Constructive dismissal is where an employee resigns to their employer's breach of an important term of their employment contract, and where this happens the employee is entitled to treat themselves as having been dismissed. The employer's conduct that led to the breach of contract is often referred to as "repudiatory conduct".
In order to successfully claim constructive dismissal, the employee needs to be able to prove that the employer was in fundamental breach of the contract of employment; and that the employee resigned as a result of that breach; and that the employee did not accept the breach. The employee may be seen as accepting the employer's breach if there is a delay between the employer's repudiatory conduct and the actual resignation of the employee.
The repudiatory conduct must be a significant breach of an implied term (e.g the implied contractual term of trust and confidence) or an express term of the employment contract that goes to the root of the contract.
It may not be just one incident that amounts to repudiatory conduct but rather a series of incidents or pattern of behaviour which, taken as a whole, amounts to such conduct. The tribunal will in this case consider any previous breaches of contract that may have otherwise been waived by the employee.
Although it is not obligatory, it is advisable to raise a grievance with your employer before bringing a claim for constructive dismissal. A failure to raise a grievance may mean that any compensation that you are ultimately rewarded could be reduced by up to 25%, if a tribunal finds that, by not raising a grievance, you have unreasonably failed to follow the Acas Code of Practice on Disciplinary and Grievance procedures.
If you have already resigned, you should still write to your Employer raising your grievance. You can lodge your grievance before or after you resign.
If you lodge a grievance before you resign, your Employer must call you to a meeting to discuss your grievance. It must then inform you of the outcome of that meeting and your right to appeal. If your Employer does not take these steps, the tribunal will increase the amount of compensation you are awarded if your claim is successful. This can be increased by up to 25%.
If you disagree with your Employer's decision on the grievance, you should appeal against it. If you bring a claim to the tribunal without doing so, and your claim is successful, the tribunal will reduce the amount of compensation you are awarded.
If you raise a grievance before you resign, it is possible that the situation may be resolved and a settlement reached, so you will not need to spend time and money making a claim at the Employment Tribunal. In addition, by acting reasonably this will help your case if you do go to trial.
If you raise a grievance after you have resigned, you need to write to the Employer and if they do not respond and you make a claim in the Tribunal and are successful, any compensation awarded will be increased. By lodging the grievance after you resign, you will avoid the risk of the delay in making the claim depriving you of the right to resign and argue constructive dismisssal. It will also avoid the stress of going through the grievance procedure.
Compensation
If you can establish that you were constructively dismissed, the tribunal will assess the loss that you have suffered as a result of your employment contract terminating without notice. The purpose of the compensation is to put you in the financial position you would have been in had you been dismissed in accordance with your contract. This means that you would be entitled to your net pay and the value of any benefits that you would have received had you worked through your notice period. You will be under an obligation to mitigate your loss, which means that you should be able to show that you are looking for another job. If you find another job quickly, any compensation payable to you will be reduced by the amount of money you have earned during the period which would otherwise have been your notice period. The tribunal may reduce compensation payable to you if it finds that you have not taken reasonable steps to seek alternative employment.
With regards to unfair dismissal, compensation for this is only available to employees who have worked for their employer for at least one year. The tribunal will consider whether your dismissal was fair or unfair and in doing so will look at a range of factors including the reason for your dismissal and whether your employer acted reasonably. In practice it will be very difficult for an employer to show that it acted reasonably if it has in fact breached a term of your employment contract, making it more likely that your dismissal will be judged unfair. If you are successful in your claim for unfair dismissal, you will be entitled to a basic award which is calculated on the basis of your age, salary and length of service. In addition, the tribunal has discretion to award you compensation for any loss flowing from the dismissal up to a maximum of £65,300 (the "compensatory award") (this maximum changes annually and is correct as at June 2010). This will take loss of earnings from the date of termination of your employment into account. However, as with compensation for breach of contract, the tribunal will look at whether you have taken reasonable steps to mitigate your loss.
Any compensation award made to you will be reduced by any compensation awarded to you under the breach of contract claim above. this is because you cannot recover damages twice relating to the same period of time.
Time Limit
A claim for constructive dismissal needs to be lodged at the tribunal within three months of the date of the termination of your employment although ideally it should be lodged as soons as possible.