Logan v Celyn House Ltd (Employment Appeal Tribunal, 19.07.12)

The recent Employment Appeal Tribunal (EAT) case of Logan v Celyn House Ltd concerned the employee’s principal reason for resigning and whether or not, for the purposes of the subsequent constructive dismissal claim, that amounted to a fundamental breach of the contract of employment.

Repudiatory breaches are breaches which are sufficiently serious to entitle an innocent party to bring the contract to an end. This happens for example where the employer’s conduct is such that the employee is entitled to treat himself as having been dismissed, and the contract of employment is seen as being discharged. For this, the breach by the employer must go to the very heart of the contract; and a repudiatory breach will, for example, consist of a unilateral reduction in pay, a failure by the employer to pay the employee, or even a change in their job description …

In the first instance, the Employment Tribunal found that Mrs Logan had not been constructively dismissed, finding that although her employer’s failure to pay contractual sick pay amounted to a repudiatory breach, it was one of many reasons – not the principal reason – for her resignation.

However, the EAT held that this was the wrong approach to take when evaluating Mrs Logan’s claim for constructive dismissal. The facts of the case are summarised below.

1. Employee resigns in response to grievance result

Mrs Logan, a veterinary nurse, took time off sick and was only paid statutory sick pay and not her normal basic pay. She raised a grievance with her employer in relation to its failure to pay contractual sick pay, coupled with complaints of alleged bullying, harassment and discrimination by another employee. Mrs Logan resigned in response to the outcome of her grievance, which she found unsatisfactory and claimed constructive unfair dismissal in the Employment Tribunal.

2. Tribunal finds that alleged bullying, not failure to pay sick pay resulted in resignation

The Tribunal held that the employer was indeed obliged to pay for Mrs Logan’s contractual sick pay and its failure to do so was a repudiatory breach of her employment contract. However, even in light of this finding, the Tribunal also held that the principal reason for Mrs Logan’s resignation was the alleged bullying and not the employer’s failure to pay her contractual sick pay (the repudiatory breach of contract). In the circumstances, Mrs Logan’s claim that she had been constructively dismissed was rejected.

3. EAT finds that failure to pay sick pay resulted in unfair constructive dismissal

Mrs Logan appealed and the EAT held that the Tribunal had been wrong in looking only for the principal reason for the resignation. Having found that the sick pay matter amounted to a repudiatory breach, the Tribunal should then have decided whether it was a reason for Mrs Logan’s resignation, not whether it was the principal reason. There were, the EAT held, sufficiently clear findings of fact in the remainder of the Tribunal’s judgment to find that Mrs Logan had resigned, at least in part, in response to the failure to pay sick pay, which was a repudiatory breach of her contract and so substituted a finding of unfair constructive dismissal.

The EAT explained simply that an employee ought not to be in a worse position as a result of relying on additional, albeit misconceived, grounds. In particular, it highlighted that if any matter constituted a repudiatory breach, an employee’s resignation would be enough to establish constructive dismissal.

Interestingly, from a defence point of view, the Tribunal held that it would still be open for the employer at the remedy stage to maintain that Mrs Logan would have resigned regardless of the sick pay issue and consequently suffered no loss.

Important contrast between repudiatory breaches and general grievances

Overall the case of Logan v Celyn House Ltd further cements the importance of repudiatory breaches in constructive dismissal claims and provides detailed guidance into the contrast between general grievances and repudiatory breaches.

From a Claimant’s point of view, another conclusion might be that one repudiatory breach is stronger than a hundred other employee grievances.

Read other items in the September 2012 Employment Brief