Constructive dismissal

There is likely to be a constructive dismissal if an employee resigns in response to a breach of contract by the employer that is so fundamental that it leaves the employee no option but to resign, such as a substantial unilateral cut in pay.

Constructive dismissal is always a high-risk course of action, but especially during a recession. The employee is left with no job and the ET may conclude that the dismissal was fair. Even if an ET claim succeeds, unfair dismissal compensation is not generous (the median award in 2018-19 was £6,243). Unlike a discrimination claim, there is no compensation for injury to feelings or psychiatric injury, no matter how badly the employer behaved.

There is also a risk that the written contract terms may allow the employer to take the action the employee objects to (so-called “flexibility terms” — see page 14), in which case, the claim would fail. Legal advice is essential.