Where an employee terminates their contract (with or without notice) in circumstances because they think there has been a fundamental breach of contract, then they can bring a claim of constructive dismissal against their employer.

For constructive dismissal claims to be successful an employee needs to show three things:

1. That the employer has committed a breach of contract that is deemed to be sufficiently serious to justify the employee terminating their contract. This is most commonly where an employer has varied terms of the employment contract without agreement or has acted in a manner that amounts to a fundamental breach of the implied term of trust and confidence.
2. That the employee has left employment because of this breach.
3. That the employee has not ‘affirmed’ the contract. The employee may be deemed as having ‘affirmed’ the contract if they act in any way that could indicate they have accepted the breach. Once an employee has accepted a breach they can no longer resign and claim constructive dismissal.

Previously, it was felt that to be successful in a constructive dismissal claim an employee had to act quickly following the alleged breach or they would be deemed to have accepted the breach. If an employee was arguing that there had been such a breakdown in trust and confidence, then to continue to work for several weeks before resigning was viewed as to undermine the validity of the employee’s claim.

The recent 2014 case of Chindove v Morrisons Supermarket has cast some doubt over that perception. In their outcome the Employment Appeal Tribunal (EAT) made it clear that when an employee resigns is not the only factor to consider, a more important indicator is the employee’s conduct prior to their resignation. Are they acting in a way that suggests they have accepted the breach or do their actions suggest they intend the contract to continue?

In the Morrisons case, the employee did not resign for six weeks following the incident that the employee believed amounted to a fundamental breach of contract. However the employee was off sick during that period and the EAT made clear that in such circumstances it is not easy to conclude that the employee had affirmed the contract.

While this would seem logical, the question then is what if the employee had been at work and continued with their duties? On the face of it this would seem inconsistent with a decision to resign and suggest that the employee had accepted the breach.

The EAT went on to make comments relating to other factors that should be taken into consideration when determining a constructive unfair dismissal claim. Referring to the case of Buckland v Bournemouth University, the EAT stated that the decision to resign is a serious one for employees to make and things such as alternative job opportunities and financial matters should be considered when deciding if the delay in resigning is sufficient to consider the contract affirmed.

While the Morrisons case does clarify that if an employee does not resign immediately after a breach of contract they would not be prevented from claiming constructive dismissal, the facts of each case need to be looked at carefully and the employee’s conduct prior to any resignation needs to be carefully considered when assessing the risk of a successful constructive dismissal claim.   

Liz Iles is a senior employment consultant at Croner, a Wolters Kluwer business.

Further reading on legal contracts

• Can I dismiss an employee who is contracted to another company?