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Case law update: Breach of contract and affirmationBack

If an employee resigns in response to a fundamental breach of contract by the employer, then if they have over 2 years’ service, they can bring a claim of constructive unfair dismissal.

Over time there has developed a body of case law that says that the ‘implied term of trust and confidence’ between employer and an employee can be destroyed by a series of small breaches or unreasonable treatment by the employer which is calculated or likely to destroy that implied term and which does not have reasonable or proper cause. This then results in a “final straw”, i.e. in conduct which wouldn’t, on its own, have given an employee a claim, but when taken in context with the previous breaches, has destroyed the implied term.

It is also established law that in constructive unfair dismissal, an employee has to resign in response to the breach, and if there is anything which affirms the contract then he or she is said to have waived the breach and cannot then claim constructive unfair dismissal.

In a recent case at the Employment Appeal Tribunal (EAT) (Pets at Home Ltd vs MacKenzie) a Manager who was passed over promotion on two separate occasions, whilst pregnant and whilst on maternity leave, resigned when she later learnt that another assistant manager (who the Claimant had previously managed) had been promoted, or rather claimed he had.  The Manager resigned claiming constructive unfair dismissal (amongst other claims) relying on her colleague’s promotion as the final straw.

Although she succeeded at a Tribunal the EAT reiterated that on the facts, the case must fail.  The Tribunal had erred because it didn’t consider whether the earlier alleged breaches of contract had been affirmed by the Claimant.  The EAT reiterated that the Claimant had a choice whether to accept the breach (being passed over for promotion) and resign at the time of those acts. She did not do so and therefore had affirmed the contract.  She could not then rely upon the colleague’s promotion as the final straw.

The case is good news for employers and reminds Tribunals to consider each alleged breach of contract and consider whether the employee’s acts afterwards are an affirmation.

Motor Industry Legal Services

Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.

Posted by Sue Robinson on 13/04/2018