Constructive dismissal: A guide for employees

Constructive dismissal is a type of unfair dismissal where you feel forced to resign, rather than being dismissed. This guide outlines how to overcome some of the common problems you may encounter when negotiating a constructive dismissal exit payout.

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    Drawing on our extensive experience as specialist employment law solicitors, we give you practical advice on how to overcome the problems that often lead to constructive dismissal. so you can get the best possible settlement agreement deal

    See also our related guides listed at the foot of this article and the real-life constructive dismissal video case study of a client taking advice from our Senior Partner Alex Monaco. 

    What is constructive dismissal?

    The term is actually short for ‘constructive unfair dismissal’ and is a type of unfair dismissal.

    The main difference between the two is that with constructive dismissal you feel forced to resign or leave voluntarily, whereas with unfair dismissal you are formally dismissed by your employer.

    It can be very difficult to prove such cases in court because employment tribunals believe that it is only in extreme circumstances that someone feels forced to leave their employment.

    The classic extreme example is not being paid your wages, or being physically assaulted.

    There are many permutations of what could constitute constructive dismissal, but they all involve having your working life made so difficult by your employer – or by other colleagues – that you feel you have no option but to leave.

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    Constructive dismissal examples of why you may resign

    Here are just a few examples of the many circumstances that might result in you feeling obliged to resign because your situation at work was intolerable

    Working conditions

    Pay and related

    Employment status

    Behaviours by your employer

    • Seeking every opportunity to disparage/humiliate/belittle you or otherwise undermine your authority in front of colleagues.
    • Permitting, or at least turning a ‘blind eye’ to harassment, bullying, disparagement or similar behaviour against you by one or more of your colleagues.
    • Giving you an excessive workload so you are likely to fail to cope with it, or become ill from the stress of trying to cope.
    • Setting KPIs (Key Performance Indicators) or other kinds of targets that are almost impossible, if not impossible, for you to achieve.

    What evidence is needed to prove constructive dismissal?

    Only around 5% of claims of constructive dismissal succeed in winning compensation in the employment tribunal.

    The main reason is that tribunals decide that there is insufficient evidence to show that the employer’s conduct was so bad that leaving was the only option (instead of, say, submitting a grievance).

    For example, if your employer puts you on a performance improvement plan, this is unlikely to be regarded as a justification to resign. A tribunal would expect you to stick it out!

    Another big ‘killer’ of such claims in tribunals is when the judge decides that the employee has affirmed or accepted their employer’s misconduct.

    In practice, this means that you left it too late to resign, and by so doing you tacitly accepted the mistreatment.

    Is there a minimum employment period for constructive dismissal?

    The minimum employment period required before you can claim for constructive dismissal in the employment tribunal is  2 years of continuous employment.

    This is the same as normal unfair dismissal.

    If you have less than 2 years under your belt, then unfortunately it means that it’s easy for your employer to dismiss you or take action that forces you to resign (even if it feels blatantly unfair) and face no legal consequences.

    In some cases, there is no requirement for a two-year qualifying period, such as:

    – whistleblowing

    Where you may have revealed malpractice and they have victimised you for that.

    – discrimination

    For example sex, disability, race, pregnancy and other types of discrimination.

    – breach of contract

    This is where your employment contract has been breached. For example, your commission structure has been changed without your agreement.

    Who usually makes the first move in constructive dismissal claims?

    In a constructive dismissal claim scenario, it is normally you, as the employee, who needs to make the first move.

    Your employer might not be aware of the situation, or, if they are aware, they probably aren’t going to have a protected conversation with you.

    Rather, they will try and keep the situation calm and hope the passage of time means that any claim you may have will fall away.

    Employers often try to ‘manage out’ employees in constructive dismissal cases, to avoid having to give them a payout with a settlement agreement.

    So, for example, managers may 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 to avoid their responsibilities towards their employees. The difficulty, however, is proving it.

    How do I start a case for constructive dismissal compensation?

    You will have to put together a without prejudice letter.  For how to do this, have a look at our article on how to write without prejudice letters.  

    You can also find a range of without prejudice letter examples – suitably anonymised and derived from successful relevant cases – in our without prejudice templates.

    In your letter, you will have to set out the fundamental breaches of contract that you consider your employer to have committed.

    There may be one big breach – such as the failure to pay a contractually due bonus.

    Or there may be lots of separate breaches that together make up a breach of trust and confidence – such as being constantly and seriously demeaned by your boss in front of colleagues.

    Remember, you are trying to prove your employer has breached your contract to the extent that they have effectively dismissed you.

    So you need to show how they have done that by using careful and precise wording in your letter and making reference to any evidence that you have collected.

    Alex Monaco

    Top Tips

    Alex Monaco

    1. Write a  without prejudice letter

    2. Keep detailed notes  and/or recordings of the treatment you are being subjected to

    3. Don’t resign – yet!

    How should I negotiate in a constructive dismissal case?

    Technically, a case for constructive dismissal does not crystallise until you have resigned: it is only then that you actually have the legal right to sue for such dismissal.

    Therefore, in the without prejudice letter that you write whilst you are still in employment,  you will be explaining to your employer that you have ‘a case of constructive dismissal should you choose to act upon it’.

    What you are effectively saying is ‘If you do not resolve this to my satisfaction, then I will resign and sue you’.

    Because of this delicate balance, negotiating in such a case can be a bit of a roller coaster ride: if your employer ‘calls your bluff’ and refuses to negotiate, then you will be put in the position of having to resign or to continue with your employment.

    It is essential, therefore, that you time your letter correctly to coincide with the worst breach of contract, or at the end of a long chain of breaches. There is no point in firing early in this particular duel.

    Remember, you also cannot leave it too long after the last breach of contract to write to your employer, or to resign; so timing really is important here. (See also our guide on how to resign.)

    How should I time negotiations for constructive dismissal?

    We would advise our clients to time their negotiations differently, depending upon the type of case. For example:

    Cases with one major breach of contract

    In a case where your employer has committed a sole and fundamental breach of your contract – eg they have failed to pay you according to your terms of contract – then the time to act is as soon as possible as there is no merit in waiting.

    You have your fundamental breach in such a case and now is the time to start negotiating for compensation.

    Cases with several smaller breaches of contract

    Whereas in the case of lots of smaller-type breaches which when taken together add up to a fundamental breach of trust and confidence, for example, you have to use your judgement a little more.

    There is no point in starting to negotiate after the first minor breach as you don’t have a potential claim, nor do you have sufficient facts to negotiate with; so when is the correct time?

    Our view is that once there is a pattern in the minor breaches that, when taken together, appear to be serious and that an outside observer would categorise as extremely bad behaviour by an employer: that is the time to start negotiating for a decent payout.

    Don’t wait longer than 2 months

    If you think your employer will commit more breaches, and therefore strengthen your case, then you can wait for this to happen if you like.

    However, we would recommend waiting no more than two months from the latest incident before starting negotiations.

    After three months, there is a real risk that – if you haven’t resigned – a judge could decide that you have affirmed (ie accepted) the breach and you would lose any case you brought.

    This means, of course, that any negotiating position you have would be weakened.

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    How much are constructive dismissal compensation payouts?

    How much you could get in a successful constructive dismissal claim depends upon the exact circumstances of the case.  Compensation is worked out in the same way as compensation for unfair dismissal claims and is detailed in our unfair dismissal guide.

    In brief, if you were to win your claim at an employment tribunal, you would get an award comprising two separate parts, the Basic award and the Compensatory award, as follows:

    The basic award

    This is worked out according to your age, your weekly gross pay (up to a maximum of £700) and the number of years you have been employed with your employer, with a maximum total payout of £21.000 (from 6 April 2024).

    The compensatory award

    This is usually the larger element and is essentially the amount of money you lost because you were out of work after you had to leave your job.

    There is (from 6 April 2024) a cap on the compensatory award of one year’s salary, or £115,115 – whichever is lower.

    You will need to provide detailed records of your efforts to find a job since leaving your role. Read our article on how much you should get to get further insight into this area, and try our calculator here.

    How can I get help with my constructive dismissal case?

    Our team of specialist employment law solicitors at Monaco Solicitors have helped hundreds of employees make successful constructive dismissal claims. We can review and advise you on the strength of your case, negotiate a settlement agreement on your behalf, or work with you on your employment tribunal case. 

    It’s easy to find out if we can help you with any aspect of your case. Just click the button below to get started.

    Alternatively, you can email us on communications@monacosolicitors.co.uk 0r speak to one of our advisors by phoning 020 7717 5259

    FAQ

    1. What does constructive dismissal mean for an employee?

    Constructive dismissal is when you feel forced to resign because of your employer’s actions or behaviour. Your employer won’t technically have dismissed or sacked you, but they will have treated you so badly that you felt you really had no choice but to resign.  

    Employers’ actions in constructive dismissal cases can include them changing your terms of employment, reducing your wages, altering your working hours without prior agreement, or behaviours such as bullying and harassment.

    In situations like this, you may well have a claim for constructive dismissal despite not having been formally dismissed.

    Constructive dismissal cases can be complicated and it is essential to get advice from an experienced employment lawyer if you think you may have a claim.

     

    2. What are examples of constructive dismissal?

    Constructive dismissal can take many forms. Some examples of circumstances that may lead to constructive dismissal include:

    – An employer changing your terms of employment without informing or consulting you.

    – Bullying, harassment, discrimination, or other conduct that makes the workplace hostile and unbearable for you.

    – Sudden and significant changes in your work duties or responsibilities without reasonable cause or explanation.

    – Unreasonable financial deductions from wages or unilaterally reducing salary, hours worked, or benefits provided.

    – Failure to make reasonable adjustments for you if you have a known disability or other protected characteristics.

    – Any form of retaliation against you if you have reported misconduct by your employer.

    – Your employer fails to take appropriate action when you have raised a complaint of discrimination or harassment.

    – Denying you access to training and development opportunities that are made available to other employees with similar roles.

    – Unilateral changes in your working hours or shifts without consulting you first.

    – Failure to pay your wages on time, on more than one occasion.

     

    3. Can you claim constructive dismissal if fired?

    It’s generally not possible to claim constructive dismissal if you have been fired. Constructive dismissal most often occurs when an employer makes unilateral changes to the terms of your employment contract that are so significant that you are effectively forced to resign.

    In this situation, you may be able to claim that you were constructively dismissed and seek compensation.

     

    4. How successful are Monaco Solicitors’ constructive dismissal cases?

    Our experienced employment law specialist solicitors have been successful in recovering substantial constructive dismissal compensation settlements for our clients.  We pride ourselves on our success rate in cases like these, as we understand how important it is to seek justice for those who have been wronged.

    In addition to pursuing claims of constructive dismissal on behalf of employees, Monaco Solicitors can provide legal advice and guidance to employees who need assistance with grievances or other forms of unfair dismissal. 


    5. What evidence do I need to prove constructive dismissal?

    To prove constructive dismissal, you must demonstrate either that your employer has significantly breached the terms of your employment contract and/or that they have otherwise behaved unreasonably towards you by means such as bullying or harassment. It is not sufficient just to claim that your employer or colleagues did something if you can’t provide any evidence to support your claims. 

    Your evidence will need to be in writing (including such formats as texts and other forms of an electronic message), audio, or video recordings. Written evidence can also include statements by colleagues or others who have witnessed the incident(s) concerned and are prepared to submit a written statement in your support.