Constructive Dismissal1

This occurs where the employee leaves the employment in response to the employers
conduct. This is treated as a termination of the contract by the employer both at common law
and under statute.
Two key ingredients:
1) The degree of conduct by the employer necessary to initiate the concept
2) The breach of contract by the employer must be a direct consequence of the
termination of the employment by the employee.
Locus classicus:
Rubel Bronze & Metal Co. v Vos (1918):
Mc Cardie J: if the conduct of the employer amounts to a basic refusal to continue the servant
on the agreed terms of the employment then there is at once a wrongful dismissal and a
repudiation of the contract.
It was thought especially after the introduction of the concept of unfair dismissal the test
would have shifted from one of repudiation of contract to one of whether the employer had
behaved reasonably or otherwise.

In the early days of the concept, judges argued that any unreasonable behaviour on the part of
the employer could form the basis of a constructive dismissal claim, but Denning MR
decided the test was a contractual test in Western Excavating Ltd v Sharp (1978).
Western Excavating (ECC) Ltd v Sharp (1978)
This restored that the matter was one of breach of contract not whether you behaved
reasonably. Here the employee was suspended without pay as a disciplinary sanction. As he
had no money, he asked his employer for his holiday pay, which was refused, and then asked
for a loan, which was also refused. He then resigned, claiming constructive dismissal because
of unreasonable conduct on the part of his employer. The CA held that there was no dismissal
and that he had resigned because the employer had committed no breach of contract.
Lord Denning MR stated, An employee is entitled to treat himself as constructively
dismissed, if the employer is guilty of conduct which is significant breach 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 employee in those circumstances is
entitled to leave without notice or to give notice but the conduct in either case must be
sufficiently serious to entitle him to leave at once.
1 https://www.gov.uk/dismissal/unfair-and-constructive-dismissal

For the purposes of determining whether conduct is repudiatory, it must objectively evince an
intention by the employer no longer to be bound by the contract that the employer no longer
intends to be bound by the contract.
Lewis v Motorworld Garages Ltd (1985):
In December 1981, the employer in breach of the employment contract, demoted the
applicant and reduced his pay. The employee accepted the breach and affirmed the contract
but over the following 8 months the employer persistently criticised him. Until finally in
August 1982, he resigned and complained of unfair dismissal; relying on the demotion and
the criticisms. The Industrial Tribunal dismissed the claim stating that he could not rely on
the demotion as he had affirmed the contract; and in terms of the criticisms it was not such a
fundamental breach to entitle him to claim that he had been constructively dismissed. The CA
allowed his appeal holding that the breach that had been affirmed by an employee could
nevertheless form part of a course of conduct justifying a claim for constructive dismissal. In
order to prove that he has suffered a constructive dismissal, an employee who leaves his
employment must prove that he did so as a result of a breach of contract by his
employer.
Nevertheless the contract test has given in to some extent to the reasonableness principle by
the decision that one of the implied terms of a contract of employment is that the employer
will not without reasonable and proper cause conduct itself in a manner calculated or likely to
destroy or seriously damage the relationship of trust and confidence between employer and
employee. Woods v WM Car Services Ltd 1981 ICR 666 Such a breach will occur if the
effect of the employers conduct as a whole judged reasonably and sensibly is such that the
employee cannot reasonably be expected to put up with it.
Thursday, November 21, 2013

Lecture 12

Constructive Dismissal Contd.

At common law you did not have to give notice if you are leaving. There needs to be a
significant breach of contract by the employer.
Must there be an intention to repudiate on the part of the employer? What if the
employer is acting under a mistaken view of the contract? Is that repudiatory conduct?
Donaldson MR in Bridgen v Lancashire CC- the mere fact that a party to a contract takes a
view of its construction which is ultimately shown to be wrong does not of itself constitute
repudiatory conduct. It has to be shown that he does not intend to be bound by the contract as
properly construed. (Now Obiter)
Financial Techniques v Hughes- where Templeman LJ as he then was had cautioned thusly,
if a party to a contract has a plausible but mistaken view of his rights under that contract he
may not insist on that view and his insistence can amount to a repudiation.
Some cases of repudiation:

Pay: Generally a reduction in pay or refusal to pay will constitute a repudiatory

breach of contract. LIAT (1974) Ltd v Greenidge ([1990-91] 4 CCLR 194)- here LIAT
took G off the pay-role because of his refusal to undergo a psychiatric exam. It was
held they had no right to do so and this was a fundamental breach of the contract.

A unilateral change in job duties- Alleyne Arthur & Hunte Ltd. v Griffith- G was both
employed by the defendant. The appellant proposed to transfer their employment to
its parent company without any loss of pay status. However, under the new
arrangements they would be required to work occasionally on Saturdays though this
previously was not required. One of the plaintiffs has two young children who she left
in a nursery where she worked and the nursery was not open on Saturdays. The other
plaintiff ran a catering business for weddings on Saturdays. They refused to work
under the new arrangements and claimed that they had been constructively dismissed.
What would be the employers response to this? It was held by the CA that the
defendant had attempted unilaterally to alter Ps contractual terms and thereby had
repudiated
the
contracts
of
employment.
Omi Laju v LBC- the conduct of the employer may take place over a prolonged period
and the employee is entitled to treat any aspect of that conduct whether a breach of
contract or not as final straw justifying him or her to treat the contract as
fundamentally breached. OL had brought a series of proceedings against the LBC for
discriminatory treatment. He had issued five sets of proceedings in the employment
tribunal. On the final occasion the employer refused to pay the applicants salary
during his absence in an employment tribunal hearing in a claim he had brought
against the employer. He resigned claiming that the refusal to pay for the full salary
was the last straw in a series of less favourable treatment by the employer. At the
Employment Tribunal the claim for unfair dismissal was dismissed on the grounds
that the alleged final straw was reasonable conduct and fully in accordance with OLs
contract of employment. This was reversed by the EAT and the employer appealed to
the CA. the CA overturned the decision of the EAT the learning of the final straw is
instructive. According to the CA the final straw while not in itself a breach of
contract may still result in a breach of the implied term of trust and confidence. The
only question in such cases is whether the final straw is the last in a series of acts or
incidents that cumulatively amount to a repudiation of the contract by the employer.
The last straw must contribute albeit in a minor way to the breach of the implied term
of trust and confidence. If the final straw is not capable of contributing to the series of
earlier events which cumulatively are argued to amount to a breach of the implied
term of trust and confidence then there is no need to consider the earlier history of the
matter.

Drydon v Greter Glass Board Mrs. D was employed as a nurse in auxiliary in

Glasgow. She was accustomed to smoking 30 cigarettes per day. Her job was such
that she was unable to leave the premises during the course of the day but until 1991

areas were set aside in the premises where smoking was permitted. During 1991, the
employers decided to prohibit smoking in the hospital and it was implemented on 1 st
July 1991. Mrs. Drydon resigned 12 July 1991. She complained that she had been
constructively dismissed and the introduction of the smoking policy was a breach of
her contract of employment. At the Industrial Tribunal it was found that there was no
implied term to the effect that she was allowed to smoke at work and it rejected her
submission that the employers were in breach of the implied term of mutual trust and
confidence. The EAT dismissed the appeal. The introduction of the no smoking policy
did not constitute a breach of her contract of employment.