Constructive dismissal is a tricky beast for employees, employers, and employment lawyers alike. When dealing with a constructive dismissal situation you often have to make logical, tactical decisions such as timing your resignation and whether to engage in a grievance process. Recent case law has highlighted the difficulties when deciding whether to engage in a grievance process after termination, and reminds employment lawyers that they must really explore the case and ensure that all elements of a successful constructive dismissal claim are present.
What is constructive dismissal?
Let’s start with the basics – a definition of what constructive dismissal actually is.
A constructive dismissal occurs where there has been a breach of the employment contract by the employer and the employee resigns in response. In resigning the employee accepts the employer’s breach and treats themselves as if they have been dismissed by the employer. The essential elements of a constructive dismissal claim are a breach of contract and a resignation in response. Taking each of these in turn:
Breach of contract
The contract must have been breached by the employer. This breach cannot be anything. Your boss having a bad day and being a bit snappy probably won’t suffice. Similarly, a failure to approve a holiday request within the same day – whilst potentially annoying - is unlikely to amount to a breach. The breach must be sufficiently serious to count as a repudiatory breach i.e. one which goes to the root of the contract. In many case, the contractual term breached is the implied duty of mutual trust and confidence.
A breach be quite obvious (e.g. physical violence, placing the employee in danger, or a refusal to pay salary). However more often than not there is a series of smaller breaches which eventually become too much for the employee, causing them to leave. In that case, the employee must still be able to point to a ‘final straw’ event which was a breach of contract.
Resignation in response to a breach
Once you have established that there has been a breach of contract, you must resign in response. This probably has two ‘sub-elements’:
First, the breach must be the reason for the resignation i.e. not because you had already found another job or for any other reason. It must be because of the breach.
Second is timing. The employee must not unreasonably delay their resignation. Exactly how long is too long will depend on the case in question. In many cases it may be a matter of hours or days. Sometimes the employee has waited weeks and the tribunal has still found that they resigned in response to the breach.
The reason a resignation in response to a breach is so important is because the employment relationship is contractual. In any contractual relationship, if one party breaches a contract and the other party affirms (i.e. approves of or agrees) the breach, the aggrieved party cannot later rely on the breach to get out of the contract or claim compensation. In employment law, we are quite flexible with our contracts; the parties have the ability to change the terms just by doing something different than the written contract (if there is one) says. This means that if your employer breached your contract and you didn’t resign, you have accepted their breach and allowed – by your conduct – the contract to continue. You have done what is termed “affirming the breach”. This means you cannot later rely on that breach to end the contract – hence the need to act quickly.
So how do grievances fit into this?
Grievances are difficult to deal with in a constructive dismissal situation. On the one hand, the tribunals expect parties to attempt to resolve issues themselves and employees are expected to use the employer’s internal processes to this. After all, it would hardly be fair if you left your employment and brought a claim about an issue of which your employer was not aware, and could have resolved in a grievance process. If you unreasonably fail to follow an internal procedure, the tribunal could reduce your compensation by up to 25% even if they find that you were unfairly constructively dismissed.
On the other hand, the grievance process can take months. If you wait until the end of that process, and assuming it doesn’t resolve the issue, have you waited too long to resign and affirmed the breach? At times that certainly is the case, particularly if you were not careful to reserve your right to treat yourself as constructively dismissed if the grievance did not resolve your issue when the matter first arose.
So what about resigning first and then raising the grievance? Many people do not know that it is possible to raise grievances after the end of your employment, so long as you do so within a reasonable time. However, in the recent case of Gordon v J & D Pierce (Contracts) Limited, the employer sought to argue that by engaging in the grievance process after resignation, the employee had affirmed the breach. The tribunal agreed with this view and the employee’s claim failed.
However, the Employment Appeal Tribunal disagreed. The confirmed that just because the employee raised a grievance did not mean that he affirmed the breach and that, even after the employment contract ends, some clauses – specifically those relating to resolving disputes – will remain in place.
That being said, you won’t always have to raise a grievance. There may be circumstances where it would not resolve the issue (for example, a grievance about a failure to deal with a grievance might be considered a nonsense). However you should always be mindful of the potential impact on claims for compensation. If you are unsure, you should seek professional advice at an early stage.
What does this mean for employees?
The takeaway message for employees is that you are unlikely to be penalised for following the grievance process and seeking to resolve your dispute with your employer before bringing the matter to court. However there are some words of warning:
If you raise a grievance before you resign you should always reserve your right to treat yourself as constructively dismissed if your concerns are not resolved or dealt with.
Constructive dismissal claims are complex and how they should be dealt with will always depend on the particular facts and circumstances of the issue. It is always advisable to take professional advice on your rights and prepare a strategy to manage your claims at an early stage. As soon as the issue arises, if you can.
You should act quickly in any potential constructive dismissal scenario to avoid an accusation that you have affirmed the breach.
If you have any queries relating to constructive dismissal, grievance or any other employment matter, please contact Charlotte Braham on 01494 893529.