A young man, worried about losing his job, contacted me this week.
He only has about 11 months service in the job and was concerned that the employer was getting ready to dismiss him before he had the necessary 12 months service for the protection of unfair dismissal legislation.
Let me explain.
In order to have the statutory protection of the Unfair Dismissals Acts an employee needs to have 12 months continuous service in the job.
This guy has been called to a “meeting” to discuss his performance. There has already been a series of these meetings with heavy hints that these probationary review meetings were leading to one inevitable conclusion~dismissal.
The employer has made it quite clear that any dismissal will be carried out just prior to 12 months service being acquired. And will have the comfort of knowing that the employee is not protected under the Unfair Dismissals Act.
There is only one (major) problem with this~when I looked at the contract of employment it provides for 6 weeks notice of termination of employment.
And most importantly it provides for 1 months notice during the probationary period.
The key point here is that a dismissal does not take place until the end of the notice period, not when notice is given.
So my contact will almost certainly have 12 months service.
And the protection of the Unfair Dismissals Acts.
The employer wouldn’t have had much difficulty here, if his contract of employment provided for, say, one week’s notice during probation. But it doesn’t.
There are 2 important tests which need to be reviewed in all claims of constructive dismissal. These tests emanate from the Employment Appeal Tribunal.
We now have the WRC adjudicating on these claims, but the same principles apply, and they emanate from a seminal decision from the Supreme Court in 2009, Berber (respondent) v Dunnes Stores Limited (appellant),  20 E.L.R. 61.
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.
In Berber v Dunnes Stores the Supreme Court held, in allowing the Dunnes Stores’ appeal and setting aside the judgment of the High Court:
In determining whether there has been a breach of the implied term of mutual trust and confidence in employment contracts:
The test is objective.
The test requires that the conduct of both the employer and the employee be considered
The conduct of the parties as a whole and the cumulative effect must be looked at.
The conduct of the employer complained of must be unreasonable and without proper cause and its effect on the employee must be judged objectively, reasonably and sensibly in order to determine if it is such that the employee cannot be expected to put up with it.
Breach of Contract-Implied Term of Trust and Confidence
The Supreme Court, in Berber v Dunnes Stores, held:
There is implied in a contract of employment a mutual obligation that the employer and the employee will not without reasonable and proper cause conduct themselves in a manner likely to destroy or seriously damage the relationship of confidence and trust between them. The term is implied by law and is incident to all contracts of employment unless expressly excluded.
The term imposes reciprocal duties on the employer and the employee. In assessing whether there has been a breach by the employer what is significant is the impact of the employer’s behaviour on the employee rather than what the employer intended. Having regard to the mutuality of the obligation the impact of an employee’s behaviour is also relevant.
The test is an objective one: if conduct objectively considered is likely to cause serious damage to the relationship between employer and employee a breach of the implied obligation may arise (Malik v Bank of Credit and Commerce International S.A.  I.C.R.606).
In Lewis v Motorworld Garages Limited  I.C.R. 157 Glidewell J. summarised the law as follows:
In order to prove that he has suffered constructive dismissal an employee who leaves his employment must prove that he did so as a result of a breach of contract by his employer, which shows that the employer no longer intends to be bound by an essential term of the contract: see Western Excavating (E.C.C.) Limited v Sharp  I.C.R. 221.
However, there are normally implied in a contract of employment mutual rights and obligations of trust and confidence. A breach of this implied term may justify the employee in leaving and claiming that he has been constructively dismissed: see Post Office v Roberts  I.R.L.R. 347 and Woods v W.M. Car Services (Peterborough) Limited  I.C.R. 666 at 670, per Browne-Wilkinson J.
The breach of this implied obligation of trust and confidence may consist of a series of actions on the part of the employer which cumulatively amount to a breach of the term, though each individual incident may not do so. In particular in such a case the last action of the employer which leads to the employee leaving need not itself be a breach of contract; the question is, does the cumulative series of acts taken together amount to a breach of the implied term. See Woods v W.M. Car Services (Peterborough) Limited  I.C.R. 666. This is the ‘last straw’ situation.”
As to the “last straw” it was held in Omilaju v Waltham Forest London Borough Council  I.C.R. 481 that the quality that a “last straw” had to possess was that it was an act in a series whose cumulative effect amounted to a breach of the implied term. The essential quality of that act was that, when taken in conjunction with the earlier acts on which an employee relied, it amounted to a breach of the implied term of trust and confidence.
As to whether conduct amounts to a repudiation of the contract the ordinary law of contract applies: the cumulative effect of the acts complained of must be such as to indicate that a party, in this case the employer, had repudiated its contract (Brown v Merchant Ferries Limited  I.R.L.R. 682).
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 should do in all but the most exceptional circumstances is to firstly exhaust all internal avenues for dealing with his/her grievances, even if he/she believes it will be a futile exercise.
Tips for Employers to Prevent Constructive Dismissal Losses
If the employer is unsure of the nature of complaints or grievances from the employee it is a good idea to seek the details. This shows a willingness on the part of the employer to address the employee’s issues.
It is also advisable for the employer to ask a senior member of management who has no prior involvement with the employee or her grievances to investigate. Again, this indicates a reasonableness on the part of the employer in dealing with the complaints.
The employer should also be agreeable to engage in mediation to resolve the differences.
These three steps will assist the employer as the ultimate decision maker-WRC or Labour Court- in relation to a constructive dismissal claim will have a significant amount of regard for the reasonableness of the conduct of the parties.
Update June 2018
A good summary of the law on constructive dismissal is contained in a June, 2018 decision of the WRC, ADJ 00003961
“Without prejudice” negotiations in an employment dispute can be an incredibly useful tool.
For many employers, they represent the best route to an acceptable outcome to an employment dispute.
Because, quite frankly, the employer often “hasn’t a leg to stand on”. You wouldn’t believe what some of them get up to!
However, if they are not handled correctly they can backfire badly on the employer.
Well Drafted Settlement Agreement
And without a well drafted agreement, the employer does run the risk of an employee collecting on foot of a settlement and bringing legal proceedings afterwards.
Without prejudice discussions or negotiations are generally, but not always, excluded from being introduced into evidence in subsequent legal proceedings.
The purpose of such discussions are to resolve the dispute to the satisfaction of both parties without the costs associated with going to Court or some other dispute resolution body.
“Without prejudice” negotiations should be carried on between lawyers for both sides, not the parties themselves. In the employment context it is a mistake for the employer to carry on “off the record” or “without prejudice” discussions with an employee.
The reason for this is simple: the employee may claim not to have fully understood the implications of such discussions.
And if this is the case the employee may well claim that even though she gave her consent for such discussions to be private, “off the record”, and “without prejudice” that her consent was not informed consent.
Independent Legal Advice
The employer should ensure that the employee has obtained independent legal advice and confirms this in writing.
Any decision maker, be it a Court or tribunal, is likely to find for the employee on this point given the perceived and/or real imbalance of power between employer and employee.
There is another reason why without prejudice negotiations or discussions can backfire on the employer.
For discussions to be truly without prejudice there must be a dispute between the parties; and the discussions must be an attempt to settle that dispute. Not a dispute in the normal sense of the word but a dispute in which legal proceedings have commenced or are being contemplated.
It’s not always certain whether a “dispute” would therefore exist to allow “without prejudice” discussions.
As state above “without prejudice” discussions can sometimes be admitted in evidence in subsequent legal proceedings. The High Court has held that without prejudice discussions can be admitted in evidence where the interests of justice require it.
For employers therefore it is prudent not to make a without prejudice offer directly to the employee to agree their exit from the employment. Such an offer could be put forward by the employee in an unfair dismissal claim as evidence of dismissal.
The better course of action is for the employer to instruct a solicitor to negotiate with the employee’s solicitor.
It is better again if the employee or his/her solicitor initiates the discussions.
Negotiations between solicitors will be more structured and reduce the chance of the employee claiming that she did not know what without prejudice discussions meant. And the written settlement agreement should be water tight.
So if you are an employer and are thinking about getting rid of a troublesome employee, you should give some serious consideration to a “negotiated exit” through without prejudice negotiations.
Constructive dismissal cases are difficult to win because the burden of proof is on the employee to prove that she had no other option but to resign due to the unreasonableness of the employer.
The January, 2013 decision of the Employment Appeals Tribunal in the case of Daniel O’Gorman v Glen Tyre Company Limited illustrates this.
In this case Mr. O’Gorman was a mechanic who had gone on sick leave in May, 2010 and did not return to work. He resigned from his position in September, 2010.
Mr. O’Gorman brought a case for constructive dismissal.
Decision of EAT
The Employment Appeals Tribunal in its decision referred to the burden of proof on the employee as being a ‘very high one’. It held that the employee must prove that his resignation was not voluntary.
The EAT must look at the contract and decide whether there has been a significant breach of the employment contract going to the root of the contract.
If there has not been a breach by the employer the EAT will then look at the conduct of the employer and employee and decide on the ‘reasonableness’ of the decision of the employee to resign.
The claim by the claimant for constructive dismissal fell under three headings:
The excessive workload placed on him
Exclusion in the workplace, for example at lunch breaks
Being bullied and harassed in the workplace.
Mr. O’Gorman suffered from Asperger Syndrome.
Mr. O’Gorman left work in May, 2010 and did not return due to stress, according to his parents and GP who stated it was work related. However, the employer stated that he did not know this until he received the 2nd medical certificate.
The EAT held that it is crucial in a constructive dismissal case that the employee fully informs the employer of the complaints being made against him and gives the employer the opportunity to resolve the problems.
Interestingly, the EAT in this held that the parents of the claimant had a duty to let the employer know of the issues.
The EAT found no significant breach of contract going to the root of the contract which would have prevented the employee from carrying out his duties as per the contract.
The EAT then examined the conduct of both parties and found that the decision of the employee to resign was not a reasonable one.