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  • Karen Bulfin

Constructive Dismissal


A constructive dismissal arises when an employer fundamentally breaches the employee’s contract, entitling them to resign and say they were effectively dismissed. The breach must be fundamental, which means it is really serious and goes to the root of the contract. If there is a fundamental breach of contract, the employee has a choice: to accept the breach and act on it by resigning or to waive the breach and affirm the contract by continuing to work.

In Gordon v J&D Pierce (Contracts) Limited, the employee’s relationship with his manager had deteriorated. He resigned and claimed constructive dismissal, saying that the trust and confidence had been destroyed. The employment tribunal dismissed his claim, saying that both sides had contributed to the relationship breakdown. Trust and confidence had not been breached and the employee had not been entitled to resign and claim he was pushed. The tribunal also said that in raising a grievance, the employee had affirmed the contract. The employee appealed.

The EAT dismissed the employee’s appeal because they agreed that there had been no breach of contract. On that basis, they didn’t strictly need to deal with the affirmation point, but chose to do so. The EAT said that engaging in a grievance process after a breach of contract did not necessarily mean a contract had been affirmed. The same principle would apply to other internal processes such as a disciplinary appeal. Exercising a contractual right such as appealing against a disciplinary sanction or raising a grievance should not be regarded as affirmation of the contract as a whole. These processes are severable from the remainder of the contract and can survive it, even when the rest of the contract is considered to have been terminated by a breach. If the employee wins the appeal or grievance, it is then open to them to affirm the rest of the contract too and continue in employment.

This decision makes sense. It would be odd if the very processes designed to resolve differences – disciplinary appeals process and grievances – could not be used by an employee in circumstances where their contract has been breached. It would completely undermine the industrial purposes of these processes. The employee lost his appeal anyway in this case, but the clarity provided by the EAT will be welcomed by all parties.

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