In many failing firms, action is taken too late against poorly performing senior executives. In some cases, large pay-offs are made to avoid claims for unfair dismissal, constructive dismissal or breach of contract. However, ensuring proper dismissal procedures are followed in time may avoid such expensive remedies. Most employers expect to be able to fire senior executives immediately if things go wrong. Having properly drafted contracts for senior executives may allow swift action to be taken when circumstances require.
Resignations can also result in constructive dismissal claims.
This type of claim generally arises where an employer has breached an employment contract in some way, assuming this is sufficiently important to justify the employee resigning without notice. Actions by employers which have amounted to breach of contract include undermining, bullying and harassment, un-acceptable and humiliating abuse, failure to provide a suitable working environment and changing terms and condition without consent. Consequences for businesses faced with employment claims by former employees who have resigned can be significant. An employee who succeeds in a dismissal case may be awarded compensation of up to L50,000 in the employment tribunal. If the claims involve sexual or racial discrimination, then there is no limit on the compensation which could be awarded by the tribunal.