Constructive dismissal

Constructive dismissal is one of the most conceptually demanding and commercially significant areas of employment law in Great Britain. This guide concerns constructive dismissal under the law of Great Britain (England, Wales and Scotland). Northern Ireland has separate employment legislation, including the Employment Rights (Northern Ireland) Order 1996, and should be checked separately.

Unlike a standard dismissal, the employer does not terminate the contract. Instead, the employee resigns and alleges that they were entitled to do so because of the employer’s conduct. The law then treats that resignation as a dismissal.

The statutory basis

The right not to be unfairly dismissed, including the concept of constructive dismissal, is contained in the Employment Rights Act 1996 (ERA 1996). Constructive dismissal is governed by section 95(1)(c) of the Employment Rights Act 1996. It applies where an employee resigns in circumstances where they are entitled to terminate the contract without notice because of the employer’s conduct. In law, this is still classed as a dismissal.

It is important to be precise about terminology. Section 95(1)(c) provides only that the resignation counts as a dismissal. Whether that dismissal is unfair is a separate question, decided under the ordinary unfair dismissal provisions in section 98 ERA 1996. In an unfair dismissal claim, the usual shorthand is “constructive unfair dismissal”. More precisely, section 95(1)(c) deems the resignation to be a dismissal; whether that dismissal is unfair is then determined separately under section 98 ERA 1996. In broad terms, an employee may bring such a claim where they resign in response to what they contend is a serious breach of their employment contract by the employer.

Even where an employee proves they were constructively dismissed, the claim does not automatically succeed. Should the tribunal find that an employee has been constructively dismissed, the employer still has the opportunity to argue that the dismissal was fair, in the sense that there was a fair reason for the dismissal and they acted reasonably in dismissing for that reason. In practice, however, an employer that has committed a repudiatory breach will rarely be able to demonstrate that the resulting dismissal was nevertheless fair.

The foundational case law

The contract test: Western Excavating (ECC) Ltd v Sharp

For many years there was genuine doubt as to whether constructive dismissal required a breach of contract by the employer, or merely unreasonable conduct. The question of whether unreasonable conduct by the employer was sufficient, or whether the employee must be able to demonstrate a breach of contract, was settled in the landmark Court of Appeal decision Western Excavating (ECC) Ltd v Sharp [1977] EWCA Civ 221, firmly in favour of the breach of contract test.

The classic formulation, derived from that decision, is that the employee is entitled to treat themselves as constructively dismissed only if the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract. Mere unreasonable conduct, however regrettable, is not by itself enough.

The principles drawn from Western Excavating can be summarised as four requirements:

1. There must be an actual breach of contract by the employer, or an anticipatory repudiatory breach where the employer’s words or conduct objectively show an intention not to perform essential contractual obligations.
2. That breach must be sufficiently important to justify the employee resigning (a repudiatory breach), or it must be the last in a series of incidents which, regarded overall, justify resignation (the “last straw”).
3. The resignation must be in response to the breach and not for some other, unconnected reason; and
4. The employee should not allow too much time to lapse between the breach and terminating the contract, or they may be deemed to have waived the breach.

The implied term of trust and confidence: Malik v BCCI

The breach relied upon may be of an express term or an implied term. By far the most important implied term in this context is the duty of mutual trust and confidence, authoritatively recognised by the House of Lords in Malik and Mahmud v Bank of Credit and Commerce International SA [1997] UKHL 23.

The duty requires that an employer must not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of trust and confidence. Notably, the test is objective and does not require an intention to damage the relationship; conduct that is likely to have that effect will suffice. In Malik, the House of Lords treated the evolution of the implied term of trust and confidence as an established fact, observing that it had proved a workable principle in practice.

The significance of Malik is that it provides a route by which a course of conduct that would not individually breach any express term may nonetheless be characterised as a fundamental breach. A breach of the trust and confidence term is, by its nature, always repudiatory.

The objective test and “cure”: Buckland v Bournemouth University

Two further principles are usefully drawn together in Buckland v Bournemouth University Higher Education Corporation [2010] EWCA Civ 121.

First, whether the employer’s conduct amounts to a repudiatory breach is judged objectively, and is a distinct question from the “range of reasonable responses” test that governs fairness under section 98 ERA 1996.

Secondly, once a repudiatory breach has occurred, the employer cannot unilaterally “cure” it so as to deprive the employee of the right to accept it and resign; later remedial conduct by the employer goes only to the separate question of whether the employee has affirmed the contract. This is an important corrective to the intuition that an employer can always undo a fundamental breach simply by putting matters right.

The “last straw” doctrine: Omilaju v Waltham Forest LBC

Many constructive dismissal claims are not founded on a single dramatic act but on an accumulation of conduct. Many cases based on the implied term of mutual trust and confidence involve the employee resigning in response to a course of conduct carried on over an extended period. The last action of the employer need not in itself constitute a breach of contract, but the question is whether the cumulative series, taken together, amounts to a breach of the implied term.

The leading authority is London Borough of Waltham Forest v Omilaju [2004] EWCA Civ 1493, [2005] IRLR 35. The Court of Appeal clarified the legal character of the final act. The final straw may be relatively insignificant but must not be utterly trivial; it must contribute something to the breach, although what it adds may be relatively insignificant; the only issue for the tribunal is whether the conduct relied upon, objectively viewed, did contribute something, however slightly; and there is no requirement that it be adjudged in itself to be unreasonable or even blameworthy.

This last point is frequently misunderstood. As the Court explained, viewed in isolation, the final straw may not always be unreasonable, still less blameworthy, and there is no reason why it should be. A “last straw” can also revive earlier conduct that might otherwise have been treated as affirmed.

The modern analytical framework: Kaur v Leeds Teaching Hospitals NHS Trust

The single most important authority for structuring a constructive dismissal analysis today is Kaur v Leeds Teaching Hospitals NHS Trust [2018] EWCA Civ 978. The Court of Appeal distilled the law into a sequence of questions that a tribunal should normally ask. Underhill LJ’s five-stage approach asks:

1. What was the most recent act (or omission) on the employer’s part that triggered the resignation?
2. Has the employee affirmed the contract since that act?
3. If not, was that act by itself a repudiatory breach of contract?
4. If not, was it nevertheless part of a course of conduct comprising several acts and omissions which, viewed cumulatively, amounted to a (repudiatory) breach of the Malik term (applying the approach explained in Omilaju)?
5. Did the employee resign in response (or partly in response) to that breach?

A subtle but important consequence of stage four is that where the resignation is in response to a cumulative breach, the question of affirmation may fall away: if the act was part of a cumulative course of conduct amounting to a repudiatory breach, there is no need for any separate consideration of a possible previous affirmation.

The relationship between Kaur and Omilaju was further explored in Williams v The Governing Body of Alderman Davies Church in Wales Primary School (EAT, 2020). Auerbach HHJ explained that the “last straw” threshold is in fact the threshold test for any conduct relied upon as contributing to a claimed cumulative breach of the Malik term, not just the so-called last straw. He also clarified the causal analysis: although the most recent act is what “tips” the employee into resigning, as a matter of causation it is the combination of both the earlier and the later conduct that contributes to the resignation. Consequently, where earlier conduct already crossed the Malik threshold, was not affirmed, and materially contributed to the resignation, the claim can succeed even if the most recent act added nothing to the breach.

The starting point in any case remains, as Williams restated, that there is a constructive dismissal where there has been a fundamental breach of contract by the employer, which the employee is entitled to treat as terminating the contract of employment, and which has materially contributed to the employee’s decision to resign.

Affirmation and delay: the most active area of recent litigation

Once a repudiatory breach has occurred, the employee faces a choice. The employee may treat the contract as terminated (resign and claim constructive dismissal) or affirm the contract and continue. The risk for an employee is that if they wait too long before resigning, the right to claim can be lost, as they may be deemed to have affirmed the contract.

The recent appellate trend has been to caution tribunals against treating mere delay as decisive. Two decisions are particularly important.

Leaney v Loughborough University

In Leaney v Loughborough University (EAT, 2023), the claimant had been employed for 40 years and resigned some months after the conduct he relied upon. The Employment Tribunal held the contract had been affirmed, focusing on the passage of time between the alleged last straw and the resignation, and concluded he had delayed too long.

The EAT disagreed. It held that the tribunal had placed too much reliance on the passage of time rather than looking at all the circumstances. The EAT identified several relevant factors that had been overlooked, including the importance of length of service, indicating that it was reasonable for such a long-serving employee to take longer to consider their position before departing from a secure job, and the period of negotiations, noting that negotiations may be an attempt to give the employer the opportunity to put things right, and that where this is the reason for delay it should not readily be assumed that the employee has affirmed the contract. The guiding principle is that a delay in resigning may give rise to implied affirmation depending on the other circumstances, but a delay in resigning will not in itself amount to affirmation.

The 2025 sick pay decision

This approach was reinforced in Dr Kate Barry v Upper Thames Medical Group and Others [2025] EAT 146 (Judge Tayler, 25 September 2025), which concerned the withdrawal of sick pay. The claimant resigned and brought a constructive unfair dismissal claim; the tribunal accepted that the withdrawal of sick pay was a repudiatory breach but held that she had affirmed the contract by delaying her resignation. The EAT held that the tribunal had erred in law, reinforcing that affirmation depends on what the employee communicates by words or conduct, and not simply on the passage of time. Critically, delay alone does not amount to affirmation, particularly where the employee is continuing to press for a remedy, is absent due to ill health, or is not performing (and so not being paid for) any work.

The practical lesson for advisers is that the affirmation analysis is fact-sensitive and conduct-focused. Employers should not assume that an employee has affirmed a breach simply because they take time to resign, especially where they are unwell or engaged in active discussions; communications during negotiations must be precise, as mixed messages can affect the legal analysis; and employees may legitimately reserve their position while seeking a remedy.

Discrimination and constructive dismissal: Wainwright v Cennox plc

The interaction between discrimination and constructive dismissal is illustrated by Wainwright v Cennox plc [2023] EAT 101 (Judge Keith). Although the EAT judgment dates from 2023, it was only published by the EAT in 2025, and the case has since attracted attention because, on remittal, the claimant was awarded over £1.2 million (including an injury-to-feelings award). The claimant, who was on sick leave for cancer treatment, had been misled by her employer about whether a colleague’s appointment to her role was permanent. The EAT held that the tribunal had erred by failing to analyse whether the proven discriminatory acts also amounted to repudiatory breaches of the implied term of trust and confidence, whether those breaches had been affirmed, and whether they had materially contributed to the resignation. The case confirms two practical points: that discriminatory treatment will often amount to a repudiatory breach, and that misleading or untrue statements to an employee may breach the trust and confidence term even where the employer believes it is acting kindly. It also reinforces the Williams point that resignation may have more than one operative cause.

The continuing role of the “last straw” in 2025

The structured Kaur/Omilaju analysis continues to be enforced rigorously on appeal. In Marshall v McPherson Ltd [2025] EAT 100, the EAT allowed an appeal where the tribunal had failed properly to apply the framework, in particular the later Kaur stages. The EAT confirmed that, in determining a fundamental breach of trust and confidence, the unvarnished Malik test should be applied, and if, applying the Sharp principles, acceptance of that breach entitled the employee to leave, he has been constructively dismissed. Where the employer then shows a potentially fair reason, it falls to the tribunal to decide whether dismissal for that reason, both substantively and procedurally, fell within the range of reasonable responses and was fair. Marshall is a useful recent illustration of how easily a tribunal can err if it treats the absence of a single identifiable “last straw” as fatal, when the correct question is the cumulative effect of a series of events.

Common factual triggers

There is no closed statutory list of qualifying conduct. There is no fixed statutory list of what counts as constructive dismissal; instead, tribunals look at whether the employer’s behaviour amounted to a fundamental breach of contract that entitled the employee to treat the contract as at an end and resign. Recurrent factual categories include:

• Failure to pay or unilateral changes to pay. Serious, deliberate or repeated failures to pay contractual remuneration, or significant unilateral reductions in pay or benefits, may amount to a repudiatory breach. This applies not only to salary but to other contractual benefits such as a company car, enhanced maternity pay, or sick pay. A minor or promptly corrected payroll error will not necessarily justify resignation.
• Unilateral variation of terms. Imposing material changes without consent or lawful contractual basis.
• Demotion. There are legitimate reasons for demotion, but it is contentious and can readily lead to constructive dismissal claims.
• Bullying and harassment. Persistent bullying or harassment can destroy the relationship of trust and confidence, and if an employer allows it to continue unchecked or fails to take complaints seriously, the employee may be entitled to resign and claim.
• Failure to handle a grievance. A grievance that is simply ignored, or where the employer fails properly or fairly to engage with it, may itself constitute or contribute to a breach.
• Health and safety failures and the creation of an intolerable working environment.

The threshold remains high throughout. Not every instance of unreasonable management conduct will meet the threshold; the conduct must be sufficiently serious to justify termination.

Who can claim, qualifying service, and time limits

The right is confined to employees. Only individuals with employee status can bring a claim for constructive unfair dismissal under the Employment Rights Act 1996; workers and self-employed contractors cannot bring unfair dismissal claims, although they may pursue other statutory claims where appropriate.

Under the law currently in force, the ordinary qualifying period applies. Because constructive dismissal is treated in law as a type of unfair dismissal, the two-year qualifying period usually applies. There are well-established exceptions where no qualifying service is required. The two-year qualifying period does not apply to discrimination claims under the Equality Act 2010, and many automatically unfair dismissal claims also do not require any qualifying service, including whistleblowing and certain health and safety, family-leave, assertion of a statutory right and National Minimum Wage cases. In those situations, an employee may claim from day one of employment.

On procedure and time limits, claimants must observe the mandatory pre-claim steps. ACAS Early Conciliation is a mandatory step before submitting a tribunal claim, and under section 111(2)(a) ERA 1996 a constructive unfair dismissal claim must normally be presented within three months less one day of the effective date of termination, subject to the early conciliation rules that pause the clock. If the employee resigns with notice, the effective date is normally the date the notice expires; if they resign without notice, it is normally the resignation date.

It may also affect compensation: where appropriate, employees should consider using the employer’s grievance procedure before resigning, or be able to explain why it was not reasonable to do so, since an unreasonable failure to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures could result in an adjustment of up to 25% in compensation. This must, however, be balanced against the risk of affirming the contract by delaying resignation after a repudiatory breach.

Remedies

If the claim succeeds, the remedies mirror those for ordinary unfair dismissal. If the employee is successful in their claim for constructive dismissal, they would be entitled to unfair dismissal compensation. Under the law currently in force, compensation consists of a basic award and a compensatory award, with the compensatory award capped at the lower of 52 weeks’ gross pay or the statutory maximum, which is £123,543 for dismissals where the effective date of termination falls on or after 6 April 2026. Where the claim is pleaded alongside discrimination or whistleblowing, the position differs: discrimination and whistleblowing claims may be uncapped. This explains why constructive dismissal claims are so often pleaded together with such allegations, which significantly increases both financial and reputational exposure for employers.

Crucial developments: the Employment Rights Act 2025

The Employment Rights Act 2025 (ERA 2025) is a substantial reforming statute. Following a long passage through Parliament, it received Royal Assent on 18 December 2025, with last-minute compromises, most notably replacing the provisions that would have made unfair dismissal protection a day-one right with a six-month qualifying period, and a surprise removal of the statutory cap on unfair dismissal awards. Its significance should not be underestimated: the 350-page Act is wide-ranging, and for many of its provisions the route into law is still underway, with essential detail subject to further consultation and several provisions not expected to come into force until 2027 and perhaps beyond.

Three changes are particularly relevant to constructive dismissal.

1) Reduction of the qualifying period

The headline change directly affects who may bring a constructive unfair dismissal claim. A series of defeats in the House of Lords forced the government to U-turn on the day-one proposal; instead, the qualifying period for unfair dismissal rights will reduce to six months with effect from 1 January 2027. The current position is unchanged in the meantime: the qualifying period for unfair dismissal has been two years since April 2012. The reform also entrenches the new threshold, because the ERA removes the power to vary the qualifying period by secondary legislation, meaning future changes will require primary legislation. On transition, employees who already have six months’ service on 1 January 2027 will gain protection immediately.

Removal of the compensation cap

A development that materially increases the stakes of every constructive dismissal claim is the abolition of the cap. Both statutory caps on unfair dismissal compensation – the lower of 52 weeks’ gross pay or (currently) £123,543 – will be abolished. The rationale links directly to the point made above about claims being bolted onto discrimination or whistleblowing: government considers that the cap created a systemic incentive for claimants to construct complex cases alleging both unfair dismissal and discrimination to access uncapped compensation. The practical impact will be uneven. Median awards may not change significantly, since most claimants do not suffer substantial financial loss, must mitigate, and remain subject to Polkey and contributory-fault deductions; but removal of the cap will potentially have a huge impact for highly paid employees, those with long-term loss of employment, and those with significant pension loss.

Restrictions on “fire and rehire” and contract variation

The ERA 2025 reforms to contractual change have a direct bearing on the most common constructive dismissal trigger, the imposition of new terms. The ERA 2025 inserts new sections 104I, 104J and 104K into the Employment Rights Act 1996. In broad terms:

• Section 104I creates automatic unfair dismissal protection for dismissals connected with “restricted variations”,
• Section 104J deals with dismissals connected with non-restricted variations; and
• Section 104K deals with replacement by non-employees.

A dismissal will be automatically unfair where the sole or principal reason is that the employee refused to agree a restricted variation of contract, or that the employer sought to engage another person (or re-engage the employee) on varied terms involving such a variation. This applies to both actual and constructive dismissals, whether the employee leaves entirely, is replaced, or is dismissed and re-engaged on revised terms..

Restricted variations comprise reductions to pay, changes to total hours, reductions to leave entitlement, changes to pensions and specified shift-pattern changes; the precise scope of pay (whether to exclude certain expenses and benefits in kind) and of shift-pattern changes was the subject of a government consultation that ran until 1 April 2026.

A parallel provision also makes it automatically unfair to dismiss employees in order to replace them with non-employees, such as agency workers, to do substantially the same work.

The only escape is narrow: a narrow financial-difficulties exemption, which requires the employer to show financial difficulties affecting, or likely in the immediate future to affect, the viability of its business, that the variation was to eliminate or significantly mitigate those difficulties, and that it could not reasonably have avoided the change; the exemption is calibrated differently for private employers, public sector employers and local authorities. Because the ERA disapplies the service requirement for this type of dismissal, individuals will be protected against restricted variations from day one of employment. These provisions are timed to commence alongside the other key reforms: the “fire and rehire” provisions come into force on 1 January 2027, tying in with the reduced qualifying period and removal of the compensation cap.

A further change to watch: time limits

From 1 October 2026, the standard employment tribunal time limit is expected to increase from three months to six months for most employment claims, including unfair dismissal, where the relevant act or termination takes place on or after that date. Breach of contract claims at tribunal sit under the separate Extension of Jurisdiction Order 1994 and so were not covered by the main reform in the Employment Rights Act 2025; they are now being extended to six months in England and Wales by the Employment Tribunals Extension of Jurisdiction (England and Wales) (Amendment) Order 2026, for contracts terminating on or after 1 October 2026, with the equivalent change for Scotland expected to follow in mid-November 2026. The existing rules on early conciliation pausing the clock will continue to apply. Practitioners should nonetheless check the precise commencement and transitional provisions before relying on the longer period.

Summary of authorities:

Authority / instrument	Significance
Employment Rights Act 1996, s.95(1)(c)	Statutory definition of constructive dismissal (resignation deemed a dismissal)
Employment Rights Act 1996, s.98	Separate test of fairness (reason and reasonableness)
Western Excavating (ECC) Ltd v Sharp [1978] ICR 221	Established the contract test (breach, not mere unreasonableness)
Malik v BCCI [1997] UKHL 23	Implied term of mutual trust and confidence
Buckland v Bournemouth University [2010] EWCA Civ 121	Objective test for repudiatory breach; an employer cannot unilaterally “cure” a breach
Omilaju v Waltham Forest LBC [2004] EWCA Civ 1493	The “last straw” doctrine
Kaur v Leeds Teaching Hospitals NHS Trust [2018] EWCA Civ 978	The five-stage analytical framework
Williams v Alderman Davies Church in Wales Primary School (EAT, 2020)	Cumulative breach, causation and affirmation refined
Leaney v Loughborough University (EAT, 2023)	Delay alone does not amount to affirmation
Wainwright v Cennox plc [2023] EAT 101 (published 2025)	Discriminatory acts as repudiatory breaches; multiple operative causes of resignation
Barry v Upper Thames Medical Group [2025] EAT 146	Delay alone is not affirmation; focus on what is communicated by words and conduct
Marshall v McPherson Ltd [2025] EAT 100	Recent enforcement of the Kaur/Omilaju structure
Employment Rights Act 2025	Reduced qualifying period (six months) and removal of compensation cap (Jan 2027); restrictions on dismissal to impose “restricted variations” (in force from 1 January 2027)

View key constructive dismissal cases.