What is Constructive Dismissal? Legal Guide for Employees

Resigning from a job is a significant step, and when an employee feels forced into it because of their employer’s behaviour, it can bring overwhelming stress and financial uncertainty. Because employment is built on a foundation of mutual trust, actions by an employer that breach this trust can leave an employee feeling as though they have no choice but to walk away.

Understanding their legal rights, their employment contract, and the strict criteria required to prove a case is essential to avoid costly mistakes and protect their future. In this guide, the Employment Law Team at Richard Nelson LLP breaks down how constructive dismissal works, the high legal burden of proof required, and what alternative routes may be available to protect their career and financial security.

Interested in a particular section? Use the links below to navigate straight to it:

• What is constructive dismissal?
• The law around constructive dismissal
  • What is ‘conduct’? 
  • Constructive dismissal outside a contract
  • Can any breaches count towards constructive dismissal?
  • Is one breach enough for constructive dismissal?
  • Can a breach be cured? 
  • Is a breach of an express term more serious than a breach of an implied term?
  • What is the difference between implied and express terms?
  • Are there any defences to a claim of constructive unfair dismissal?
• Alternatives to constructive dismissal
• What is constructive unfair dismissal?
• How we can help

What is constructive dismissal?

Constructive dismissal arises when an individual feels compelled to resign due to their employer’s actions fundamentally breaching the core terms of their employment contract. In a legal context, this is interpreted as a forced dismissal, as the employer’s behaviour has rendered the working relationship untenable.

The law around constructive dismissal

Section 94 of the Employment Rights Act 1996 states that an employee with at least 2 years of continuous service has the right not to be unlawfully dismissed (though employees who have at least 6 months continuous service by 1st January 2027, or accrue six months of continuous service from 1st January 2027, will also have this right). 

Section 95 of the Employment Rights Act 1996 defines the definition of ‘dismissal’ – which can apply in 3 different situations. One of which is where an employee resigns (with or without notice) due to the employer’s conduct. 

Despite their resignation, they would, for all intents and purposes, be entitled to claim that they were dismissed (constructively). 

So, depending on an employee’s length of service, they could either claim constructive dismissal or constructive unfair dismissal. 

What is ‘conduct’? 

The ‘conduct’ in question must be a fundamental breach of a contractual term – for instance, an implied term (implied by law, i.e. the right not to suffer unlawful deductions from wages) or otherwise implied (i.e. by custom and practice) or an express term (i.e. oral or in writing). 

Constructive dismissal outside a contract 

By law, employees are entitled to a written statement of employment particulars on or before their first day of work. Section 1 of the Employment Rights Act 1996 provides an exhaustive list of all the information that the statement ought to include.

A written statement of employment particulars is not a contract of employment, though it is the best evidence to establish the terms of the contract. 

The wording of contracts is not determinative of the issue, though – Courts & Tribunals have discretion to look beyond the express terms – and various statutory mechanisms prohibit attempts to vary or disapply certain rights. 

Can any breaches count towards constructive dismissal? 

No, the breach must be fundamental to the contractual relationship – not every breach of an express term will be fundamental – though a breach of the implied term of mutual trust and confidence will always be fundamental. 

Most employees are familiar with the term ‘gross misconduct’ – the implied term of mutual trust and confidence is essentially gross misconduct, but in reverse. 

In practice, most claims are brought based on a breach of this implied term. 

Is one breach enough for constructive dismissal?

Yes, as long as that breach is a fundamental one. 

A fundamental breach can arise in a single event or a series of events that cumulatively amount to a breach. A single event, or a series of events, can also amount to both breaches of implied and express terms. 

Can a breach be cured? 

Strictly speaking, a fundamental breach cannot be cured per se – a breach can only be accepted, or affirmed. 

Accepting a breach means viewing the contract as at an end and resigning in response. 

Affirming a breach means either expressly (orally, or in writing) agreeing to it (such as a pay cut) or acting in a manner that is consistent with affirmation (such as continuing to perform the contract on new terms, or simply not taking issue with the breach or conduct).  

Is a breach of an express term more serious than a breach of an implied term? 

From a purely contractual view, both types of breaches rank equally – unlike other types of claims (i.e. workplace discrimination, or detriment) and so the frequency or the severity of the breach(es) in question does not influence the seriousness of the offence, or the damages arising from, per se. 

Whilst the implied term of mutual trust and confidence has a broad application, and can apply to claims of discrimination, they would be claims in their own right. 

What is the difference between implied and express terms? 

Generally, an implied term does not override or replace an express term (unless implied by law), though the implied term of mutual trust and confidence can apply to how and when an express contractual term is invoked. 

For instance, in the case of United Bank Ltd v Akhtar [1989] IRLR 507, EAT – the Respondent sought to rely on a legitimate express relocation clause. However, the Appeal Tribunal found that they had breached the implied term of mutual trust & confidence. 

Are there any defences to a breach? 

Generally, there are no defences for an employer’s breach of an express term, insofar as the reason for the breach is concerned. 

However, an employer can defend a breach of the implied term of mutual trust and confidence if they can show that they had ‘reasonable and proper cause’ to justify their conduct. 

Are there any defences to a claim of constructive unfair dismissal? 

Under Section 98 of the Employment Rights Act 1996, an employer must show that they had a potentially fair reason for the dismissal. There are 5 potentially fair reasons (conduct, capability, redundancy, illegality and ‘some other substantial reason’). 

Following the case of Iceland Frozen Foods v Jones, an employer must show that the decision to dismiss fell within the band of ‘reasonable responses’. 

Therefore, an employer can defend a claim of constructive unfair dismissal, notwithstanding the above, on the basis that the constructive dismissal was for a potentially fair reason and a reasonable response (even though it was not their decision to terminate the contract!). 

In fact, in Mr M Mostyn v S & P Casuals Limited (Case Number: 2601380/2016), the Employment Tribunal determined that whilst the Claimant had suffered a fundamental breach (reduction in pay), he was fairly (constructively) dismissed due to capability concerns. 

Alternatives to constructive dismissal

Resigning as a result of a breach is a drastic step. Employees can instead bring claims of unlawful deductions from wages if a breach results in financial loss, whilst remaining in employment. This is known as ‘standing and suing’. 

Further, the right not to suffer unlawful deductions is a statutory right (under Section 13 of the Employment Rights Act 1996), so an employee who is dismissed owing to their assertion of this right and the employer’s infringement of it could benefit from recourse to automatic unfair dismissal (of which there is no defence). 

What is constructive unfair dismissal?

Constructive dismissal is an objective test, and a matter of contract; matters of fairness and reasonableness are not relevant. Whereas unfair dismissal is a subjective test (viewed through the eyes of the ‘reasonable employer’), and factors such as fairness and reasonableness are crucial. 

A key takeaway for employees is that a resignation due to a breach of contract will not automatically amount to a constructive unfair dismissal, and a constructive dismissal also does not automatically amount to a constructive unfair dismissal. 

Any employee who resigns due to a breach of contract can claim constructive dismissal. Generally, the damages are quite modest (usually limited to notice pay they were contractually entitled to if their contract was terminated in accordance with the contract). When an employee resigns with notice, there may not be a claim for damages to pursue. 

Constructive dismissal does, however, form a defence to the application of restrictive covenants (i.e. post-employment restrictions not to compete with the business, solicit/approach customers or suppliers, or entice or employ certain staff members) and may also apply to any clawback provisions (such as repayment of training fees, etc). 

How we can help

At Richard Nelson LLP, our specialist employment solicitors for employees understand the daunting legal complexities of forced resignations inside out. 

We will work with employees to draft a detailed grievance or formal letter of representation, pairing their evidence with a meticulous review of their documents to ensure the employer is put fully on notice.

While public advisory websites offer free instructions on lodging claims, the high burden of proof and strict tribunal deadlines mean professional representation makes the process smoother and more secure. Working with our multidisciplinary team ensures employees have an expert guiding them through Acas Early Conciliation and the Employment Tribunal procedure to secure the best possible outcome.

Get in touch with our expert solicitors today to discuss the circumstances.