Constructive dismissal – what is it?

HR expert David Wright answers common questions relating to the subject of constructive dismissal. The term constructive dismissal is often quoted by employers. They view it as a risk when they make changes in their salon that involve the terms and conditions of service for their staff; or it’s a threat when staff walk out and state they will claim constructive dismissal. What constitutes constructive dismissal? Constructive dismissal occurs where an employee terminates their employment in response to an action taken by their employer. Although there has not been an actual dismissal, the treatment is sufficiently radical that the employee is entitled to regard themselves as having been dismissed. For example, the employer says “I am reducing your hours by 20% next week and stopping your commission payments”. What does the employee have to prove to win a case? The employee has to show that they have resigned in response to a fundamental breach of contract by the employer. Sometimes that conduct will be the breach of an express (written) term of the contract of employment, such as the right to be paid a certain amount on a certain date. More commonly, it will be that the employer’s behaviour has breached the term of mutual trust and confidence that is implied into all contracts of employment. The employee might have been treated outrageously or bullied. Examples of such conduct may include unilaterally and radically changing their terms and conditions, humiliating them in front of others and falsely accusing the employee of misconduct. Similarly, there are cases when there has been a long series of acts and one is seen as the “final straw”. How easy is it to Show constructive dismissal has occurred? Constructive dismissal is far more difficult to prove than employees often think. First they must prove a fundamental (rather than minor) breach of contract by the employer. The employee must also show that their decision to terminate their employment was in response to the breach and not, for example, because they had been offered a more attractive job elsewhere and were already planning to leave. An employment tribunal will also need to satisfy itself that the employee did not delay too long in resigning ie they acted following the employer’s action. But on the other hand an employment tribunal may well expect an employee to have tried to resolve the complaint through the grievance procedure before jumping ship. How can I protect myself from claims? The obvious answer is don’t breach an employee’s contract or give them the reason to resign. If you receive complaints or grievances take them seriously and document what happens and the outcome! If you do want to make changes make sure you follow a reasonably transparent consultative process. If you can’t reach agreement you need to consider how radical the change is, might you give long notice of the change e.g from January next year. Or as a last resort dismiss the employees and offer reengagement on new terms and conditions. If an employee resigns normally the expectation is they would give notice or ironically they have also breached the contract. I often advise that when staff unilaterally quit or walk out the employer offers to meet them to discuss the issues and offers the opportunity to withdraw the resignation for a period of seven days. What if there are lots of reasons for an employee resigning? It’s probably easiest to look at an actual case. An employee worked shifts as a care at home assistant. She brought grievances against her employer but they were not dealt with properly. She then went through a very difficult period when her mother died and her partner suffered a stroke. Split shifts did not make it easy to cope with this situation. Attempts to reorganise her working pattern were not successful. To cut a long story short, the eventual decision was that the employee had to show that the main reason they resigned was the employer’s actions and not the need to provide care or inability to work the shifts. You can see it can get quite complicated so there is a real need to keep a comprehensive record of what happens and what decisions are taken and why.