Latest News

18 09 2009

Employers have to repay sick pay

Some good news for employees came out last week with the decision by the European Court of Justice in Pereda v Madrid Movilidad SA that says if an employee is sick whilst on holiday, they can retake the holiday later on or carry the days lost over to the next year. 

Not surprisingly employers’ representatives are unhappy about it as it places additional burdens on them.  It also increases the risk of unscrupulous employees taking advantage. No guidance is offered by the ECJ on how this could be policed.  Employers can only insist on a sick note from GPs after seven days absence. 

Costs Awards in Tribunal

A while ago I wrote about the case of Daleside Nursing Home v Mathew    which dealt with the issue of when costs should be awarded against a party by an Employment Tribunal.  A recent case has now followed that decision.  In Dunedin Canmore Housing Association Limited v Donaldson, a case before the Employment Appeal Tribunal (EAT) in Edinburgh it was held that the Claimant (who was representing herself) had lied under oath and the Tribunal should have awarded costs against her.  In particular the Honourable Lady Smith said;

The issue was not whether a lay person could reasonably have been expected to understand the law.  It was whether she had or had not, in simple human terms, approached the essential factual matters that lay at the heart of her case honestly and reasonably.  She had not done so and these are exactly the sort of circumstances where a Tribunal has a responsibility to make clear that it is quite unacceptable to cause expense to another party by bringing proceedings on that basis.

Be warned!


Notice Monies and Constructive Dismissal

Here is some good news for employers.  The Court of Appeal (CA) has recently overturned the EAT’s decision in Stuart Peters v Bell  which had said that an employee who claimed constructive dismissal from his employer and then went on to work for another  employer during the notice period they would otherwise have served did not  have to give credit for the monies earned.  This has been the law, since 1972 case of Norton Tools v Tewson.  Effectively the employee could get his salary twice for that period, which was something of a windfall for him.  That has now been overturned by the CA, but only insofar as constructive dismissal cases are concerned. So, if an employee claims constructive dismissal, leaves the employer without serving their notice and finds alternative work elsewhere, the employer won’t have to pay the notice monies due to the employee during that period.

 Norton Tools is still good law in other respects and hasn’t been completely overturned.

Please contact me on 0207 464 8433 or email me at if  you require further advice.

Constructive Dismissal – recent developments

24 07 2009

This post isn’t about Freddie Flintoff bowling 5-92 to defeat the Aussies at Lords (a very constructive dismissal in my view) but, sadly, is about some recent cases on the law relating to constructive dismissal.  The recent case of Bournemouth University Higher Education Corporation v Buckland [2009] EAT whilst not being as newsworthy as this week’s actions at Lords is, nevertheless, important stuff on the difficult topic of constructive dismissal.  In my experience few topics cause as much confusion or are as overused as constructive dismissal.  Every second client thinks they have or are about to suffer it.

So, what is it about? The definition provided by the Employment Rights Act 1996 s.95(1)(c) is that constructive dismissal occurs when an employee “resigns in circumstances such that he is entitled to terminate his [contract of employment] without notice by reason of the employer’s conduct”. In other words the employer commits an act (or even fails to do something that he said he would) and the employee’s response is to resign in protest. The breach doesn’t have to be of an express term of the policy (like a failure to pay salary, for instance): implied terms can be breached and the usual one that gets raised with constructive dismissal is that the employer has breached the implied term of trust and confidence.

The employer must be said to have committed a repudiatory (i.e. fundamental) breach of contract – it must be more than just unreasonable behaviour by the employer: it just go to the heart of the employment contract.  This is called a WRONGFUL dismissal (which is NOT the same as an UNFAIR dismissal).  If the employee then resigns in response to this breach he is said to have ACCEPTED the repudiatory breach.  The contract is then discharged and the employee is free of all obligations under that contract.  On the other hand, if the employee doesn’t accept the breach or resigns over some unrelated issue he may be said to have AFFIRMED the breach.

For an employee claiming constructive dismissal is a big step.  The burden of proof is on the employee to (1) show that the employer was in breach, (2) that it was a fundamental breach, and (3) that he (the employee) resigned in response and (4) the employee mustn’t delay in acting.  Effectively the employee resigns and walks out without his notice monies or any other compensation because the employer won’t pay notice monies to an employee who walks out.   I often call it, perhaps rather melodramatically, the “nuclear option”. 

A constructive dismissal is not always an unfair dismissal. It will be if the employer cannot show a potentially fair reason for the dismissal. The ERA lays down five potentially fair reasons – (1) redundancy, (2) capability, (3) conduct, (4) frustration of contract and (5) some other substantial reason.  The employer needs to show that the action he took or threatened comes within one of these five categories. If he can’t then the dismissal is unfair.  If he can show that the reason for dismissal was within one of these categories then he must then prove that he (the employer) acted reasonably in relying upon that reason for the dismissal.

How is that established? The case of Buckland (above) dealt with this issue.  In most unfair dismissal cases before an Employment Tribunal the ET will be asked to consider whether employer’s actions were within the “band of reasonable responses” test – which is not where the ET decides what decision it would have taken if it had had to make that decision but whether the action the employer took was a reasonable response to the employee’s situation.  Buckland confirms that the band of reasonable responses test is NOT relevant in cases of constructive dismissal.  This has been an issue for some time in this area.  What is the relevance to employees?  This decision confirms that “mere” unreasonable conduct by the employer is not sufficient to establish constructive dismissal: there must be a breach of contract that goes right to the root of the employment contract and shows that the employer no longer wished to be bound by its terms.  This raises the bar for Claimants in an already difficult area.

The second recent case that grabbed my attention is Wishaw and District Housing Association v Moncrieff EAT.  It illustrates another aspect of the constructive dismissal situation: what if you don’t have one particular act or event constituting the repudiatory breach, but a series of events leading up to a “final straw”?  This case dealt with that issue and confirmed that the final incident has to be more than trivial.  The cumulative effect of all the breaches has to amount to a fundamental breach of contract. 

I would urge any employee contemplating claiming constructive dismissal to get legal advice as a matter of urgency before taking (of failing to take) any action.  Don’t rely on this post either!  Constructive dismissal is a complex subject and you need to look carefully at each case on its own merits before deciding what to do.