Constructive dismissal

What is constructive dismissal?

Constructive dismissal occurs when an employee resigns due to conduct by their employer, which amounts to a repudiatory breach of their employment contract (in contrast to express dismissal, where the employer terminates the contract of the employee).

The term “constructive dismissal” is not a phrase that is used in statute. It is the common term used for a repudiatory breach of contract by the employer, which the employee accepts, bringing the contract to an end.

What is a repudiatory breach?

There is no single test to help decide whether a repudiatory breach has happened. However, a key test is to consider whether the breach goes to the root of the contract or shows that the employer no longer wishes to be bound by the contract. Unless the breach falls into one of those two categories, it will be unlikely to satisfy the definition of repudiatory breach needed for a constructive dismissal claim to arise.

The ‘Last Straw Doctrine’ has been developed by the courts to describe a situation where an employee resigns after a series of events or a course of conduct. The events, taken together, must amount to a breach of the implied term of trust and confidence. The use of the term ‘last straw’ conveys that taken on their own, the issues are unlikely to be sufficient to be classed as a repudiatory breach, but collectively, may amount to a breach of the implied term.

Employee’s response

To establish constructive dismissal, an employee must be able to show that they resigned in response to the relevant breach, in the majority of cases.

Whilst the breach need not be the only reason for resignation, the resignation must be in response to the breach of contract. Recent case law has established that it need not even be the effective, or principal cause of the resignation, but it must be a factor.

A prolonged period of ‘affirmation’, or doing nothing in response to the breach, on the part of the employee may mean they cannot claim constructive dismissal, since they are taken to have accepted the breach through their lack of action.

Possible consequences

Provided that an employee can prove that they have been the subject of a repudiatory breach of a term of their contract by the employer, i.e. they have been constructively dismissed, they will be able to make a claim for breach of contract/wrongful dismissal.

Additionally, should they have the requisite service of 2 years, the employee would be able to make a claim for unfair dismissal. In this scenario, the Tribunal would have to consider whether the constructive dismissal was fair or unfair. In practice, it is difficult for employers to show that a fundamental breach of contract on the part of the employer was fair or reasonable.