Understanding the legal risks of changing terms, managing employees and bringing employment relationships to an end
The phrases “quiet quitting” and “quiet dismissal” have entered workplace vocabulary, but only one has any legal substance—and even then, only indirectly. “Quiet dismissal” is not a legal term. It is a colloquial label sometimes used to describe management behaviours that marginalise an employee or make their position untenable in the hope they resign. These situations can create significant legal risk, including claims for constructive dismissal, discrimination, whistleblowing detriment and breach of contract.
In this article, our employment law team explains the legal landscape for employers and flags practical steps to reduce exposure, with brief pointers for employees.
What Is ‘Quiet Dismissal’ and Is It Legal?
Although not a term of art, “quiet dismissal” typically refers to patterns such as removing meaningful work, excluding an employee from meetings or communications, unjustified performance management, ignoring grievances, imposing unreasonable changes, or creating a hostile environment. Where such conduct is sufficiently serious, it may amount to a fundamental breach of contract, exposing the business to claims if the employee resigns in response.
When Can ‘Quiet Dismissal’ Lead to Constructive Dismissal?
Constructive dismissal arises where an employee resigns in response to the employer’s fundamental breach of contract. The breach may be of an express term or of the implied term of mutual trust and confidence. The key elements are:
- Fundamental breach: The employer’s conduct must be sufficiently serious to go to the root of the contract. A course of conduct can cumulatively amount to a fundamental breach.
- Resignation in response: The employee must resign because of that breach.
- No affirmation: Delay or continued working without protest may be treated as affirming the contract, defeating the claim.
If constructive dismissal is established, the employee may have two distinct claims:
- Wrongful dismissal (breach of contract): Typically limited to notice pay and any contractual losses, without a qualifying service requirement.
- Unfair dismissal: The employee ordinarily needs two years’ continuous service to bring an ordinary unfair dismissal claim. There are important exceptions, including dismissals for automatically unfair reasons (for example, whistleblowing, health and safety activities, asserting statutory rights, or certain family-related reasons), which do not require qualifying service.
Discrimination and Whistleblowing Risks
Where the employee has a protected characteristic (such as sex, race, disability, age, religion or belief, sexual orientation, gender reassignment, pregnancy/maternity, marriage/civil partnership), “quiet dismissal”-type behaviours can also engage the Equality Act 2010. Claims for discrimination, harassment or victimisation do not require qualifying service and have uncapped compensation, including for injury to feelings.
If the individual has made a protected disclosure, any detrimental treatment because of that disclosure can give rise to a whistleblowing detriment claim and, if dismissed, an automatically unfair dismissal claim. These claims do not require two years’ service and compensation is uncapped.
What Is ‘Fire and Rehire’?
“Fire and rehire” describes dismissing employees and offering re-engagement on new terms to achieve contractual changes. It is not automatically unlawful. However, it is high risk and will be unfair if not supported by a genuine business reason and a fair process. Tribunals scrutinise whether the employer:
- Had a sound business rationale for the change (often categorised as “some other substantial reason”, or SOSR).
- Carried out meaningful consultation, exploring alternatives and giving employees proper information and time to consider proposals.
- Considered the impact on different groups and any equality implications.
- Applied a fair selection and decision-making process and gave the correct contractual or statutory notice.
Even where a dismissal is found to be for SOSR, it may still be unfair if the process was inadequate or if dismissal was outside the range of reasonable responses. Poor process can also lead to uplifts in compensation where applicable Codes apply.
Other legal risks in “fire and rehire” exercises include breach of contract, unlawful deductions from wages where changes reduce pay without consent, and discrimination if the proposed changes adversely impact protected groups and cannot be justified. Employers should also be aware of collective rights and consultation obligations.
When Does Collective Consultation Apply?
Statutory collective consultation is required where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. “Redundancy” in this collective context is broader than the ordinary redundancy definition and can include dismissals for the purpose of re-engagement on new terms. Whether a “fire and rehire” proposal triggers collective consultation is fact-sensitive and turns on the numbers, the establishment(s) involved and whether the dismissals fall within the statutory definition.
Where triggered, employers must consult appropriate representatives, provide prescribed information, and notify the Secretary of State. Failure can lead to protective awards of up to 90 days’ gross pay per affected employee. Given the complexity, early legal advice is essential to assess whether collective consultation is required and to structure the process accordingly.
The Statutory Code of Practice on Dismissal and Re-engagement
A statutory Code of Practice on dismissal and re-engagement has been introduced to set expectations around good faith consultation, transparency of business reasons, consideration of alternatives and avoiding threats of dismissal as a negotiating tactic. Employment tribunals can take the Code into account when assessing the fairness of dismissals and may adjust compensation by up to 25% for unreasonable failure to comply. The Code does not create new legal obligations by itself, but non-compliance increases litigation risk and potential awards.
Practical Steps for Employers to Reduce Risk
- Diagnose the issue early. Identify the legitimate business drivers and whether change is necessary. Consider whether alternatives such as voluntary changes, trials, or incentives could achieve the same result.
- Plan the legal route. Assess whether proposed dismissals may trigger collective consultation. Map timelines, representatives, information requirements and notifications.
- Consult meaningfully. Share the business case, the data and the proposed changes. Seek views, consider counterproposals and keep an open mind. Document the process carefully.
- Avoid “quiet dismissal” behaviours. Manage performance or conduct issues transparently and fairly. Allocate work consistently, address grievances promptly and keep communication professional and documented.
- Equality and whistleblowing checks. Undertake equality impact assessments, consider reasonable adjustments, and ensure no detrimental treatment follows grievances or protected disclosures.
- Use notice lawfully. If changes cannot be agreed, ensure any dismissals are by proper contractual or statutory notice and that the offer of re-engagement is clear and in writing.
- Follow applicable Codes and policies. Comply with the statutory Code on dismissal and re-engagement and the ACAS Code of Practice on Disciplinary and Grievance Procedures where relevant. Tribunals may adjust compensation by up to 25% for unreasonable non-compliance or, in some cases, for unreasonable failure by an employee to comply.
- Protect communications. Mark proposals as “without prejudice” or “protected conversations” only where the legal criteria are met. Do not rely on labels; take advice on privilege and admissibility.
What Should Employees Do If They Are Concerned?
Employees concerned about “quiet dismissal” should keep a contemporaneous record of events, raise concerns informally where appropriate, and use the grievance procedure if issues persist. Obtain legal advice promptly before resigning, as resignation can be a point of no return for constructive dismissal claims and delay can risk affirming the contract. Consider requesting reasonable adjustments if disability is relevant and seek advice if a protected disclosure has been made. If pay is changed without consent, take advice on unlawful deduction from wages.
Potential Claims, Compensation and Employer Risk
For unfair dismissal, compensation comprises a basic award and a compensatory award subject to the statutory cap, save for certain automatically unfair dismissals where the cap does not apply. For wrongful dismissal, damages generally reflect notice and contractual losses. Discrimination and whistleblowing claims can attract uncapped compensation, including injury to feelings. Tribunal awards may be adjusted by up to 25% for unreasonable failure to comply with the relevant statutory or ACAS Codes. Employers should also factor in the reputational and employee relations impact of any process.
Key Takeaways for Employers
“Quiet dismissal” is not a legal category, but the behaviours it describes can amount to serious legal breaches. Constructive dismissal requires a fundamental breach, prompt resignation in response and avoidance of affirmation. “Fire and rehire” is not per se unlawful, but it is highly scrutinised and demands a genuine business reason, meaningful consultation, careful equality analysis and compliance with statutory and ACAS Codes. Where numbers are significant, collective consultation obligations may arise. Early planning, respectful engagement and clear documentation are central to defensible outcomes.
Need Advice on Constructive Dismissal or Fire and Rehire?
If you are considering contractual changes, navigating a difficult performance situation or responding to employee concerns, our employment team can help you plan a compliant strategy and reduce risk. Please contact us for tailored advice.
Read our previous guide to the key provisions every employer should include in a settlement agreement for related information.
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For more information on how we can help, please call 0207 586 1141 or email contact@muscattblackgraf.com, or alternatively, fill in our online contact form.
Disclaimer
This article was produced in August 2026 and provides general information only and does not constitute legal advice. Specific advice should be sought on particular facts and before taking or refraining from any action.