Morrow v Safeway Stores plc [2002] IRLR 9
Hilton v Shiner Builders Merchants [2001] IRLR 727
BG plc v O'Brien [2001] IRLR 496
Johnstone v W Wilson and Sons IRLB 667
Quinn v Weir Systems Ltd IRLB 673

Constructive Dismissal cases are often seen as the last refuge of the desperate and the first refuge of the bar room lawyer. There has been a recent flurry of cases considered by the Employment Appeal Tribunal which look at breaches of contract and in particular the duty of trust and confidence. This feature summarises the cases and gives guidance for advisors.

The test for whether or not constructive dismissal can be shown is set out in the box. For an employee to get a claim off the ground she first has to identify a breach of contract, the classic contractual test is set out in Western Excavating (ECC) Ltd v Sharp {1978} IRLR 27. The employee has to show that the employer is guilty of conduct going to the root of the contract of employment. It has long been clear that the breach can be an actual breach of contract or a breach of the implied term of trust and confidence or fair dealing.

In Morrow, the applicant was employed in the supermarket as a bakery production controller. She had had a bad working relationship with the store manager who she felt unreasonably harassed her. The store had a special promotion of bloomer loaves and when the store manager found the loaves were not on the shelves he gave her a strong ticking off in front of staff and a customer, saying 'If you cannot do the job I pay you to do, then I will get someone who can'. Two hours later he gave her another telling off. She was extremely distressed at the way she had been spoken to and resigned claiming constructive and unfair dismissal.

The Employment Tribunal said it thought that the public criticism by the store manager was a breach of the implied term of trust and confidence, but that not every breach was a repudiatory breach and what had happened was not serious enough as to entitle her to resign and claim constructive dismissal. The EAT said this was wrong and that 'In general terms, a finding that there has been conduct which amounts to a breach of the implied term of trust and confidence will mean, inevitably, that there has been a fundamental or repudiatory breach going necessarily to the root of the contract'. They stressed that the decision as to whether there was any such conduct was for the Tribunal to decide after hearing all the evidence.

In Hilton, the applicant worked at a builders yard for twenty years, serving customers and dealing with cash transactions. He had no written job description. The employers were concerned that customers had left the yard without a sales invoice. Mr Hilton explained this by saying he was striking a balance between building materials bought by the yard and the value of the purchases made. The employers were not satisfied, thought he had acted dishonestly and decided to transfer him to other work not involving cash. He was told he was 'not suitable to be employed in a position of trust'. There was no disciplinary procedure followed. When Mr Hilton was sent a letter setting out his new role he resigned and claimed unfair dismissal.

The Tribunal thought there had been no repudiatory breach of contract and dismissed his complaint. They thought the offer made to him of a new role was a generous one. The EAT disagreed and said that 'Requiring an employee to cease doing what had been his principal job, and to require him to take up a new role, in circumstance in which there had been no allegations of dishonesty, would in our view amount to a variation of the employee's contract'. Further they did not think such a variation could be imposed without consent 'To attempt to do so would, we think, almost always be capable of being a repudiatory breach'.

BG Plc v O'Brien (LELR 64) also considered the implied duty of trust and confidence. In this case Mr O'Brien had not been offered enhanced terms for redundancy whereas all his colleagues had. The EAT again said this was a breach of mutual trust and confidence or their obligation of fair dealing. The EAT stressed that when a Tribunal has to determine whether or not an employer is in breach of the implied contractual duty of trust and confidence, the question is whether, looked at objectively, the employer has acted in a manner likely to destroy trust and confidence.

Quinn is an example of a case where no breach of contract was found. Mr Quinn was a long standing employee. The company he worked for was in financial difficulties and redundancies were anticipated. Mr Quinn heard a rumour via various secretaries in his firm that the director had said he 'was next for the chop'. He was upset and resigned. The Tribunal thought that it could not be reasonably said that Mr Quinn was in an intolerable position and dismissed his case. The EAT did not disturb the finding.

In Johnstone a head dairyman on a farm was demoted for poor timekeeping and offered a job of second dairyman on the same rate of pay. However he was also required to move to a smaller house. He told his employer he was not prepared to work under the new head and was told ' You may as well go then'. An employment tribunal was satisfied he had resigned but that he was not constructively dismissed because his demotion was entirely reasonable. The tribunal got into a muddle about what test it was applying and failed to identify whether there was a breach of contract, instead considering the band of reasonable responses (the test to be applied in unfair dismissal conduct cases). The EAT found that the decision was flawed but went on to decide on the facts of the case that it was not possible to show a material or fundamental breach of contract where the reasons for the changes were related to poor conduct.

It is encouraging that the EAT has been prepared to take such robust views on what amounts to fundamental breaches of trust and confidence. However all this review considers is the first stage in proving a constructive dismissal case: whether or not a breach of contract can be proved. There are three other hurdles to leap before an employee can show she has been constructively dismissed, and then a Tribunal must also look at whether there is a potentially fair reason for dismissal and issues of fairness under section 98(4) ERA 1996.

In the current climate when so many employers are seeking ways of not terminating employment to avoid their redundancy and unfair dismissal liability it would be tempting to start relying on enforced changes of contract to justify resignation. Advisors must continue to exercise great caution before suggesting resignation and the uncertainty of litigation as against the certainty of a monthly pay packet.

However, where a situation is intolerable, these cases give some comfort.