Home > Insights > Difficulties with constructive dismissal

An employer’s actions or inactions may be so bad, that employees can walk out and treat the employer’s actions or inactions as terminating their employment contract – this is known as constructive dismissal.  However, this is not always the best option for an employee as we explain.

To help employees we have set out below:

  • Implications of claiming constructive dismissal;
  • Reasons why constructive dismissal claims are rare; and
  • Case highlight showing pitfalls in claiming constructive dismissal.

Implications of claiming constructive dismissal

Sometimes, employees see a constructive dismissal claim as a way of getting around restrictive covenants which would otherwise operate on termination of employment.   The courts are in tune to this thinking.  Therefore, extra special care is needed to the facts if the constructive dismissal claim leads to the employee claiming that post termination restrictions are at an end.

Not genuine

Unless the employee is genuine he may find that the employer is successful in obtaining an injunction to prevent anti competitive behaviour.  To obtain an injunction against an employee the employer will be subject to the usual burden of establishing that damages are not wholly an adequate remedy.

Case must be put in writing before resignation

To stand any chance of success, the employee must set out his complaint against the employer in writing and follow the grievance process.  We do help employees set out the complaint.

Reasons why constructive dismissal claims are rare

In our experience, constructive dismissal claims brought by employees are rare.  The simple reason is that walking out and claiming the employment contract is at an end means that the salary will immediately cease.  The employee may subsequently recover lost salary if the claim is successful at court or settles but many employees cannot afford the cash flow loss.

Best advice – do not resign

The best advice for an employee is usually to never resign.  Wait until the employer pushes the employee out as then the employee could have an unfair dismissal claim.  The advantage of an unfair dismissal claim is that the burden on the employee of proving that the employer’s conduct was so bad that it brought the contract to an end does not then arise.

As the case considered below demonstrates, failure to follow the procedures will mean that any claim for compensation is rejected by the courts.

Case highlight of difficulties with a constructive dismissal claim

Mr Lambrou was employed by Cyprus Airways Limited. Four instances of the firm’s behaviour upset him. He formally complained about the first incident. However, he did not complain about the next three incidents.

Subsequently he said all four incidents were so bad, he was entitled to resign and sue Cyprus Airways.  Cyprus Airways argued that Mr Lambrou could not sue, because before he resigned, he hadn’t complied with the required procedures.

In most cases, these procedures require employees to notify the employer about every complaint. This presented a problem for Mr Lambrou. He had only raised one complaint about the first incidence.

Employment appeal tribunal’s verdict

Mr Lambrou lost his case in the employment appeal tribunal. The court decided that Mr Lambou could not sue. Since Mr Lambrou claimed all four matters together entitled him to resign, he should have followed the specified process for all four matters.

Mr Lambou had followed the process for the first incident. However, it was not possible to split this incident from the other three. So the court did not allow Mr Lambrou to proceed on the basis of only the first incident.