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Constructive Dismissal – The (Or An) Effective Cause Of Resignation

Adam Barnes - DAS Law

  1. 11 February 2014
  2. Business
  3. 0 comments
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Constructive dismissal is an interesting facet of employment law, as it shows that, in legal terms, an employee does not even have to have been fired in order to make an unfair dismissal claim. In cases where their working environment or role becomes so unbearable as to drive them from the job, they can bring a claim of constructive dismissal to the Employment Tribunal.

But what kind of treatment justifies a claim for constructive dismissal? How far must the employer go before they are considered to have effectively driven an employee away? And what factors are brought to bear in deciding the dispute one way or the other?

The issue of why an employee has resigned is central to whether or not they can say they have been constructively dismissed. It is a question that has been the cause of much consideration by employers, lawyers and indeed Employment Tribunals, with a range of conflicting conclusions having been reached. This has now been clarified (again) in the Employment Appeal Tribunal (EAT), in the case of Wright v North Ayrshire Council.

In order for an employee to succeed in a claim for constructive dismissal, there must have been a fundamental (repudiatory) breach of the employment contract on the part of the employer. This can be a breach of an express term (i.e. a written term) or an implied term (for example, a course of conduct leading to a loss of trust and confidence).

The employee must resign in response to the breach and they must not unduly delay in resigning, otherwise the implication is that it cannot have forced them out of their job.

The scope of this article, however, is focused on whether the employee resigns in response to the breach or, rather, whether the breach was the or simply an effective cause of the resignation.

Often circumstances in which an employee resigns include more than one reason for the resignation, and it has often been considered that the employee resigned not for the breach on the part of the employer but for some other reason; for example, because they have found new employment or, in the case of Wright mentioned above, because there were caring responsibilities.

In the case of Wright v North Ayrshire Council, Ms Wright was a carer and had raised three grievances, none of which had been properly answered by the employer. The failure to properly answer the grievances was found to constitute a fundamental breach of contract.

The first tier Tribunal found in Wright that the effective cause of the resignation was Ms Wright’s caring responsibilities external to her employment situation, and they did not therefore uphold the claim of constructive dismissal.

The EAT, however, found on appeal that the Tribunal had erred in considering the question of whether the breach was the effective cause of resignation and clarified, as per the Court of Appeal case of Nottingham County Council v Meikle, that it is sufficient that the repudiatory breach merely “played a part in the dismissal”.

Therefore, the correct test is whether the breach was an effective cause of the resignation rather than the effective cause, and, if so – subject to satisfying the other tests – this shows that the employee was entitled to reject the breach and resign, claiming that they have been constructively dismissed.

The issue of whether there were other reasons that also played a part in the decision to resign does play a part, however, as it can come into play when considering the amount of compensation that may be due.

This clarification has arguably made the claimant’s position somewhat easier and conversely, the employer’s position in respect of liability somewhat weakened in these circumstance.

It is therefore important when considering whether an employer should defend a claim of constructive dismissal to conclusion, in a case when the crucial issue is solely whether the breach was an effective cause, to consider the potential impact of the other reasons the employee resigned.

Whilst the issue of liability may be in question, there may still be potential to argue a substantial reduction in the compensation to be paid out, and we would advise that this should be considered early in the process of litigation so as to save cost where possible. It is entirely possible that a commercial view taken early in proceedings could save cost, inconvenience and also reduce risk.

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