Court of Appeal confirms approach in “final straw” constructive unfair dismissal cases

The Law

Constructive Unfair Dismissal

Employers are subject to an implied term of trust and confidence. They must not, without reasonable and proper cause, conduct themselves in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.  A breach of the implied term of trust and confidence will be a repudiatory breach.

It is well established that a series of acts, which may not individually amount to breaches of contract, can, when taken together amount to a breach of the implied term of trust and confidence.

In a cumulative breach case the “final straw” may be relatively insignificant and may not always be unreasonable or blameworthy. However the last incident cannot be utterly trivial or innocuous, and it must contribute something to the breach.

If an employee continues to work, the employee will have affirmed the contract. This would ordinarily mean that the employee loses their right to resign in relation to the breach and claim constructive unfair dismissal.

The Facts

Ms Kaur was employed by Leeds Teaching Hospitals NHS Trust (the “Trust”) as a nurse. Following an altercation with a colleague in April 2013, she raised a grievance. The Trust began disciplinary proceedings against Ms Kaur. In October 2013, Ms Kaur was issued with a final written warning for inappropriate behaviour. On 16 July 2014, her appeal against the disciplinary sanction was dismissed. The 9 month delay in hearing the appeal was partly due to Ms Kaur’s maternity leave. 

The following day, Ms Kaur informed the Trust that she had been left with no choice but to resign and put a claim into the employment tribunal for constructive unfair dismissal. She argued that the rejection of her appeal was the last straw in a series of acts that when taken together amounted to a breach of the implied term of trust and confidence.  The series of acts included the alleged unjustified complaints about her performance, the altercation with her colleague and the Trust’s conduct of the disciplinary and appeal proceedings.

The Trust applied to strike out her claim. The tribunal struck out her claim as it had no reasonable prospect of success.  The tribunal found Ms Kaur could not rely on the altercation as a last straw given that she had remained in the Trust’s employment for 15 months after the altercation and had waived any potential breach.

Her appeal to the EAT was unsuccessful so she appealed to the Court of Appeal.

Decision

Ms Kaur’s appeal failed. The Court of Appeal found that the employment judge had been entitled to strike out the claim for constructive unfair dismissal as having no reasonable prospect of success. There was no last straw as the employer’s disciplinary process was perfectly proper.

The Court of Appeal also confirmed its view that:

• The Trust was entitled to proceed with Ms Kaur’s disciplinary process simultaneously with her dignity at work complaint (against the colleague involved in the altercation) as they arose out of the same facts
  
  
• An employee’s exercising of their right to appeal is unlikely to amount to an unequivocal affirmation of contract
  
  
• An employer properly following its disciplinary process and / or the outcome of such a process, cannot amount to, or contribute to, a repudiatory breach of contract.

The Court of Appeal confirmed that, whilst a tribunal ought to be slow to strike out a claim where there are disputed facts, there is no absolute rule against it. Whether it is appropriate in a particular case requires assessment of the nature of the disputes and the facts that can be realistically disputed. 

Guidance on Constructive Unfair Dismissal Cases

What is significant is the Court of Appeal took the opportunity to review the operation of the last straw doctrine and its potential interaction with previously affirmed breaches.

The Court of Appeal confirmed that all that is required for a last straw resignation is that a series of incidents, whether or not previously affirmed, amounts to a fundamental breach of contract. i.e. further contributory acts effectively “revive” an employee’s right to rely upon the whole series of acts, despite any earlier affirmation(s). If the employee does not delay in their resignation from the last of these incidents, their claim will be well-founded.  In so holding the court disapproved the EAT’s decision in Vairea (Vairea v Reed Business Information Ltd [2017] ICR D9) which was contrary to the earlier Court of Appeal authority in Omilaju (London Borough of Waltham Forest v Omilaju [2004] EWCA Civ 1493).

The Court of Appeal suggested there were 5 questions for tribunals to consider in unfair dismissal cases:

1. What was the most recent act (or omission) on the part of the employer which the employee says caused, or triggered the resignation?
   
   
2. Has the employee done anything to suggest that they have accepted (or affirmed) the contract since that act?
   
   
3. If not, was that act (or omission) by itself a repudiatory breach of contract (i.e. of sufficient important to justify resignation)?
   
   
4. If not, was it nevertheless a part (applying the approach explained in Omilaju) of a course of conduct comprising several acts and omissions which, viewed cumulatively, amounted to a repudiatory breach of the employee’s contract by showing that all trust and confidence had been destroyed? If it was, there is no need for any separate consideration of a possible previous affirmation.
   
   
5. Did the employee resign in response (or partly in response) to that breach?

What does this mean for you or your business?

• You need to be aware that employees may later rely upon historical “complaints” as contributing to a cumulative breach of trust and confidence, even if you consider the complaints to have been addressed or even forgotten.
  
  
• A properly followed disciplinary process cannot constitute a repudiatory breach of contract, or contribute to a series of acts that cumulatively amount to such a breach.

What do you need to be doing now?

• Ensure that you have in place, and follow carefully, well drafted grievance and disciplinary procedures.

These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.