Understanding Constructive Dismissal in the Workplace

You’ve likely come across the term ‘constructive dismissal,’ but do you truly understand its implications?

Constructive dismissal occurs when changes to an employee’s working conditions or unfair treatment compel them to resign. This differs from unfair dismissal, where the employer terminates the employee.

In constructive dismissal, employees feel compelled to leave the company due to factors beyond their control, such as unfavourable employer behaviour. Generally, employees can only claim constructive dismissal if they’ve been with a company for more than two years, though this rule doesn’t apply if the claim involves discrimination.

If an employment tribunal deems an employer guilty of constructive dismissal, they may be required to compensate the employee. The compensation amount varies based on factors like the employee’s tenure, age, and weekly pay, with a cap on the basic award at £17,130 and a cap on the compensatory award at £93,878. In total, including legal fees and travel expenses, the costs could exceed £110,000.

Avoiding constructive dismissal claims is crucial, not only due to the financial implications but also because it consumes time and can harm your business’s reputation, creating unrest among remaining employees.

To shed light on constructive dismissal, consider a few examples:

1. Mr. Parbhjot Singh v Metroline West Limited

Following an invitation to a disciplinary meeting, the employee went on sick leave and attended an occupational health appointment. The employer, suspecting the sickness was a tactic to avoid the disciplinary meeting, paid statutory sick pay instead of contractual sick pay. The employee claimed constructive dismissal due to the failure to pay contractual sick pay. While the employment tribunal found it was a breach of contract, the employer’s intention to maintain the employment relationship complicated the decision.

2. Adams v Charles Zub Associates Ltd

When the employee didn’t receive April salary by 9 May, he filed an unfair dismissal claim to an employment tribunal. Despite a breach of contract, the tribunal ruled that it wasn’t the company’s intention to withhold payment deliberately, emphasising the importance of clear communication channels.

3. Craig v Abellio

An employee on sick leave experienced incorrect sick pay calculations due to employer errors. Despite the employer’s agreement to pay by a specified date, missing the deadline led the employee to resign and file a constructive dismissal claim. The case exemplifies the challenges in determining whether an issue is a mistake or a genuine repudiatory breach.

Constructive dismissal cases are intricate and lengthy. Even after concluding, appeals can prolong the process. If you’re uncertain about an employee dispute or potential concerns, seek expert advice before taking action. It can save you time, money, and stress. Feel free to reach out if you need assistance with any employment-related matters.