Monthly Archives: September 2015

What is Constructive Unfair Dismissal?

Disgruntled employees often ask if they have a claim for “constructive dismissal”.  They have heard the phrase but don’t quite know what it means.

Constructive dismissal is not defined as such in the Employment Rights Act 1996 which is the legislation which covers unfair dismissal.  However, section 95(1)(c) of that Act provides that an employee is dismissed by his employer if “the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct”. This is in effect the definition of constructive dismissal.  It should be noted that a constructive dismissal can be  either fair or unfair depending on the circumstances.

The above does not answer the essential question as to what are the circumstances in which the employee is entitled to terminate the employment contract.  In order to do so, three questions have to be asked.

The first question is whether the employer’s conduct amounted to a breach of contract. If it did the second question is whether the breach was a repudiatory breach, also referred to as a fundamental breach.  If there had been a repudiatory breach, the third question then arises which is whether the breach played a part in the decision of the employee to resign.

For there to be a constructive unfair dismissal there has to be a breach of contract by the employer.  A minor breach will not do.  It is also not enough that the employer has (in the eyes of the employee) acted unreasonably.  It has to be a repudiatory breach.  A repudiatory breach is a breach which the law regards as serious enough to entitle the employee to end the employment there and then.  This must be established objectively; it cannot be established simply because an employee says he felt justified in resigning because of what had happened.

The breach of contract which an employee usually says has occurred, is a breach of the term of trust and confidence which is implied into every employment contract; the question for the Tribunal is whether the employer has conducted itself “without reasonable and proper cause in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust” (Malik v. BCCI) which the employer and employee should have in each other.  If a Tribunal is satisfied that there was a breach of the implied term of trust and confidence, this will inevitably be repudiatory.

However, an employee should take on board the reference to “without reasonable and proper cause”.  If the employer has reasonable and proper cause for his conduct which destroys or seriously damages the employee’s trust and confidence, then there is no breach of the implied term and thus no repudiation of the employment contract by the employer.

If the employee has successfully answered the first two questions, he faces the third question which is whether the breach played a part in the employee’s decision to resign.  The employee must, at least in part, resign because of the employer’s repudiatory breach of contract.  The employer’s breach must have played a part in the decision to resign but does not have to have been the main reason.

An employee cannot delay for too long before he resigns because if he does delay too long, he may be taken to have affirmed the contract and thereby lost his right to bring an unfair dismissal claim.  The question of affirmation is essentially whether the employee can be said to have chosen to accept the situation in which he finds himself.  He will do so not only by continuing to work in the job but also by what he says and does – his words and actions might show that he intends the employment to continue.  It is not just a question of measuring the lapse of time between the employer’s behaviour which is complained about and the resignation (although the longer this period is, the more likely the employee will be taken to have affirmed the contract) but of looking at the employee’s reaction in context, including how he behaved in the period leading up to his resignation and his financial and personal circumstances.  If an employee is off work sick it is more difficult for an employer to argue that an employee has affirmed the contract than if he was in work.

For an employee to win a constructive unfair dismissal claim he has the burden of persuading the Employment Tribunal to answer the three questions in his favour.  Even when he can do that, he may well have to overcome the argument that he has affirmed the contract.  An employee should think long and hard before putting himself out of a job and a salary with a view to bringing a claim in the Employment Tribunal for constructive unfair dismissal.

Different tests for wrongful dismissal and unfair dismissal (for misconduct)

A wrongful dismissal is where an employer dismisses an employee in breach of his employment contact, usually by not giving the employee the notice of termination which the employment contract provides for.  The employment contract does not necessarily have to be in writing – an employment contract can be oral.  The right to claim unfair dismissal is a right given by legislation.

The test for succeeding in a wrongful dismissal claim is different from the test in an unfair dismissal claim.

When approaching a wrongful dismissal claim, a Tribunal (which has jurisdiction to hear such claims up to £25,000 – if claiming more than £25,000 the employee can always bring his claim in the courts) must decide for itself whether the employee has in fact done the acts which the employer says entitle it to dismiss the employee without notice or pay in lieu of notice.  The onus is on the employer to show, on the balance of probabilities, that the employee was guilty of the alleged misconduct, so as to enable the employer to dismiss the employee without notice or pay in lieu.  In other words, in cases of wrongful dismissal it is necessary for the employer to prove that the employee had in fact committed the misconduct which he is accused of and the employer’s reasonable belief in the employee’s guilt, is irrelevant.  The standard of proof to be applied is the balance of probabilities so that the employer has to show that it was more probable than not that the employee was guilty of the misconduct.

It is important to realise that the test for unfair dismissal is not that the Employment Tribunal has to decide whether the employee was actually guilty of the misconduct he was accused of.  The test for unfair dismissal is whether the employer’s decision to dismiss was within a range of reasonable responses open to a hypothetical reasonable employer as a response to the employee’s misconduct.  The test is an objective one which focuses on the employer’s decision.  In applying the test the Tribunal must not substitute its own view for that of the employer.  What the Tribunal has to decide is (a) whether the employer genuinely believed that the employee was guilty of the misconduct (b) whether it had reasonable grounds on which to form that belief and (c) whether in arriving at (a) and (b), the employer had carried out as much investigation as was reasonable.  If it decides these matters in favour of the employer, then the Tribunal cannot substitute its own view for that of the employer.  This means that whilst the Tribunal might feel that the decision to dismiss was harsh and that the Tribunal itself would not have decided upon dismissal, nevertheless the employer’s decision to dismiss will be held to be fair as being within the band of reasonable options open to the employer.

Another feature of wrongful dismissal is this.  An employer who has unjustifiably dismissed an employee with immediate effect and without making a payment in lieu of notice, but who subsequently finds out something which would have entitled him to terminate the employment without notice, can rely on that after acquired knowledge to avoid paying the employee the salary which would otherwise have become payable during the notice period.  This is illustrated by the facts of Williams v. Leeds United Football Club [2015 EWHC 376 (QB). Briefly, Mr Williams was entitled to 12 months notice of termination under his employment contract with Leeds Football Club. The club ended his employment immediately and without notice and without paying him in lieu of notice.  The club did not want to pay Mr Williams for his notice period and he brought a claim for wrongful dismissal.  The court held that the club was entitled to rely on Mr Williams’s gross misconduct which the club had discovered after dismissal in order to justify the dismissal.  It was entitled to do so even though the club had deliberately set out to find a reason to avoid paying Mr Williams anything for the notice period.  The gross misconduct which the club had subsequently found out about, consisted of his having used the club’s email system to send pornographic images to a junior female employee of the club and 2 footballer friends at other clubs and had taken place in 2008 – 5 years before Mr Williams was dismissed in 2013.

In all unfair dismissal cases it is necessary to establish the reason for the dismissal. Pre-dismissal misconduct which the employer only finds out about after the dismissal has taken place, cannot by definition have been in the mind of the employer when he dismissed.  This means that it is not a factor in deciding the fairness of the dismissal.  It can however be taken into account by the Employment Tribunal when determining the amount of compensation and might even reduce the compensation to nil.