Constructive dismissal and fundamental breach 


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The Employment Appeal Tribunal (EAT) has held in Singh v Metroline West Ltd that, for the purposes of a constructive dismissal claim, an employer's actions need not indicate an intention to bring the employment relationship to an end in order to amount to a fundamental breach of the employment contract.

Mr Singh was invited to a disciplinary hearing by Metroline West Ltd and the next day was signed off sick by his doctor. During his period of absence he was examined by occupational health; there was no suggestion that his sickness was not genuine. Metroline believed that Mr Singh was trying to avoid the disciplinary hearing and only paid him statutory sick pay instead of company sick pay. Mr Singh brought a claim for constructive dismissal alleging that the failure to pay him company sick pay was a fundamental breach of contract.

The employment tribunal found that, although there was a breach of contract it was not fundamental as it held that Metroline's aim in withholding pay was to encourage Mr Singh's participation in a disciplinary process which was integral to the employment relationship. The EAT disagreed holding that what is required is that the employer demonstrates an intention to no longer comply with the terms of the contract that is so serious that it goes to the root of the contract. In this case, there was a deliberate decision to withhold pay to which Mr Singh was entitled, resulting in a significant reduction in earnings, in circumstances where there were other contractual provisions which would have allowed Metroline to deal with suspicions about his absence (he could have been suspended without pay but his power wasn't exercised). This was a fundamental breach. 

Take note: The decision in Singh operates as a reminder that an act on the part of the employer which demonstrates that it no longer intends to be bound by a contractual term can, depending on the nature of the term, constitute a fundamental breach. Even if there is no intention to end the employment relationship on the part of the employer the employee will still be able to resign and claim constructive dismissal.

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