Last reviewed 9 August 2017

In this article, Kathy Daniels, employment law author and lecturer, looks at two recent successful claims of constructive dismissal arising from situations where the management have not addressed performance issues well, and assesses what we should learn from these rulings.

Constructive dismissal

Before looking at the rulings it is useful to revise our understanding of constructive dismissal. This occurs when the:

  • employer breaches the contract of employment

  • employee resigns in response to that breach

  • employees resign in a timely manner.

The breach of contract could be any of a number of things. Maybe the most common claim is a breach of mutual trust and confidence. Here, the employee believes that the employer has done something which fundamentally undermines the trust between the employer and the employee. A breach could also arise if the employee varies the contract (eg change hours of work) without the employee’s agreement.

The employee has to show that the breach was fundamental, and it was a significant part of the reason for resigning. If the employee stays working for the employer for several months after the alleged breach, and then resigns when he or she has found a new job, this would not be a “timely manner”. If there really is a breach it is bad enough to mean that the employee resigns almost immediately.

Case 1: The breach was an apparent demotion

In Dickenson v The Governing Body of Easington Lane Primary School [2017] the employee concerned was the school business manager, and had worked at the school for 21 years. She was a senior member of staff, with 15 employees reporting to her and managing a budget of £1.2m. She was concerned that a funding shortfall was going to mean that redundancies were needed and she confided her concerns to a colleague. This was thought to be unacceptable, and she was told that she should only have confided her concerns to a member of senior management. She was suspended, pending disciplinary action.

At the disciplinary hearing it was decided that no disciplinary sanction should be imposed, and hence she returned to work. When she returned she found that employees who had previously reported to her now reported to someone else, she was expected to sit in the general office rather than have her own office as she had previously done, and she was given basic work to do. She resigned, and claimed constructive dismissal. Seemingly demoting her in this way was a breach of contract, particularly given that the disciplinary hearing had concluded that no action was necessary.

She was successful in her claim.

Case 2: Bullying and not robust management

In Williams v Meddygfa Rrhdbach Surgery [2017] the employee concerned had worked at the surgery for almost 30 years. She had worked her way up from Receptionist to Practice Manager. The doctors were concerned that she had been over-promoted, and a number of concerns were raised about her performance. She had a particularly difficult relationship with one doctor who shouted at her, questioned her and challenged her on a number of occasions. There was then a meeting between her and the doctors which resulted in more shouting and aggressive behaviour. She went off work with stress and wrote to the Health Board to complain of bullying. She then raised a grievance, and did not think that it was investigated properly. As a result, she resigned and claimed constructive dismissal. She argued that the way that she was treated was a breach of mutual trust and confidence.

She was successful in her claim.

What can we learn from the cases?

What do these two cases tell us about the way that we should approach the management of employees, particularly when there are concerns about performance or behaviour?

  1. We should not be frightened of constructive dismissal claims. If a situation is managed fairly and reasonably there is no reason at all that contract would be breached. These claims should not make us afraid to manage.

  2. We should always act reasonably. If an employee has under-performed or done something which is potentially damaging to the business it is easy to get angry. It is important to take a moment to calm down before talking to the employee, and then to engage in a reasonable discussion about what has happened.

  3. Shouting at an employee might not always be a breach of contract. However, if it is particularly aggressive, and particularly if it is in front of junior colleagues or customers, it could easily become a breach of mutual trust and confidence. Shouting also suggests a loss of control. So, encourage your managers to avoid shouting and to talk to employees in a reasoned way.

  4. It is important to investigate a grievance, and not to ignore any complaints which are raised. Case law has shown us that a breach cannot be “righted” once it has occurred. However, case law has also shown us that action can be taken before a situation escalates to a breach. For example, in the second of our cases, if someone had intervened and had managed the poor relationship between the employee and the doctor, it is possible that there would have been no breach. Take every opportunity to resolve a situation before it escalates out of control.

It is worth noting that an employee needs to have two years’ consecutive service to bring a claim of constructive dismissal. The compensation that can be awarded if an employee is successful in the claim is the basic award (which is calculated in the same way as a statutory redundancy payment) and a compensatory award which is capped at £80,541 or the employee’s annual salary, whichever is lower.