To prove constructive dismissal, claimants have to show that they resigned in response to a repudiatory breach of contract by their employer. In Gibbs v Leeds United Football Club, the High Court held that the claimant could still bring a claim of constructive dismissal, although he had discussed a possible termination package with his employer.
After a new company acquired a majority interest in Leeds United FC in early 2014, the manager left on agreed terms shortly afterwards. Mr Gibbs, the assistant manager at the time, expected to be dismissed but instead was asked if he would like to take over as manager. He turned down the offer, saying he felt loyalty to his former boss.
On 4 June the club wrote to him saying that it wanted him to remain in his post, but at a meeting on 9 June, he discussed terms on which he might leave. On 19 June, the club announced the name of the new manager. Mr Gibbs subsequently felt he was being squeezed out of his role because he was not given any meaningful work to do. Shortly afterwards he was told that he was no longer to work with any of the first team players and on 23 July was informed by e-mail that he was to work only with the youth team and other non-first team players.
Mr Gibbs resigned on 26 July on the basis that the club had breached his contract and claimed constructive dismissal. The club argued that he had intended to leave all along after the previous manager had left and that he had “hung on” as a negotiating tactic.
High Court decision
The High Court held that the only issues to be decided were whether the club was in breach of contract, whether the breach was repudiatory, and whether Mr Gibbs resigned at least in part in reliance on that breach.
Although the general duties of an assistant manager were not spelt out in Mr Gibbs’ contract, the evidence showed that they involved the selection, tactics and training of the first team as opposed to the youth team and other non-first team players. It was not reasonable therefore for the club to require him to work only with the under 18s and under 21s as the loss of status would be obvious to everyone, including Mr Gibbs. By sending the e-mail of 23 July the club made clear that it was refusing to perform the contract as originally agreed. As it had demonstrated that it no longer intended to be bound by the contract “in its essential terms” it had committed a repudiatory breach.
The High Court also accepted Mr Gibb’ argument that he had responded to receipt of the e-mail by resigning because of the close connection in time between the two events.
The fact that Mr Gibbs had expressed the view that he was prepared to leave the club if he could agree suitable terms was beside the point. It was not a breach of contract to initiate discussion about possible consensual termination. Mr Gibbs remained willing, indeed keen to fulfil his contractual duties, whereas Leeds had clearly committed a repudiatory breach of contract.