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Case law: Affirmation of contract by an employee following employer's breaches does not 'wipe the slate clean' if there is a future breach

Employers who seriously breach an employee's contract of employment, but the employee affirms the contract rather than terminates it, should avoid further breaches as the previous breach may still be relevant when considering whether there is a series of acts or omissions which cumulatively amount to a repudiatory breach.

June 2018

This update was published in Legal Alert - June 2018

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.

An employer rejected an employee's appeal against a final written warning for inappropriate behaviour. The employee resigned and claimed constructive dismissal.

There is a constructive dismissal when an employer has done (or omitted to do) something that is so fundamentally inconsistent with the employer/employee relationship – a 'repudiatory breach' – that the employee is entitled to terminate their contract of employment and treat him or herself as dismissed.

In this case, the employee argued that it was a series of acts and omissions by her employer, rather than any one thing on its own, that cumulatively amounted to a repudiatory breach and entitled her to treat herself as constructively dismissed. Previous breaches included unjustified criticism of her performance and not following proper disciplinary and appeal proceedings following her alleged inappropriate behaviour. The rejection of her appeal against her final written warning was the 'last straw' in that series.

However, where an employee is the victim of a repudiatory breach, it is open to them to 'affirm' their contract of employment. This means they can treat it as continuing, despite the breach, rather than resigning and claiming constructive dismissal.

The employer argued that as she had affirmed her contract of employment after the previous breaches, by carrying on working, those breaches should not be taken into account because they fell out of the reckoning – they were no longer part of the series of acts or omissions. It argued that the rejection of her appeal was not, therefore, the final straw in a series of breaches, but a new breach to be considered on its own.

The Court of Appeal found that there had been no 'last straw' as the employer's disciplinary process was properly conducted, and there had been no repudiatory breach or constructive dismissal.

However, it provided useful guidance, setting out the questions that should normally be asked when dealing with 'last straw' cases:

  • What was the most recent act or omission by the employer which amounted to the last straw?
  • Has the employee affirmed their contract of employment since then?
  • If they haven't, was that act or omission a repudiatory breach of contract on its own?
  • If it wasn't, was it part of a course of conduct, a series of acts and omissions, which, taken cumulatively, amounted to a repudiatory breach? If it was part of such a course of conduct, the fact the employee may have affirmed their contract of employment following a previous act or omission is irrelevant, as the employee's right to terminate their employment is revived by any fresh breach following the affirmation
  • Did the employee resign as a response to (or partly as a response to) that breach?

This guidance makes it clear that:

  • If an employer has committed previous breaches of contract ('the original breaches')
  • the employee has affirmed their contract of employment following the original breaches
  • the employer commits another breach (which is not, on its own, a repudiatory breach)
  • that breach can be considered as part of the same series of acts or omissions as those which the employee has previously affirmed
  • all of the breaches, taken cumulatively as a series, amount to a repudiatory breach, and
  • the employee resigns and claims constructive dismissal on the basis the final breach was the 'last straw' in that series of breaches

Then the fact the employee affirmed their contract after the original breaches does not stop those original breaches from being taken into account when considering whether there has been a repudiatory breach arising from a series of acts or omissions. The affirmation does not 'wipe the slate clean' at that point.

Operative date

  • Now

Recommendation

  • Employers who have committed a repudiatory breach of an employee's contract of employment, but the employee has affirmed their contract rather than terminated it, should avoid further breaches as they could revive the employee's right to terminate, despite their previous affirmation

Case ref: Kaur v Leeds Teaching Hospitals NHS Trust [2018] EWCA Civ 978

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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