In Gordon v. J&D Pierce (Contracts) Limited, the Employment Appeal Tribunal (EAT) held that, by engaging in a grievance process available under the contract of employment, an employee does not affirm the contract and lose the right to claim constructive dismissal as a result of their employer’s breach. That did not help the Claimant in this case as his appeal was rejected on the specific facts.
Employment Tribunal decision
The Claimant alleged that he had been constructively dismissed after a breakdown of his working relationship with his manager. He alleged that the Respondent had breached the implied obligation of trust and confidence between the parties. In applying the test in Malik v. BCCI,the Employment Tribunal (ET) held that the implied obligation of trust and confidence had not been breached. The Respondent’s conduct did not amount to a repudiation of the contract of employment and the Claimant was not entitled to treat the contract as at an end and claim constructive dismissal. The ET noted that there were “faults on both sides” and went on to hold that, by engaging in the grievance procedure, the Claimant had affirmed the contract. That meant he had waived the alleged breach and could not claim constructive dismissal. The Claimant appealed.
The Claimant drew attention to the fact that, when referencing the test in Malik, the ET repeatedly referred to conduct that was likely to “destroy” the relationship of trust and confidence rather than conduct that was likely to “destroy or seriously damage the relationship of trust and confidence”. The EATrejected this submission and held that the ET was aware of the full terms of the test and that the likely explanation of the ET’s failure to quote the test in full was that it was engaging in abbreviation.
The Claimant also submitted that the ET had erred by seeking to identify whether there was a “last straw” that led to the rupture of the parties’ contractual relationship. He argued that there can be a breach of the implied term of trust and confidence regardless of whether there is a last straw. The EAT held that, while there did not need to be a “last straw”, the Respondent’s conduct was not such as to amount to a breach of the implied obligation of trust and confidence.
As a result, the EAT dismissed the appeal and held that the contract of employment remained entire. No right of resignation arose and there was no constructive unfair dismissal.
Of wider interest, the EAT also held that the ET had erred in its finding that lodging a grievance and going through the grievance procedure meant a Claimant had affirmed the contract and so waived their employer’s breach. Where an employer breaches the employee’s contract in a material way, the employee generally has the option either to end the contract (and claim constructive dismissal) or to waive the breach and affirm the contract. If the employee waives the breach, they cannot claim constructive dismissal. The EAT confirmed that lodging a grievance should not be regarded as waiving the breach.
The EAT found that grievance or appeal provisions may be regarded as severable from the remainder of the contract and capable of surviving independently, even though the remainder of the contract is brought to an end as a result of the breach. At the end of the grievance process, it will be an employee’s choice whether to affirm the contract or to leave and claim constructive dismissal. If they affirm, their right to claim constructive dismissal disappears.
This case serves as a useful reminder that, if an employer’s conduct amounts to a repudiation of the employment contract, the employee can choose whether to resign or waive the breach. However, lodging a grievance will not, by itself, be enough for an employer to argue the employee has lost the right to resign and claim constructive dismissal.