What is constructive dismissal?
Understanding constructive dismissal is really important if resigning seems like your only viable option because you can’t stand the way you’re being treated at work any more. This blog explains what constructive dismissal is and when you may be able to claim compensation for being constructively dismissed.
See our main page on constructive dismissal for further detail.
What is constructive dismissal and when can you claim it?
Let’s start by clarifying what constructive dismissal is not: When you are directly fired or dismissed by your employer, that is not constructive dismissal. When you resign because you have got a better job or just want to take some time out, that’s not constructive dismissal either.
Constructive dismissal actually occurs when your employer’s conduct or actions make your work environment so intolerable that you feel forced to resign. Behaviour by your employer that is merely unreasonable is insufficient to justify constructive dismissal. Their behaviour must fundamentally breach your contract, as explained below.
To claim constructive dismissal, three major conditions must be met
- There has to be a significant breach of contract: Your employer must breach your contract fundamentally, affecting the core of your employment agreement and justifying your decision to leave.
- Your resignation is your response to this breach of contract: it must be directly due to this breach. If you leave for any other reason, it doesn’t count as constructive dismissal.
- Your resignation must be ‘timely’. In other words, you must resign shortly after the breach. Delaying could signal your acceptance of the new conditions, losing you the right to claim for constructive dismissal.
Should you work your notice period in a constructive dismissal scenario?
The question of whether or not to work your notice period when you’ve been constructively dismissed, or are planning to be, is complex. In some cases, working it might suggest acceptance of the breach. However, if you make it clear – in writing – that your continued working is under protest, and/or only for the time it takes you to seek legal advice, this can support your claim that you have not accepted your employer’s wrongful conduct.
Restrictive covenants and constructive dismissal
Restrictive covenants in employment contracts are clauses that impose limitations on your actions both during and after your period of employment. These typically include what are called non-compete clauses, non-solicitation agreements, and confidentiality obligations. For example:
Non-compete clauses
Suppose you are a marketing specialist and have a clause in your contract preventing you from working with competing marketing firms within a 50-mile radius for one year post-employment. This is a non-compete clause.
If you were to resign in a constructive dismissal situation because, say, you were demoted without good reason, the non-compete clause might no longer be enforceable. The thinking is that your employer’s significant breach of contract (in other words, your unjust demotion) undermines the basis on which the restrictive covenants were originally agreed upon.
Non-solicitation agreements
Non-solicitation agreements prevent you from soliciting clients, customers, or colleagues of your former employer for a specified period after you’ve left their employment.
If you’ve been constructively dismissed, this might invalidate a non-solicitation clause and you might then be able to engage with clients or former colleagues immediately after leaving, without breaching your contract.
Confidentiality obligations
Confidentiality clauses – also called Non Disclosure Agreements (NDAs) generally remain enforceable even after a constructive dismissal.
However, the circumstances of the dismissal could affect how these clauses are interpreted or enforced, particularly if your employer’s breach is related directly to their own misuse of confidential information or if they forced you to sign such an agreement.
Constructive dismissal as an act of harassment
If the behaviour forcing you to leave qualifies as harassment under the Equality Act 2010, you can pursue claims for both constructive dismissal and harassment. Harassment is unlawful when it relates to protected characteristics and involves unwanted conduct affecting an individual’s dignity or creating a hostile environment. See our guide on harassment for more detail.
What next?
If you’re considering claiming constructive dismissal against your employer, seek legal advice, as each case is unique and your actions before and after your resignation can significantly influence employment tribunal outcomes.
If you find yourself in a situation that might lead or has led to your constructive dismissal, get in touch with Monaco Solicitors as soon as possible to explore your options with one of our employment law specialists.
