Constructive Dismissal Breach of Contract: The Test Explained
Updated: Oct 10
Sometimes an employee feels forced to resign because of how their employer treats them. That may lead to a constructive dismissal claim. At the heart of every such claim is the breach of contract test. This article explains how constructive dismissal breach of contract works in England and Wales. It covers what an employee must prove and what employers should know.
This is general information, not legal advice. Take advice on your own facts, because time limits are short.
What is constructive dismissal?
Constructive dismissal happens when an employee resigns because their employer has seriously breached the contract of employment. The employee is not fired. Instead, the employee feels they have no choice but to leave because of the employer's conduct.
The law is set out in section 95(1)(c) of the Employment Rights Act 1996. It treats the employee as dismissed if they end the contract, with or without notice, in circumstances where they are entitled to end it because of the employer's conduct.
Understanding the breach of contract test
To succeed, the employee must show three things:
A fundamental breach. The employer must have broken a term of the contract in a serious way. This is also called a repudiatory breach.
The employee resigned in response. The breach must be the reason, or an important reason, for leaving.
The employee did not delay too long. If you stay in the job for too long after the breach, you may be taken to have accepted it.
If the employee proves all three, they have been dismissed in law. They then still need to show the dismissal was unfair, or that another claim applies.
What counts as a fundamental breach?
The breach must be serious enough to justify resignation. A small or technical breach is not enough. The test looks at whether the employer's conduct went to the root of the contract.
Common examples include:
Not paying wages, or making serious unauthorised deductions.
Unfair treatment, such as bullying or harassment. See our guide to workplace bullying, harassment and constructive dismissal.
Unlawful changes to contract terms, such as cutting pay or hours without agreement. See our page on employment contract changes.
Failing to provide a safe working environment.
Serious false accusations, or a demotion without a fair reason.
The implied term of mutual trust and confidence
Every employment contract includes an implied term of mutual trust and confidence. An employer must not, without reasonable and proper cause, act in a way that is calculated or likely to destroy that trust. A serious breach of this implied term is often the basis of a claim.
For example, a sudden demotion without explanation could breach it. So could a pattern of delayed pay or humiliating treatment in front of colleagues.
The last straw
Sometimes no single event is serious enough. Instead, a series of events builds up. The final event is called the last straw. The last straw does not have to be a breach on its own. But it must add something to the earlier conduct and must not be trivial. This is a complex area, so legal advice helps.
Time is critical
If you believe your employer has seriously broken the contract, act quickly. Staying in the job and carrying on as normal may suggest you accepted the change. That can weaken your constructive dismissal claim.
Some employees say plainly that they are working under protest while they take advice. That can help. It does not always protect you for long.
Top tip
If you plan to claim, resign soon after the breach. Always seek legal advice first.
Proving your case
To win a constructive dismissal claim, the employee must prove the following:
The employer's breach was serious.
The resignation was a response to that breach.
The claim was brought in time.
The employee was entitled to bring the claim. See the service rules below.
Good evidence helps. Keep emails, letters, pay records, notes of meetings and any grievance you raised. Our page on grievance meetings and hearings explains that process.
Qualifying service and time limits
Two years' service
In general, an employee needs a minimum period of service to bring an ordinary unfair dismissal claim. That period has been two years. The government has announced reforms, so check the current rule on GOV.UK before you rely on it.
Some claims need no qualifying service. Examples are dismissals that are automatically unfair, and discrimination claims. If you have no qualifying service, ask a lawyer whether another route is open to you.
The time limit
A tribunal claim must normally be brought within three months, less one day, of the date the employment ended. In a constructive dismissal case, that is the date you resigned. You must usually go through Acas early conciliation first. Read our guide on employment tribunal claim steps for the process.
What can employers do?
Employers can reduce the risk of a claim. They should:
Keep communication with employees clear.
Resolve workplace disputes promptly.
Avoid changing contracts without proper consultation.
Provide a safe and respectful working environment.
Deal with grievances fairly and in good time.
Remedies
If a constructive dismissal claim succeeds, the tribunal can award compensation. This usually includes a basic award and a compensatory award. Limits and caps apply, and the figures change over time. See our guide to compensation claims for unfair dismissal and our overview of constructive dismissal claims.
Frequently asked questions
Can I claim constructive dismissal if I resigned because of stress?
It depends. You need to show that the stress came from a serious breach of contract by your employer. Medical evidence can help.
What is the time limit for a constructive dismissal claim?
It is normally three months, less one day, from the date you resigned. Early conciliation with Acas comes first.
Do I need legal advice before I resign?
It is strongly advisable. Resigning is a big step. Advice before you resign can help you decide whether your case is strong enough.
Can I be constructively dismissed if I work out my notice?
Often yes, but you should take advice. How you resign, and what you say, can matter.
Conclusion
The breach of contract test is central to any constructive dismissal claim. The employee must show that the employer committed a serious breach, and that they left because of it. Employers should take steps to prevent disputes and breaches. If you are unsure about your situation, speak to a specialist employment lawyer to discuss your options.
