Constructive Dismissal involves the resignation of the employee in circumstances arising out of the conduct of the employer. The employer’s conduct must be repuditory i.e. it must be sufficiently serious to be treated as a breach of the employment contract by the employee. It can be just one incident such as a unilateral reduction in salary or benefit, or it can involve a series of smaller breaches. In order to make a valid claim the employee must resign in response to such breach or breaches and he or she must do so fairly quickly otherwise he/she will be deemed to have accepted the variations in his/her contract.
The consequences of an employee establishing such a claim, can have a substantial impact on the employer and his business which is not limited to the payment of financial compensation. In law the employer is treated as having brought the contract to an end which means that any post termination restrictions are automatically cancelled. The employee may then be free to compete against the former employer or join a competitor and solicit the former employer’s business clients.
A claim to the Tribunal must generally be made within 3 months and this time limit is in the main adhered strictly although it can be extended in certain circumstances. These time limits are however automatically extended providing the employee complies with the statutory grievance procedure requirements.
In these cases the burden of proof is on the employee i.e. he or she has to show that all the above criteria are satisfied unlike in unfair dismissal claims where the burden is squarely on the employer to show that the dismissal was fair.
Under the Employment Act 2002 (Dispute Resolution) Regulations 2004, brought into force from the first of October 2004 except in certain specified circumstances, no employee will be allowed to bring a claim in a Tribunal unless he or she has first put in a formal grievance to the employer. In response, the employer will be required to arrange a meeting to discuss the issue and to provide an opportunity for the employee to appeal if the meeting fails to resolve the matter. If the employee does not meet the requirements set out in the procedure, then any constructive dismissal awards made to him or her will be reduced by at least 10% and maybe reduced by up to 50%. In exceptional circumstances, compensation may be adjusted by less than 10%.
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