What is a constructive dismissal?

Constructive dismissal is the term used to describe a situation where an employee resigns "in circumstances such that he is entitled to terminate [his contract] without notice by reason of the employer's conduct". ERA 1996 s.95(1)(c) and ERA 1996 s.136(1)(c) provide that an employee in that situation is treated as having been dismissed.

In such a case the dismissal will as a general rule be wrongful dismissal . It may also be unfair dismissal and/or dismissal by reason of redundancy (see notes at Unfair dismissal/redundancy and unfair dismissal/interaction of unfair dismissal & redundancy rules ).

What are the elements of constructive dismissal?

The employer's conduct in such a case is termed a "repudiatory breach of contract" and the employee's resulting resignation will rank as dismissal, termed "constructive dismissal". Technically, the employee is said to have accepted the repudiation of the contract by the employer.

There are four elements in a constructive dismissal claim (see France v Westminster City Council, EAT on 9th May 2003):

• there has to be a breach of contract by the employer. This can be actual or anticipatory;
  
• the breach must be sufficiently important to justify the employee resigning or the last in a series of incidents which justifies leaving;
  
• the employee must leave in response to the breach and not for some unconnected reason; and
  
• the employee must not take too long about leaving.

While a constructive dismissal as "defined" above will always be wrongful dismissal it may or may or may not also be unfair dismissal. In order to show that a constructive dismissal is unfair a fifth question must be considered; that is whether the employer can show a potentially fair reason for the constructive dismissal. If he cannot do so, the dismissal is unfair. If he can do so the question then becomes whether the employer acted reasonably or unreasonably in treating that reason as a sufficient reason for dismissal ( Cape Industrial Services v Ambler EAT 2002 on 20th December 2002).

For further notes generally on when a resignation may be a constructive dismissal go to Definitions and interpretation/dismissal .

What are the consequences of a constructive dismissal?

As well as claims for compensation or damages a constructive dismissal brings the contract of employment to an end and the employer is regarded as having caused this. As a result the employer will in general no longer be able to enforce any terms contained in the contract, including any "post-termination" restrictive covenants or minimum notice period requirements. With senior employees this could lead to particularly serious problems for the employer (see Restrictive covenants/a general note ).

When is a resignation not a constructive dismissal?

If the elements of constructive dismissal are not made out then the resignation will not be a constructive dismissal. An employee who resigns in other circumstances, perhaps simply because he decides to do so, is not dismissed at all and there can be no constructive dismissal ( Rofique v Governing Body of Turves Green Girls' School EAT 2003 on 9th December 2002 and/or Thorpe v Eaton Electrical Ltd, EAT on 6th December 2004).

There can normally be no appeal against an employment tribunal's decision as to the reason for an employee's resignation, assuming it is not perverse, as it is a question of fact not law (O'Shea v Coventry City Council, EAT on 15th February 2005 and see notes at Employment Appeal Tribunal/jurisdiction/fact or law? ).

See also notes at Breach of contract and/or Implied terms in employment contracts/a general introductory note and/or at Repudiation of contract by employer or employee and/or Constructive dismissal/discrimination cases and/or at Bullying at Work .