Unfair dismissal - Case Round-Up: February 2015

In this month's round-up, Mark Shulman consultant solicitor with Keystone Law, looks at recent cases on constructive dismissals.

Mark Shulman, Consultant Solicitor at Keystone Law

Did resignation after a delay of 19 months after the treatment complained of mean that there was no constructive dismissal because the contract had been affirmed? Yes said the EAT on the facts in [Mari v Reuters Ltd]() UKEAT/0539/13/MC.

The Claimant resigned following a substantial period of sickness. When she had returned to work after her first bout of sickness she found that her roles of market-data and system-net backup had been allocated to someone else. She complained of the "scope of her work being restricted to that below her expertise".

In October 2010 the Claimant wrote a letter to the Respondent in the following terms:

"As you will know, I am currently off sick with symptoms of stress and depression and signed off until the 5th of November.... I consider that I have been prevented from taking on positions of responsibility and have not been provided with the same opportunities as other members of my team…

…Please accept this letter as confirmation that I will no longer tolerate this situation and I am now considering my position. However, I am still not well enough to directly deal with this situation or conduct a grievance. When I am well enough, I will be in contact again."

In her evidence the Claimant said that she had a settled intention of leaving at this point, and it never changed. Subsequently, the alleged final straw was a refusal of access to the system for a purpose which was well within her expertise and it was, she said, by reason of this conduct, described as a "fundamental breakdown of trust and confidence", that she relapsed and was signed off with stress and depression. The Claimant resigned in April 2012 - nearly 18 months after she wrote the above letter in October 2010.

Preliminary hearing
The ET considered as a preliminary point, the Respondent's argument that the claim of constructive dismissal could not succeed because the contract had been affirmed. For this preliminary point the ET proceeded on the assumption that the Respondent had committed a fundamental breach of contract which entitled the Claimant to resign. The ET heard evidence on this affirmation issue and accepted the Respondent's argument, finding that the Claimant had affirmed the contract. The Claimant appealed.

The Claimant's health - was she well enough to resign?
The Claimant's case was that she was in such a bad way between October 2010 and April 2012 that she was unable to contemplate resignation. A psychiatric report was commissioned jointly by the parties to the proceedings. The report concluded that:

"[It] seems probable that these symptoms of depression, particularly low energy, low self confidence and low mood would have made it extremely difficult for her to raise the complaint whilst these symptoms were still highly active..."

There was also a letter from the Claimant's treating GP dated February 2013. The diagnosis given was "single major depression - mild", and the medication prescribed was at a relatively low level.

The ET decided that the Claimant's health had not prevented her from resigning and claiming constructive dismissal, finding that:

* From April 2008 until she resigned the Claimant was prescribed and took the lowest dose of medication that had clinical effect; * The Claimant did not visit her doctor for months at a time; * The expert who provided a report did not comment on the mismatch between his diagnosis of severe depression, but the minimal medication prescribed by her GP; * The Claimant visited her parents' home in Ibiza three times a year for a week. She continued this pattern throughout her sickness absence. She had organised her own plane tickets and got herself to and from Ibiza without difficulty; * Throughout the period the Claimant was engaged in coherent e-mail traffic with the Respondent and she was also able to take legal advice.

On appeal, the Claimant argued that the ET had been perverse to conclude that she was not incapable of resigning or putting in a claim, but the EAT agreed with the ET's conclusion.

The EAT's conclusion was that there was ample material on which the ET could reject the Claimant's case that she was incapable of resigning for medical reasons. It was entitled to look at the evidence as a whole and reach the conclusion it did. The ET was not bound to reach the opposite conclusion by reason of the expert's report (which had been based on a one hour consultation with the Claimant). The ET had a much fuller picture of the Claimant's correspondence and activities and had the advantage of hearing the Claimant give evidence over a significant period.

Had the contract been affirmed?
The ET's reasoning was, in summary, that the Claimant had affirmed the contract by:

(i) the repeated requests for and the use of access to her work email when it had been cut off;
(ii) acceptance of 39 weeks sick pay;
(iii) requests to be considered for permanent health insurance;
(iv) discussions at a disciplinary meeting (relating to failure to provide sickness certificates) and at a welfare meeting which discussed matters concerning continuing employment (rather than ceasing it).

The Claimant sought a review of the ET's decision arguing that she had in effect been demoted; she was affirming only the contract she had as a "top level adviser", not the lower level contract to which she had been demoted. The ET rejected that submission.

Affirmation test
Had the ET been wrong in law in relation to the issue of affirmation? No said the EAT. The Claimant contended that it was not sufficient that she should affirm the employment relationship, but must affirm the varied contract of employment. However, WE Cox Toner (International) Limited v Crook [1981] ICR 823 remained the leading case on the doctrine of affirmation and in [Hadji v St Luke's Plymouth]() [2013] UKEAT/0095/12, the essential principles were summarised as follows:

(i) The employee must make up his or her mind whether or not to resign soon after the conduct of which s/he complains. If s/he does not do so s/he may be regarded as having elected to affirm the contract or as having lost their right to treat themselves as dismissed.

(ii) Mere delay of itself, unaccompanied by express or implied affirmation of the contract, is not enough to constitute affirmation; but it is open to the Employment Tribunal to infer implied affirmation from prolonged delay.

(iii) If the employee calls on the employer to perform its obligations under the contract or otherwise indicates an intention to continue the contract, the ET may conclude that there has been affirmation.

(iv) There is no fixed time limit in which the employee must make up his mind; the issue of affirmation is one which, subject to these principles, the ET must decide on the facts; affirmation cases are fact sensitive.

As the ET in the present case had approached the law in accordance with these principles, the EAT could see no error of law.

In principle, the EAT did not see why a different approach would be needed depending on whether the claim was put as breach of an express term (i.e. in relation to the demotion in this case) or as contributing to a breach of the implied term of trust and confidence. Indeed, it seemed to the EAT that the law would be unworkable if different tests for affirmation were applied to different aspects of an employer's conduct. However, it was necessary to consider whether the cases of Bashir v Brillo Manufacturing Co Limited [1979] IRLR 295 and El-Hoshi v Pizza Express Restaurants [UKEAT/0857/03], required a different conclusion, as the Claimant had contended.

The EAT decided that Bashir was not authority for any special or different test applicable to cases which involved an allegation that an employee has effectively been demoted. Further, despite what was said in El-Hoshi, there was no absolute rule that acceptance of sick pay is always neutral. The significance to be afforded to the acceptance of sick pay will depend on the circumstances. At one extreme an employee may be so seriously ill that it would be unjust and unrealistic to hold that acceptance of sick pay amounted to or contributed to affirmation of the contract. At the other extreme an employee may continue to claim and accept sick pay when better or virtually better and when seeking to exercise other contractual rights. What could safely be said is that an innocent employee faced with a repudiatory breach is not to be taken to have affirmed the contract merely by continuing to draw sick pay for a limited period while protesting about the position.

Therefore the ET had applied the correct principles of law to the question of affirmation and  the appeal was dismissed.

Determining a preliminary issue
The EAT added that although the ET had taken the question of affirmation as a preliminary issue, (assuming for this purpose the Claimant's case on fundamental breach of contract), that course should be regarded as exceptional. In nearly all cases which are listed for a full hearing it was better to have a determination of the issues by the ET.

Practical Tips**

* there is no fixed time limit in which the employee must make up their mind whether to affirm the contract when there has been a fundamental breach; the issue of affirmation is one which the ET must decide on the facts -  affirmation cases are fact sensitive; * an expert's medical report may not be accepted as determinative of any medical issues. The ET may reach a different conclusion (as it was entitled to do in the present case); * a preliminary hearing on the issue of affirmation would be "an exceptional course". In nearly all cases which are listed for a Full Hearing, it is better to have a determination of the issue.

Last straw dismissals
[Addenbrooke v Princess Alexandra Hospital NHS Trust]() UKEAT/0265/14/DM provides a useful reminder of the principles to be applied in "last straw" constructive dismissal cases.

The Claimant raised a grievance in 2011 which was investigated but the conclusion of it was never communicated to her. In 2012 the Claimant was suspended but then written to by the Respondent's HR Manager asking her to return to work without involving a disciplinary process but asking that the Claimant accept a warning. A few days after receiving the HR Manager's letter, the Claimant resigned and complained of constructive unfair dismissal.

She lost her claim, the ET finding that taking all the matters complained of cumulatively, there was no fundamental breach of contract by the employer. Even if there was, the letter from HR did not contribute to or cause her to resign because on and after 19 October the Claimant was considering returning to work and it was only sometime after 23 October that she formed the view that she would not do so - she could not point to anything which happened during that period which triggered the resignation. The letter from HR was an "innocuous act" - lifting a suspension could not be said to contribute anything to the earlier straw so as to allow the Claimant to claim a repudiatory breach of contract. The Claimant appealed.

Was there a fundamental breach of contract?
"Last straw" cases are where the particular latest act of the employer would not amount to a fundamental breach, but that act, taken with other acts, will entitle the employee to treat the employer as repudiating the contract of employment. That may arise in two types of cases:

* firstly, there may have been an earlier fundamental breach which has been affirmed by the employee. If there is subsequently conduct which, taken together with the employer's earlier fundamental breach, causes the employee to resign or plays a part in the decision of the employee to resign, the later act effectively reactivates the earlier fundamental breach; * the second situation is where the latest act does not amount to a fundamental breach but it is a series of breaches of which the last is the last straw and, coupled with the earlier non-fundamental breaches of contract, also enables the employee to treat the contract as repudiated.

The Appellant contended that there was a finding by the ET that there had been a fundamental breach of contract in respect of the failure by the Respondent to follow the grievance procedure (Blackburn v Aldi Stores Ltd.

ET's decision unclear
The EAT considered that there was "a lack of clarity and…an internal contradiction" in the ET's Decision. On the one hand, the ET appeared to have decided that there was a repudiatory breach by reason of the way in which the grievance had been handled inadequately, with a failure to investigate sufficiently and a failure to communicate the result of the investigations to the Appellant. However, later in the Decision the ET appeared to have assumed that none of the breaches were repudiatory breaches, despite its earlier comments. The EAT recognised that the ET could have found that the breach arising out the grievance procedure was not sufficiently serious to amount to a repudiatory breach, but it did not appear that it was saying that.

The EAT thought that the Reasons of the ET were unclear and so for that reason alone, there was an error of law and the matter had to go back to the ET.

The last straw?
Was lifting the suspension a last straw? The EAT thought not - the ET's decision that the October letter from HR was an "innocuous act" was, on the facts, not perverse. The Appellant had been excluded from work in the light of serious allegations by patients. In the circumstances, what HR was trying to do was to bring about a situation where a less dramatic course of action was followed and the parties would agree to resume the working relationship. It was therefore open to the ET to decide that such action was not capable objectively of being conduct that amounted to a last straw.

Practical tips

Issues in last straw constructive dismissal cases will include:

* whether the conduct complained about amounted to a breach of contract;  * if so, was the breach a fundamental breach (showing that the employer did not intend to be bound by the contract)? * there are two types of "last straw" dismissals: (i) an earlier fundamental breach which has been affirmed by the employee and then  subsequent conduct by the employer effectively reactivating the earlier fundamental breach, and (ii) a series of breaches of which the last is the last straw, coupled with earlier non-fundamental breaches of contract.

Interlinked claims
Was it possible to uphold a constructive unfair dismissal when a sex discrimination claim (entitling the Claimant to resign from his employment as a result of the discrimination) was dismissed on appeal? Yes, said the EAT in [West Sussex County Council v Austin]() UKEAT/0034/14/JOJ.

The Claimant resigned from his employment with the Respondent following a complaint having been made of his harassing another employee. He claimed that the implied term of trust and confidence had been broken by the employer who had, it was alleged:

* suspended him without giving the reason and kept him in the dark for over a month as to the full allegations, causing his mental health to deteriorate; * failed to make allowances for a medical condition and took actions to exacerbate his stress and anxiety; * made up its mind he was guilty at the outset and then conducted a shallow and one-sided investigation that was not in accordance with its own and ACAS procedures; * failed to provide documentation and failed to interview witnesses as requested by the Claimant, making it impossible to mount a defence; and * scheduled a hearing date when the Claimant was unfit to attend despite knowing he was unfit to attend and that he had been told that he would be fit to attend a month later

As a result the Claimant contended that he was forced to resign to avoid unfair dismissal and to put an end to bullying. It was also alleged that the Respondent favoured a female who complained about the claimant's conduct, amounting to unlawful sexual discrimination.
The ET upheld the claims of unfair constructive dismissal and sex discrimination, finding that the Respondent had discriminated on grounds of sex, and in so doing had behaved in such a way as to entitle to the Claimant to resign and claim unfair constructive dismissal. An award of £168,957.29 was made in favour of the Claimant as a result of the sex discrimination finding. The Respondent appealed both decisions.

De-coupling of claims
At the EAT, Counsel for the Respondent argued that the ET had found that there was sex discrimination by the Respondent in the way in which it dealt with the Claimant and that he resigned because of that discrimination. It was submitted that there was no separate finding by the ET of conduct which amounted to constructive unfair dismissal - the ET did not find that the breaches of procedure amounted to a fundamental breach of contract giving rise to a constructive unfair dismissal. Thus, if the finding of sex discrimination could not stand, there was no finding of unfair constructive dismissal. Counsel's argument was that as there was no cross appeal on the question of unfair dismissal, the only course open to the EAT was to dismiss the appeal if it was satisfied that the ET had erred in law in finding discrimination proved.

Although the EAT agreed that the ET's decision had "gone awry", on the facts the ET was in a position to make a finding that the procedural defects of the Respondent's disciplinary procedure were such as to break the term of mutual trust and, thereby equating to constructive dismissal. The findings made by the ET were such that an ET properly directing itself would be bound to find that there had been an unfair constructive dismissal.

On sex discrimination, although the ET had made findings, it was distracted by a misunderstanding of the nature of the comparator. It was accepted that the decision on sex discrimination could not be upheld on the ET's findings in the written reasons.

Accordingly, the case was remitted to the same ET to hear submissions and make a decision on the appropriate remedy for the unfair constructive dismissal claim which was upheld.

Practical tips
If the EAT allows an appeal, it may substitute its own decision by exercising any of the powers of the ET. But the EAT is only entitled to substitute its decision for that of the ET where both:

**(i) the decision reached by the ET is plainly and unarguably wrong on the facts (i.e. the facts do not require any amplification or investigation), as a result of a misdirection of law; and
(ii) the EAT concludes that, had it applied the law correctly, the ET would have had to reach the decision that the EAT has done.**

Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator. His blog on new employment legislation can be found here.

Published: 09/02/2015 11:37

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