How To Establish Constructive Dismissal Based On Contract Breach

What constructive dismissal means in contract breach cases

Constructive dismissal arises where an employee resigns in response to a fundamental breach of contract by the employer. Rather than being directly dismissed, the employee treats the employer's conduct as effectively ending the employment relationship.

In UK employment law, constructive dismissal is governed primarily by the Employment Rights Act 1996. The legal focus is on whether the employer committed a serious (repudiatory) breach of contract and whether the employee resigned in response to that breach without delay.

Where the breach involves contractual terms-express or implied-the claim is often framed as constructive dismissal based on contract breach.

Legal framework for constructive dismissal

Employment Rights Act 1996

Under section 95(1)(c) of the Employment Rights Act 1996, an employee is treated as dismissed if:

• They terminate their contract in circumstances where the employer has committed a fundamental breach of contract
• They resign in response to that breach
• They do not delay or affirm the contract after the breach

Key case law principles

UK courts have established core principles for constructive dismissal:

• The breach must be fundamental (repudiatory)
• The employee must resign in response to the breach
• The employee must not have affirmed the contract after the breach
• The employer's conduct is assessed objectively

A well-known authority is Western Excavating (ECC) Ltd v Sharp, which sets out the requirement for a fundamental breach going to the root of the contract.

What counts as a contract breach in constructive dismissal cases

Constructive dismissal claims are built on identifying a breach of an express or implied contractual term.

1. Express contractual terms

These include written terms in the employment contract, such as:

• Pay and salary terms
• Job role and duties
• Working hours
• Notice provisions
• Disciplinary procedures
• Bonus or commission structures

A serious breach may include failure to pay wages or unilateral changes to essential terms.

2. Implied terms of the employment contract

Even where not written, employment contracts include implied terms, including:

• Mutual trust and confidence
• Duty to provide a safe working environment
• Duty not to act in a manner likely to destroy trust and confidence

Most constructive dismissal claims rely heavily on breach of the implied term of mutual trust and confidence.

Step-by-step: how to establish constructive dismissal based on contract breach

Step 1: Identify the specific breach of contract

The first step is to clearly identify what contractual term has been breached.

Examples include:

• Unlawful reduction in salary
• Significant change in job role without agreement
• Failure to address workplace harassment
• Imposing unreasonable disciplinary sanctions
• Persistent failure to pay wages or commission
• Undermining authority or exclusion from duties

The breach must be serious enough to undermine the employment relationship.

Step 2: Show the breach is fundamental

Not every breach will qualify. The breach must be:

• Serious enough to go to the root of the contract
• Likely to destroy trust and confidence
• Not a minor or isolated issue

Tribunals assess the seriousness objectively, considering the full context of employment.

Step 3: Establish employer responsibility

It must be shown that:

• The employer committed the breach, or
• The employer allowed the breach to continue without remedy

This may include actions by managers or systemic HR failures.

Step 4: Demonstrate resignation in response to the breach

The employee must resign because of the breach.

This requires showing:

• The breach influenced the decision to resign
• The resignation followed the breach in a reasonable timeframe
• There was no unrelated reason for leaving

If the employee delays too long, the employer may argue the contract was affirmed.

Step 5: Avoid affirming the contract

Affirmation occurs where the employee:

• Continues working without protest for too long
• Accepts ongoing breaches without objection
• Does not raise a grievance or complaint

Affirmation can prevent a constructive dismissal claim succeeding.

Step 6: Follow a clear resignation process

A resignation should ideally:

• Be in writing
• State that resignation is due to employer breach
• Identify the key breach(es)
• Be submitted promptly after the breach or final incident

While not legally required, clarity strengthens the claim.

Step 7: Gather supporting evidence

Evidence is essential in proving constructive dismissal. This may include:

• Employment contract
• Emails and written instructions
• HR correspondence
• Pay slips or payroll records
• Witness statements
• Grievance documentation
• Notes of meetings or incidents

Tribunals rely heavily on contemporaneous evidence.

Common types of contract breaches leading to constructive dismissal

1. Breach of mutual trust and confidence

Examples include:

• Bullying or harassment
• Unreasonable disciplinary treatment
• False allegations or unjust accusations
• Exclusion from duties without reason

2. Unilateral changes to contract terms

Such as:

• Reduced pay or altered bonuses
• Changed working hours without agreement
• Demotion or role changes

3. Failure to follow disciplinary procedure

Including:

• Ignoring contractual disciplinary process
• Skipping investigation steps
• Predetermined dismissal outcomes

4. Unsafe or intolerable working conditions

Such as:

• Failure to address harassment complaints
• Unsafe workplace environments
• Persistent hostility from management

Tribunal approach to constructive dismissal claims

Employment Tribunals assess:

• Whether a fundamental breach occurred
• Whether the employee resigned in response to it
• Whether resignation was timely
• Whether the employee affirmed the contract

The test is objective: what a reasonable employee would consider a fundamental breach.

Common challenges in proving constructive dismissal

1. Delayed resignation

Delays weaken the link between breach and resignation.

2. Lack of clear breach

General dissatisfaction is insufficient without a contractual breach.

3. Insufficient evidence

Claims often fail where incidents are not documented.

4. Employer justification

Employers may argue conduct was reasonable or proportionate.

Time limits for constructive dismissal claims

Constructive dismissal claims must usually be brought within:

• 3 months minus 1 day from the effective date of resignation
• Subject to ACAS Early Conciliation extension rules

Strict limitation rules apply in Employment Tribunal proceedings.

Practical considerations when building a claim

• Identify breach clearly and specifically
• Keep written records of all incidents
• Raise grievances where appropriate
• Avoid long delays before resignation
• Preserve all contractual documents and communications

Tribunals assess both the breach and the employee's reaction to it.

Key Takeaways

Constructive dismissal based on contract breach requires proving that the employer committed a fundamental breach of an express or implied contractual term, that the employee resigned in response to it, and that the resignation was not delayed in a way that affirms the contract.

Success depends on clear identification of the breach, strong supporting evidence, and a direct causal link between the breach and resignation. Tribunals apply an objective test based on whether the employer's conduct destroyed the employment relationship.