Constructive dismissal

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What's it regarding?

A constructive dismissal occurs when an employer commits a repudiatory breach of contract and the employee resigns in response. A repudiatory breach of contract is one which is sufficiently serious as to entitle the employee to regard the contract as being at an end. Examples include imposing a pay cut or a temporary lay-off, or failing to provide the employee with a safe working environment.

Employees often rely on the implied duty of trust and confidence. In the key case of Mahmud v Bank of Credit and Commerce International [1997] ICR 606,the duty was formulated in the following way:

“The employer shall not without reasonable and proper cause conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.”

In cases where the relationship between employer and employee has been poor for some time, the employee may be able to show that, taken cumulatively, a series of less serious breaches by the employer amount to a repudiatory breach of contract.

Not all constructive dismissals are unfair. For example, an employer may be able to justify the imposition of a pay cut if it is necessary for the survival of the business.

As constructive unfair dismissal is simply a species of unfair dismissal, the remedies available for successful claimants are the same.

Read our article on constructive dismissal to learn more.