What is constructive dismissal?

You’ve likely come across the term “constructive dismissal” before, but do you have a clear understanding of what it entails?

Constructive dismissal occurs when changes in an employee’s working conditions or unfair treatment compel them to resign from their position.

This is sometimes mistaken for unfair dismissal, which involves terminating the employee’s contract by the employer.

In cases of constructive dismissal, the employee feels compelled to leave the company due to circumstances beyond their control, such as the actions of their employer.

Typically, an employee can only claim constructive dismissal if they have been employed by the company for more than two years. However, this rule does not apply if they claim discrimination.

If an employment tribunal determines that constructive dismissal has occurred, you, as the employer, may be required to compensate the employee. The amount of compensation is influenced by factors such as the length of the employee’s tenure, their age, and their weekly salary.

There is a cap on both the basic award (£19,290) and the compensatory award (£104,659). Consequently, including legal fees and travel expenses, the total expenditure could exceed £110,000.

This underscores the importance of avoiding constructive dismissal claims. Apart from the financial implications, such claims consume considerable time and can tarnish your business’s reputation, while also fostering discontent among remaining employees.

Considering this, what are some instances that could be classified as constructive dismissal?

Mr Parbhjot Singh v Metroline West Limited

After receiving an invitation to a disciplinary meeting, the employee took sick leave. He attended an occupational health (OH) appointment to evaluate his capability. The OH advisor did not indicate that his sickness was not genuine. However, the employer suspected that the sick leave was a tactic to avoid the disciplinary meeting, so the employee was paid statutory sick pay instead of contractual sick pay.

The employee argued that they were constructively dismissed due to the failure to receive their contractual pay.

The employment tribunal (ET) concluded that the employer’s failure to provide contractual sick pay constituted a breach of contract. However, it deemed this breach not to be repudiatory. The employer’s intention to maintain the employment relationship and withholding the employee’s pay was perceived as a strategy to do so. Nevertheless, the employment appeal tribunal (EAT) dismissed this rationale, asserting that the employee was entitled to pay which they did not receive.

Adams v Charles Zub Associates Ltd

Adams, the employee, did not receive his April salary by May 9th, prompting him to resign and lodge an unfair dismissal claim with an Employment Tribunal (ET).

Typically, such a significant breach of contract would lead the ET to determine that the employee was constructively dismissed.

However, in this instance, the ET ruled that while a breach of contract had occurred, the company did not deliberately withhold the money. Consequently, it did not meet the criteria for constructive dismissal. The employee had been informed of the organisation’s financial situation and the extenuating circumstances surrounding their pay.

This case highlights the importance of maintaining transparent communication channels.

Craig v Abellio

In this instance, an employee was absent from work due to illness. Due to a series of errors and miscommunications by the employer, the calculation and payment of the employee’s sick pay were incorrect. Initially, the employee raised a grievance, resulting in the employer being found to owe £2,000. However, this amount increased to over £6,000 upon further examination.

Although the employer agreed to pay the outstanding amount by a specified date, they failed to meet this deadline. Consequently, the employee resigned the following day and filed a constructive dismissal claim.

The Employment Tribunal (ET) and Employment Appeal Tribunal (EAT) debated whether the issue stemmed from mistakes or constituted a genuine repudiatory breach. Initially, it was determined that the failure to pay was a mere error and not a breach of an express contractual term. However, the EAT eventually referred the case back to the ET for further review.

This case demonstrates the challenge of determining whether the final incident in a constructive dismissal scenario is substantial enough to support a successful claim.

 

 

As you can see, constructive dismissal isn’t clear cut. Tribunals can be long processes, and even when you think they’re concluded, an appeal can be launched.

If you’re unsure as to where you stand with any employee dispute, or potential cause for concern, take expert advice before you act. It could save you a lot of time, money and stress. If I can help you with that, please get in touch.