Constructive Unfair Dismissal – Communicating an acceptance of a repudiatory breach
The recent case of Chemcem Scotland Ltd v Ure UKEAT/0036/19/SS considered whether the acceptance of a repudiatory breach had to be expressly communicated or whether simply refusing to return to work could be enough for the employee to claim constructive unfair dismissal.
What is Constructive Unfair Dismissal?
Constructive Unfair Dismissal arises when the employee resigns, rather than being dismissed, as a result of the employer's conduct. For a claim in constructive dismissal to be valid, there must be a repudiatory breach on the part of the employer. This means either a serious breach, or series of breaches, going to the root of the contract of employment. The employee must accept the breach and treat the contract as having ended. If the employee waits too long before accepting the breach, then they may be seen to have waived the breach and will not be entitled to successfully claim constructive dismissal.
The test for whether or not there has been a repudiatory breach is an objective one. It does not matter whether the employer intended to break the contract. The Employment Tribunal will consider each case and the circumstances leading to the breach to establish whether it is sufficiently serious as to amount to a repudiatory breach.
Chemcem Scotland Ltd v Ure UKEAT/0036/19/SS
The Claimant was on maternity leave when a series of repudiatory breaches occurred. This was complicated by the fact that the Claimant's father was a majority shareholder of the Respondent and was currently in the process of divorcing the Claimant's mother.
The Employment Tribunal ('ET') held that the actions of the Respondent amounted to a repudiatory breach, which entitled the Claimant to refuse to return to work and treat the Respondent's conduct as constructive dismissal. The ET further held that the failure to return to work constituted a communication of the Claimant's decision to treat the contract as having ended.
On appeal to the EAT, it was held that the ET was correct to find that the Claimant was entitled to claim constructive dismissal. The EAT also agreed that, whilst ordinarily it was necessary to communicate a decision not to return to work, in the circumstances it enough for the Claimant not to return, as the Respondent would not have been in any doubt that this was what the Claimant intended.
What Employers can take away from this
It is important for employers to be aware that it may be possible for an action, such as failure to return to work, to amount to an acceptance of a breach. There does not necessarily need to be an explicit communication of such acceptance, particularly where it is clear from the employee's action that they intend the contract of employment to come to an end.
This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact Valerie Bond to discuss any issues you are facing.