Constructive Dismissal & Compensation + Settlement Agreements

Constructive Dismissal Settlement Agreements

This article explains constructive dismissal and sets out the many pitfalls which tend to thwart employees who want to make a claim for constructive dismissal. You might want to get a rough idea of the value of your case by filling in the Settlement Agreement Calculator

Case of constructive dismissal

Top 3 TIPS

  1. Consider raising a grievance
  2. Keep detailed notes and/or recordings
  3. Make sure you time your resignation right

2 year qualifying period

In order to make a claim for constructive unfair dismissal in the employment tribunal, you need to have worked for your employer for at least 2 years. If you have less then 2 years under your belt, unfortunately it means that it is very easy for your employer to dismiss you or constructively dismiss you (even if it feels blatantly unfair) and get away with it.

The other types of claim which employees can bring, even if they have been employed for less than 2 years, include whistleblowing (if you have revealed malpractice and they have victimised you for that), discrimination (for example sex, disability, race, pregnancy and other types) and breach of contract (whereby your contract has been breached, for example commission structure changed).

Constructive dismissal compensation

Compensation for successful constructive dismissal claims is worked out in exactly the same way as compensation for unfair dismissal claims. It is essentially the amount of money you lost because you were out of work after you had to leave. There is now a cap of one year’s salary of £75,000 pounds, whichever is greater. You will also need to keep detailed records of your efforts to find a job in the mean time.

What is constructive dismissal?

Constructive dismissal is a certain type of unfair dismissal, the difference being that in constructive dismissal the employee resigns, or leaves voluntarily, rather than being formally dismissed by their employer. The full name for constructive dismissal is actually constructive unfair dismissal.

It can be very difficult to prove because employment tribunals believe that it is only in extreme circumstances that someone feels forced to leave employment. The classic extreme example is not being paid your wages, or being physically assaulted. There are so many permutations but they all involved having your working life made so difficult that you feel no option but to leave.

Evidence needed for constructive dismissal claims

Unfortunately only around 5% of claims of constructive dismissal succeed in the employment tribunal. The main reason is that tribunals decide that there is insufficient evidence that the employer’s conduct was so bad that leaving was the only option (instead of, for example, submitting a grievance). So, if your employer puts you on a performance improvement plan, for example, this is not an excuse to quit. Stick it out!

Another big killer of constructive dismissal claims is whereby the employment tribunal deems the employee to have ‘accepted’ the employer’s misconduct. In practice this means that you left it too late to resign, and by so doing you tacitly accepted the mistreatment. So it may be that swift action on your part is required, but at the same time don’t be rash.

As you probably know, often employers try to manage out employees in order to avoid having to pay them off with a settlement agreement. A manager could be told to put an employee on performance review or to discipline them over a trivial matter. It is surprising how even big corporations employ these kinds of underhand tactics in order to avoid their responsibilities towards their employees. The difficulty however, is proving it.

Timing your resignation

Get the timing of your resignation right

Exactly when to resign is a difficult question. As set out above, if you leave it too late to resign then you can be taken to have accepted the conduct of your employer, and then you cannot resign much later (for example when you have found another job!) and point to the much earlier conduct as the cause of your resignation. Conversely, if you can stretch out your resignation and stay employed, then you can be a constant thorn in your employer’s side, and they will pay you more in a settlement agreement just to get you out of their hair. Read more in our article about negotiating settlement agreements.


Next steps

If you want to talk to an experienced employment solicitor about the details of your case, and find out how we could help you improve your settlement package. Get in touch on 020 7717 5259, 0800 533 5134 or apply for a free 15 minute consultation.