What Is Constructive Dismissal and Do I Have a Claim?
Constructive dismissal occurs when an employee resigns in response to a serious breach of their employment contract by the employer. Despite resigning, the employee may be able to claim unfair dismissal.
Quick Answer
Constructive dismissal occurs where your employer's conduct fundamentally and seriously breaches your employment contract, leaving you with no choice but to resign. You can then bring an unfair dismissal claim as if you had been dismissed. You must have at least two years' continuous service, resign promptly after the breach, and not have 'affirmed' the contract by continuing to work for an extended period.
Full Explanation
Constructive dismissal is a specific form of unfair dismissal claim where the employee has resigned but argues that the resignation was caused by the employer's serious breach of contract. The legal framework comes from Employment Rights Act 1996 section 95(1)(c): an employee is treated as dismissed if they terminate their contract 'in circumstances in which they are entitled to terminate it without notice by reason of the employer's conduct'.
The fundamental test was established in Western Excavating (ECC) Ltd v Sharp [1978]: the employer must have committed a significant or fundamental breach of the employment contract โ either an actual term or the implied duty of mutual trust and confidence. The breach must be sufficiently serious to justify the employee treating the contract as ended. Examples include: unilaterally reducing pay; failing to deal with bullying or harassment; imposing unjustified disciplinary action; fundamentally changing job duties without agreement; or creating an intolerable working environment.
Three requirements must be met for a constructive dismissal claim to succeed: (1) the employer committed a fundamental breach of contract; (2) the employee resigned in response to that breach (not for some other reason); and (3) the employee did not affirm the contract โ i.e., they did not continue to work for so long after the breach that they are taken to have accepted it. The resignation must be reasonably prompt, though what counts as 'prompt' depends on the circumstances.
Even if constructive dismissal is established, the tribunal still considers whether the dismissal was 'unfair' โ in practice this is usually straightforward once the fundamental breach is proved, but it is a two-stage test. Compensation follows the same rules as ordinary unfair dismissal (basic award + compensatory award).
Constructive dismissal claims are notoriously difficult to win โ tribunals apply the tests strictly and claimants often fail because they cannot show a fundamental breach or because they waited too long to resign. Always take legal advice before resigning.
Legal Basis
- ยงEmployment Rights Act 1996, section 95(1)(c)
- ยงWestern Excavating (ECC) Ltd v Sharp [1978] ICR 221 (fundamental breach test)
- ยงMalik v BCCI SA [1997] UKHL 23 (implied duty of mutual trust and confidence)
What To Do
Do Not Resign Impulsively โ Take Legal Advice First
Before resigning, speak to an employment solicitor, your trade union rep, or ACAS. Constructive dismissal claims are difficult and the decision to resign is irreversible. Ensure you can identify a clear fundamental breach of contract before resigning.
Raise a Formal Grievance
Raising a grievance before resigning is strongly recommended. It creates a paper trail showing that you raised the issue and gave the employer an opportunity to remedy it. Failure to raise a grievance may reduce any tribunal award by up to 25% under the ACAS Code.
Resign in Writing Citing the Breach
When you resign, do so in writing and clearly state that you are resigning in response to a fundamental breach of contract โ naming the specific conduct. Do not give a vague resignation letter; the reason for resignation is critical evidence in any subsequent tribunal claim.
Notify ACAS for Early Conciliation
Contact ACAS immediately after resigning to start Early Conciliation. The three-month limitation period starts from your last day of employment.
Issue a Tribunal Claim
File Form ET1 setting out clearly: the nature of the employer's breach, the date of the breach, that you resigned promptly in response, and the financial losses you have suffered.
Important Deadlines
Important Warnings
Do not continue working for months after the breach and then claim constructive dismissal โ long delays are fatal to the claim as they are taken as affirmation of the contract.
The two-year qualifying period applies to constructive dismissal as it does to ordinary unfair dismissal (except for automatically unfair reasons).
If you resign without having another job lined up, your duty to mitigate means you must take reasonable steps to find new employment โ failure to do so will reduce compensation.
Frequently asked questions
- What is constructive dismissal and how is it different from ordinary dismissal?
- Constructive dismissal happens when you resign because your employer seriously breached your contract, leaving you no choice but to leave. If successful, you can claim unfair dismissal as if you had been fired. To qualify, you generally need at least two years' continuous service, must resign promptly after the breach, and must not have continued working for so long that you are seen to have accepted the breach.
- Can I claim unfair dismissal if I resigned instead of being fired?
- Yes, you can bring an unfair dismissal claim if you resigned due to a fundamental breach of contract. The legal basis is that you are treated as dismissed if you terminate your contract because of the employer's conduct. However, the claim is difficult to win; you must prove the breach was serious enough to justify ending the contract and that you resigned in direct response to it, not for other reasons.
- How long do I have to wait before resigning to keep my claim valid?
- You must resign reasonably promptly after the breach. If you continue working for an extended period, the law may treat this as 'affirming' the contract, meaning you accepted the breach. This can be fatal to your claim. What counts as 'prompt' depends on the specific circumstances, but long delays significantly reduce your chances of success. It is advisable to seek legal advice before resigning to ensure your timing is defensible.
- What are the time limits for making a constructive dismissal claim?
- You should notify ACAS immediately after resigning to start Early Conciliation. The limitation period for filing an employment tribunal claim is three months less one day from your last day of employment. You must file Form ET1 within this window. Additionally, failing to raise a formal grievance before resigning may reduce any tribunal award by up to 25% under the ACAS Code.
- Do I need to raise a grievance before I resign?
- Yes, you should raise a formal grievance before resigning. This creates a paper trail showing you gave your employer a chance to fix the problem. Failing to do so can reduce your potential compensation by up to 25%. When you do resign, do so in writing and explicitly state that you are leaving due to a fundamental breach of contract, naming the specific conduct. Vague resignation letters can weaken your claim.