An employee who wants to claim constructive dismissal must show (1) that their employer has committed a serious breach of contract; (2) that they have not’accepted’ the breach (acted as if it didn’t matter to them) but resigned in response to it; and (3) do it promptly.
A recent High Court case looked at whether an employee who resigns on notice is seen to have accepted the breach or not.
Facts:
Three employees accused their employer Neon of breaching their contracts of employment. Particular breaches alleged included:
- Failing to pay salary increases and discretionary bonuses awarded to them;
- Making the salary increases and bonuses conditional on signing new terms and conditions; and
- Removing commission agreed at the time of recruitment.
They alleged these breaches amounted to a serious breach of contract entitling them to resign. They resigned on notice. They claimed that Neon:
- Made unjustified findings of misconduct in a disciplinary process; and
- Unjustifiably reported that misconduct to the regulator.
Two out of the three claimants responded by resigning (during their notice period) with immediate effect. They brought claims of wrongful dismissal and breach of contract; the third stayed an employee and brought a claim of breach of contract for salary.
The High Court held that Neon committed a serious breach of all three of their employment contracts; that the first two accepted that serious breach, that they were constructively dismissed (in effect, sacked), and that they wrongfully dismissed (which means entitled to their notice pay).
The High Court interestingly commented that some breaches had been ‘accepted’ by the first two (who resigned giving their notice periods of 6 months and 12 months). The judge thought that it was unfair to allow them to reserve their right to accept the breach of contract, while continuing to work for Neon for such a length of time.
This case shows that to claim constructive dismissal, if an employee resigns with notice in relation to a big breach of contract, and has a notice period that is 6 months or more, this may very well amount to an acceptance of that breach. So, it appears employees with longer notice periods are better off resigning with immediate effect (or giving three to five months’ notice) if they intend to bring a claim that relies on a finding of constructive dismissal.
Case report: Brown & Anor v Neon Management Ltd & Anor
By Zahid Reza
Image used under CC courtesy of Sherwood