Labour & European Law Review Weekly Issue 288 27 September 2012
To prove constructive dismissal, claimants have to show (among other things) that the employer committed a fundamental breach of contract. In Roberts v the Governing Body of Whitecross School, the Employment Appeal Tribunal (EAT) said that employers cannot defend a breach by arguing that it was the result of a genuine mistake.
Mr Roberts went off sick suffering from stress and depression in November 2009. He was then informed by the school at the end of March 2010 that he would go onto half pay from 28 May 2010.
He pointed to a clause in the collective agreement incorporated into his contract which stated that “in the case of absence due to accident, injury or assault” he was entitled to continue to receive full pay.
The school, however, followed advice from the county council which said that although the provision was open to interpretation, it was of the view that the clause related only to physical injuries and not to stress.
Mr Roberts resigned and claimed constructive dismissal, arguing that, by refusing to honour a term in his contract relating to pay, the school had committed a fundamental breach of contract. He also made a claim for unpaid wages.
The tribunal agreed that the provision in the collective agreement was not clear, but found in favour of Mr Roberts, holding that the clause covered psychological, as well as physical, injuries and awarded him the unpaid wages he had claimed.
However, relying on the decision in Bridgen v Lancashire County Council, it also said that just because a party to the contract takes a view “which is ultimately shown to be wrong does not of itself constitute repudiatory conduct. It has to be shown that he did not intend to be bound by the contract as properly construed […]”.
As this was a genuine mistake and not a breach indicating that the employer no longer wanted to be bound by the contract as a whole, Mr Roberts had not been entitled to resign and claim constructive dismissal.
The EAT disagreed, however, saying that although the clause was clearly open to interpretation the school “had a settled intention to pay 50 per cent not 100 per cent of pay from 28 May” which it then acted on.
It held that defendants in civil litigation facing a claim of fundamental breach of contract cannot defend themselves on the basis that they believe their view to be correct.
It makes no difference to the character of the breach, as to whether it is fundamental or not, whether it is actual or anticipatory”.
In this case, the school had committed an anticipatory breach of contract by deciding to implement a “significant” reduction in pay to take effect two days after Mr Roberts’ resignation.
It held that as neither the facts nor the “established principles of law” supported the tribunal’s decision, the only conclusion was that the school was in fundamental breach of contract when it indicated a “settled intent” to reduce Mr Roberts’ pay by 50 per cent.
The EAT remitted the case to a new tribunal to decide if he had been constructively dismissed in response to that (as opposed to some other) breach.
In the 1977 case of Western Excavating Ltd v Sharpe, it was held that a repudiatory breach could be established by “a significant breach going to the root of the contract” or “conduct which shows that the employer no longer intends to be bound by one of more essential terms of the contract.” These are alternative, not cumulative provisions. The tribunal had therefore erred by requiring intention to be a necessary ingredient to establish a fundamental breach, in circumstances where there had been a significant breach going to the root of the contract. It is important to note, however, that not all breaches of pay terms will amount to a fundamental breach of contract as every case will turn on its own facts.