Constructive dismissal is not the employer sacking the employee — it's the employee resigning because the employer's behaviour has made their position untenable. If successful, the claim is treated as an unfair dismissal, with the same remedies available. It is one of the most complex areas of employment law and one that catches many employers off guard.
The Legal Test
To succeed in a constructive dismissal claim, the employee must demonstrate:
- A fundamental breach of contract — the employer's conduct must amount to a serious breach of an express or implied term of the contract
- Resignation in response to the breach — the employee must resign because of the breach, not for some other reason
- No undue delay — the employee must not wait too long after the breach before resigning, or they risk being seen as having accepted the situation
Common Triggers
Behaviours that may constitute a fundamental breach include:
- Unilateral pay cuts or demotions — reducing pay or status without agreement
- Failing to address bullying or harassment — ignoring complaints or failing to take action
- Unreasonable changes to working conditions — such as changing hours, location, or duties without consultation
- Breach of trust and confidence — the implied term of mutual trust and confidence is the most commonly cited ground. Examples include public humiliation, unwarranted disciplinary action, or creating an intolerable working environment
- Failure to provide a safe working environment
- Discriminatory conduct — treatment related to a protected characteristic
The "Last Straw" Doctrine
Constructive dismissal can be based on a series of smaller incidents rather than one dramatic event. The "last straw" — which need not itself be a serious breach — can trigger the resignation, provided it is part of a cumulative pattern of unreasonable behaviour. However, the last straw cannot be entirely trivial.
Employer Defences
Common defences include:
- The conduct did not amount to a fundamental breach
- The employee delayed too long, implying acceptance of the situation
- The employee resigned for another reason (e.g., they had another job lined up)
- The employer had taken steps to address the issues raised
Prevention
The best defence is prevention. Employers should:
- Take grievances seriously and investigate promptly
- Never impose contract changes without consultation
- Address bullying and harassment complaints effectively
- Ensure management conduct is professional and reasonable
If an employee has raised a grievance or is threatening to resign, act quickly. Our grievance handling service can help you resolve issues before they escalate. Contact us.