For a claim of constructive dismissal to succeed, the employee has to show that the employer breached a fundamental clause of their contract; that they resigned in response to that breach; and that they resigned fairly soon after the breach.

In Kerry Foods Ltd v Lynch (2005, IRLR 680), the employment appeal tribunal (EAT) said that there could not be a constructive dismissal in circumstances where the employee resigned before the notice period had expired.

 

What were the basic facts?

Mr Lynch had worked for Kerry Foods (or its predecessors) from 1972 until his dismissal in March 2004. He worked a fiveday week, excluding weekends, although managers in other depots worked six days, including Saturdays.

In 2003 his employer decided to introduce a six day working week for all managers, on the basis that, when they worked the same rota as their team, the Saturday trading results improved. It also decided to reduce his holiday entitlement by six days.

Mr Lynch refused to agree to the changes, but was told in January 2004 that his contract would be terminated and that he would be re-engaged on the new terms with effect from 29 March 2004.

He resigned on 22 March and claimed constructive dismissal, arguing that his employer had breached the implied term of trust and confidence between them.

 

What did the tribunal decide?

And the tribunal agreed with Mr Lynch. It rejected the argument put forward by Kerry Foods that the dismissal was for "some other substantial reason" within the meaning of section 98(1)(b) of the Employment Rights Acts (ERA)1996.

It said that there was no evidence to show that the business would have suffered, had the changes not been introduced. As a result, Kerry Foods had not discharged the burden of showing some other substantial reason for dismissal.

The tribunal did not, therefore, need to go on to consider the question of reasonableness under section 98(4) of the ERA. It awarded Mr Lynch nearly £40,000.

 

What was decided on appeal?

Unfortunately for Mr Lynch, the EAT disagreed and said that there was plenty of evidence that the company would benefit from introducing the rota changes.

It pointed out that the tribunal itself had identified the advantages to the employers of the proposed changes. These were enough, it said, to pass the low hurdle of showing some other substantial reason for dismissal. It was not necessary, as the tribunal had required, for employers to show the "quantum of improvement achieved".

The tribunal was, therefore, bound as a matter of law to find that Kerry Foods had shown some other substantial reason for dismissal, and should then have gone on to consider section 98(4) reasonableness. In addition the EAT said the tribunal was wrong in law to find that the company was in repudiatory breach of the contract (a pre-requisite for constructive dismissal).

This was not, the EAT said, "a case in which the respondent employer unilaterally varied the claimant's terms and conditions of employment. They gave lawful notice of termination to expire on 29 March 2004, coupled with an offer of continuous employment on the new terms proposed. During the notice period the old terms remained in force."

The final nail in the coffin for Mr Lynch was the fact that he resigned during the notice period, and his resignation was accepted. Accordingly the effective date of termination took place before the expiry of the company's notice.

The EAT concluded that these facts could not give rise to a breach of the implied trust and confidence term. It therefore declared that there was no dismissal, and set aside the tribunal's decision and consequent award.