Constructive dismissal claim fails but holiday pay awarded for cash-in-hand worker
A counter assistant who resigned after receiving a written warning for sickness absence lost her unfair dismissal claim, but was awarded £4,777.50 for unpaid holiday pay over nine years.
1 min read · Last updated 19 May 2026
Case details
- #constructive-dismissal
- #holiday-pay
- #illegality
- #cash-in-hand
- #small-business
- #weight-comments
Key facts
- Miss Foreman worked as a counter assistant from 13 January 2014 to 21 November 2022.
- She was paid cash in hand without tax deductions until 1 September 2016.
- Her employment transferred to My Plaice Gorleston Limited on 1 September 2016.
- She was issued a first written warning for sickness absence on 21 November 2022.
- She resigned on the same day, believing she could not be warned while having a fit note.
- She was never paid holiday pay during employment and was told holidays were unpaid.
Timeline
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Employment started
Miss Foreman began working as a counter assistant at the fish and chip shop, paid cash in hand.
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Company incorporated
My Plaice Gorleston Limited was incorporated.
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Employment transferred to company
Miss Foreman's employment transferred to the company and tax deductions began.
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First contract of employment
Miss Foreman received a written contract stating holidays were unpaid.
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Oral warning for sickness
Miss Foreman received an oral warning for six sickness absences in six months.
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Took unpaid holiday
Miss Foreman took eight days unpaid holiday.
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Reported sick
Miss Foreman texted Mr Bains that she could not walk and would not be at work.
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Provided fit note
Miss Foreman provided a fit note certifying her unfit to work until 14 November 2022.
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Return to work interview
Mr Bains conducted a return to work interview after Miss Foreman's sickness absence.
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Disciplinary hearing and resignation
Miss Foreman attended a disciplinary hearing, was issued a first written warning for absence, and resigned.
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Claim issued
Miss Foreman issued proceedings for constructive unfair dismissal and holiday pay.
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Judgment given
Employment Judge Warren dismissed the unfair dismissal claim but awarded £4,777.50 for holiday pay.
The legal issue
The tribunal had to decide whether the employer's comments about the claimant's weight and the decision to issue a written warning for sickness absence amounted to a fundamental breach of contract entitling her to resign and claim constructive dismissal, and whether she was entitled to holiday pay for the entire period of her employment despite being paid cash in hand for part of it.
The outcome
The tribunal found that the claimant was not constructively dismissed. The comments about her weight, while inappropriate, did not destroy trust and confidence, and the written warning was a reasonable response to her sickness record. However, the employer's failure to pay any holiday pay over nine years was a breach of the Working Time Regulations. The claimant was awarded £4,777.50 for unpaid holiday pay, calculated on her average weekly earnings.
Lessons & takeaways
- Employees paid cash in hand without deductions are still entitled to statutory holiday pay.
- Constructive dismissal claims require a fundamental breach of contract – inappropriate comments alone may not suffice.
- Issuing a written warning for sickness absence can be reasonable if the employer follows a fair process and the employee has a history of absence.
- Small businesses must ensure they comply with working time regulations, even for long-serving staff.
- Resigning on the spot without raising a grievance can weaken a constructive dismissal claim.
This case highlights the risks for small businesses that fail to comply with basic employment rights, particularly around holiday pay. The claimant, a counter assistant at a fish and chip shop, worked for nine years without ever receiving paid holiday. She was told holidays were unpaid, a practice that the tribunal found unlawful under the Working Time Regulations.
Why the constructive dismissal claim failed
The claimant resigned after receiving a first written warning for sickness absence, arguing that the warning, combined with past comments about her weight, destroyed trust and confidence. However, the tribunal found that the employer's conduct did not cross the high threshold needed for constructive dismissal. The weight comments were isolated and not part of a campaign of harassment, and the warning was a proportionate response to her attendance record.
What the employer could have done differently
The employer could have avoided the holiday pay claim entirely by simply paying the statutory minimum. Many small businesses mistakenly believe that paying cash in hand exempts them from holiday pay obligations – it does not. The tribunal calculated the award based on the claimant's average weekly earnings over the entire period, including the cash-in-hand years.
Why this matters for similar claims
The case is a reminder that employees with long service but informal arrangements still have statutory rights. For anyone considering a constructive dismissal claim, the key takeaway is that you need to show a serious breach of contract – not just poor management. Resigning immediately without giving the employer a chance to address concerns can also weaken the claim.
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