Constructive dismissal

Constructive dismissal

In employment law, constructive dismissal, also called constructive discharge, is where an employee resigns because of their employer's behaviour. The employee must prove that the behaviour was unlawful — that the employer's actions amounted to a fundamental breach of contract, also known as a repudiatory breach of contract.

The exact legal consequences differ between different countries, but generally a constructive dismissal leads to the employee's obligations ending and the employee acquiring the right to make claims against the employer. For example in the United Kingdom, a claim for "unfair dismissal" and a claim for "wrongful dismissal" may arise.

The employee may resign over a single serious incident or over a pattern of incidents. Generally, the employee must have resigned soon after the incident.

The notion of constructive dismissal comes from the concept that (as it is phrased in United Kingdom law) "An employer must not, without reasonable or proper cause, conduct himself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between the employer and the employee." (Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84, EAT.)

Examples of actions potentially justifying resignation

  • Failing to pay wages due.
  • Putting managers into excessively difficult work situations without supporting their decisions.
  • Harassment or humiliation, particularly in front of less senior staff.
  • Victimisation of the staff member.
  • Unilaterally changing the employee’s job content or terms of employment.
  • Significantly changing the employee’s job location at short notice.
  • Falsely accusing an employee of misconduct or of not being capable of carrying out their job.
  • Undue demotion or disciplinary procedures.
  • Sabotage of employee's work product either directly or indirectly with repeated interruption, confusing or inaccurate direction, or uncommunicated deadline changes.
  • Vandalizing the employee's workspace, home or other personal property. Such tactics could range from minor destruction of immaterial items to more severe acts of vandalism.

Constructive dismissal in law

UK law

In United Kingdom law, constructive dismissal is defined by the Employment Rights Act 1996 , section 95(1)(c):

The employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct.

The Department of Trade and Industry states :

A tribunal may rule that an employee who resigns because of conduct by his or her employer has been 'constructively dismissed'. For a tribunal to rule in this way the employer's action has to be such that it can be regarded as a significant breach of the employment contract indicating that he or she intends no longer to be bound by one or more terms of the contract: an example of this might be where the employer arbitrarily demotes an employee to a lower rank or poorer paid position. The contract is what has been agreed between the parties, whether orally or in writing, or a combination of both, together with what must necessarily be implied to make the contract workable.

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