Legal Q&A: Constructive dismissal

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The law surrounding constructive dismissal can often create headaches for employers. It can be difficult to know what constitutes a breach of contract on the part of the employer that would entitle an employee to resign and raise a claim. Employment lawyers Verity Clark and Victoria Smith provide some answers to common questions, which have arisen as a result of recent case law.

Q. Can an employer cure a breach?

Generally, once an employer has fundamentally breached the contract of employment, this cannot be cured by any subsequent action by the employer. However, while an employer’s actions cannot cure a breach of the contract, it can repair the employment relationship if the action has damaged, but not yet breached it. In Assamoi v Spirit Pub Company (Services) Ltd, an employee had unreasonably been suspended by his manager, which seriously damaged the relationship. However, the employer’s subsequent action (of recalling the suspension) was found to have recovered the relationship.

While there is no clear guidance as to the line between acts that will only damage and those that will destroy the employment relationship, the following points should be considered:

  • An ongoing situation that is allowed to fester is more likely to cause a breakdown than a one-off act.
  • Conciliatory gestures such as an apology may be helpful even if an employer is unsure whether its acts are just damaging or totally destructive.
  • Conciliatory gestures may prevent a fundamental breach of contract from occurring or put the onus on the employee to either continue under the contract or accept the breach and claim constructive dismissal.

Q. Does the employer’s breach of contract have to be the only reason for resigning?

An employee can succeed in a claim for constructive dismissal as long as they can show the employer’s fundamental breach of contract was a reason for resigning, not necessarily the principal or substantial reason.

Employers should be aware of the terms of a contract that, if breached, are repudiatory. These are generally the fundamental terms of a contract, for example relating to job role, place of work, salary, and trust and confidence. Even if an employer’s breach of such a term is only minor, because the term is fundamental to the contract, it can give rise to a claim.

Where there are simultaneous grievance and disciplinary processes relating to an employee, employers should ensure that the grievance isn’t “lost” whilst dealing with the disciplinary process, as this may give rise to a subsequent claim. The Acas code allows an employer to suspend a disciplinary process in order to investigate a grievance, or to deal with cases concurrently where the grievance and disciplinary are related.

Q. Will a mistaken belief amount to a breach of contract?

The case of Roberts v Governing Body of Whitecross involved a dispute over the employee’s entitlement to sick pay under the terms of a collective agreement. The employee believed that he was entitled to full pay, while the employer (incorrectly) considered he was only entitled to half pay and confirmed to the employee that he would receive half pay. The Employment Appeal Tribunal held that if an employer mistakenly interprets a contractual provision and intends to act on that mistake, this can be a fundamental breach of contract.

Employers should ensure their contracts of employment are clearly drafted and reviewed regularly to ensure that they are appropriate for the circumstances of each employee.

Where an external source (such as a collective agreement or health and safety legislation) may affect the contract of employment, employers should ensure that they have an accurate and up-to-date understanding of its effect.

Q. Can one employee’s behaviour be treated as the actions of the employer?

This question commonly arises in the context of bullying among employees.

An employer can be liable for the acts of employees in the course of their employment. Liability will arise if the employee:

  • was doing what they were employed to do; and
  • in the course of so doing, behaved in a way that, if done by the employer, would constitute a fundamental breach of the contract between the employer and employee.

Ensuring through disciplinary policies that bullying behaviour will not be tolerated and thoroughly investigating allegations of bullying may prevent claims being raised and improve the workplace environment. If an employee feels supported by their employer, they are less likely to raise a claim of constructive dismissal.

Verity Clark, senior solicitor, and Victoria Smith, trainee, are both members of Brodies’ employment team. Follow the Brodies employment team on Twitter – @BrodiesEmpLaw

Further FAQs from XpertHR:

Can an employee claim unfair dismissal if he or she has resigned?

Must an employee have been employed for a particular period of time before he or she can claim constructive dismissal?

When an employee who is subject to disciplinary proceedings raises a grievance, must the employer put the disciplinary proceedings on hold?