Constructive Dismissal: An Employer's Guide to Avoiding Claims

Last updated: April 2026

Constructive dismissal claims are among the most damaging tribunal claims an employer can face. They are hard to predict, often come out of nowhere, and regularly succeed because the employer failed to recognise the warning signs.

From 2027, the two-year qualifying period for unfair dismissal is being removed under the Employment Rights Act 2025. Once that change takes effect, employees will be able to bring constructive dismissal claims from day one of employment. That dramatically increases your exposure as an employer.

This guide explains what constructive dismissal actually means under UK law, the most common causes, how to prevent claims, and what to do if an employee resigns and alleges constructive dismissal.

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What Is Constructive Dismissal in UK Employment Law?

Constructive dismissal occurs when an employee resigns because the employer has committed a fundamental breach of the employment contract, and the employee treats that breach as ending the contract.

The legal basis sits in the Employment Rights Act 1996, section 95(1)(c). An employee is treated as dismissed if they terminate the contract (with or without notice) in circumstances where they are entitled to do so because of the employer's conduct.

Three conditions must be met for a constructive dismissal claim to succeed:

1. The employer breached the employment contract. The breach must be fundamental, meaning it goes to the root of the contract. A minor disagreement or isolated management error will not usually be enough.

2. The employee resigned in response to the breach. The resignation must be caused by the breach, not by something unrelated. If the employee had another reason for leaving (a new job, personal circumstances), the claim is weaker.

3. The employee did not delay too long. If the employee continues working for a significant period after the breach without objecting, they risk being found to have affirmed the contract and accepted the breach. There is no fixed time limit, but weeks of silence followed by a resignation will face scrutiny.

This is sometimes called the "last straw" doctrine. A final incident, even a relatively minor one, can be the last straw that entitles the employee to resign, provided there is a pattern of earlier breaches that, taken together, amount to a fundamental breach of contract.

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The Implied Term of Mutual Trust and Confidence

Most constructive dismissal claims are not based on a breach of an express contractual term (like pay or hours). They are based on breach of the implied term of mutual trust and confidence.

This implied term was established in Malik v BCCI [1997] and requires that neither party, without reasonable and proper cause, conducts itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.

In practice, this means the employer's behaviour must be assessed objectively. It does not matter whether the employer intended to breach the contract. What matters is whether the conduct was, objectively, likely to destroy or seriously damage the trust relationship.

The threshold is high, but it is crossed more often than employers expect.

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Common Causes of Constructive Dismissal Claims

Understanding the triggers is the first step to prevention. These are the most frequent scenarios that lead to constructive dismissal claims in UK tribunals.

Unilateral Changes to Terms and Conditions

Changing an employee's role, responsibilities, pay, hours, or workplace without their agreement is a classic trigger. Even changes that seem reasonable from a business perspective can amount to a fundamental breach if the employee did not consent.

Examples:

• Demoting an employee without a contractual right to do so
• Reducing pay or removing a contractual bonus
• Relocating an employee to a different site without a mobility clause
• Significantly altering job duties so the role is unrecognisable

If you need to change terms, follow a proper consultation process. Get agreement in writing. If you cannot reach agreement, consider whether the change is genuinely necessary and take legal advice before imposing it.

Bullying, Harassment, and Toxic Management

Persistent bullying, intimidation, or harassment by managers or colleagues, left unaddressed by the employer, is one of the strongest foundations for a constructive dismissal claim.

This includes:

• Shouting, belittling, or humiliating an employee (publicly or privately)
• Persistent unfair criticism not supported by evidence
• Isolating an employee from their team
• Failing to act on complaints of harassment or bullying

Since October 2024, employers have a proactive duty to take reasonable steps to prevent sexual harassment in the workplace. From April 2026, sexual harassment is also a qualifying disclosure for whistleblowing protection. A failure to address harassment exposes you to constructive dismissal claims, harassment claims, and potentially whistleblowing detriment claims simultaneously.

Failure to Follow Proper Procedures

Employers who skip or shortcut their own disciplinary or grievance procedures create fertile ground for constructive dismissal claims.

Common failures include:

• Issuing warnings without investigation or a hearing
• Failing to follow the ACAS Code of Practice
• Ignoring or unreasonably delaying a grievance
• Conducting a sham investigation where the outcome is predetermined

If an employee raises a grievance and you fail to investigate it properly, the employee may resign and claim constructive dismissal. Tribunals take grievance handling very seriously.

Unreasonable Workload or Pressure

Consistently overloading an employee, setting impossible targets, or refusing to address workload concerns can amount to a breach of trust and confidence.

This is particularly relevant where:

• The employee has raised concerns about workload and been ignored
• The workload is causing documented health problems
• The employer is aware the situation is unsustainable but takes no action

Failure to Provide a Safe Working Environment

Employers have a duty of care to provide a safe working environment. This covers both physical safety and psychological wellbeing. Persistent failure to address safety concerns, especially after they have been raised formally, can amount to constructive dismissal.

Suspending an Employee Without Good Reason

Suspension should only be used where it is genuinely necessary (for example, during a gross misconduct investigation where the employee's presence could compromise evidence or put others at risk). Using suspension as a punishment, or suspending an employee for an unreasonable length of time without progressing the investigation, can breach the implied term of trust and confidence.

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How to Avoid Constructive Dismissal Claims

Prevention is significantly cheaper than defending a tribunal claim. The following steps will reduce your exposure substantially.

1. Do Not Make Unilateral Contract Changes

If you need to change terms and conditions, consult with the employee first. Explain the business reason. Seek agreement. Document the outcome. If the employee does not agree, do not simply impose the change. Consider alternatives, and take advice if needed.

If you are considering redundancy that would substantially change roles, follow the proper redundancy consultation process rather than trying to restructure by stealth.

2. Take Complaints Seriously

When an employee raises a grievance, formal or informal, act on it. Investigate promptly. Communicate progress. Even if the complaint seems minor to you, the employee's perception matters. Dismissing concerns or allowing them to drift is one of the most common precursors to a constructive dismissal claim.

3. Train Your Managers

Most constructive dismissal situations are created by line managers, not by deliberate company policy. Invest in management training that covers:

• How to give fair and constructive feedback
• When and how to use disciplinary and grievance procedures
• What constitutes bullying or harassment
• How to manage workload conversations

A single poorly trained manager can generate tribunal claims that cost tens of thousands of pounds.

4. Follow Your Own Procedures

If you have a disciplinary policy, follow it. If you have a grievance process, use it. If your contract says something, honour it. Inconsistency between your written policies and your actual practice is a red flag in any tribunal.

See our guide on running a fair disciplinary procedure for the full process.

5. Document Everything

Keep records of meetings, discussions, complaints, and decisions. If an employee later claims constructive dismissal, your file notes will be your primary defence. Tribunals draw adverse inferences from gaps in the record.

6. Act Quickly When Problems Emerge

If you become aware of a breakdown in the working relationship, address it immediately. Mediation, a facilitated conversation, or a management change can resolve situations that, left to fester, become constructive dismissal claims.

7. Review Contracts and Policies Regularly

Outdated contracts create risk. If your contracts do not reflect current working arrangements, or if your policies have not been updated for recent legislative changes, you are exposed.

The Employment Rights Act 2025 introduces significant changes phased between April 2026 and 2027. If your contracts and policies have not been reviewed against these changes, do it now.

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What to Do If an Employee Resigns and Claims Constructive Dismissal

Despite your best efforts, an employee may resign and allege constructive dismissal. Here is what to do.

Immediate Steps

1. Accept the resignation in writing. Do not try to persuade the employee to stay or withdraw the resignation. This could be seen as an admission that there was a problem.

2. Preserve all records. Secure all relevant emails, meeting notes, HR files, and communications. Do not allow managers to delete or alter records.

3. Conduct an internal review. Even before you receive a tribunal claim, review what happened. Identify the alleged breach and assess whether there is substance to it.

If You Receive an ACAS Early Conciliation Notification

Before an employee can bring a tribunal claim, they must notify ACAS for early conciliation. You will receive a notification. This is your opportunity to resolve the matter before it reaches tribunal.

Consider:

• Is there merit to the claim? Be honest with yourself.
• What would a settlement cost compared to defending at tribunal?
• Would a settlement agreement be appropriate?

Early resolution is almost always cheaper and less disruptive than a full tribunal hearing.

If the Claim Proceeds to Tribunal

The employee must prove that:

• There was a fundamental breach of contract by the employer
• They resigned in response to that breach
• They did not affirm the contract by delaying too long

You will need to show that either there was no breach, or that the breach was not fundamental, or that the employee did not resign because of it.

The burden of proof initially sits with the employee, but once they establish a prima facie case, the employer's conduct comes under close scrutiny.

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Constructive Dismissal and the Employment Rights Act 2025

The removal of the two-year qualifying period for unfair dismissal claims, expected from 2027, will have a direct impact on constructive dismissal claims.

Currently, employees generally need two years' continuous service to bring an unfair dismissal claim, and constructive dismissal is a form of unfair dismissal. Once the qualifying period drops, any employee, regardless of length of service, will be able to claim constructive dismissal.

This means:

• New hires who experience poor management in their first weeks could claim
• Probationary periods will not protect you if the underlying conduct amounts to a fundamental breach
• The volume of potential claims will increase significantly

Employers who are not already running tight management practices and proper procedures should treat this as an urgent compliance priority.

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Compensation in Constructive Dismissal Claims

If a tribunal finds constructive dismissal, the employee is entitled to:

• Basic award: Calculated the same way as a statutory redundancy payment (based on age, length of service, and weekly pay, capped at £700 per week from April 2026)
• Compensatory award: Loss of earnings, benefits, and pension, currently capped at the lower of 52 weeks' pay or £115,115 (2026/27 cap)
• ACAS Code uplift: If the employer unreasonably failed to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures, the tribunal can increase the compensatory award by up to 25%

In discrimination cases (for example, where the constructive dismissal was caused by harassment related to a protected characteristic), there is no cap on compensation, and the tribunal can also award damages for injury to feelings.

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Frequently Asked Questions

Q: Can an employee claim constructive dismissal if they have been employed for less than two years?

A: Currently, in most cases, no. Constructive dismissal is a form of unfair dismissal under ERA 1996 s.95(1)(c), and the standard qualifying period is two years' continuous service (s.108). However, there are exceptions where no qualifying period applies, including dismissals connected to whistleblowing, pregnancy, or asserting a statutory right. From 2027, the Employment Rights Act 2025 removes the two-year qualifying period entirely, making constructive dismissal claims available from day one.

Q: What counts as a "last straw" in constructive dismissal?

A: The last straw doctrine, established in Omilaju v Waltham Forest LBC [2005], means that a final act by the employer, even if relatively minor in itself, can be the trigger for resignation if it is part of a series of acts that together amount to a breach of the implied term of trust and confidence. The last straw does not need to be unreasonable or blameworthy on its own, but it must contribute something to the overall breach. A wholly innocuous act cannot be a last straw.

Q: Does the employee have to resign immediately after the breach?

A: Not immediately, but they must not delay unreasonably. If an employee continues working for a significant period without objecting to the breach, they risk being found to have "affirmed" the contract under the principle in Western Excavating (ECC) Ltd v Sharp [1978]. There is no fixed time limit. Tribunals look at the circumstances, including whether the employee was trying to resolve the situation through internal processes. However, months of silence followed by a sudden resignation will face scepticism.

Q: Can I defend a constructive dismissal claim by showing the employee had a new job lined up?

A: This can help your defence, but it is not a complete answer. The test is whether the employee resigned in response to the employer's breach. If the employee was already looking for a new job before the breach, or if the resignation was primarily motivated by the new opportunity rather than by the employer's conduct, the claim is weaker. However, an employee can resign partly because of the breach and partly for other reasons, and the claim can still succeed if the breach was a significant cause. Tribunals look at the whole picture.

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Concerned About Your Exposure to Constructive Dismissal Claims?

Concerned your employment contracts or policies could expose you to constructive dismissal claims? The EmployerKit Audit identifies compliance gaps before they become tribunal claims. From £49. Visit employerkit.com/tools/employerkit-audit.

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This article provides general information about UK employment law for employers. It is not legal advice. For advice on a specific situation, consult a qualified employment lawyer.