An employee who is constructively dismissed without notice or pay in lieu of notice is entitled to unfair dismissal compensation for his entire notice period, even if he has found alternative work during that period (Stuart Peters Ltd v Bell).
This decision could have financial implications for employers defending unfair constructive dismissal claims. Such employers should not assume they will not have to pay out if an employee has secured alternative employment during (what would have been) his notice period. Employees are effectively gaining a windfall in such circumstances, and the longer the notice period and the higher the salary the greater the windfall.
Ms Bell brought a successful claim of unfair constructive dismissal against her former employer. As she did not work out her notice period (having resigned without notice) she claimed compensation for the whole of her six-month notice period, even though she had managed to secure alternative employment for three of those months. The EAT ruled that she was entitled to do this. Although it was controversial there is case law which makes it clear that if an employee is dismissed without notice and without pay in lieu of notice he is entitled for unfair dismissal purposes to compensation equal to his net pay for his notice period, without deduction in respect of earnings which he has received from alternative employment during that period. This case confirmed that there was nothing to stop this principle applying to constructive dismissals as well as ordinary dismissals.