Constructive Dismissal

Constructive dismissal is a legal concept found in section 95(1)(c) of the Employment Rights Act 1996. It occurs when an employee resigns in circumstances where the employer has committed a fundamental breach of the employment contract — typically a breach of the implied term of mutual trust and confidence — and the employee resigns in response to that breach.

The employee is treated in law as having been dismissed, even though they technically resigned. They can then bring a claim for unfair dismissal in the Employment Tribunal, provided they have at least two years of continuous employment.

The concept has three key elements:

1. A fundamental breach of contract by the employer — not merely unreasonable behaviour but a serious breach going to the root of the contract
2. The employee accepts the breach by resigning — the resignation must be caused by the breach
3. The employee does not affirm the breach — they must resign promptly rather than continuing to work for a prolonged period after the breach

A wide range of employer conduct has been found to amount to a fundamental breach, including:

• Unilateral changes to fundamental contract terms — reducing pay, changing hours, or changing location without agreement
• Sustained workplace bullying or harassment by managers or colleagues that the employer fails to address
• False accusations of misconduct made in bad faith
• Failure to follow a proper procedure during a disciplinary process in a way that undermines trust and confidence
• Deliberately failing to provide a safe working environment
• Undermining an employee's authority without good reason
• Victimising an employee for raising a grievance

Not every unreasonable act by an employer amounts to a fundamental breach. Isolated incidents or minor breaches are unlikely to support a constructive dismissal claim. However, a series of incidents — even if individually minor — may collectively amount to a "last straw" that justifies resignation.

Constructive dismissal claims are high-risk because:

• You lose your job and income immediately on resignation
• The Tribunal must find both a fundamental breach and that you resigned in response to it — this is often difficult to prove
• Even if constructive dismissal is found, the Tribunal will also assess whether the dismissal was unfair — the employer may have had a legitimate reason for their conduct
• You must notify Acas and go through Early Conciliation before bringing a claim, and you have only three months less one day from the date of resignation to start the process

Before resigning, you should: exhaust internal grievance procedures (this strengthens your case and is important evidence); document all relevant incidents with dates and details; take advice from an employment solicitor or Acas; and consider whether the situation can be resolved another way. Many constructive dismissal cases settle at the Early Conciliation stage.

Constructive dismissal claims are difficult to win — you must prove the employer committed a fundamental breach of contract, you resigned in response to that breach, and you did not delay too long (which could be seen as affirming the breach). Keep contemporaneous evidence: save emails, note dates of incidents, and keep a diary of events.

It is usually advisable to raise a formal grievance before resigning, though it is not legally required. If your employer fails to follow the Acas Code on grievances, any tribunal award can be increased by up to 25%. When you resign, state clearly in your resignation letter that you are resigning because of the employer's breach. Do not simply say you have found another job. Take legal advice before resigning if possible.

Before you can lodge a constructive dismissal claim at the Employment Tribunal, you must contact Acas and register for Early Conciliation. This is a mandatory pre-claim step and pauses the three-month time limit while conciliation is ongoing. Many constructive dismissal claims settle at this stage — often through a settlement agreement that includes compensation and a negotiated reference.

The Acas Code of Practice on Disciplinary and Grievance Procedures is central to constructive dismissal cases for two reasons:

• If you raised a grievance and your employer failed to follow the Code — for example, by not holding a meeting, not allowing a companion, or not informing you of your right to appeal — the Tribunal can increase any award by up to 25%.
• If you failed to raise a grievance where it was reasonable to do so, the Tribunal can reduce your award by up to 25%.

At the Tribunal, the burden of proof in constructive dismissal is different from ordinary unfair dismissal. You must establish that there was a fundamental breach of contract. Once you do, the employer must show that the dismissal was fair — i.e., that even if there was a breach, there was a potentially fair reason for the underlying conduct and it was within the band of reasonable responses.

Compensation in constructive dismissal follows the same framework as unfair dismissal: a basic award (calculated like statutory redundancy pay) and a compensatory award for financial loss. The compensatory award is subject to a statutory cap (currently the lower of one year's pay or the prescribed maximum, reviewed annually). There is no cap where the constructive dismissal was connected to whistleblowing or certain other automatically unfair reasons.

The Employment Rights Bill 2024 proposed to make unfair dismissal a day-one right, removing the two-year qualifying period. If enacted, this would significantly extend the pool of employees who can bring constructive dismissal claims, since the claim type requires satisfaction of the unfair dismissal qualifying period in most cases. Monitor legislation.gov.uk for developments. In the meantime, if you have less than two years' service, consider whether the fundamental breach also amounts to discrimination or a whistleblowing detriment — both of which do not require two years' service and may allow you to claim regardless of tenure. Documenting the facts carefully from the outset preserves your options whichever route ultimately applies. A detailed contemporaneous record — timestamped emails, diary notes, witness names — is the foundation of any successful constructive dismissal or discrimination claim and is far easier to compile while events are fresh than months later during tribunal preparation.