What is constructive dismissal in the context of employment law?
Our experience in Jersey indicates that employers commonly misunderstand what constructive dismissal actually is.
Employers often expose themselves to potential liability when they unilaterally change important terms of employment such as employee compensation, duties and reporting structures.
What is “Constructive Dismissal”?
This is where an employer decides unilaterally to make substantial changes to the essential terms of an employee’s contract of employment and the employee does not agree to the changes and leaves his or her job. In this circumstance, the employee has not resigned but has been dismissed.
Since the employer has not formally dismissed the employee, this has been referenced to as “constructive dismissal”. The employee can then treat the contract as being in breach and can issue proceedings against the employer for damages. This can also have ramifications for the employer such as losing the right to enforce restraint of trade clauses in the contract of employment.
How does a Court determine constructive dismissal?
To reach the conclusion that an employee has been constructively dismissed, the court must determine whether the changes imposed by the employer substantially altered the essential terms of the employee’s contract of employment.
The types of unilateral changes that amount to constructive dismissal vary from case to case. It will depend on the nature of the change and the employment relationship in question. Constructive dismissal may arise for example in the following situations where a move is made unilaterally and without reasonable notice, namely:
This list is by no means exhaustive of the types of significant unilateral changes that may lead to a constructive dismissal.
How does an employer minimise risk?
As long as the employment contract permits such and reasonable notice of any changes is given to the employees, an employer is entitled to manage its workplace and implement unilateral changes to the employment contract from time to time.
The requirement that an employer provides reasonable notice to an employee of its intention to implement significant changes to the terms of employment has its roots in the employer’s duty to provide reasonable notice of dismissal. The two requirements are very closely related.
How Parslows can help
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We advise on all aspects of employment law: whether it be advice on employment contracts, handbooks or restraint of trade advice or HR advisory.
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The information and opinion expressed in this briefing does not purport to be definitive or comprehensive and are not intended to provide professional advice. For specific advice, please contact Parslows, We are not responsible for, and do not accept any responsibility or liability in connection with, the content of this document or any reliance upon it