Should consideration be given to both sides’ conduct when assessing a claim of repudiatory breach of the employment contract, said to amount to constructive dismissal?
No, said the Employment Appeal Tribunal (EAT) decision of Nelson v Renfrewshire Council [2024] EAT 132. Assessing the threshold for repudiatory breach involves examination of the employer’s conduct, not that of the employee, in determining whether there has been a breach of trust and confidence so as to establish a constructive (unfair) dismissal.
Background
Ms Nelson (the Claimant) was a support for learning teacher at a High School operated by Renfrewshire Council (the Respondent). She had raised a grievance about the conduct of the head teacher towards her alleging it was threatening, insensitive and aggressive, contrary to the school’s ‘Respect at Work’ policy.
During the grievance process she felt there was bias, and that first-hand witness evidence had been ignored. Having lost faith in the grievance process, Ms Nelson resigned from her employment with immediate effect. She had participated in only the first two stages of the grievance process and did not appeal the outcome of the ’Stage 2’ hearing.
Renfrewshire Council’s process had two more Stages (3 and 4), so Ms Nelson had not exhausted internal grievance processes before resigning. Stage 3 would have been heard by a panel of council members rather than the local authority management team.
The Employment Tribunal (ET) dismissed the claim as the potential of Ms Nelson’s complaints being resolved within the remaining stages of the grievance process was sufficient to mean the relationship of trust and confidence had not been damaged seriously enough for her to found a claim of constructive dismissal upon. It found that Stage 3 of the process could be expected to have been diligent, fair and not biased in favour of management. Ms Nelson appealed the decision to the EAT.
Applicable law
Section 95 of the Employment Rights Act 1996 (ERA) which applies to constructive dismissals provides:
Circumstances in which an employee is dismissed.
(1) For the purposes of this Part an employee is dismissed by his employer if …
(c) 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.
It is for a claimant to satisfy the ET that they have been constructively dismissed in terms of S95(1)(c), otherwise the employment is treated as having terminated as a result of resignation, not a dismissal.
In terms of well-established case law, the breach must be a significant one going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract. The repudiatory breach need not be the sole or predominant reason for the resignation, it need only be one of the factors relied upon when resigning. The test for whether there has been a repudiatory breach is an objective one that does not depend on the subjective intentions of the employer.
Decision
At appeal the EAT noted that the ET had agreed that the mishandling of Stage 1 of the grievance process had damaged the relationship of trust and confidence, and that Stage 2 had been inadequate to correct the earlier bias. So objectively the relationship of trust and confidence had been damaged without reasonable and proper cause. Also, that the ET had then concluded that as internal processes had not been exhausted, the potential of the remaining Stages was enough to mean that the relationship of trust and confidence had not been damaged seriously enough to found a claim for constructive dismissal.
The EAT however, found that Ms Nelson’s failure to complete the grievance process was irrelevant in deciding if there had been a repudiatory breach of contract, entitling her to resign and claim constructive dismissal. It also found that the ET had failed to objectively assess whether the conduct of Renfrewshire Council was such that it would be likely to damage or destroy the relationship of trust and confidence, having instead examined whether the relationship had actually been damaged. Finally, the ET had not looked cumulatively at whether the conduct in question amounted in and of itself to a breach of trust and confidence, which had been errors of law.
The EAT remitted the claims back to the ET for reconsideration.
Comment
Katherine Irvine, Associate in our Employment team, comments:
“Constructive dismissal claims are notoriously difficult to succeed in, but this decision is a reminder it is not impossible. Employers should never be too confident of success when such claims arise.
“The Nelson EAT decision demonstrates that it is the employer’s actions and conduct which must be examined, not those of the employee, in assessing likely damage to the implied relationship of trust and confidence in a constructive dismissal.
“The case highlights that it is not only disciplinary processes in which errors can be made rendering endings of employment unfair, but also grievance processes which are equally important. The assumption by an employer that any errors can be remedied at an appeal stage, as demonstrated here, is not advisable as the employee may lose faith and abandon the internal processes, resigning instead.
“Grievance processes can be complex. It is essential not to simply pay lip service to their operation. There should be thorough investigation, clear and reasoned decision making, with unbiased and reasonable weighing of evidence at each stage.
“Had the grievance process in this case been more thorough with careful consideration given to whose version of events was to be preferred and why (which was found lacking at Stage 1 and 2 in this case) there is every likelihood this employer could have avoided time consuming and costly ET and EAT processes.”
