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What is constructive dismissal?

By Joanney Hue, Last updated: 2023-01-12 (originally published on 2022-12-05)

constructive dismissal
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If you are an employee struggling to understand the concept of Constructive Dismissal, observe it simply as an entitlement that employees have. This entitlement concerns the employee’s right to resign in the circumstance you as an employee have committed a fundamental, anticipatory, or actual breach of the employment contract. If the employer has conducted a breach of contract, and the employee resigns without causing delay, the resignation amounts to constructive dismissal. Here, the conduct of the employee is the reason for resignation.

The claims of constructive dismissal are infamous because it is extremely arduous for an employee to substantiate it. This is because to make a strong claim, the employee has to prove a repudiatory breach has occurred and there is no clear test to a repudiatory breach. 
A repudiatory breach provides the aggrieved party with the choice to end a contract. In the context of constructive dismissal, the employee is the aggrieved party.  Repudiation on behalf of the employer might look like an unwillingness to pay the employee as promised in the contract, discriminatory behaviour against the employee, unwillingness to look into the grievances raised by the employee, and making unreasonable changes to the work pattern without prior information.

What treatment or conduct could result in a Constructive Dismissal claim?

If an employee has claimed constructive dismissal, the employer’s failure to abide by their employment contract is its basis. It is therefore helpful to be aware of what behaviour or conduct could result in a constructive dismissal claim.

 A constructive dismissal claim can be issued on financial grounds. This may include the employer’s failure to pay on time, failure to pay for the work carried out by the employee, and reduction of the employee’s payment without prior notice and agreement. It also entails making changes to an employee’s duties outside of what is agreed in the contract-  for example increasing the task load without any agreement on the payment situation. 

A Constructive Dismissal Claim can also be made on a behavioural basis. This implies that if an employee is treated unfairly in the workplace, they have the entitlement to resign and make such claims. Such treatment might incorporate discrimination, negligence in dealing with valid concerns raised by the employee, failure to take disciplinary actions, inadequate disciplinary actions, failure to maintain mutual trust and confidence, etc. Based on these, your employee may claim the employment contract’s termination and constructive dismissal.

What is the difference between Constructive Dismissal and Unfair Dismissal?

The key difference between Constructive Dismissal and Unfair Dismissal is whether the employee resigns by the dismissal of the contract or the employer terminates the employment contract. Constructive Dismissal assigns the burden of proof to the employee while unfair Dismissal assigns it to the employee.

For the claim of Constructive Dismissal, the employee needs to resign. The resignation could be prompt and with or without notice. The employee will have to prove their resignation to be directly impacted by the breach or series of breaches of the employment contract by the employer. The breach could be anticipatory, actual, or fundamental. In an Unfair Dismissal claim, the employer has the responsibility to prove that the employment contract was terminated because of the employee’s dismissal. 

The standard time to bring forth the claim in both unfair and constructive dismissal is three months from the date of termination of the contract. However, in the case of a constructive dismissal claim, when an employee has provided you prior notice, the date is three months from the date of submission. The determination of compensation for constructive dismissal is the same as that for unfair dismissal. However, throughout the notice, the employee is required to give credit during the damage assessment. For instance, a worker who was told three months in advance and found a new position two months later is not eligible to use the final month of the notice period.

How can Constructive Dismissal Claims be Prevented? 

A constructive dismissal claim can be problematic for the employer and the employee. Constructive Dismissal Claims can be prevented by creating a corporate culture that values communication, equality, respect, and openness. Employees should therefore make it a top priority. Employers must proactively ensure that managers are adept at leading diverse teams. Additionally, it is a good idea to have a company hand book drafted as it clarifies harassment, discrimination as well as termination reporting procedures. 

 A good strategy for developing leadership, and problem-solving abilities and increasing employee trust is to provide workshops and training to leaders and staff who have the potential to become good managers. 

Managers are less inclined to engage in dismissals and other actions that can cause unfavourable circumstances when they are aware of the dangers associated with constructive dismissals.

Notifying staff members frequently about business changes is an efficient method to make sure they are adhering to corporate policies. Employees should be kept aware when memos are sent via email or corporate newsletters, announcements are made during meetings, or information is given directly to them. This encourages everyone to abide by the rules and regulations. It’s a simple technique to ensure that employees do not feel the necessity to resign based on repudiation. Employees are more motivated and are less likely to make constructive dismissal claims about their termination when they feel like they are a part of a cohesive team with effective communication and clear roles and responsibilities.

What Remedies can employers use for Constructive Dismissal Claims?

If an employee succeeds in their claim for constructive dismissal, they may also pursue damages for contract breach. Constructive dismissal compensation includes a baseline payment and a compensating award, similar to unfair dismissal compensation. The basic distinction is calculated similarly to how a statutory redundancy payment is made. The employment tribunal may reduce the basic award if the employee’s behaviour before termination justifies it.If a contract is broken, damages should put the employee in the same financial situation that they would have been in if the agreement had been followed. Workers must attempt to lessen their losses and earn them as quickly as feasible. If the employer’s breach of the agreement results in damages, such as claims for personal harm, in addition to the employee’s failure to pay under the terms of the agreement, or results in additional damages, including claims for damages resulting from unlawful termination.

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