What Is Constructive Dismissal? A Guide for Employers

Constructive dismissal occurs when an employee resigns because their employer has committed a serious breach of their employment contract.

Although the employee makes the decision to leave, they may argue that their employer's actions effectively forced them out. For employers, this can create significant legal risks, even where there was never any intention to dismiss the employee. Understanding when constructive dismissal might arise, and how to recognise the warning signs, can help businesses address workplace concerns before they escalate.

What Counts as Constructive Dismissal?

For constructive dismissal to arise, there must generally be a fundamental breach of the employment contract by the employer, and the employee must resign in response to that breach without having accepted it. The breach might relate to an express contractual term, such as pay, or an implied term, including the duty of mutual trust and confidence.

Importantly, an employee feeling unhappy, frustrated or unfairly treated doesn't automatically mean constructive dismissal has occurred. The employer's conduct must meet the legal threshold of a sufficiently serious contractual breach. Constructive dismissal also isn't automatically unfair dismissal. Constructive dismissal concerns how the employment relationship ended, while an unfair dismissal claim considers whether the dismissal was legally unfair.

What Are Examples of Constructive Dismissal?

Depending on the circumstances, situations that could contribute to constructive dismissal include:

• Significant contractual changes, such as reducing pay or changing working arrangements without agreement or contractual justification.

• Bullying or harassment, especially where serious concerns are raised but not appropriately addressed.

• Failure to deal with serious grievances, leaving employees without a reasonable response to significant workplace concerns.

• Unsafe working conditions, where an employer fails to address serious risks.

• Repeated unreasonable treatment, which undermines the relationship of trust and confidence.

These situations don't automatically establish constructive dismissal. The seriousness of the conduct, the employer's contractual obligations and the circumstances surrounding the employee's resignation all matter.

Can Constructive Dismissal Result From Several Incidents?

Yes. A fundamental breach doesn't always arise from one significant event. A series of incidents may collectively undermine the employment relationship. This is sometimes known as the last straw principle, where a final incident contributes to an existing pattern of conduct that amounts to a fundamental breach.

The final incident doesn't necessarily need to be serious enough to amount to a breach on its own, but it must contribute to the overall situation. Employers should therefore avoid overlooking repeated complaints or workplace concerns simply because individual incidents appear relatively minor.

Does an Employee Have to Raise a Grievance Before Resigning?

Employees aren't legally required to submit a formal grievance before resigning and alleging constructive dismissal. However, raising concerns internally can give an employer the opportunity to investigate and resolve matters before the employment relationship breaks down.

Where relevant grievance procedures aren't followed, this may also affect compensation in certain circumstances. Employers should take concerns seriously whether they're raised formally or informally, rather than assuming that the absence of a grievance means there isn't a problem.

Can an Employee Claim Constructive Unfair Dismissal?

An employee may bring a constructive unfair dismissal claim if they believe their employer's fundamental contractual breach caused them to resign. Under the Employment Rights Act 2025, changes to employment tribunal time limits and unfair dismissal rights are being introduced in stages:

From 1 October 2026, the time limit for bringing most employment tribunal claims increased from three months less one day to six months less one day. This applies where the relevant event occurred on or after that date, with Acas early conciliation affecting how deadlines are calculated.

Before 1 January 2027, employees generally need two years' continuous service to bring an ordinary unfair dismissal claim, including constructive unfair dismissal, although exceptions apply.

From 1 January 2027, the qualifying period will reduce to six months, extending protection to more employees. The statutory cap on compensatory awards for unfair dismissal will also be removed.

What Should an Employer Do if Constructive Dismissal Is Alleged?

If an employee resigns and claims they were forced out, employers shouldn't dismiss the allegation simply because the employee chose to leave. Managers should establish what concerns have been raised, review relevant correspondence and records, and consider whether previous complaints were appropriately addressed.

Where allegations involve bullying, discrimination, contractual breaches or serious management concerns, further investigation may be necessary, even after employment has ended. Seeking HR or legal advice early can help the business assess the situation and respond appropriately.

How Can Employers Reduce the Risk?

Preventing constructive dismissal disputes starts with fair and consistent people management. Employers should communicate openly, consult appropriately before making contractual changes and address grievances without unnecessary delays. Managers also need to recognise when their own behaviour or decisions may be contributing to a breakdown in working relationships.

Not every disagreement will result in a constructive dismissal claim, but repeatedly overlooking concerns can allow relatively manageable problems to develop into more serious disputes.

Need HR Support?

Constructive dismissal concerns can be difficult to navigate, especially where an employee has raised allegations about management behaviour or workplace treatment.

BloomHR provides friendly, straightforward HR advice to small and medium businesses across the UK, helping employers address employee relations issues fairly and confidently. Contact us for more information.