In the recent case of Chemcem Scotland Ltd v. Ure,the Employment Appeal Tribunal (EAT) held that the employee’s failure to return to work after maternity leave was sufficient to communicate her acceptance of a repudiatory breach for the purposes of an unfair constructive dismissal claim.
Facts of the case
Ms Ure worked for Chemcem (the company) in which her father was the majority shareholder. She went on maternity leave but remained in touch with the company and, in particular, her father about a variety of matters affecting her employment. Their communication was difficult as her father had left Ms Ure’s mother and formed a new relationship. At times, he misled Ms Ure and failed to communicate information to her that she, as an employee, was entitled to have. The company also imposed changes to her contract. This included varying her pay without notice, changing her payroll, not paying her statutory maternity leave on time, failing to respond to her questions regarding pay entitlement and failing to represent the true position of her pay.
Ms Ure did not return to work after her maternity leave ended. She brought a claim for constructive unfair dismissal against the company. The claim was successful. The Employment Tribunal held that the breaches amounted to a breach of trust and confidence which entitled her to resign. The company’s conduct amounted to constructive dismissal.
The company appealed. One of the grounds was that Ms Ure had not communicated her acceptance of the repudiatory breaches and, as such, there was no termination of contract.
The importance of a repudiatory breach in constructive dismissal claims
A constructive dismissal occurs where “the employee terminates the contract under which he is employed…in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct” (section 95 of the Employment Rights Act 1996). The key elements that need to be established are:
- A repudiatory breach of the contract by the employer;
- the employee has accepted the breach and treated the contract as terminated;
- the resignation must be in response to the breach; and
- the employee did not delay too long in accepting the breach.
“Repudiatory breach” occurs where the breach is so significant that it goes “to the root” of the contract of employment and/or where the employer behaves in such a way that shows it no longer intends to be bound by the essential terms of the contract. Employees often rely on a breach of the implied term of mutual trust and confidence as being a repudiatory breach. This applies when the employer behaves in such a way that it destroys or seriously damages the trust and confidence between the parties.
Termination of an employment contract following a repudiatory breach does not happen automatically. The employee’s resignation therefore needs to be communicated to the employer in some way.
The EAT decision
The EAT dismissed the appeal. It pointed out that, in normal circumstances, a failure to return to work would not be deemed as acceptance of a repudiatory breach. However, in this case it was plain that such a characterisation was acceptable and “it was for the tribunal as finder of fact to judge whether [the claimant’s] non-appearance was eloquent of an acceptance of the repudiatory breaches.”
The EAT noted that the company had not challenged the conclusions of the tribunal as to why Ms Ure had not returned to work. Additionally, when Ms Ure did not return to work, no one from the company contacted her as to her whereabouts.
Ms Ure’s case confirms that, in certain circumstances, an express communication of resignation (i.e. an acceptance of a repudiatory breach by an employee as terminating the contract) is not required. The tribunal will consider the circumstances of each case and decide, based on its facts, whether the acceptance occurred. It was apparent in this case that Ms Ure’s failure to return to work was sufficient to communicate her acceptance to the company. However, it is important to remember that, where an express acceptance has not been provided, the implied acceptance should be clear from the facts of the case. It must not be equivocal or ambiguous.