Disgruntled employees often ask if they have a claim for “constructive dismissal”. They have heard the phrase but don’t quite know what it means.
Constructive dismissal is not defined as such in the Employment Rights Act 1996 which is the legislation which covers unfair dismissal. However, section 95(1)(c) of that Act provides that an employee is dismissed by his employer if “the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct”. This is in effect the definition of constructive dismissal. It should be noted that a constructive dismissal can be either fair or unfair depending on the circumstances.
The above does not answer the essential question as to what are the circumstances in which the employee is entitled to terminate the employment contract. In order to do so, three questions have to be asked.
The first question is whether the employer’s conduct amounted to a breach of contract. If it did the second question is whether the breach was a repudiatory breach, also referred to as a fundamental breach. If there had been a repudiatory breach, the third question then arises which is whether the breach played a part in the decision of the employee to resign.
For there to be a constructive unfair dismissal there has to be a breach of contract by the employer. A minor breach will not do. It is also not enough that the employer has (in the eyes of the employee) acted unreasonably. It has to be a repudiatory breach. A repudiatory breach is a breach which the law regards as serious enough to entitle the employee to end the employment there and then. This must be established objectively; it cannot be established simply because an employee says he felt justified in resigning because of what had happened.
The breach of contract which an employee usually says has occurred, is a breach of the term of trust and confidence which is implied into every employment contract; the question for the Tribunal is whether the employer has conducted itself “without reasonable and proper cause in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust” (Malik v. BCCI) which the employer and employee should have in each other. If a Tribunal is satisfied that there was a breach of the implied term of trust and confidence, this will inevitably be repudiatory.
However, an employee should take on board the reference to “without reasonable and proper cause”. If the employer has reasonable and proper cause for his conduct which destroys or seriously damages the employee’s trust and confidence, then there is no breach of the implied term and thus no repudiation of the employment contract by the employer.
If the employee has successfully answered the first two questions, he faces the third question which is whether the breach played a part in the employee’s decision to resign. The employee must, at least in part, resign because of the employer’s repudiatory breach of contract. The employer’s breach must have played a part in the decision to resign but does not have to have been the main reason.
An employee cannot delay for too long before he resigns because if he does delay too long, he may be taken to have affirmed the contract and thereby lost his right to bring an unfair dismissal claim. The question of affirmation is essentially whether the employee can be said to have chosen to accept the situation in which he finds himself. He will do so not only by continuing to work in the job but also by what he says and does – his words and actions might show that he intends the employment to continue. It is not just a question of measuring the lapse of time between the employer’s behaviour which is complained about and the resignation (although the longer this period is, the more likely the employee will be taken to have affirmed the contract) but of looking at the employee’s reaction in context, including how he behaved in the period leading up to his resignation and his financial and personal circumstances. If an employee is off work sick it is more difficult for an employer to argue that an employee has affirmed the contract than if he was in work.
For an employee to win a constructive unfair dismissal claim he has the burden of persuading the Employment Tribunal to answer the three questions in his favour. Even when he can do that, he may well have to overcome the argument that he has affirmed the contract. An employee should think long and hard before putting himself out of a job and a salary with a view to bringing a claim in the Employment Tribunal for constructive unfair dismissal.