Constructive Dismissal and Mental Health: What Employers Often Get Wrong

In the evolving landscape of workplace wellbeing, mental health has taken centre stage. Yet despite growing awareness, many employers still fall short in understanding the legal implications of mishandling mental health concerns—particularly when it leads to claims of constructive dismissal.

Constructive dismissal occurs when an employee resigns due to their employer’s conduct, which amounts to a fundamental breach of contract. When mental health is involved, that conduct may include failure to support, accommodate, or respond appropriately to stress, anxiety, depression, or related conditions. These claims can be costly, reputationally damaging, and, more importantly, avoidable.

So where do employers go wrong?

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1. Failing to Recognise Mental Health as a Workplace Issue

One of the most common missteps is treating mental health solely as a “personal” issue, rather than a legitimate workplace concern. Under the Health and Safety at Work etc. Act 1974, employers have a legal duty to ensure, as far as reasonably practicable, the health, safety, and welfare of their employees—including mental health.

If a workplace environment is contributing to poor mental wellbeing (for example, through excessive workload, bullying, or lack of support), and the employer does nothing to address it, they may be in breach of the implied term of mutual trust and confidence—a cornerstone of constructive dismissal claims.

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2. Inadequate or Inflexible Policies

A one-size-fits-all approach to absence management and performance reviews is another key failing. Too often, employers treat mental health absence like any other sickness—triggering disciplinary warnings, capability reviews, or dismissal without taking account of the underlying cause.

However, where mental health conditions qualify as a disability under the Equality Act 2010 (i.e. a condition that has a substantial and long-term adverse effect on day-to-day activities), employers have a legal duty to make reasonable adjustments. Failure to do so is not only discriminatory—it may give rise to claims of constructive dismissal if the employee resigns as a result.

Reasonable adjustments might include:

• Adjusted working hours

• Phased return to work

• Modified performance targets

• Temporary reduction in workload or responsibilities

Refusing to consider or implement such adjustments—even inadvertently—can lead to serious legal consequences.

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3. Poor Communication and Lack of Support

Mental health conditions are often invisible, which makes proactive and sensitive communication essential. A lack of regular check-ins, poorly handled return-to-work meetings, or dismissive responses to disclosed mental health concerns can all contribute to a perception of neglect or hostility.

If an employee feels unsupported to the point where they believe continuing employment is untenable, they may have grounds to resign and claim constructive dismissal. Tribunals have consistently found that employers must not only listen to concerns but also act reasonably and with empathy.

In the 2017 case of Hinsley v Britannia Hotels Ltd, for example, an employee suffering from depression was criticised and subjected to performance management without the employer taking proper account of his medical condition. The tribunal found in his favour, holding that the employer’s conduct breached the implied term of mutual trust and confidence.

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4. Disciplinary Action Without Context

Employers often default to disciplinary procedures when performance dips or absences increase, without considering whether those issues are symptoms of a larger mental health problem. This is particularly risky where an employee has disclosed their condition, or where the employer ought reasonably to have known about it.

Where an employee is penalised for behaviour or performance linked to their mental health—especially without medical evidence or occupational health input—it can amount to unfair treatment and lay the groundwork for a constructive dismissal claim.

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5. No Clear Mental Health Strategy

Ultimately, constructive dismissal claims often stem from a broader failure to create a psychologically safe and supportive workplace. The absence of a mental health policy, lack of manager training, or failure to act on known issues can all lead to breakdowns in the employment relationship.

To mitigate this risk, employers should:

• Train managers on recognising and responding to mental health issues

• Establish clear policies on mental health support and absence management

• Ensure access to occupational health and/or Employee Assistance Programmes (EAPs)

• Document all support offered and steps taken in response to concerns

Constructive dismissal claims linked to mental health are increasing as employees become more aware of their rights. Employers who fail to act reasonably or compassionately may find themselves exposed to claims that could have been avoided with a proactive, legally compliant approach to mental health in the workplace.

Supporting employee wellbeing isn’t just a moral obligation, it’s a legal one.