One of the things that concerns many small businesses in relation to employment law is the issue of constructive dismissal. A perception has grown up around the concept that if a business makes any change that an employee doesn’t like, they can resign and take the company to a tribunal. This perception isn’t helped by stories like this from The Guardian, especially its clickbait headline “Senior staff can sue if given ‘low status’ desk, UK tribunal rules”
Of course, the headline isn’t true and the story is far more complex. But it’s a useful one to look at since it covers a lot of issues that a small business might face when dealing with a change.
Firstly, what is constructive dismissal? It’s the idea that an employer makes a significant detrimental change to an employee’s terms, conditions or position that the employee can consider that they have effectively been dismissed and resign on the spot. It is in many ways the reverse of gross misconduct, which is where an employee does something so serious that the employer considers that dismissal without notice is the appropriate solution.
In some situations, constructive dismissal can be triggered by the ‘final straw’ in a series of changes. That’s in part what happened in this case.
The claimant, a Mr Walker, was a manager of a branch of an estate agents. He was moved without discussion to a smaller branch and given – again without discussion – a revised pay package. To achieve a similar level of salary he would have to hit more demanding targets. A couple of months later, he was required to return to his original branch in what was termed a joint managerial role, but which required him to sit with the majority of staff in the main office rather than at the manager’s desk. He considered this to be a demotion and considered that it would be difficult and embarrassing to have to sit among staff he had formerly managed. When he raised this with his Director, the director dismissed his concerns with a comment that he couldn’t believe someone of Mr Walker’s age would make a fuss about a desk (there was some dispute about whether the Director swore in this conversation). Mr Walker considered this the final straw, and resigned claiming constructive dismissal.
There are three key learning points from this for small businesses:
- If you are making a change which has a negative impact on someone – even if they are in a senior role – discuss and (where possible) agree the way forward. Don’t just impose it.
- Consider your company culture. In some businesses, where people sit would not be an issue. But if status is conveyed by office location, type of desk or anything else, taking that away will clearly indicate to people in the organisation that the individual’s status has been downgraded.
- The Estate Agents had an external HR adviser who gave advice on how to handle the situation. The advice was not necessarily incorrect but was based on partial information (what the Director thought was important for her to know) and as result made the situation worse. Always tell your HR adviser (for my clients that means me ) the full story, even the bits that you don’t think are valid.
Constructive dismissal is actually very rare (in a 40 year HR career I’ve dealt with 2 cases and I don’t think that I am unusual in that). But you can make it rarer still by following the steps above.
