Constructive Dismissal: The Last Straw

When an employer engages in conduct that fundamentally undermines the contract of employment to the employee (called a repudiatory breach) then the employee has the option of resigning and claiming constructive dismissal. Effectively the employee says ‘enough is enough’ you have given me no option but to leave. When the employee has been continuously employed for at least two years or the reason is for ‘automatically unfair’ reason (e.g., whistleblowing) then the employee can claim that the dismissal was an unfair dismissal, which brings with it the prospect of much more substantial compensation than would apply in a normal wrongful dismissal claim (in which it is only unpaid notice pay can be claimed – which can be as little as one week’s pay).

In order to do so the employee needs to resign in response to the enmployer’s breach of contract and should not have taken a decision to accept the breach and carry on employment (called affirming the contract). In some cases simply continuing to work for a period of time after the event is enough to ‘affirm the contract’ (this will be unlikely to apply if the employee has registered her objection to the conduct, by raising a grievance for example). If a contract has been affirmed then the orthodox position is there can be no wrongful dismissal (because, effectively, as the breach has been affirmed it no longer exists).

That, at least, is the basic position, which is why an employee when faced with a repudiatory breach needs to make a fairly quick decision whether to resign or not. If they delay, then they may find they have affirmed the contract. However, in a constructive unfair dismissal claim the position is more nuanced.

Sometimes an employee does not resign immediately to a breach but also does not agree to the breach and then the employer does something else that may not, in itself be a repudiatory breach but when taken together with the earlier instances are the tipping point for an employee which forces them to resign. This is called the ‘last straw’ doctrine.

To understand this idea it is important to remember that a repudiatory breach if often an isolated instance but it can also be a series of incidents that taken individually are less than repudiatory breaches but taken together are. When an employee is having problems with their employer it is quite common for there to be a series of incidents and also, in the earlier stages, there may be some earlier events that were affirmed by the employee (an example could be an employee withdrawing a grievance).

In Kaur v Leeds University NHS Trust (2018) confirmed that where an employee resigns because of the last straw that involves a recent (perhaps) less serious incident taken together with the earlier decision then that may amount to constructive dismissal (even though in the actual case it was ruled this could not apply).

The Kaur decision is helpful for employees because prior to this ruling employer’s were often able to argue that where an employee has affirmed a previous repudiatory breach that breach could no longer be relied upon by an employee as one of a series of actions that cumulatively is a repudiatory breach. The Kaur decision definitively rules this out meaning that it is not necessarily the case that a repudiatory breach of contract ‘vanishes’ once affirmed. Instead, that breach is revived if it forms a material part, together with newer more than trivial breaches by the employer enabling an employee to resign and claim constructive dismissal.

It is worth noting that the Kaur decision provides a helpful five step test that should be applied in last straw constructive dismissal cases:

  • What was the most recent act or omission on the part of the employer which the employee says triggered the resignation?
  • Has the employee affirmed the contract since that act?
  • If not, was that act or omission, by itself, a repudiatory breach of contract?
  • If not, was it nevertheless a part of a course of conduct comprising several acts and omissions which, viewed cumulatively, amounted to a repudiatory breach of trust and confidence? If it was, there is no need for any separate consideration of a possible previous affirmation. i.e. even if a past breach has previously been affirmed by an employee, it can still form a part of a series of events culminating in a “final straw” constructive dismissal.
  • Did the employee resign in response, or partly in response, to that breach?

I have not covered these here but they are well worth reviewing for anyone contemplating pursuing a last straw constructive dismissal case as I wanted to highlight just the fourth point

Taking a step back from a solely legal consideration it strikes me that on policy and justice grounds this is the right course to take. The common law has unhelpfully established constructive dismissal as the main weapon an employee has to respond to wrongful conduct by an employer towards an employee. The difficulty is the utilisation of this weapon can often harm the employee since an employee is forced to choose between taking a stand and losing their livelihood, and sometimes their home and family’s wellbeing or what the EAT has elsewhere termed “soldiering on”. When exercised, the weapon is, therefore, one that may hurt the employee more than the intended target since ‘affirmation’ is rarely a rational choice (as free-market purists would assert) but more likely a decision to put up with hostile treatment from their employer in order to avoid a worse outcome (unemployment, poverty, homelessness, etc) so less an affirmation of the employer’s conduct and more the choice of a lesser evil. What the last straw option, especially when one can rely on previously ‘affirmed’ decision allows is the opportunity for an employee to revisit such a decision if an employer’s hostile treatment continues, this eliminating in some small way the difficult decision to resign immediately form a serious repudiatory breach or lose any right to hold their employer to account.

Of course, wrongful dismissal is a common law remedy (supplemented by statute) the best weapon is collective actions by workers acting together through their trade unions.

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