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Gotta have a reason – what is constructive dismissal and how do you defend a claim?

An employee who resigns will not normally have a claim for dismissal, as it was not the employer who terminated the employment.

However, where an employer commits a serious breach of an express or implied term of the contract of employment (known as a “repudiatory breach”), then the employee will have the option to either:

  • accept the breach and continue their employment; or
  • resign in response to the breach.

If the employee chooses to resign, they will be treated as being constructively dismissed - which means that although they resigned, their resignation is construed in law as being a dismissal by their employer.

The consequence of this is that the employee may have a claim arising from that constructive dismissal.

If they choose to resign without notice, then they will be able to bring a claim against the employer for the pay which the employee would have earned over the period of notice which the employer would have had to give them if the employer had ended the employment – known as a wrongful dismissal claim.

Also, because in law the employee is deemed to have been dismissed, they may be entitled to bring other claims, in the same way they would have been able to if the employer had actually dismissed them – for example, if at the time their employment ends, the employee has worked for their employer for at least two years, then they will be able to bring a claim in the employment tribunal for unfair dismissal.

The duty of trust and confidence

Constructive dismissal claims often arise out of an alleged breach by the employer of the implied duty of trust and confidence.

This is a term which is implied into every employment contract and it places a duty on the employer not to conduct themselves in a way which is calculated or likely to destroy or seriously damage the relationship of trust and confidence between the employer and employee, unless the employer has reasonable and proper cause for behaving in that way.

Where an employer breaches this duty, this will constitute a repudiatory breach of the contract of employment and the employee will then have the option, if they so choose, of resigning and bringing a claim arising from that constructive dismissal.

Some examples of conduct by employers which the courts and employment tribunals have said amounts to a breach of the implied term of trust and confidence include:

  • suspending an individual from work without reasonable or proper cause
  • fundamentally changing the nature of an employee’s position or role and doing so without the employee’s agreement
  • making false or unjustified allegations against the employee
  • imposing a final written warning with justification
  • reducing an employee’s pay without their consent
  • unlawfully discriminating against the employee
  • raising performance issues while the employee is on sick leave
  • publicly reprimanding an employee, and
  • imposing an excessive workload that could foreseeably cause mental or physical injury.

Upton-Hansen Architects v Gyftaki

As mentioned above, where an individual is constructively dismissed, then because the law treats the employee’s resignation as a dismissal, this means that if the employee has two years’ service or more, they can bring a claim of unfair dismissal.

In an unfair dismissal claim, once it has been decided by the employment tribunal that the employee was dismissed, the employer than has to satisfy the tribunal that the reason for that dismissal was one of the potentially fair reasons set out in the Employment Rights Act 1996 – namely (a) conduct or (b) capability or (c) redundancy or (d) that continuing to employ the individual would have placed the employer in breach of a statutory duty or (e) the employer had some other substantial reason for dismissing the employee.  

The recent case of Upton-Hansen Architects v Gyftaki serves as an important reminder to employers of the steps they need to take to defend an unfair dismissal case which arises out of an allegation by the employee that they have been constructively dismissed.

Upton-Hansen Architects suspended Ms Gyftaki and she resigned from her employment in response. Ms Gyftaki claimed that the act of suspending her amounted to a breach of the implied term of trust and confidence and she brought an employment tribunal claim, stating that she had been constructively dismissed and that that dismissal was unfair.

What this case demonstrated was that when drafting a defence to an employment tribunal claim of constructive dismissal, the employer not only needs to set out why its conduct should not be regarded as having been in breach of the employee’s contract. The employer also has to be ready for the tribunal deciding that in fact the employer’s conduct was in breach of the employment contract and so the defence also needs to argue that the reason for the employer’s conduct was one of the five potentially fair reasons for dismissal mentioned above. If the employer’s defence does not do this, then if the tribunal decides that the employee was constructively dismissed, it will then also inevitably conclude that the dismissal was an unfair one.

The lesson to be learnt

Successfully defending a constructive unfair dismissal claim can be a difficult task - an employee is unlikely to leave their job and then risk the time and expense associated with bringing an employment tribunal claim unless they have significant cause to do so.

There are two particular lessons employers can learn from the Upton-Hansen case:

  • before suspending an employee from work, carefully consider whether there is reasonable and proper cause to suspend – is it the most effective response to the situation you’re facing?
  • if you do find yourself having to draft an employment tribunal response to a claim of constructive unfair dismissal, then make sure your defence includes all the necessary elements.   Firstly, argue that the conduct which the employee relies upon to establish a breach of the contract wasn’t actually a breach. Secondly, argue that even if the constructive dismissal can be established, the dismissal was nonetheless for one of the potentially fair reasons and also argue that your conduct was a reasonable way for you to behave.

In the words of Bon Jovi (and whether you’re keen on that band or not)….you’ve gotta have a reason.

Published: Wednesday 18th September 2019
Categorised: Employment

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