Tom Stenner-Evans
Posted on 3 Sep 2014

Employment Law Monday Update - 1 September

Anyone who works in HR will know how quickly changes come about in Employment Law, and how hard it is to keep up with them all. With that in mind, the Michelmores Employment Team has created a weekly newsletter that encapsulates the most significant Employment Law developments of the last 7 days. The Weekly Update will be sent out around midday on Monday, so be sure to keep an eye out for it!

Employee's Previous Repudiatory Breach Did Not Prevent Him Bringing a Constructive Dismissal Claim

Atkinson v Community Gateway Association [UKEAT/0457/12]

Background

An employee can claim constructive dismissal where they terminate their contract, with or without notice, in circumstances where they are entitled to terminate it without notice, by reason of the employer's conduct.

There is some dispute as to whether an employee's prior breach may prevent them from relying on their employer's subsequent breach to claim constructive dismissal.

The Facts

The Claimant was the Director of Resources at a Housing Association. In 2010, the Association discovered a significant overspend, and the Claimant was told that his position was untenable. He declined a settlement package and was suspended pending disciplinary proceedings.

A disciplinary hearing was scheduled for 9 March 2011 but, following disagreements about procedure and postponements, the Claimant resigned with immediate effect on 14 March 2011, before the hearing had been completed.  He brought a claim for constructive dismissal in the Employment Tribunal.

At the Tribunal Hearing, the Association was successful in applying to strike out the Claimant's constructive dismissal claim. The Tribunal found it had no reasonable prospects of success on the grounds that he was barred by law from claiming to have been constructively dismissed because of his own prior repudiatory breaches of contract.

The Claimant appealed to the Employment Appeal Tribunal ('EAT').

Judgment

The EAT upheld the Claimant's appeal in relation to the constructive dismissal claim and remitted it to a fresh Tribunal.

The EAT found that, where a party with the right to end a contract does not do so and, simultaneously or subsequently, was itself in fundamental breach of contract, it will be open to the party that was originally at fault to accept that repudiation and end the contract. However, if the party who was originally at fault subsequently brought a successful constructive dismissal claim, the Tribunal would be required to consider reducing compensation. That reduction could be up to 100% if it was established that the employee would have been fairly dismissed, had the employer known about the employee's original breach.

Tips for Employers

This case provides welcome clarity on the relevance of a prior repudiatory breach of contract by an employee claiming constructive dismissal. Although employees aren't barred by law from claiming constructive dismissal where they have committed prior repudiatory breaches of contract, there is scope for reducing any compensation to up to 100% if the employer would have dismissed fairly had they known about the original breach.


Consultation on Closing Loopholes in Proposed Zero Hours Exclusivity Ban

The Government has launched a consultation on the potential loopholes employers may use to avoid the proposed exclusivity ban in zero hours contracts. The results of the consultation will be used to determine whether it is necessary to implement regulations to specifically deal with avoidance of an exclusivity ban. The consultation will close on 3 November 2014.

The Government has also announced that business representatives and unions should work together to develop sector-specific codes of practice to help guide the fair use of zero hours contracts. ACAS has stated that it is keen to engage with the Government on how best to provide additional support in this area.