Constructive Dismissal Flashcards
What is constructive dismissal?
Constructive Dismissal is where an employer has committed a serious breach of contract, entitling the employee to resign in response to the employer’s conduct. The employee is entitled to treat him or herself as having been “dismissed”, and the employer’s conduct is often referred to as a “repudiatory breach”.
Wrongful constructive dismissal is the easier of the two to prove. As long as there is a repudiation of the contract forcing the employee to resign, they can claim wrongful constructive dismissal. The remedies available are the same as for a wrongful dismissal claim.
Requirements for constructive dismissal?
To prove constructive dismissal, the employee must show that:
The employer breached their contract of employment
The breach was serious enough to justify the employee resigning
The employee resigned in response to the breach
It is not enough to show the employer has behaved unreasonably. There must be a fundamental breach of either an express contractual term, or the implied term of “trust and confidence”. Furthermore, the employee must have resigned because of the actual breach- not for some other reason. The employee should make it clear at the time they regard themselves as having been “constructively dismissed”.
For a claim to succeed, what conditions must be met?
For a claim to be considered constructive dismissal, the following conditions must be met:
a. A fundamental breach of contract by the employer: This breach can be a single serious incident or a series of less significant incidents that cumulatively amount to a serious breach.
b. The breach must be a direct cause of the resignation: The employee must resign promptly in response to the breach without condoning the employer’s behaviour by continuing to work under the same conditions for an extended period.
c. The resignation must be without undue delay: Any significant delay between the breach and the resignation may be interpreted as the employee accepting the breach, thus weakening their claim and ‘affirming’ the contract.
Repudiation of Contract
Western Excavating Ltd v Sharp, confirmed that for there to be constructive dismissal, the employer must have repudiated the contract.
Trust and Confidence
Breach by the employer of the implied duty of mutual trust and confidence can lead to the employee resigning and claiming dismissal. Morrow v Safeway Stores plc
Series of Acts
Kaur v Leeds Teaching Hospitals NHS Trust, COA held that there does not need to be a single repudiatory act, but instead there could be a series of acts. The employee must not wait too long to resign, otherwise they will be taken to have affirmed the contract.
Proceedings and Claim
Unfair constructive dismissal, Claimants must be able to show that they meet the unfair dismissal eligibility requirements.
Claims for constructive unfair dismissal can only be made by those with employee status and at least two years’ continuous service at the time they resigned. If the dismissal is deemed automatically unfair or due to discrimination such as pregnancy, the two-year qualifying period does not apply.
The employee also has to show that there was a repudiation of the contract forcing them to resign and that the dismissal was unfair.
The remedies available are the same as for an unfair dismissal claim.
Remedies
Requires a serious breach:
To claim constructive dismissal, the employee must prove their employer committed a substantial breach of their contract, like unreasonable changes to working conditions, harassment, or failure to pay wages, which left them with no choice but to resign.
Resignation as a response:
The employee must have resigned directly in response to the employer’s breach, not for other reasons.
Two components of compensation:
Basic award: A statutory calculation based on length of service and age.
Compensatory award: Covers financial losses incurred due to the dismissal, such as lost wages, benefits, and potential future earnings.
Reinstatement is dealt with by s114 ERA 1996. Reinstatement will not be ordered if it is not practicable for the employer to comply with it or if it would be unjust to do so because the employee contributed to the dismissal.
Re-engagement (S115 ERA 1996). The ET must exercise its discretion and take into account S116(1) ERA 1996: Whether it is practicable for the employer to comply with the order
Compensation is covered by ss118-124 ERA 1996. Consists of the basic award, compensatory award and the additional award.
Basic award is a fixed sum calculated in a similar way to redundancy pay, that is, a factor of the number of years’ service (max 20 years) and the gross weekly wage at dismissal (max £571).
Compensatory award is designed by S123 ERA 1996. The loss includes any expenses reasonably incurred and any benefit lost.
a) The maximum award is either 52 weeks of the employee’s gross pay or £93,878 or whichever is the lower.
Heads of damages was originally established in Norton Tool Co v Tewson.
Compensation is only intended to cover actual loss. This covers loss of net earnings from the date of dismissal to the date of the hearing.
It is now clear that compensation for unfair dismissal cannot include damages for bullying, stress or humiliation; but if the employer’s conduct prior to, and independent of, the dismissal causes psychiatric or other injury leading to financial loss, the employer will be deemed to have breached the implied common law term of trust and confidence.
Other factors, the employee has a duty to mitigate their own loss, this does not mean taking any available job, but offers of employment must be reasonably considered.
The employee’s contribution to their own dismissal must also be taken into account; this involves some element of blameworthiness.
Compensation will be reduced where it is felt just and equitable (S123(1) ERA 1996) or where the ET finds that C has contributed to or caused the dismissal (S123(6).
In Smith v Lodge Bros (Funerals) Ltd the EAT confirmed that it is possible to reduce both basic and compensatory award by 100% if the employee caused their own dismissal by their conduct.
