Constructive dismissal: what employers need to know

What constructive dismissal is

An employee who resigns has not been dismissed, and cannot ordinarily claim unfair dismissal. Section 95(1)(c) of the Employment Rights Act 1996 creates the exception. An employee is treated as dismissed where they terminate the contract, with or without notice, "in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct".

The phrase that matters is "entitled to terminate it without notice". That is the language of contract, and it means the employer must have committed a repudiatory breach: a breach serious enough that the employee is released from the contract altogether. A poor management decision, an unwelcome instruction or an unfair appraisal falls short of that. A cut in pay imposed without agreement, or a grievance about harassment that is never answered, does not.

Once the resignation counts as a dismissal, the ordinary rules apply. The employer has to show a fair reason and a fair process, and an employer who has just committed a repudiatory breach rarely can. In practice a finding of constructive dismissal is a finding of unfair dismissal, and the claim is usually pleaded alongside a wrongful dismissal claim for the notice pay the employee gave up by leaving.

The implied term of trust and confidence

Every contract of employment contains a term, whether or not it is written down, that the employer will not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee. The House of Lords confirmed the term in Malik v Bank of Credit and Commerce International, and it has been the foundation of most constructive dismissal claims since.

Three features of the term catch employers. It is objective: what the employer intended does not matter, only whether the conduct was likely to have the effect. A breach of it is always repudiatory, so there is no such thing as a minor breach of trust and confidence. And the words "reasonable and proper cause" do real work, which is why a disciplinary process run fairly, for a genuine reason, cannot amount to a breach however much the employee disagrees with the outcome. The Court of Appeal made that last point directly in Kaur v Leeds Teaching Hospitals NHS Trust in 2018.

Express terms can be broken too, and the claim is simpler when they are. Failing to pay wages that are due, demoting somebody without a contractual right to do so, or moving them to a different site where the contract contains no mobility clause are breaches of the contract's express terms.

The last straw

A claim does not need a single dramatic act. A series of incidents, none of which would justify resignation on its own, can together amount to a breach of trust and confidence. The act that finally prompts the resignation is the last straw, and it need not be serious in itself, though it must contribute something to the breach. An entirely innocuous act cannot revive earlier conduct.

Kaur set out the questions a tribunal asks in a last straw case: what was the most recent act the employee says caused the resignation; has the employee affirmed the contract since it; was that act by itself a repudiatory breach; if not, was it part of a course of conduct which, taken together, amounted to one; and did the employee resign in response to that breach.

The point employers most often miss is the second half of the affirmation question. An employee who put up with earlier incidents, and carried on working, has affirmed the contract in respect of them. But once a further act in the same course of conduct occurs, the earlier incidents come back into the account. Carrying on after the first three things does not stop the employee relying on all four when the fourth happens.

Who can claim, and the change in January 2027

Constructive dismissal is a route to an unfair dismissal claim, so the ordinary qualifying period applies. Section 108(1) of the Employment Rights Act 1996 requires two years' continuous employment, and that is the position today.

The Employment Rights Act 2025 changes it. Section 25 of that Act reduces the qualifying period to six months and repeals the cap on the compensatory award. The commencement regulations bring those changes in on 1 January 2027, and they apply to any case where the effective date of termination falls on or after that date, including where the employee resigned before it. An employee with six months' service on 1 January 2027 is protected from that day. Our guide to the Employment Rights Act 2025 sets out the wider timetable.

Two consequences follow for employers. From January 2027 a much larger share of the workforce can bring the claim, including people in their first year whose grievances were previously a contractual risk only. And because the cap on compensation goes at the same time, a constructive dismissal of a well-paid employee who struggles to find work again becomes materially more expensive.

No qualifying period is needed where the resignation is connected with a protected characteristic, whistleblowing, health and safety or another automatically unfair reason. A constructive dismissal claim brought with a discrimination claim attached is the most common shape we see, and it is uncapped already.

The employee has to resign because of it

Two further conditions are in the employee's hands, and they are where most claims fail.

The resignation has to be in response to the breach. An employee who resigns for a new job, or for family reasons, and later discovers a breach they could have relied on has not been constructively dismissed. The breach need not be the only reason, but it has to be an effective one, and a resignation letter that thanks the employer warmly and mentions nothing is a difficult starting point for a claim.

The employee also has to act without undue delay. An employee who continues working for months after the breach, without protest, is treated as having affirmed the contract and lost the right to rely on it. Raising a grievance and waiting for the outcome is not affirmation, and Acas guidance encourages employees to raise one before resigning, so an employee who stays on while a grievance runs has usually kept the right to leave. Working under protest, and saying so in writing, has the same effect.

Acas describes the claim as difficult to win, and it is. The employee carries the burden of proving the breach, the causation and the timing, and gives up their income to do it. That difficulty is the employer's opportunity, because most of the conditions can be knocked out by responding properly when the problem first surfaces.

How employers cause it

The same three patterns account for most of the claims we see against owner-managed businesses.

Changing terms without agreement. A pay cut, a reduction in hours, removal of a bonus, a new role, a longer commute. The business need may be real, but a change to a contractual term requires the employee's agreement, and imposing it is a breach of the express term and usually of trust and confidence as well. The right route is consultation, a written variation the employee signs, and where agreement cannot be reached, a properly handled dismissal and re-engagement, which the 2025 Act restricts from January 2027.

Ignoring grievances. An employee raises a complaint in writing and nothing happens, or the meeting is held and no outcome is ever sent. Failing to deal with a grievance is itself a breach of trust and confidence, and it converts whatever the grievance was about into a claim. This is where employers get caught, because the original complaint was often something they could have resolved.

A manager's behaviour. The employer is responsible for its managers. Shouting, humiliation in front of colleagues, exclusion, unreasonable targets used as pressure, and a pattern of criticism that is never put through a proper capability process. An owner who knows a manager behaves this way and does nothing has authorised it for these purposes.

Behind all three sits the same lesson: the conduct that produces a claim is almost always conduct somebody in the business knew about at the time.

Responding to a resignation letter that alleges it

A letter arrives saying the employee is resigning with immediate effect because of a fundamental breach of contract. It usually lists the incidents and often uses the phrase "constructive dismissal". What the employer does in the next fortnight shapes the claim.

Acknowledge it in writing promptly. Confirm the date the employment ended and that final pay, accrued holiday and the P45 will follow. Do not argue the allegations in that letter, and do not send anything that could be read as accepting them.

Then treat the letter as a grievance and investigate it, even though the employee has left. Offer them the chance to attend a meeting or to submit further detail, hear from the people named, and send a written outcome. Employers resist this because the person has gone; the reason to do it anyway is that a tribunal will ask what the employer did on receiving the complaint, and "nothing, because they had resigned" reads badly. It also, quite often, surfaces something that can be fixed before the next person resigns over it.

Check the timing. Work out the date of the last act the employee relies on and what happened between it and the resignation. If the employee carried on for a long period without protest, say so in the outcome, because affirmation is the employer's best defence and it depends on the record. Pull together the contract, any variation letters, the grievance file and the emails, and preserve them.

Where the letter is an opening position in a negotiation, and many are, an early conversation about a settlement is worth having, and our guide to settlement agreements for employers covers the mechanics.

The Acas Code, early conciliation and time limits

The Acas Code of Practice on disciplinary and grievance procedures applies to the grievance stage. Where a tribunal finds that an employer unreasonably failed to follow the Code, it can increase any award by up to 25% under section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992. The same section allows a reduction of up to 25% where the employee unreasonably failed to follow it, which is one reason to invite the departed employee to a grievance meeting: an employee who declines has handed the employer an argument.

Before presenting a tribunal claim the employee must notify Acas, and early conciliation is offered to both sides. Taking part is voluntary, and an employer who wants to explore settlement should take the call, because a conciliated agreement recorded by Acas on a COT3 binds the employee without the need for a separate settlement agreement. If no agreement is reached Acas issues a certificate, and the claim cannot be lodged without it.

The time limit for an unfair dismissal claim under section 111(2) of the 1996 Act is three months beginning with the effective date of termination, which for a resignation is usually the date it takes effect. The Employment Rights Act 2025 extends that to six months, and the commencement regulations apply the longer limit where the effective date of termination is on or after 1 October 2026. Notifying Acas within the limit gives the employee at least a month from the certificate to lodge the claim. So a resignation in the autumn of 2026 can produce a claim well into 2027, and records should be kept on that footing.

Settling it

Most constructive dismissal disputes settle, and the arithmetic usually favours settling early. The employee is out of work and funding a claim; the employer faces management time, legal cost and the risk of an uncapped award once the January 2027 changes apply.

Settlement can happen through Acas on a COT3, or through a settlement agreement meeting the conditions in section 203 of the Employment Rights Act 1996, which requires the employee to take independent advice on its terms. Either route waives the statutory claims. Where the employee has not yet resigned but the relationship is plainly over, a protected conversation allows the offer to be made before anything formal starts.

What the employer should not do is treat the resignation as the end of the matter. The period between the letter and the claim is the only point at which the cost of the dispute is still within the employer's control.

Frequently asked questions

What is constructive dismissal?

It is a resignation that the law treats as a dismissal because the employer committed a breach of contract serious enough to entitle the employee to leave without notice. The rule is in section 95(1)(c) of the Employment Rights Act 1996. The breach is usually of the implied term of trust and confidence, and it can be a single act or a series of acts ending in a last straw. Once the resignation counts as a dismissal, the ordinary unfair dismissal rules apply and the employer has to justify it.

Does an employee need two years' service to claim constructive dismissal?

At present, yes, because constructive dismissal is a form of unfair dismissal and section 108 of the Employment Rights Act 1996 requires two years' continuous employment. From 1 January 2027 the qualifying period falls to six months for any dismissal where the effective date of termination is on or after that date, and the cap on compensation is removed at the same time. No service is needed where the resignation is linked to discrimination, whistleblowing or another automatically unfair reason.

What is the last straw doctrine?

It allows an employee to rely on a series of incidents which together breach the implied term of trust and confidence, where the final incident prompts the resignation. The last straw need not be serious on its own, but it must add something to the pattern, and an entirely innocent act does not count. The Court of Appeal set out the questions a tribunal asks in Kaur v Leeds Teaching Hospitals NHS Trust, including whether the employee affirmed the contract after the most recent act.

Can an employee claim constructive dismissal if they delayed resigning?

Delay is the employer's main defence. An employee who carries on working for a long period after the breach, without protest, is treated as having affirmed the contract and loses the right to resign in response to it. Raising a grievance and waiting for the outcome, or working under protest and saying so in writing, is different and usually preserves the right. A further act in the same course of conduct can also revive earlier incidents that had been affirmed.

How should an employer respond to a resignation alleging constructive dismissal?

Acknowledge it in writing, confirm the leaving date and final pay, and avoid arguing the allegations in that letter. Then treat it as a grievance: investigate, invite the former employee to a meeting or to give more detail, and send a written outcome. Preserve the contract, variation letters, grievance file and emails, and check the dates so any affirmation argument is documented. Where the letter is an opening position, consider settlement early.

How long does an employee have to bring a claim?

Three months beginning with the effective date of termination under section 111(2) of the Employment Rights Act 1996, subject to the Acas early conciliation rules, which give at least a month from the certificate where Acas was notified in time. The Employment Rights Act 2025 extends the limit to six months where the effective date of termination is on or after 1 October 2026. Employers should keep records on the assumption that a claim can arrive well after the resignation.

Is a fair disciplinary process a breach of trust and confidence?

No. The implied term is only breached where the employer acts without reasonable and proper cause, and a disciplinary process run properly for a genuine reason has cause. The Court of Appeal confirmed in Kaur that a fair process cannot amount to a repudiatory breach, or contribute to one, however strongly the employee disagrees with the result. The risk arises where the process is a pretext, is run unfairly, or is used to put pressure on the employee.

Sources & further reading

• Employment Rights Act 1996, section 95
• Employment Rights Act 1996, section 108
• Employment Rights Act 1996, section 111
• The Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026
• The Employment Rights Act 2025 (Commencement No. 5 and Transitional Provisions) (Amendment) Regulations 2026
• Trade Union and Labour Relations (Consolidation) Act 1992, section 207A
• Kaur v Leeds Teaching Hospitals NHS Trust [2018] EWCA Civ 978
• Acas: constructive dismissal

This article is general information, not legal advice. The law changes and depends on your circumstances — always take advice on your specific situation before acting. Last reviewed 22 September 2026. AD Solicitors Limited is a recognised body regulated by the SRA (no. 8011228).