02 Mar 2020
In a previous article, we define constructive dismissal as a change to an employee’s working conditions, employee conduct or aspects of their job description in an effort to force their resignation.
This isn't the same as an unfair dismissal, which involves dismissing an employee without a fair reason.
If an employment tribunal finds that your actions amounted to a breach of your employee’s contract, you’ll be liable to pay compensation for constructive dismissal.
The maximum payment an employee can receive is £86,444 or 52 weeks’ pay, whichever is lower. So, depending on the circumstances of the case and including the basic award payment (max payment £15,750), legal fees and travel expenses, it could end up costing upwards of £100,000.
To avoid claims of constructive dismissal, it’s important to familiarise yourself with some constructive dismissal examples in the UK.
For immediate assistance with issues relating to constructive dismissal, contact the helpful and experienced team at Croner. Call us now on 0808 145 3380.
Alternatively, this piece explores some various constructive dismissal examples. With it, you can gain an understanding of the type of scenarios that constitute constructive dismissal and take steps to avoid them.
Examples of constructive dismissal cases
There are a variety of instances that might lead an employee to resign from their position at your organisation. However, for the employee to claim constructive dismissal after they resign, they’ll need to prove, for example, that you:
- Refused to pay them or drastically cut their pay.
- Demoted them for no reason.
- Allowed harassment and bullying.
- Didn’t provide a safe working environment.
- Forced them to accept unreasonable changes to their roles, working conditions or hours.
Changes to an employment contract
This is the most common reason employees claim for constructive dismissal. These changes can happen at any time and for a variety of reasons. However, to fulfil your obligations as stated in your employee’s contract of employment, your employee must agree to all changes before implementation.
An example of this is if you change an employee’s working hours forcing them to work longer without a good business reason or first agreeing on it with them.
In this scenario, if the employee doesn’t accept the change, they’d inform you of this in writing. They’ll agree to continue working but ‘under protest’ until you both come to a resolution. If you’re unable to come to an agreement and the employee ends up resigning because of this, that’s constructive dismissal.
Safe working environment
There’s an implied term of trust and confidence between you and your staff. This means they trust you to create a safe environment while they’re at work. Additionally, case law demonstrates that an intolerable work environment can constitute a breach of this implied term.
So, for example, an employee who regularly uses display screen equipment (DSE) for more than an hour at a time complains about eye pain. The law requires you to take steps to reduce the risks associated with using this equipment including providing an eye test.
If you don’t and they quit as a result of it. This constitutes a constructive dismissal.
Harassment and bullying
When either of these occurs in the workplace, you should act immediately. If you fail to deal with it properly, you’re liable for harassment suffered by your employees.
For example, a member of staff informs you informally that their line manager regularly criticises and disregards their contributions, purposefully ignore them in conversation and regularly makes comments about their religion.
You go through the process of addressing the issue first informally and then formally, but the employee still sees no improvement and the bullying continues. If as a last resort the bullied employee decides to resign, they can make a claim for constructive dismissal.
Under article six of the Human Rights Act 1998, everyone has the right to be presumed innocent until proven guilty. The same approach applies to the workplace. You should follow your internal policies and investigate all allegations properly and fairly and give the accused a chance to respond.
An example of a situation that can lead to claims of constructive dismissal is if a manager suspects an employee of theft from the company and accuses them of this without carrying out an investigation.
If the employee decides to resign as a result of this baseless allegation, they can then bring a claim against you for constructive dismissal.
Constructive dismissal and case law
You should also familiarise yourself with some constructive dismissal case law examples to highlight the various circumstances in which employees claim for constructive dismissal.
- Malik and Mahmud v. Bank of Credit; Mahmud v. Bank of Credit: This is a leading case that first confirmed the existence of an implied term of mutual trust and confidence in all employment contracts. Both claimants lost their jobs with the organisation after it went insolvent due to various fraudulent activities. They then tried to seek other employment elsewhere but to no avail. Eventually, they sued their previous employer for their loss of job prospect due to the reputational damage they suffered because of their association with the company. The case concluded with the House of Lords unanimously holding that contracts imply an unspoked term of mutual trust and confidence. They also went on to say that while the aim of the implied term is to protect employee relationships, employers can be held liable if the breach to the terms causes “continuing financial losses”.
- Adams v Charles Zub Associates Ltd: This case highlights the importance of maintaining clear communication channels. The employee, Adams quit his job and filed an unfair dismissal claim to an employment tribunal because he hadn’t received his April salary by the 9th of May.
Ordinarily, because this constitutes a significant breach going to the “root of the employment contract”, the ET would conclude that the employee was constructively dismissed.
However, in this case, the ET found that although a breach of contract occurred, it wasn’t the intention of the company to purposefully withhold the money, so it didn’t pass the test for constructive dismissal. This is because the employee was made aware of the organisation’s financial situation and the mitigating circumstances surrounding their pay.
- Kaur v Leeds Teaching Hospitals NHS Trust: Employed as a nurse at Leeds Teaching Hospital Trust for six years, Kaur filed a claim for constructive dismissal. She claimed that from the onset of her employment with the hospital she’d received unjustified complaints about her performance. The above, along with other mitigating circumstances (maternity leave, an altercation with fellow co-workers, work-related stress, the organisation’s handling of her grievance, etc) led her to quit her job. She made a claim for constructive dismissal and identified the final straw as the outcome of an appeal she made following the organisation's disciplinary procedure. Although the tribunal agreed to a preliminary hearing to get the particularisation of the claim, they went on to dismiss it. The judge presiding on the case stated that her case for constructive dismissal would depend on whether or not the outcome of her appeal constitutes a ‘final straw’.
- Western Excavating ECC V Sharp: In this example, an employee resigns from his position at Western Excavating because of financial hardships in this personal life. The claimant approached his employers for an advance on his accrued holiday pay which they refused as it was against company policy to pay holiday pay unless it was actually taken. It then asked for a loan to which the company also declined because they couldn’t make him a loan to that extent. In order to receive his holiday pay, Mr Sharp decided to quit his job. After receiving it he went on to an industrial tribunal to claim for unfair dismissal. In the tribunal, while the court found that the employers had not done anything wrong and Mr Sharp actually dismissed himself, he was still awarded compensation. They said the company ought to have leant over backwards to help their employee and because of their conduct, Mr Sharp received £659 in compensation.
These are general examples and can relate to organisations in different industries. Contact us for more detailed support with all dismissal issues including constructive and unfair dismissals. Speak to a Croner expert today on 0808 145 3380.
Do you have any questions?
Get a free callback from one of our regional experts today