Case update (1): Constructive unfair dismissal – prior breach

Summary: Can an employee bring a Tribunal claim for constructive dismissal if he has previously acted in breach of his contract?

Yes, says the EAT in Atkinson v Community Gateway Association available here.

Facts: Mr Atkinson was employed by Community Gateway Association (the Association) as its Director of Resourcing. During his employment the Association found that there had been a £1.8 million overspend. Mr Atkinson initially admitted that he was accountable for this but he later tried to pass responsibility to others. Mr Atkinson was subsequently advised that his position was untenable and he could either resign with a settlement package or face disciplinary proceedings. Mr Atkinson refused the settlement offer and the Association started an investigation as part of its disciplinary proceedings.

During the investigation the Association found that Mr Atkinson had been having a relationship with a female friend who worked for another housing association. He had been sending her overtly sexual messages in emails that had not been marked private or personal. This was in breach of the Association’s email use policy. He had also sought to help his female friend obtain a position in the Association. Mr Atkinson resigned before disciplinary proceedings were completed, complaining that they were being conducted in such a way as to amount to a repudiatory breach.

Mr Atkinson brought various Tribunal claims, including a claim for constructive unfair dismissal based on a fundamental breach by the Association in searching his emails. The Association claimed that Mr Atkinson’s gross misconduct prevented the employee from making a valid claim of constructive dismissal. The Association relied on the common view that such misconduct had already destroyed the employment relationship.

The Tribunal dismissed Mr Atkinson’s unfair dismissal claim but the EAT overturned this decision. The EAT stated that constructive dismissal is about the law of contract and involves a straightforward question about breach. In order to terminate a contract the wronged party needs to ‘accept’ the breach and act on it. This is the case even where, like here, the employer does not know about the misconduct. If the employer does not act on the employee’s breach, i.e. the gross misconduct, and does not dismiss, then the employment relationship remains alive. This is a sensible approach given that otherwise, the moment an employee was in breach of contract, rather than following a fair and proper disciplinary process, the employer would be entitled to prejudge the outcome and treat the employment relationship as already ended.

Implications: An employee’s breach of his own employment contract does not preclude a constructive dismissal claim against his employer. However, there is a sting in the tale for employees. In similar circumstances to this case, where gross misconduct is only discovered at a later date, any damages awarded to the employee for constructive dismissal can be reduced up to 100% on the basis that they would have been dismissed in any event.