Constructive dismissal

Produced by Tolley in association with Hannah Freeman at Old Square Chambers

The following Employment Tax guidance note Produced by Tolley in association with Hannah Freeman at Old Square Chambers provides comprehensive and up to date tax information covering:

  • Constructive dismissal
  • Employer’s conduct
  • Repeated minor breaches of contract
  • Employee must accept the breach and resign in response
  • Employee must act quickly

Constructive dismissal

A constructive dismissal will occur in a situation where the employee resigns because a sufficiently serious breach of the contract by the employer entitles them to leave without giving notice. The employee may bring a claim for unfair dismissal (if they have the requisite length of service) even though they chose to end the contract by resigning. The resignation is considered a dismissal because it occurred in circumstances in which the employer's breach of contract made it almost impossible for the employee to stay at work. Western Excavating (ECC) Ltd v Sharp [1978] 1 All ER 713

Employer’s conduct

The employer's breach of contract must be very serious. It must be shown that the employer has breached a fundamental express or implied term of the employee's contract. It is not sufficient that the employer has behaved unreasonably; the behaviour must be so serious that the employee is justified in resigning.

Employees will often allege a breach of the implied term of trust and confidence, which is a fundamental term of every contract. In such cases, to show that there has been a fundamental breach of contract capable of supporting a claim of constructive dismissal, the employee must show that the employer has, without reasonable and proper cause, conducted itself in a manner calculated, or likely, to destroy or seriously damage the relationship of confidence and trust between them.

The following elements are needed to establish a case of constructive

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