Case law update: Constructive dismissal

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Employer’s fundamental breach need not be the sole cause of employee’s resignation.

Background

In broad terms, a 'constructive dismissal' occurs where an employee resigns because the employer’s actions have made his or her situation untenable. To prove constructive dismissal, the employee must show there has been a 'fundamental' breach of contract, and that the employee has resigned in response to the breach. Examples of actions that might constitute a fundamental breach of contract include downgrading an employee, imposing a disciplinary sanction on an employee that is grossly out of proportion to the offence he or she has committed, or instructing an employee to carry out a task that is unsafe.

The EAT has recently looked at the question of whether the fundamental breach of contract must be the only cause of the employee’s resignation, or simply a reason for the resignation - two quite different things.

Facts

Mrs Logan was employed as a veterinary nurse. She raised a grievance covering several issues with her employer, all of which were rejected. There was an appeal hearing in relation to the grievances. When Mrs Logan received the letter rejecting her appeal, she resigned. The original grievance had included allegations of bullying and her employer’s failure to pay her contractual sick pay.

Decision

The employment tribunal rejected Mrs Logan’s claim of constructive dismissal. It found that the alleged bullying was a figment of her imagination but concluded that her employer’s failure to pay her sick pay did constitute a fundamental breach of contract. It went on to find, however, that the principal reason for her resignation was the alleged bullying, not the sick pay matter.

The EAT, in upholding Mrs Logan’s appeal, said that the question is whether there was a fundamental breach of contract, and if so, it was necessary only to assess whether that was a reason for Mrs Logan’s resignation. The tribunal had been wrong to focus on the ‘principal reason’ for her resignation. It was enough that Mrs Logan had resigned, at least in part, in response to the fundamental breach of failing to pay contractual sick pay.

Implications

This case reminds us of the potentially serious implications of fundamentally breaching an employee’s contract of employment. In this case, had the company paid the employee the sick pay to which she was entitled, there would have been no fundamental breach of contract for her to rely on to found a constructive dismissal claim.

Click here for the judgment.

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