Good morning and welcome back to your weekly case law update. Last week was our monthly employment law update with features on the Windrush scandal, Brexit whistleblower and zero hours contracts. Prior to that, our last case law update had cases on early conciliation and shared parental leave. This week we have a case about constructive dismissal.
Moyston v S & P Casuals Ltd
This case concerns constructive dismissal. Constructive dismissal is a type of unfair dismissal defined by Section 95(1)c of the Employment Rights Act as: The employee terminates the contract under which they are employed (with or without notice) in circumstances in which they are entitled to terminate it without notice by reason of the employer’s conduct.
The circumstances which entitle an employee to resign arise from repudiatory breach of contract. This breach can either be an express term – not being paid/being made to work outside the UK – or an implied term – trust and confidence.
In light of the above, today’s question is:
If an employee resigns due a breach of an express term of their contract but erroneously pleads a breach of an implied term, can their constructive dismissal claim succeed?
Mr Moyston, the Claimant, worked for clothing importer S & P Casuals Ltd, the Respondent. He was in charge of their Manchester show room and his role was sales based. Initially. the Claimant had had healthy sales figures but these fell over time.
The Respondent invited the Claimant to a meeting to discuss his performance. The prospect of a pay cut from £45,000 to £25,000 was mentioned as a possible outcome if sales did not improve. The Claimant was then accidently copied into an email by the Respondent which said he was costing them money.
The Claimant sent in a letter stating that a 45% pay cut was not a minor alteration to his contract and that he felt the Respondent was trying to force him out. The Respondent treated this letter as a grievance, which was rejected with no reasons or investigation notes, and the Claimant’s salary cut was confirmed.
The Claimant resigned and initiated ET proceedings. The drafting of his ET1 was quite muddled and the ET took the claim to be that the Respondent’s conduct amounted to a breach of the implied term of trust and confidence. The ET held that the Respondent had a reasonable cause to cut the Claimant’s pay and the claim was dismissed.
The Claimant appealed and the EAT allowed the appeal. They held that the claim was in relation to the breach of an express term caused by the pay cut and the implied term pleaded. The ET had been wrong to direct itself that the pay cut was with cause.
The takeaway point:
In this case, yes. Previous case law has stated that resignations in relation to pay cuts will almost always be a breach of contract unless consented to. In this case, the muddled pleading could not undo the fact the Claimant had a near 50% pay cut enforced on him without his consent.