Thu 02 Aug 2012

Constructive Dismissal – Can the grievance procedure resolve the issue?

Employees often seek advice on whether they should resign from their employment and pursue their employer for constructive dismissal. It goes without saying that, especially in today’s deflated labour market, this is not a decision to be taken lightly. Nor is it usually an easy decision for an employee to make. With the persisting high unemployment figures, the risk of being unable to secure new employment is far greater now than in earlier “boom” times.

In addition, a recent Employment Appeal Tribunal decision has highlighted the legal hurdles faced by employees when pursuing a claim for constructive unfair dismissal against a former employer.

I wanted to mention this case in my blog but before I get on to that I thought it would be useful to include a brief overview of constructive dismissal is as I find that many employers and employees do not fully understand constructive dismissal.

Where an employer dismisses an employee, the employee can potentially raise an Employment Tribunal claim for unfair dismissal. However, where there is no active dismissal by the employer, employees sometimes feel it necessary to take matters into their own hands by resigning and claiming constructive dismissal.

A claim for constructive dismissal may arise where the employee terminates his contract of employment, with or without notice, in circumstances where he is entitled to terminate by reason of the employer’s conduct. One example of such conduct that may amount to constructive dismissal is where the employer has failed to pay the employee’s salary. However, it is not enough for the employee to show that the employer’s conduct has been unreasonable in some way. A constructive dismissal claim requires the following:

  • The employer must have broken a fundamental term of the contract;
  • the employee must show that this fundamental breach of contract was what caused him to resign.

Although only ostensibly a two-stage test, it can be a difficult one for employees to satisfy. Even where an employee can establish a fundamental breach, claims often fail because the employee either delayed too long before resigning (so that it can be said that the employee has affirmed the contract so that he can no longer rely on the breach) or his resignation can be explained by other means (most commonly after securing a new job).

The recent EAT decision of Assamoi v Spirit Pub Company is a good example of the high bar set by the Tribunal in constructive dismissal claims. This claim was lodged by a head chef against his former employer. After a somewhat turbulent employment over the course of many years, the Claimant lodged a grievance accusing his manager, amongst other things, of undertaking malicious and spurious disciplinary actions against him. The Respondent’s senior managers considered and upheld the Claimant’s grievance. The Respondent stated that no further action would be taken and three days later offered the Claimant the option of a transfer to another pub under a different manager. The Claimant declined this offer and maintained that he expected an apology from his manager, failing which he resigned. The EAT found that the actions of the more senior managers had prevented the matter escalating into a fundamental breach of contract and so there was no breach upon which the Claimant could rely to claim constructive dismissal.

It is important to remember that, once a breach of contract has actually occurred, it cannot be cured unilaterally by the employer (Bournemouth University Higher Education Corporation v Buckland [2010] ICR 908 CA). Crucially, the facts of Assamoi show that the actions of the senior managers resolved matters before the treatment suffered by the Claimant was serious enough to amount to a fundamental breach of contract.

For employers, this highlights the importance of giving full and fair consideration to any grievance raised by an employee. It is also a reminder to both employers and employees of the rationale behind the grievance procedure – namely to provide employees with a formal avenue for raising concerns and give employers an opportunity to address those concerns before matters escalate beyond resolution.

For information on how an employment tribunal award is calculated see our article on Employment tribunal awards

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