Case update (4):  Constructive unfair dismissal and grievance procedure

Summary:  Can an employee successfully claim constructive dismissal if they use the grievance procedure following the alleged breach of contract?

Yes, says the EAT in Gordon v J & D Pierce (Contracts) Ltd available here.

Background:  Constructive dismissals occur when an employee resigns in response to their employer’s repudiatory breach of the employment contract.  However, an employee is not 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.

Facts: The employee, Mr Gordon, alleged that he had been constructively dismissed after a breakdown of his working relationship with his line manager. He alleged that the employer had breached his contract of employment (more particularly, the implied obligation of trust and confidence). The employee brought a Tribunal claim for unfair dismissal.

Tribunal decision

The Tribunal held that the employer had not breached the implied obligation of trust and confidence. The employer’s conduct did not amount to a repudiation of the contract of employment and the employee was not entitled to treat the contract as at an end and claim constructive dismissal. The Tribunal also held that, by engaging in the grievance procedure, the employee had affirmed the contract. That meant he had waived the alleged breach and could not claim constructive dismissal.

The employee appealed.

EAT decision

The EAT 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.

The EAT held that participation in a grievance process was not an unequivocal affirmation of the contract. I.e. lodging a grievance should not be regarded as waiving the breach.  Grievance or appeal 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 brought to an end as a result of the breach.

At the end of the grievance process, it will be an employee’s choice whether to affirm the contract or to leave and claim constructive dismissal. If they affirm, their right to claim constructive dismissal disappears.

Implications: This case is a useful reminder that, if an employer’s conduct amounts to a repudiation of the employment contract, the employee can choose whether to resign or affirm the contract.

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). Lodging a grievance will not, by itself, be enough for an employer to argue the employee has lost the right to resign and claim constructive dismissal.