Constructive dismissal clarified by Court of Appeal case

22 May 2018 By Ben Daniel

A recent ruling may help employers to close down apparently ill-founded claims promptly and cost-effectively, says Ben Daniel

Constructive dismissal is notoriously tricky. Employees often allege that their employer has breached the implied term of mutual ‘trust and confidence’ in the employment contract, either through a single serious misdeed or a series of smaller incidents that cumulatively amount to a fundamental breach. 

In the latter case, the employee must identify the ‘last straw’ (or the final incident that prompted them to resign). They also need to satisfy the employment tribunal that they resigned at least partly in response to that event. Employees must resign fairly quickly following the last straw event, or they may be found to have accepted the breach and given up their right to claim. 

In Kaur v Leeds Teaching Hospitals NHS Trust, an employee who resigned following her unsuccessful internal appeal against a disciplinary penalty was held to have no reasonable prospects of success in her constructive dismissal claim. The last straw she had identified was ‘innocuous’ and did not breach her contract. 

Ms Kaur was employed by the trust as a nurse and was subject to a formal capability procedure, which she alleged was unjustified. Later, she complained of bullying by colleagues. Following an altercation between Kaur and another staff member in April 2013, the trust began disciplinary proceedings. In October 2013, the disciplinary panel found her guilty of ‘inappropriate behaviour’ and issued a final written warning. Her appeal against this penalty was rejected in July 2014 (15 months after the altercation) and she resigned the next day. 

The last straw

What was the last straw that triggered her resignation? The employment tribunal held that it could not be the disciplinary process or appeal, as the trust had acted fairly and properly throughout. Could it be the April 2013 altercation with a colleague? The tribunal thought not, as she had waited too long to resign and had effectively accepted this alleged breach of contract. 

The Employment Appeal Tribunal and Court of Appeal ultimately agreed, but not before spending many paragraphs wrestling with a complex point of constructive dismissal law. Can an ‘old’ breach of contract, which has apparently been accepted by the employee, be ‘revived’ if another breach occurs much later? 

The Court of Appeal decided that yes, it can – confirming our existing understanding of the law on this issue. However, in this case, the ‘old’ incident (the altercation between the claimant and her colleague) was never brought back to life, as no further breach of contract took place. 

Lessons for HR

While it appears to be more of a case of interest to lawyers, because of the legal wrangling involved, there are important take-away messages for employers and HR teams too. Crucially, a properly followed disciplinary process, or its outcome, cannot be a fundamental breach of contract for the purposes of a constructive dismissal claim, or contribute to a series of events that are alleged to cumulatively breach the contract. 

Additionally, the Court of Appeal confirmed that it is perfectly acceptable to consider an employee grievance alongside a closely related disciplinary matter, rejecting the employee’s argument that failure to deal with the grievance first was unfair. 

Usually, an employment tribunal will be reluctant to find that a claim has ‘no reasonable prospects of success’ when the facts of the case are disputed, preferring to allow a claimant to argue their case fully at a hearing. However, the court helpfully confirmed here that, occasionally, an early strike out of the claim will be appropriate (even where there is no agreed account of events). This decision may therefore prove useful for employers and their representatives seeking to block apparently ill-founded claims of constructive dismissal quickly and cost-effectively. 

Ben Daniel is head of employment, pensions and immigration at Weightmans

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