Staff asserting contract breaches get new rights

Employees alleging breach of contract by their employers are
‘whistleblowers’ qualifying for special protection

Despite recent changes in employment law, employers have generally been able
to rely on two broad principles. First, they can dismiss staff during their
initial year of employment without risk of an unfair dismissal complaint, and
second, they have a significant degree of latitude as to how they treat their
employees while the working relationship continues.

This is, of course, an over-simplification. For example, it has for many
years been unlawful to discriminate against workers on grounds of sex, race and
or (since 1996) disability, regardless of their length of service. And the
general duty of mutual trust and confidence implied into all employment
contracts places constraints on how employers behave towards their staff.

In addition, the law provides special protection to all employees against
suffering a "detriment" in a range of circumstances. Dismissal on the
same grounds is generally treated as automatically unfair, even if the employee
does not have a year’s qualifying service. Most of these "prohibited"
grounds are rather obscure and will rarely arise – for example, dismissal for
being a trustee of an occupational pension scheme.

Of potentially greater significance, however, are the provisions introduced
by the Public Interest Disclosure Act 1998 (PIDA) to protect staff who
"blow the whistle" on wrongful activities. It is unlawful to dismiss
employees, or subject them to detrimental treatment, for making a
"protected disclosure".

Possible subjects for a protected disclosure include the commission of
criminal offences, miscarriages of justice, protection of health and safety and
safeguarding the environment. But the legislation also covers a disclosure that
tends to show "that a person has failed, is failing or is likely to fail
to comply with any legal obligation to which he is subject".

A recent Employment Appeal Tribunal decision has shown the potential breadth
of this provision (Parkins v Sodexho, IDS Brief 695, October 2001). Parkins was
dismissed by Sodexho after only four months’ employment. Sodexho must have
thought it was safe, but Parkins said the reason he was dismissed was that he
informed his manager about lack of supervision, which he said was "an
infringement of my contract". Accordingly, Parkins claimed he had been
automatically unfairly dismissed for asserting a breach of a "legal
obligation" by Sodexho under his contract of employment.

The employment tribunal did not consider that an allegation of breach of an
employment contract came within the "letter or spirit" of the PIDA
whistleblowing provisions. However, the EAT disagreed and allowed Parkins’
appeal. According to the EAT, the legislation is broadly drawn, and provides no
basis for distinguishing between a legal obligation arising from an employment
contract and any other form of legal obligation.

The upshot is that all employees have the right to claim they have been
dismissed or subjected to adverse treatment for alleging that their contract
has been breached – or, indeed, that the contract of employment of any other
member of staff has not been honoured.

This is perhaps a surprising result, but it does arguably resolve an anomaly
in employment law. It has for some years been unlawful to dismiss staff for
asserting breach of statutory employment rights, and it will now be similarly
regarded as automatically unfair to dismiss for asserting breach of contractual

Key points

– Employees can claim unfair dismissal, even if they have less than one
year’s service, if they allege the reason for their dismissal is that either
their own contract of employment or that of another person has been breached.

– Employees who are "victimised" (ie, subjected to a detriment)
for asserting a breach of contract can also bring a tribunal claim.

By Gareth Brahams  a senior
solicitor at Lewis Silkin

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