Constructive Dismissal and Affirming the Contract

Posted on 6th February 2024

In layman’s terms, constructive dismissal is where an employer makes it so difficult for an employee to continue in their employment that they feel forced to resign. In those circumstances the law may assist the employee by treating the resignation as a dismissal and thereby allowing the ex-employee to bring an unfair dismissal claim.

Unsurprisingly, the legal explanation is more complex. An employee seeking to bring a constructive dismissal claim needs to be able to establish 3 primary points:

1. That the employer committed a fundamental breach of the terms of the employee’s contract. This may be an express term of the contract (such as a unilateral reduction in pay), or a term implied into the contract by law (such as a breach of the implied term of mutual trust and confidence);

2. That the employee resigned in response to the breach of contract;

3. That the employee did not delay too long before resigning, otherwise the employee may be regarded as having elected to affirm the contract and the right to accept the employer’s breach may be lost.
The final point was considered in the recent case of Dr Paul Leaney v Loughborough University before the Employment Appeal Tibunal (EAT). Without going into the detailed facts of the case, Dr Leaney had worked for the University for over 40 years and ultimately resigned as a result of the University’s alleged failure to resolve a dispute and grievance. However, there was a 3 month gap between the alleged fundamental breach of contract and Dr Leaney’s resignation.
The tribunal in the first instance held that Dr Leaney had affirmed the contract. The EAT disagreed and in its decision set out a reminder that it is not necessarily just the passage of time that is relevant.
The EAT’s decision highlighted that there may be circumstances occurring in the period of time between the fundamental breach and the resignation, or specific factors relating to the particular employee, that may point towards or away from affirmation.
These circumstances could include, for example:
• Length of service. An employee with long service may reasonably need more time to make up their mind given that they are likely to be abandoning a secure and stable job with the loss of valuable accrued benefits which would be difficult to replace.

• Whether the employee was in fact working in the relevant period. For example, they may have been on holiday or sick leave.

• Whether there was a grievance being pursed or ongoing negotiations in the relevant period which could point away from the employee having affirmed the contract.

• Whether the employee had indicated that they were working under protest.

It is usually preferable for employees to act as quickly as possible when resigning in circumstances of a potential constructive dismissal, however, both employers and employees may need to be aware of the issues highlighted by this case when bringing or defending such claims.

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