Responding reasonably

Abbey National plc v Fairbrother

Section 95(1)(c) of the Employment Rights Act 1996 (ERA) says that employees can claim constructive unfair dismissal if they resign in response to a fundamental breach of contract by their employer.

In Abbey National plc v Fairbrother (2007, IRLR 320; IDS 826), the Employment Appeal Tribunal (EAT) said that in constructive dismissal cases involving an allegedly badly handled grievance, employers have a discretion in how they carry them out. If it is reasonably exercised, the claim will fail.

Basic facts

Mrs Fairbrother worked as a customer manager for Abbey National from 1998. She suffered from obsessive compulsive disorder (OCD), but had no problems at work until 2002 when she gave some very precise instructions to two colleagues. They called her Frau Fairbrother all day and made Nazi salutes. They then continued to taunt her after that about her need for tidiness and order. They also taunted another woman, Mrs Roberts, for being slow.

Things came to a head in July 2003, as a result of which Mrs Fairbrother walked out. The area manager, Mr McNicholas, investigated and suggested that the three women sit down together to resolve matters. He told her that she could have been disciplined for walking out, and added that one of the women had just smiled when he had asked whether Mrs Fairbrother was a “tosser”.

Mrs Fairbrother then complained about the way the manager had handled her complaints of bullying. The company carried out an investigation, but dismissed her grievance. She appealed unsuccessfully and finally resigned in June 2004. She claimed unfair dismissal, among other things.

Tribunal decision

The tribunal concluded that the grievance procedure was seriously flawed, saying that:

• Mr McNicholas should have offered a mediator to resolve relations after the incident in July 2003
• He should not have told Mrs Fairbrother about the “tosser” exchange, nor warned her that she could have been disciplined
• Her complaints about bullying prior to July 2003 should have been considered

The tribunal accepted that Abbey National was not obliged to uphold her grievance, but that Mrs Fairweather was justified in her view that the investigation into her grievance was too restrictive and had “trivialised” her complaints. The company had therefore “acted in a way which was likely to destroy or seriously damage the relationship of mutual trust and confidence.”

EAT decision

The EAT said that employees first have to show they have been dismissed under section 95(1)(c). Then the tribunal has to consider whether the employer has breached the implied term of trust and confidence.

Tribunals therefore have to ask:

• What was the conduct being complained about?
• Did the employer have a good reason for behaving like that?

If they do, then the employee cannot succeed. If they don’t, then the tribunal has to ask a third question

• Was the employers’ conduct likely to seriously damage the relationship between the two parties?

The EAT said it was obvious that employers have to act reasonably, but that did not mean they had no discretion in how they carried out a grievance or disciplinary procedure.

In the context of a grievance procedure (which has to be looked at as a whole), tribunals have to answer the second question by looking at the “band of reasonable responses”. It is only if the grievance has been carried out “in a manner in which no reasonable employer” would have conducted it that tribunals can then conclude that the employer did not have a good reason for behaving as they did.

This tribunal, however, did not do any of that. If they had looked at the grievance procedure as a whole, they would have concluded that Abbey National had “reasonable and proper cause for the outcome on which they determined.”