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))
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))
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
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.