Constructive Dismissal, Key Pitfalls in Employee Claims and Warning Signs Employers Should Not Ignore

What Could Damage a Claim, Resigning Too Soon or Waiting Too Long

Consider two employees facing workplace difficulties:

One employee walks out after a difficult meeting and resigns immediately, convinced that the employer’s behaviour left no option but resignation.

Another employee stays on for months feeling unhappy, repeatedly raising concerns and trying to resolve the issue before finally giving up and resigning.

Both employees may believe they have constructive dismissal claims but could each face distinctive difficulties.

The first employee may struggle because unfair or unreasonable treatment alone is not enough to establish constructive dismissal. The employer’s conduct must amount to a fundamental or repudiatory breach of contract. Where a resignation occurs in the heat of the moment questions could also arise.

The second employee may find their employer argues that the employee accepted the situation by continuing to work despite the alleged breach. This is known as affirmation of the contract.

In each scenario, a tribunal would consider the facts as a whole, including the seriousness of the employer’s conduct, the employee’s response and the steps taken.

Employees should obtain legal advice before resigning wherever possible. Resignation often carries significant legal and financial consequences, and there is no guarantee a claim will succeed.

What Is Constructive Dismissal?

Constructive dismissal occurs when an employer commits an actual or anticipatory fundamental (repudiatory) breach of the employment contract and the employee resigns in response. In simple terms, this means a very serious breach of contract.

The breach may involve an express contractual term, such as pay, duties, benefits or working hours. It may also involve an implied term, most frequently the duty of mutual trust and confidence.

Common examples of conduct that may give rise to constructive dismissal, depending on the circumstances can include (but are not limited to):

Failing to pay wages

Cutting pay without agreement

Bullying or harassment not being addressed

Demoting an employee without justification

To establish constructive dismissal, an employee must show that:

the employer committed a fundamental (serious) breach of contract;

the employee resigned because of (i.e. in response to) that breach; and

the employee did not affirm the contract through their conduct. In practical terms, this often means not waiting too long before resigning in response to a breach. Should an employee continue working without leaving, they may lose the right to treat the contract as breached.

The tribunal will seek to assess the employer’s conduct when considering a claim. A single serious incident may amount to a fundamental breach. But equally, a series of less serious incidents may become sufficiently serious when viewed together. Under the ‘last straw’ principle, an employee may be able to rely on a later incident that forms part of a wider pattern of conduct, even if that incident would not justify resignation on its own. The breach does not need to be the sole reason for resignation, though it must have played an effective part in the employee’s decision to leave.

It is also important not to confuse constructive dismissal with constructive unfair dismissal. Constructive dismissal describes how the employment ended and is based around contract. Constructive unfair dismissal is based around fairness. To bring a successful constructive unfair dismissal claim, an employee must establish constructive dismissal, and the resulting dismissal must be unfair. Legal advice can help determine which claims may be available to an employee, depending upon their circumstances.

Currently, ordinary unfair dismissal claims generally require two years’ continuous service, although exceptions apply. Under the Employment Rights Act 2025, that qualifying period will reduce to six months for dismissals taking effect on or after 1 January 2027. This is a significant change which is likely to heavily increase litigation risk for employers, highlighting the importance of fair and lawful employment practices.

Key Mistakes That Can Damage an Employee’s Claim

Employees who continue working after an alleged fundamental breach risk allowing their employer to argue that they affirmed the contract. In simple terms, working too long after the relevant breach may indicate that the employee has given up the right to resign and claim. Timing in a constructive dismissal claim can be critical. Nonetheless, there have been cases where the tribunal has been lenient around this issue. Taking legal advice can help determine the appropriate time to resign.

Constructive dismissal requires a serious contractual breach. Ordinary workplace disagreements, unpopular management decisions and isolated acts of unreasonable behaviour will not usually satisfy that threshold. Claims can fail where employer conduct (despite being unreasonable) was not serious enough to count as a fundamental breach. Employees should therefore carefully assess the seriousness of the employer’s conduct before resigning, as not every disagreement or instance of unreasonable treatment will meet the required legal threshold. The sensible step is to take legal advice on which terms may have been breached.

Employees should consider raising a formal grievance. This creates a written record of their concerns and gives the employer an opportunity to investigate and potentially resolve the dispute. Although a grievance is not compulsory before resignation, an unreasonable failure to follow the Acas Code, where applicable, may result in a reduction in compensation of up to 25%.

A constructive dismissal resignation letter often provides important evidence which can be heavily relevant in a claim. Employees should identify the conduct relied upon, explain why it justified their resignation and confirm whether they are resigning with or without notice. A clear letter can help demonstrate that the employee resigned because of the employer’s breach. Ideally a solicitor should draft or at least review the letter.

Evidence is crucial and employees should document all relevant facts for such cases. This could include preserving emails or letters which highlight any misconduct, clear grievance and resignation letters, and securing relevant witness evidence where possible.

Resigning is a risky move, especially in today’s challenging job market. An experienced employment law solicitor can help an employee understand the relevant claims they have and develop a tactical strategy based upon the circumstances. They can also warn them of key risks to avoid which could prejudice their claim and advise on the compensation which could be obtained. Depending on the circumstances, an employee may be able to receive compensation for breach of contract and unfair dismissal. Employees should also obtain advice before deciding whether to work notice, as how notice is handled can have different consequences.

Employees must present claims within the applicable time limits. From 1 October 2026, most Employment Tribunal claims now carry a six month less one day limitation period. However, claims relating to events prior to this date will generally be subject to previous time limits.

Employees must also generally notify Acas before bringing a claim, and Acas Early Conciliation may affect the calculation of time limits. Legal advice can help confirm the relevant time limits and steps to take, for the specific individual claimant.

The Warning Signs an Employer Should Not Ignore

Where employment related disputes develop over time, employers should notice warning signs of growing workplace concerns.

These might include a formal grievance alleging a breakdown in trust and confidence, an employee working ‘under protest’, a subject access request being raised, or an employee asking for detailed written records.

Whilst these actions do not necessarily indicate that a constructive dismissal claim will follow, they may signal an unresolved workplace dispute and that a claim could later arise. Employers should therefore investigate concerns promptly and take appropriate steps to resolve problems before they escalate.

Key Actions for Employers

The most sensible proactive step is to foster a positive working atmosphere and act lawfully and responsibly, as this may help keep staff happy and reduce the chance for employment law claims from the outset. In the event of problems arising, constructive dismissal disputes can often arise where concerns stay unresolved for too long. Prompt intervention and handling workplace issues quickly may help employers reduce risk and seek to preserve the employment relationship.

Key steps to mitigate risk include:

Employers should handle workplace issues fairly and lawfully, use transparent contracts, address problems promptly and foster an inclusive working environment. Supporting open communication and regular feedback can help resolve issues before they escalate into disputes. Regular training for management on employment law rules can also help avoid breaches which could result in complaints.

A grievance gives employers an opportunity to investigate concerns, correct mistakes and potentially avoid a resignation or a dispute from arising.

Settlement discussions may help resolve disputes before they escalate. Employers should seek legal advice on how best to handle such discussions and Settlement Agreements.

Prompt corrective action may preserve the employment relationship, reduce legal risk and help to support a negotiated resolution.

Constructive dismissal claims can be serious, time consuming and expensive for employers. They can also lead to reputational harm and business disruption. Taking legal advice as soon as any signs of a complaint arise can help employers plan how to react and take the best steps to protect their business from risk.

How We Help Employees and Employers

Constructive dismissal claims can hinge on their timing, evidence, and pre and post resignation actions. Taking legal advice from an experienced expert is therefore crucial. We support both employers and employees with all aspects of such claims.

For employees, we can review employment contracts, workplace concerns and evidence to assess potential fundamental breaches of contract and advise on potential claims. We also advise on grievances, affirmation risks, notice requirements and resignation timing. We can prepare resignation letters, negotiate settlements and guide employees through Acas Early Conciliation and employment tribunal proceedings.

For employers, we provide support from the first signs of disputes, including addressing grievances. We advise how to handle potential claims and settlement negotiations. If an employee resigns and alleges constructive dismissal, we can help assess legal risks, respond to allegations and defend claims. Prevention is better than cure, and we help employers build robust and compliant practices from the outset to reduce risk, including thorough contracts, policies and staff training materials.

You can contact our supportive team for nuanced advice tailored to your circumstances and view our specialist Constructive Dismissal, Wrongful Dismissal and Settlement Agreement service pages for further information on how we can assist.

This article provides general introductory information about constructive dismissal in England and Wales. It does not constitute legal advice and should not be relied upon as such. You should obtain legal advice for specific guidance on your individual circumstances, whether you are an employer or an employee.