Difficulties with constructive dismissal

An employer’s actions or inactions may be so bad that employees can lawfully resign 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.

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.

From 6 April 2023, the maximum compensatory award for unfair dismissal will increase from £93,878.00 to £105,707.00.