Fri 05 Feb 2021

Raising grievance does not preclude constructive unfair dismissal claim

EAT holds raising a grievance does not affirm contract of employment

Constructive dismissals occur when an employee resigns following a repudiatory breach of contract by the employer.  An employee is not though obliged to resign in these circumstances.  Rather than accepting the repudiatory breach (i.e. by resigning) the employee could instead affirm the contract (i.e. treat the contract as continuing).  It is not uncommon when defending constructive dismissal claims for employers to argue that an employee has acted in a way that affirms the contract.  That may be because they delayed resigning and/or acted in a manner that suggests they are treating the contract as continuing.  In the case of Gordon v J & D Pierce (Contracts) Limited the EAT considered whether raising a grievance affirmed the contract and so prevented a successful constructive dismissal claim. 

The claim made to the Employment Tribunal was that the respondent had breached the implied term of trust and confidence between the parties.  This was based on a deterioration in the working relationship between the claimant and his line manager.  Based on the facts before it the employment tribunal held that while the respondent had behaved badly, the implied obligation of trust and confidence had not been breached.  Not all the causes of breakdown alleged by the claimant were the fault of the respondent and the claimant was, to some degree, a contributor to that breakdown.  The Tribunal also held that, even if there had been a fundamental breach of contract that had entitled the claimant to resign, his claim could not have succeeded because he had affirmed the contract by engaging with the respondent's grievance procedure.  The Tribunal's position was that the claimant could not, on the one hand, claim the contract is at an end but simultaneously rely on a grievance procedure that presupposed the contract's existence.

The claimant appealed to the Employment Appeal Tribunal (EAT) who upheld the Tribunal's finding that there had been no fundamental breach of contract.  While that meant the issue of affirmation did not arise (as there was no breach to affirm) the EAT made a finding on the issue anyway, disagreeing with the Tribunal judgement. 

Two conflicting Court of Appeal authorities were referred to with the EAT preferring the judgement in Kaur v Leeds Teaching Hospitals NHS Trust and agreeing that reliance on one contractual right (in this case the grievance process) does not necessarily signify an acceptance that all the other contractual rights are intact.  Participation in, in this case, the grievance process was not an unequivocal affirmation of the contract.  Grievance provisions may be regarded as severable from the remainder of the contract and capable of surviving independently even though the remainder of the contract is properly regarded as terminated through breach. 

The practical impact of this is that, as long as there is not undue delay, an employee may pursue a grievance and, if unsuccessful, the employee would be able to resign and claim constructive dismissal as a result of the original repudiatory breach (which led to the grievance). However, one point that is unclear is how long an employee could delay resigning for even if a grievance procedure is on-going without being seen to have affirmed the contract.

The purpose of grievance and appeal procedures is to allow the parties to sort out their differences internally.  If pursuit of a grievance was treated as affirmation of contract that would effectively remove that option, with claimants being left to pursue the matter before a Tribunal.  Those employees who then choose not to risk affirming the contract by raising a grievance would then run the risk that any compensation they might be awarded could be reduced by up to 25% for an unreasonable failure to comply with the ACAS Code of Practice on Disciplinary and Grievance.  The EAT noted in their judgement that "pragmatic considerations are not always a sure guide". However, in this case, the pragmatic approach they have taken appears to avoid both litigation that might otherwise not have been necessary and unfairness on the employee.

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