Constructive Dismissal: Employer Responsibility

Constructive dismissal arises where an employee resigns because the employer has committed a serious breach of the employment contract. In UK law, the resignation is treated as a dismissal under section 95(1)(c) of the Employment Rights Act 1996, provided strict legal conditions are met.

Employer responsibility is central to constructive dismissal claims. The legal question is not simply whether the employer behaved badly, but whether their conduct amounted to a fundamental breach of contract, particularly of the implied duty of mutual trust and confidence, leaving the employee with no reasonable option but to resign.

Legal Definition of Constructive Dismissal

Constructive dismissal occurs where:

• The employer commits a repudiatory (fundamental) breach of contract, and
• The employee resigns in response to that breach, and
• The employee does not delay so long that they are treated as accepting the breach

This principle was firmly established in Western Excavating (ECC) Ltd v Sharp [1978], which confirmed that the test is contractual rather than based on general fairness.

A key modern formulation is that the employer must not, without reasonable and proper cause, act in a way that is likely to destroy or seriously damage the employment relationship.

Core Employer Responsibility in Constructive Dismissal Claims

Employer responsibility is assessed through both express contractual duties and implied legal obligations.

1. Duty Not to Breach Express Contract Terms

Employers must comply with written contractual obligations, including:

• Payment of wages and benefits
• Agreed working hours and location
• Job role and responsibilities (where contractual)
• Notice and disciplinary procedures

A serious unilateral change without consent may constitute a breach.

2. Implied Duty of Mutual Trust and Confidence

The most significant employer responsibility arises from the implied term of mutual trust and confidence, confirmed in Malik v BCCI [1997].

This requires employers not to:

• Act in a manner likely to destroy trust
• Treat employees arbitrarily or unfairly without justification
• Ignore or mishandle serious workplace concerns
• Subject employees to harassment, bullying, or sustained hostility

A breach of this implied term is one of the most common foundations for constructive dismissal claims.

3. Duty to Maintain a Safe and Reasonable Working Environment

Employer responsibility extends to workplace conduct, including:

• Preventing bullying and harassment
• Addressing grievances properly
• Ensuring fair management practices
• Avoiding discriminatory treatment

Failure to act on complaints or allowing a toxic working environment to persist can contribute to a constructive dismissal finding.

4. Duty to Follow Fair Procedures

Even where there are legitimate concerns about performance or conduct, employers are expected to act fairly by:

• Investigating issues before taking action
• Following disciplinary or grievance procedures
• Allowing employees to respond to allegations
• Considering alternatives to dismissal or resignation

Failure to follow fair process may turn a potentially lawful situation into a constructive dismissal claim.

Common Employer Conduct Leading to Constructive Dismissal

Tribunals frequently consider the following types of employer behaviour:

Unilateral Contract Changes

• Reducing pay without agreement
• Changing job duties significantly
• Forcing relocation without contractual authority

Workplace Bullying or Harassment

• Persistent inappropriate conduct by managers or colleagues
• Failure to intervene in known bullying situations
• Hostile or humiliating treatment

Failure to Deal with Grievances

• Ignoring formal complaints
• Delaying investigations unreasonably
• Conducting biased or inadequate investigations

Breakdown of Trust and Confidence

• Accusations of dishonesty without evidence
• Exclusion from key duties or meetings
• Undermining an employee's role without justification

Legal Test Applied by Employment Tribunals

Tribunals apply a structured test:

Step 1: Was there a fundamental breach?

The tribunal considers whether the employer's conduct was serious enough to go to the root of the contract.

Step 2: Did the employee resign because of it?

There must be a clear causal link between the breach and resignation.

Step 3: Did the employee affirm the contract?

If the employee delays too long before resigning, they may be treated as accepting the breach.

Step 4: Was the employer's conduct without reasonable justification?

Even poor treatment may not qualify if there was reasonable and proper cause.

Employer Responsibility and “Last Straw” Situations

Constructive dismissal can arise from:

• A single serious incident, or
• A series of smaller incidents culminating in resignation

A final incident may act as the “last straw” when combined with earlier breaches, even if the final act alone is not serious.

Legal Process for Constructive Dismissal Claims

1. ACAS Early Conciliation

Before issuing a claim, employees must engage with ACAS Early Conciliation, which aims to resolve disputes without tribunal proceedings.

2. Employment Tribunal Claim

If unresolved, a claim may be filed for:

• Unfair dismissal (constructive dismissal)
• Breach of contract (in limited cases)
• Discrimination (if relevant)

3. Evidence Requirements

Claimants typically need to show:

• Contract terms or implied obligations
• Emails, records, or witness evidence of misconduct
• Timeline showing resignation linked to breach

Time Limits

Strict time limits apply:

• 3 months less 1 day from the date of resignation
• ACAS Early Conciliation pauses the limitation period

Missing the deadline usually prevents the claim from proceeding.

Employer Defences

Employers commonly defend claims by arguing:

• No fundamental breach occurred
• Employee resigned for unrelated reasons
• Employee delayed too long before resigning
• Conduct was justified or reasonable in context
• Proper procedures were followed

Tribunals assess the overall reasonableness of the employer's actions rather than isolated incidents.

Compensation and Remedies

If successful, remedies may include:

• Basic award (based on age, service, and pay)
• Compensatory award (loss of earnings and benefits)

In rare cases, reinstatement or re-engagement may be ordered.

Practical Indicators of Employer Responsibility Breach

Constructive dismissal risk increases where employers:

• Ignore formal complaints or grievances
• Allow sustained bullying or discrimination
• Change essential terms without agreement
• Fail to follow internal procedures
• Act in a way that undermines employee trust without justification

Common Questions from our Readers

Is poor management enough for constructive dismissal?

Not usually. The conduct must amount to a fundamental breach of contract.

Must I resign immediately?

Delay can weaken a claim if it suggests acceptance of the breach.

Can I raise a grievance before resigning?

Yes. This may support a claim, but is not strictly required.

Does stress or pressure count?

Only where it results from employer conduct that breaches contractual obligations.

Key Takeaways

Constructive dismissal under UK law depends on whether an employer has fundamentally breached the employment contract, particularly the implied duty of mutual trust and confidence. Employer responsibility includes maintaining fair treatment, following procedures, and avoiding conduct that undermines the employment relationship. If these duties are breached and the employee resigns in response, the resignation may be treated as a dismissal for legal purposes. Claims are subject to strict evidential requirements and short limitation periods, assessed by employment tribunals using established contractual principles.