ARE CONSTRUCTIVE DISMISSAL CASES ON THE RISE?

Helen Taylor
Aug 12
4 min read

two ladders with six worker men on the ladders constructing a metal boarder / wall

While the focus has been on the Employment Rights Bill and how it will impact on employment law as we know it, behind the scenes it has been business as usual in the Employment Tribunals, with the focus being on unfair dismissal’s best friend; constructive dismissal.

Understanding the mechanics of a constructive dismissal claim

Employers generally understand how to avoid an unfair dismissal claim – a fair reason and process being key. More often employers are being challenged with complaints or threats of constructive dismissal, accompanied by allegations of discrimination.

Before looking at a recent case, it is useful to understand what an employee has to establish in order to succeed with a constructive dismissal claim. This understanding can assist employers to identify the steps necessary to protect themselves from this type of claim.

While there is no actual dismissal by the employer, constructive dismissal is treated as a form of unfair dismissal. It arises where an employee has resigned because they consider their employer to have seriously breached their contract of employment, or there has been a series of breaches of the contract, such that they are entitled to treat themselves as dismissed. Below are some examples of this:

regularly not being paid the agreed amount without a good reason;
being bullied or discriminated against;
raising a grievance that the employer refuses to look into; or
unreasonable changes to working patterns or place of work without an agreement.

A recent example of an employee walking away from her job and challenging the way she had been treated is the case of Wainwright v Cennox plc. Mrs Wainwright resigned having been off sick due to cancer, in response to a colleague being appointed to do her role of Head of Installations. Cancer is an automatic disability.

On returning to work and concerned about losing some of her responsibilities, Mrs Wainwright raised a grievance alleging she had been demoted for medical reasons. The grievance was dismissed.

Mrs Wainwright resigned and claimed constructive dismissal and discrimination arising from a disability, amongst other complaints. The case ended up in front of the Employment Appeal Tribunal (EAT) as the Employment Tribunal did not agree that Mrs Wainwright has been constructively dismissed but concluded that she had been discriminated against. The EAT disagreed, indicating that consideration should have been given as to whether the discriminatory treatment was a fundamental breach of contract. If there was, and Mrs Wainwright resigned in response, there was a valid claim for constructive dismissal. A new Employment Tribunal was asked to reconsider the case based on the EAT’s decision. Subsequently, Mrs Wainwright was found to have been discriminated against and constructively dismissed.

The compensation award for discrimination and constructive dismissal was sizeable; exceeding £1.2 million.

From the employer’s perspective

While the outcome of the Wainwright v Cennox plc case is a warning to employers of what can happen if it goes wrong, constructive dismissal claims are difficult to bring. Many claims fail because employees are unable to demonstrate that:

there was a breach of contract or a series of breaches serious enough to justify resignation;
they rejected a breach with the most common issue being that the employee delayed in resigning; or
the resignation was in response.

Employers can also argue that their treatment of the employee was fair and reasonable.

How to manage legal risk

While employers have a strong armoury for defending a claim, being reactive to a problem can be costly, leading to reputational risk and legal costs. A proactive approach will assist to manage legal risk and make a disgruntled employee think twice about resigning and claiming constructive dismissal.

While each case will be fact specific, the following are tools for managing legal risk at an early stage:

Have clear policies and procedures. Policies should manage expectations; explaining what the employee can expect from their employer and, if dissatisfied, how they can raise concerns.
Have open communication. If there are changes (contractual or otherwise) to be implemented, consult with affected employees.
Use the grievance procedure when complaints are raised. Concerns must be acknowledged promptly and investigated thoroughly to resolve concerns. Employers should keep an audit trail of the process, including the outcome.
Ensure managers and the HR team are trained. Those managing and supporting during the grievance process should understand the process and be equipped to deal with complaints, particularly where employees may have additional protection arising from protected characteristics such as a disability, as in Mrs Wainwright’s claim.

Employers are ahead of the game when it comes to constructive dismissal complaints. However, this does not mean there should be complacency about an employee's legal rights. Complaints should be taken seriously.

Now is the time to strengthen your HR practices and foster a better, healthier workplace culture.

So, how can FG Solicitors help your business?

If your business wants to be even further ahead when it comes to legal risk management, FG Solicitors can assist you to strengthen your HR and employment law practices, whether it is through a document audit, training for your team, or supporting you with a complex grievance.

Contact FG Solicitors today on 0808 172 93 22 or complete our quick contact form for a no obligation discussion!