Constructively Dismissed or Contract Affirmed?

Where an employer commits a repudiatory breach of an employment contract, and the employee resigns in response to that breach, the employee may be able to argue that they have been constructively dismissed, allowing them to bring claims for wrongful and/or unfair dismissal. A repudiatory breach is a breach of contract which is so serious that it goes to the very core of the employment contract, such as a breach of the implied term of mutual trust and confidence.

Upon a repudiatory breach, an employee has two options:

• Accept the breach, most commonly by resigning. The employee may then be able to argue that they have been constructively dismissed.
• Affirm the contract, meaning that the employment contract continues. The employee may do this expressly, or through their actions – for example, by continuing to work after the employer’s repudiatory breach. If an employee affirms the contract, they lose their opportunity to argue that they have been constructively dismissed.

An employee who delays in resigning risks inadvertently affirming the contract and waiving their right to assert that they have been constructively dismissed. However, delay will not always mean that the contract is affirmed. In W E Cox Toner (International) Ltd v Crook, the Employment Appeal Tribunal (EAT) clarified that mere delay alone will not itself amount to affirmation of the contract. For example, if the employee continues to work while making clear that they are reserving their right to accept the breach if the employer fails to remedy the breach, then this continued performance of the contract will not necessarily amount to affirmation. However, prolonged delay in such circumstances may be sufficient to constitute an implied affirmation of the contract.

In Leaney v Loughborough University, Mr Leaney had worked for Loughborough University since 1979, both as a teacher in its School of Engineering and as a warden for the halls of residence. After a student self-harmed in 2018, the University had raised concerns with Mr Leaney’s handling of the incident, leading to his resignation from the warden role. From 2018 through the first half of 2020, Mr Leaney repeatedly raised his own concerns with the University regarding this incident and how the University had treated him. The University partially upheld his grievance, but failed to arrange a grievance appeal hearing, and encouraged Mr Leaney to draw a line under the matter.

On 29 June 2020, Mr Leaney raised the incident with the Dean of the School of Engineering, who said that the matter was not within his remit. On 1 July 2020, Mr Leaney instructed a solicitor, who engaged in negotiations with the school on his behalf. These negotiations ended inconclusively in early September 2020. Mr Leaney felt anxious about interacting with students at the beginning of the new academic year and was signed off work with stress on 10 September 2020. On 28 September 2020, he resigned from his teaching role.

Mr Leaney then sough to bring a claim for unfair dismissal, on the basis that he had been constructively dismissed, with his resignation having been in response to the University’s cumulative breach of the implied term of mutual trust and confidence.

The Employment Tribunal dismissed Mr Leaney’s claim, on the basis that Mr Leaney had continued to work for another three months after the Dean of Engineering had told him that there was nothing that he could do regarding the self-harm incident – this being the “final straw”, assuming the University had breached the implied term of mutual trust and confidence. Mr Leaney had not indicated that he was continuing to work under protest, and there was no evidence that the University had misled Mr Leaney so as to cause him to delay his resignation. The Tribunal therefore concluded that Mr Leaney had affirmed his employment contract. Mr Leaney appealed to the EAT.

The EAT confirmed that affirmation may be implied by an employee’s actions, such as continuing to proactively carry out duties over a prolonged period. However, the EAT held that the passage of time prior to resignation will not necessarily be determinative as to whether a contract has been affirmed – rather, the conduct of the parties (particularly the employee) during this period between breach and resignation must be taken into account.

The Tribunal should have given greater consideration to the following factors:

• The period was during the summer holidays, at which time Mr Leaney was not doing any significant work.
• Negotiations were ongoing during this period, with attempts being made to resolve Mr Leaney’s concerns.
• Mr Leaney was then away on sick leave for the remainder of this period, following the conclusion of negotiations.
• Whether Mr Leaney would be sacrificing a stable and secure job, or losing valuable benefits, were he to resign, and therefore whether he might need more time to consider his options.

Ultimately, the EAT remitted the matter to the Tribunal.

The EAT’s judgment acts as an important reminder for employers that an employee’s delay in resigning will not necessarily be fatal to their argument of constructive dismissal. Tribunals will take into account all of the relevant circumstances, including whether the employee had reasonable prospects of having the matter resolved without resigning and other factors that might have led them to hesitate in resigning.

If you would like advice on managing an employee’s grievance or legal support with a tribunal claim, please get in touch at [email protected]