Continuing our regular series on the implications of recent significant
cases. Debra Gers, associate solicitor, the human resources group, at
Eversheds, looks at the issues
Resignation under Tupe due to detrimental changes essential to show
fundamental breach of contract
Rossiter v Pendragon plc Court of Appeal May 2002 Lawtel
Rossiter’s employment transferred to Pendragon in October 1997 following a
business transfer to which the Tupe regulations applied. In 1999 he resigned
and claimed constructive dismissal after Pendragon varied the commission
structure for its sales team which reduced Rossiter’s salary by £3,000. He
argued the variation constituted a substantial and detrimental change to his
working conditions which entitled him to resign pursuant to Regulation 5(5).
The tribunal found Rossiter suffered no substantial detriment as a result of
the changes which he had in fact affirmed by working for 16 months before
resigning. Pendragon’s changes did not constitute a fundamental breach of
contract, a prerequisite for a successful constructive dismissal claim
according to the provisions of s95 (1)(c) of the Employment Rights Act 1996.
The EAT allowed Rossiter’s appeal. In the context of a business transfer,
the correct way to establish constructive dismissal was to show a substantial
and detrimental change in working conditions within the meaning of Article 4(2)
of the Acquired Rights Directive rather than the need to show a fundamental
breach of contract. Moreover, the 1996 Act had to be construed purposively to
give effect to the directive.
Pendragon successfully app-ealed. The EAT had erred in holding that
s.95(1)(c) could be construed in such a way to enable an employee to claim
constructive dismissal where there was no fundamental breach of contract by the
employer. The employer’s conduct had to amount to a fundamental breach of
contract (as per Western Excavating v Sharp, 1978, IRLR 27). This principle
applied to transfer of undertaking situations as well as any other situation
and the tribunal was entitled to reach the conclusions it did.
No contributory fault in stress claim
Young v Post Office Court of Appeal April 2002 Lawtel
Young started work at the Post Office in 1978 and became a manager in 1993.
He was in sole charge of a workshop with responsibility for four men. In 1995
he had difficulty in coping with new systems of work and was off sick for five
months with a stress-related illness.
At his own volition, Young returned to work and was told he could choose the
hours he worked and was given some flexibility to effect a gradual return. In
reality however, he ended up managing an increased workload and within seven
weeks went off work permanently suffering from stress. He issued proceedings
for psychiatric injury arguing the PO had breached its duty of care. The County
Court allowed the claim and awarded Young £93,000.
The Post Office appealed unsuccessfully. Knowing that Young was
psychiatrically vulnerable following his first period of stress-related illness,
the second period of illness was reasonably foreseeable.
The court also rejected the PO’s argument that by not voicing his concerns
on his return, Young had contributed to his injury. He was a hard-working,
conscientious but vulnerable employee and his return to work at his own pace
should have been properly managed. The court concluded that only in very rare
cases would a weak and vulnerable employee be expected to shoulder
responsibility for the fact an employer had not kept its promises.
Care needed when drafting employment handbook
Briscoe v Lubrizol Ltd Court of Appeal April 2002 New Law Online
Briscoe was employed by Lubrizol in heavy manual work from December 1986. He
had a prolonged period off work from June 1990 and initially Lubrizol continued
to pay his salary in full while insurers considered whether he was entitled to
benefit under the employer’s long-term disability scheme.
After a period of around six months, Lubrizol paid Briscoe the benefit to
which he was entitled under the scheme assuming the insurers would accept his
However, in June 1991 the claim was rejected because the medical evidence
did not support the assertion that Briscoe was medically unfit and unable to
follow his normal occupation. In November 1991 Lubrizol stopped paying benefit
to Briscoe because of his refusal to return to work (in the absence of medical
evidence to justify his decision) and his failure to co-operate with reasonable
requests. Communications between Briscoe and Lubrizol broke down and he was
dismissed in June 1992.
Briscoe sued for damages and there were two issues to be res-olved. Firstly,
whether Briscoe was entitled to any benefit at all because the scheme provided
that benefit would be paid if he were totally unable to perform his ‘normal’
occupation (which he could not), whereas the employment handbook provided
benefit was only payable if an employee was totally unable to perform ‘any’
occupation. Secondly, whether Lubrizol had lawfully terminated his employment
in June 1992 thereby ending Briscoe’s right to benefit under the scheme.
The judge held the entitlement to benefit was governed by the scheme and not
the handbook, but Briscoe’s failure to respond to Lubrizol’s instructions
constituted gross misconduct which justified summary dismissal. Accordingly
benefit was payable only up to June 1992. Briscoe appealed and Lubrizol
cross-appealed arguing that the definition of disability in the hand- book
rather than the scheme should prevail.
Both appeals were dismissed. The entitlement to benefit was as defined in
the scheme and not as mis-stated in the handbook and so Briscoe had to satisfy
only the lower threshold in order to qualify for benefit.
However, Briscoe had been lawfully dismissed. His repeated failure to
respond to reasonable requests and instructions and his refusal to work
constituted gross misconduct justifying summary dismissal.