The Employment Appeals Tribunal applies 2 common tests to all claims of constructive dismissal. (Even though we now have the WRC adjudicating on these claims, the same principles and previous decisions taken by the EAT are very important).
Constructive dismissal is where the employee quits and leaves the employment.
Constructive dismissal, as defined by the Unfair Dismissals Act 1977 is
“dismissal in relation to an employee means the termination by the employee of his contract of employment with his employer whether prior notice of the termination was or was not given to the employer, in circumstances in which, because of the conduct of the employer the employee was or would have been entitled or it was or would have been reasonable for the employee, to terminate the contract of employment without giving prior notice of the termination to the employee”.
The Employment Appeals Tribunal has held that an employee is only entitled to succeed in a constructive dismissal claim where
“An employee is entitled to terminate the contract only when the employer is guilty of conduct which amounts to a significant breach going to the root of the contract or shows that the employer no longer intends to be bound by one or more of the essential terms of the contract.”
The relationship of trust and confidence between employer and employee is a 2 way one. The Tribunal has held that
“….. an employer is entitled to expect his employee to behave in a manner which will preserve his employer’s reasonable trust and confidence in him so also must the employer behave”.
So the Tribunal has to decide in any constructive dismissal case whether
“the employer’s conduct amounted to undermining the relation of trust and confidence between the parties in such a way as to go to the root of the contract. “
The Contract Test
This “contract test” was summarised in the English case “Western Excavating Ltd. V Sharpe (1978)”:
” If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract then the employee is entitled to treat himself as discharged from any further performance”.
The Reasonableness Test
The reasonableness test asks whether an employer conducts himself or his affairs so unreasonably that the employee cannot fairly be expected to tolerate it any longer and justifies the employee leaving.
Circumstances which render it reasonable for an employee to terminate the contract of employment may constitute ‘constructive dismissal’ and may also justify resignation.
“Entitlement to terminate a contract by reason of the conduct of the employer is a perfectly familiar concept of the law of contract. Like much else it is easy to formulate but can be difficult to apply…The law of contract for this purpose is that where an employer so conducts himself as to show that he does not intend to be bound by the contract of employment the employee is entitled, at his option, either to treat the contract as at an end, and cease performing his part…The question of what is reasonable in the circumstances having regard to equity which has to be considered in cases of unfair dismissal, applies equally to the facts…It is the conduct of the employer which you must look at…But it is not the epithets which his conduct attracts, but whether you are entitled to treat your contract as at an end, and whether if you exercise your option to do so you have been ‘constructively dismissed.” Wetherall (Bond St. W1) v Lynn (E.A.T.) 1
The Employment Appeals tribunal, in deciding any constructive dismissal claim, will apply the tests set out above-the “reasonableness” test and the “contract” test- and decide each case on its particular facts.
One thing that the employee must do in all but the most exceptional circumstances is to exhaust all internal avenues for dealing with his/her grievances.