Unfair and constructive dismissal: what’s the difference?

Unfair dismissal claims rising

According to the most recent employment tribunal and Employment Appeal Tribunal statistics there were 57,400 unfair dismissal claims in 2009/10. However, a large number of them were actually based on constructive dismissal. This works differently to a conventional unfair dismissal claim. So what do you need to know?

What is unfair dismissal?

The term “unfair dismissal” describes a dismissal that doesn’t fall within one of the fair statutory reasons to dismiss. These are: (1) conduct; (2) capability; (3) redundancy; (4) retirement; (5) illegality; or (6) some other substantial reason.

Risks of getting it wrong. If you use one of these grounds wrongly, e.g. it’s a sham redundancy, the dismissal will be unfair. The same rule applies if you don’t follow a fair dismissal process. The maximum amount the tribunal can award for this type of claim is currently £68,400.

Avoiding unfair dismissal

But as an unfair dismissal claim will only succeed if the employer acted unreasonably, you can easily avoid them. This is done by following a fair disciplinary process, i.e. a thorough investigation, conducting an impartial hearing and giving the employee the right of appeal. In addition, the reason for dismissal must genuinely fall within one of the six statutory grounds, such as conduct.

Note. Some employers have come unstuck by using one of these grounds to mask discrimination, e.g. on the grounds of sex, not realising that a tribunal will always see right through it!

Constructive dismissal

Where a “constructive dismissal” occurs there’s no express dismissal. Instead, the employee chooses to resign without notice following a “fundamental breach of contract” by the employer. This must be something that’s serious enough to destroy the entire employment relationship. It may be a single event or a series culminating in the “last straw”.

Examples. The most common scenarios are where an employer deliberately undermines an employee or bullies them, changes their job location at short notice, reduces pay without agreement or demotes them without cause or consultation.

Up to the tribunal

The tribunal will judge each constructive dismissal claim on a case-by-case basis. In order to succeed the employee must be able to prove that: (1) there was a breach of contract; (2) the breach was serious enough to justify them resigning; (3) their resignation was a direct result of the fundamental breach; and (4) they didn’t accept the breach by remaining in employment for too long afterwards.

Tip 1. There’s no set time period for what counts as “too long”. However, any longer than a week and you probably have grounds to challenge it.

Tip 2. Deal with any problems immediately. Where you resolve them, always get the employee to confirm in writing afterwards that they’ll carry on working as normal. If you don’t, they could still bring a tribunal claim against you.

Note. Generally, an employee must have one year’s service to bring either type of claim. However, there are exceptions to this rule which we will be examining in a future article.