98(1)–(2))
Employer must follow a fair procedure — failure is automatically unfair or increases compensation
Wrongful dismissal (common law) claim available regardless of qualifying service

Best For

The straightforward case where an employer has communicated termination of the contract — the most common type of dismissal in practice.

Constructive Dismissal (ERA 1996 s.95(1)(c))

Time: ET claim: 3 months less 1 day from the date of resignation (subject to ACAS Early Conciliation)

Pros

Protects employees from employers who deliberately make their position untenable to force a resignation
Entitles employee to claim unfair dismissal (after 2 years) and wrongful dismissal (from day one) despite having resigned
Mutual trust and confidence implied term (Malik v BCCI [1997]) often relied upon — covers a wide range of employer misconduct
Allows the employee to claim notice pay (wrongful dismissal) and unfair dismissal compensation

Cons

High evidential burden — employee must prove: (i) repudiatory breach; (ii) they resigned in response to it; (iii) they did not affirm the breach by delay
Risk that tribunal finds the employer's conduct was not repudiatory — claim fails entirely
No guaranteed right to resign and claim immediately — employee should seek legal advice before resigning
Delay in resigning may be construed as affirmation of the breach, extinguishing the right to claim

Best For

Employees who have experienced sustained bullying, significant changes to terms without consent, failure to investigate grievances, or other serious employer misconduct that makes the employment relationship untenable.

Key Differences

AspectActual Dismissal (ERA 1996 s.95(1)(a))Constructive Dismissal (ERA 1996 s.95(1)(c))

Who terminatesEmployer terminates (ERA 1996 s.95(1)(a))Employee resigns (ERA 1996 s.95(1)(c))

Burden of proofEmployer proves fair reason; employee proves dismissal was unfairEmployee proves repudiatory breach and causal resignation

EDTDate notice expires or date of summary dismissalDate of employee's resignation

Affirmation riskNot applicable — employer acts firstDelay or continuation of employment may affirm the breach and extinguish the claim

Notice payEmployer must pay statutory or contractual notice unless gross misconduct justifies summary dismissalEmployee may resign without notice if breach is sufficiently serious (wrongful dismissal damages recoverable)

Success rateHigher — dismissal is established; dispute is about fairnessLower — employee must clear the additional repudiatory breach threshold

Our Recommendation

If you are an employee considering resignation due to employer conduct, do not resign before taking employment law advice — the constructive dismissal threshold is high and a failed claim leaves you without a remedy. If you are an employer, ensure that disciplinary, grievance, and workplace change processes are conducted fairly and in accordance with the ACAS Code to avoid inadvertently creating the conditions for a constructive dismissal claim.

Official Resources

ERA 1996 s.95 — Circumstances in Which an Employee is Dismissed →ACAS: Constructive dismissal →GOV.UK: Being dismissed →