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Case law: Employee believing himself demoted successfully claims unfair constructive dismissal

Employers planning changes to an employee's terms of employment, particularly where it may be interpreted as a demotion, should consider whether the changes may amount to a fundamental breach of contract, meaning the employee can resign and claim constructive dismissal.

Legal Alert

This update was published in Legal Alert - June 2016

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A football club employee considered he had been demoted so he resigned and claimed unfair constructive dismissal.

There is a constructive dismissal when an employer has done something that is so fundamentally inconsistent with the employer/employee relationship – a 'repudiatory breach' - that the employee is entitled to treat him or herself as dismissed.

The legal test of whether there has been a repudiatory breach is whether, from the perspective of a reasonable person in the position of the innocent party, looking at all the circumstances, the contract breaker has shown a clear intention to abandon and altogether refuse to perform, the contract.

The High Court ruled in the employee's favour: the employee's new role would not meet his contractual expectations, which showed the employer's intention to refuse to perform the contract as originally entered into.

It was irrelevant that the employee had occasionally threatened to resign if he was not offered suitable new terms – the employer's conduct could still be a breach. It was also irrelevant that the employee had refused a promotion offered to him once the dispute had escalated, as it was reasonable for him to feel that his credibility with players and staff had already been damaged too much by the employer's treatment of him.

Operative date

  • Now

Recommendations

  • Employers planning changes to an employee's terms should consider whether the changes may amount to a fundamental breach, entitling the employee to resign and claim constructive dismissal

Case ref: Gibbs v Leeds United Football Club [2016] EWHC 960 (QB)

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