Constructive dismissal – when an employer is given the red card by an employee

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Posted in:HR and Employment|January 20, 2016 | Join the mailing list

Dr Eva Carneiro’s constructive dismissal claim against Chelsea football club has hit the headlines in recent months. Here, we take a closer look at what constitutes ‘constructive dismissal’ and the issues that employers and employees should be aware of.

Constructive dismissal occurs when an employer commits a serious breach of the employment contract which forces an employee to resign.

So, what is considered to be a serious breach of contract?

Examples may include unilaterally cutting pay; changing an employee’s job description or duties without consent; failing to provide an employee with reasonable support to carry out their job; and forcing an employee to work in unsafe conditions.

Demoting an employee to a role of either lesser status or lower pay may also constitute a breach of contract and can be hugely problematic.

Demotion should be approached with caution by the employer

Unless permitted by the contract of employment, demotion is effectively a fundamental breach of the express terms of an employment contract. If there is no clause allowing demotion, the employer is unable to impose demotion unilaterally and would need to seek the employee’s consent before adopting this approach. If consent is not sought, the employer may also be at risk of a claim for unlawful deduction from wages.

In the absence of a contractual clause effecting potential demotion, the only scenario in which demotion is permitted is following a full disciplinary procedure compliant with the ACAS Code of Conduct. Demotion should only be considered in cases of underperformance or serious misconduct.

If, as an employer, you are considering demoting an employee, there are key questions to consider:

  1. What impact will the demotion have on the employee?
  1. Is this a change in status from a more senior role that the employee has worked hard to reach?
  1. Are there sound reasons for the demotion and have you explained those reasons to the employee?
  1. Will this decision have a negative impact on the rest of the workforce?

If there are issues concerning the capability of the employee, these should be dealt with by way of a performance management procedure, rather than demotion. A performance management procedure may result in a restructure of the role.

Finally, from a practical point of view, consider the financial, physical and emotional impact on your business and your workforce should an employee decide to bring a claim for constructive dismissal. Not only is the cost of legal proceedings significant, the cost to your business in terms of morale could be catastrophic, especially if other employees “side” with the demoted employee. Perhaps Jose Mourinho has taught us a valuable lesson here.

Watch this space for further updates on constructive dismissal, demotion and the Carneiro case.

For more information about any of the above or for practical commercial advice on this or any other aspect of employment law, please contact Michelle Gray or Kim Freeman-Smith of the berg Employment team on 0161 833 9211 or by email at or

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The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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