How employers can avoid constructive dismissal claims

Navigating employment law is tricky at the best of times, but things become a lot more complicated when an employee suddenly resigns and claims that their hand was forced by the business. This scenario, known legally as constructive dismissal, can leave employers facing unexpected tribunal claims without ever having issued a formal termination letter.

Because these claims often hinge on an accumulation of minor grievances or perceived breaches of trust, understanding where management action crosses the line is vital for protecting your organisation.

In this guide, we have broken down what constructive dismissal means under UK law and highlighted the common management pitfalls that trigger claims. Find our practical strategies to help your business manage risk effectively below.

What is constructive dismissal?

Constructive dismissal occurs when an employee resigns from their role due to an employer’s actions making it an intolerable position to be in (a repudiatory breach of contract). This scenario can play out in several different ways, but the dismissal is always driven by an employer’s breach of contract or behaviour rather than a voluntary resignation from the employee.

These breaches of contract include the withholding of salary, demotion without justification, unsafe working conditions, or other unfair actions that leave a worker with no choice other than to resign from their position. It is important to note that because the employer does not explicitly end the contract, this form of dismissal is different from redundancy, standard, wrongful, and unfair.

Who can bring a constructive dismissal claim forward?

Most employees require the qualifying period of service to bring an ordinary constructive unfair dismissal claim. However, claims involving discrimination, whistleblowing, health and safety concerns and certain statutory rights may be brought without the usual qualifying service requirement.

It is important to note that with the Employment Rights Act 2025, the qualifying period of service mentioned above is being changed to be six months by the 1st January 2027. Furthermore, self-employed contractors, agency workers, and casual workers cannot come forward with claims of constructive dismissal as they are not of legal employee status.

Examples of employer actions that could lead to constructive dismissal claims

There are multiple ways that employer actions can risk constructive dismissal claims.

Drastic, non-consensual contract changes

This involves changing any terms in an employee contract without their knowledge or agreement. It can be demonstrated through salary reductions or withdrawal, demotion, changing contractual hours, and demanding unreasonable relocation.

Workplace bullying

This example is threefold. Not only is bullying and discrimination a reason for an employee to make a claim, but employers failing to investigate complaints and permitting a hostile environment to exist are both perfectly valid reasons for a claim to be raised.

Unreasonable workloads

This can take the form of employers piling huge quantities of work on an individual despite warnings regarding their mental health and capacity. Furthermore, failing to make adjustments in the workplace for those with disabilities or mental health conditions also comes under this category.

Unjustified disciplinary action

The most common way this is displayed in the workplace is through micro-management and intense scrutiny. Other ways it is seen is through employers failing to follow the company performance issue procedures and implementing Performance Improvement Plans (PIP) without fair investigation.

Failure to provide safe environment

Forcing employees to work in dangerous conditions, either with broken equipment or unsanitary environments. If an employer’s Duty of Care is breached and an employee’s physical health is at risk, a constructive dismissal claim has grounds to take place.

The implied duty of trust and confidence

An important legal obligation that’s built into every single UK employment contract (regardless of whether it’s written or not) is the implied term, duty of trust and confidence. This clause states that neither the employer or employee will act in a way that will likely destroy or damage the relationship of trust and confidence between them.

The breach of this clause is what’s often relied upon in constructive dismissal claims rather than the explicit violation of a written contract term. Employment Tribunals evaluate whether the employer’s conduct objectively destroyed trust and confidence. In the event that they believe their behaviour was acceptable, it’s important to note that this isn’t enough to protect them.

Note that ongoing issues can bubble under the surface for weeks or months, and all it takes is one final event that causes the resignation of an employee to reactivate all unresolved problems.

How employers can reduce the risk of claims

There are multiple, equally effective ways for employers and management teams to make sure they don’t face constructive dismissal claims.

Communication

Whether this comes in the form of team check-ins or regular one-to-ones, there’s no better way to understand your staff members than by talking to them. Establish consistent meetings between management and team members to make sure any issues are caught early on and dispelled.

Equally, look out for changes in behaviour or an increase in absence rates to determine whether there is a negative workplace dynamic that needs to be addressed.

Follow HR policies

Despite seeming obvious, it is often overlooked that problems can be easily solved by well-established policies that are committed to by employers as much as their teams.

Keep clear records of all formal and informal interactions as well as outcomes of meetings and evidence of fair processes. It’s important for employers to avoid shortcutting important processes so that it doesn’t come back to bite them later down the line and employees feel the benefit of fair treatment and proper care.

Handle contract changes properly

A formal discussion should always take place before making changes to any employee’s pay, job title, working hours, or duties. A good way to finish off these meetings is to get written confirmation or signed consent in order to move forward with confidence.

If a business has to change, there is always the option to discuss transitional periods or alternative arrangements with employees to stop them from having no choice in the matter.

Address grievances properly

Finally, to avoid claims of neglect, always ensure a proper roadmap is followed when handling complaints of any kind. Provide clear outcomes, explanations, and thorough investigations free from bias.

Not only does this improve employee wellbeing and show care for your teams, but it can also be the most effective way to rule out easily avoided constructive dismissal claims.

What happens if an employee makes a claim?

In the event that an employee suddenly resigns and files a claim, here is what will take place next:

1. The process of a constructive dismissal claim usually starts with an ACAS Early Conciliation to try and resolve the issue before escalation.
2. If that fails, the employee may submit their claim to an Employment Tribunal.
3. The employee must establish that a fundamental breach occurred and that they resigned in response to it. Employers will typically seek to demonstrate that no such breach occurred or that they acted reasonably and with proper cause. In the case of an employer loss in an Employment Tribunal, businesses can be hit financially and reputationally, and it can lead to significant losses in management time. This may induce further fallouts and failures in the company.

This is all the more reason for employers to put time and focus into building a culture of trust and open communication, not only for the benefit of teams and retaining talent, but for the longevity and growth of the business too.

How Sapphire HR can help

Figuring out the nuances between different types of dismissal can be a difficult task in itself, let alone managing the complicated legal risks when an employee unexpectedly resigns. This is where outsourced HR can provide invaluable knowledge and support so that you don’t have to struggle through the details alone.

We audit workplace policies and disciplinary procedures to ensure terms are clear and procedures are easily followed. Our dedicated team can mediate conflicts between employees and managers before relationships break beyond repair, and if grievances are filed, we offer objective, third-party investigations to make sure no bias is present.

If you need management training on fair practices or advice on a sensitive employee issue that’s arisen, contact us today for support tailored to your organisation and your team.