Constructive Dismissal – the latest cases banner


Constructive Dismissal – the latest cases

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Constructive dismissal is a concept that can be confusing to some, and it’s always worth consulting top employment solicitors about any given situation where it is possible that an employee has resigned as a consequence of the behaviour of the employer. Given the complexity involved in determining whether there has been a constructive dismissal or not, 2 recent cases which offer guidance around changing terms and conditions of Employment (which is often the cause of a constructive dismissal claim) and so called ‘last straw’ cases, will be welcomed by Employment claim solicitors.

Changing terms and conditions and constructive dismissal

Constructive dismissal claims are based on a unilateral breach of the employment contract by the employer which is such that the employee can resign and treat him or herself as dismissed. In many cases, the term of the contract relied on is the implied term of mutual trust and confidence, but the resignation may also be in response to changing terms and conditions of Employment that are express – not just implied.

In Mostyn v S and P casuals, the employer sought to deal with a drop in performance by its employee, Mr Mostyn, asking him to accept a £20,000 cut in his basic pay. Mr Mostyn was a sales executive and his sales figures had reduced dramatically between 2012 and 2016. He resigned and claimed constructive dismissal based on an argument that the employer had breached the implied term of mutual trust and confidence. The Employment Tribunal rejected the claim concluding that although there was a breach of the implied term, the employer had acted reasonably in asking him to accept the pay cut.

On appeal, though, the Employment Appeal Tribunal concluded that there had been a breach of the express term of Mr Mostyn’s employment contract so far as it related to salary payment. The Employment Tribunal should have considered whether there had been such a breach of an express term before it decided that there was a breach of an implied term of the contract.

As any lawyer advising on Employment contracts in London or elsewhere in the UK will be well aware, an employer cannot impose a change in key terms and conditions of Employment without consultation with the employees. A unilateral change, such as in the Mostyn case, is unlikely to go unchallenged, so any employer that ignores the proper approach is likely to face a constructive dismissal claim.

The case highlights the need for any employer considering changing terms and conditions to think carefully about the correct approach. It may be that, as in this case, it is the terms and conditions of one employee that must change, or that there is a collective situation that needs to be addressed – for example a change in working hours because of a change in demand. The employer also needs to consider whether the terms and condition it is considering changing are key terms and conditions, such as salary, or more inconsequential terms and conditions. In the case of key terms and conditions, a full consultation exercise may be necessary. The employer might also need to consider whether what is contemplated actually amounts to a redundancy situation and not simply ‘changing of terms and conditions’. In the case of less consequential terms and conditions, it may be enough to make the change – perhaps giving some notice - and to provide an explanation to employees of the change and the reasons for it. Taking advice from some of the best London employment solicitors will always be advisable for an employer facing such a situation.

Constructive dismissal and ‘the last straw’

Another recent case, Kaur v Leeds Teaching Hospitals NHS Trust, gave the Court of Appeal the opportunity to consider the question of the so called ‘last straw’ – the act that finally tips the employee over the edge and prompts them to hand in their resignation which then triggers the constructive dismissal claim.

When considering a constructive dismissal claim, it’s always important to consider whether an employee has effectively ‘accepted’ a fundamental breach of contract. This can happen if, following a breach by the employer, the employee continues to work for the employer and does not make it clear that he or she does not accept the previous breach. In the Kaur case, the Court of Appeal found that an employee could essentially resurrect a previously accepted breach of contract if the employer committed a further breach of contract.

The Court of Appeal provided the following guidance that applies in last straw cases – there is a series of questions to ask as follows

- Firstly - what was the most recent act (or omission) on the part of the employer which the employee says caused, or triggered, his or her resignation?

- Having answered that question it is necessary to consider whether the employee accepted the breach and affirmed the contract since that act.

- If the contract hasn’t been affirmed, was the act or omission a repudiatory breach of contract of itself?

- If the most recent act or omission is not a repudiatory breach of contract, is it part of a ‘course of conduct’ which taken together was a fundamental breach of the implied duty of mutual trust and confidence?

- And finally, the key question in many constructive dismissal claims - did the employee resign in response to the breach of contract?

Ultimately, in the Kaur case, the claimant was unsuccessful, but the above guidance will be helpful to any employer faced with a potential constructive dismissal claim.

For advice and support in any employment law matters, or if you are looking for an Employment lawyer in the City of London, OTS Solicitors are here to help. We take a practical, intelligent and business focussed approach to all employment law matters, whether dealing with individual or collective employee issues, delivering HR training, or providing support with HR and Employment policies. To discuss employment law matters with one of our team, please call 0203 959 9123 today.

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