Constructive dismissal is a much misunderstood term. Claims occur when an employee leaves, saying they were forced out of their job by their employer’s actions. To quote the legislation, constructive dismissal is where the employee “is entitled to terminate their employment without notice by reason of the employer’s conduct”.
To make a successful claim, there must have been a fairly serious act by the employer, usually a fundamental breach of contract. I see many claims where an employee walks out after an argument then takes a claim for constructive dismissal to employment tribunal. Few of these claims succeed but every case is considered on its merits so it’s well worth understanding what constructive dismissal is and how to avoid it.
What constitutes constructive dismissal?
Significantly, unlike when claiming unfair dismissal, an employee does not need two years’ service to claim constructive dismissal. To be successful they must show the employer has breached a serious term going to the root of the employment contract. This might be:
• a significant cut in pay or working hours
• major changes to duties or job title
• change of location where there is no mobility clause in the contract
• failure to address a grievance or a claim of bullying or harassment
The employee might claim based on a single act or a series of incidents. The resignation could even relate to something that’s going to happen in the future, such as “I was told my hours would be cut next week.” Of course, you would expect the employee to have made complaints before leaving.
When might it occur?
There is usually a history of events that lead to the walk out. Many cases have been before tribunals and it is established that it is not absolutely necessary for the employee to give the reasons for resignation. It’s much better for them to do so as it gives an employer who makes a mistake the an opportunity to rectify it. Even if the employee has already left you would want to let them know you take their complaint seriously, give them a clear indication of what you plan to do, and give them a week or so to reconsider their decision.
Let’s look at some real-life examples: an employee was repeatedly bullied by her line manager and eventually made a formal complaint. The outcome of the hearing was that the manager should be moved or the employee redeployed, but neither happened. When the employee got a letter saying redeployment was no longer available she resigned and claimed constructive dismissal.
In another case, a therapist claimed the “last straw” was when a self-employed practitioner working in the salon became aggressive with her. In defence, the salon owner argued that the individual wasn’t their employee and was, therefore, outside of their control.
Normally, it isn’t possible to claim constructive dismissal based on the actions of a third party but in this case the tribunal decided the employer failed to take reasonable steps to control them.
What might it cost?
Under constructive dismissal, the employee claims breach of contract, so can only claim damages – i.e. the money they lost. If they resigned without notice that is usually notice pay plus any benefits due during that period. Breach of contract claims are capped at £25,000, whereas it is three times that for unfair dismissal and there is no cap for discrimination cases.
A reasonable employer is unlikely to find themselves facing a claim for constructive dismissal but as you can see, it might be the actions of your manager, colleagues or even self-employed people that cause the problem.
If you have regular staff meetings, appraisals, reasonable HR policies and have an active presence in the salon, you at least give employees the opportunity to raise any concerns they have with you.
David Wright is a consultant in all aspects of employment practice and law. He is the main employment law consultant for Habia and provides a personalised support service for UK salons. Tel: 01522 831061 www.davidwrightpersonnel.co.uk for Habia and provides a personalised support service for UK salons. Tel: 01302 563691 davidwrightpersonnel.co.uk