Breaches of contract which have been affirmed by the employee can be revived by a later breach

Employers beware - the recent Court of Appeal decision in Kaur v Leeds Teaching Hospitals NHS Trust resolves prior uncertainty about whether employees can still claim constructive dismissal, having affirmed an earlier repudiatory breach of contract. The Court of Appeal has clarified that employees may still resign and claim constructive dismissal if a further incident occurs after the employee’s affirmation which forms part of a course of conduct that cumulatively amounts to a repudiatory breach of contract.

Facts

The Claimant's relationship with her employer (the Trust) broke down over a period of four years. There were three aspects to her complaint.

Firstly, she was subject to a formal performance process in 2010 which concluded in January 2012 but which she said was unjustified and had damaged her confidence.

Secondly, she complained that she was being bullied by another employee, Ms Luckaine, and that the Trust had taken no action when she made a formal complaint in 2012.

Thirdly, on 22 April 2013 there was an altercation between the Claimant and Ms Luckaine. Each claimed that they had been assaulted by the other during the incident. Ms Kaur raised a Dignity at Work Complaint against Ms Luckaine and the following events then took place:

  • The Trust investigated the incident under its disciplinary process. The investigation concluded that disciplinary proceedings should be brought against the Claimant and Ms Luckaine.
  • The Claimant attended a disciplinary hearing on 2 October 2013 which she was told also covered her Dignity at Work Complaint. The disciplinary panel found that both employees were shouting at one another close to an area where patients were being treated. It refrained from making a finding as to whether the Claimant had made physical contact with Ms Luckaine as there was conflicting evidence on that point.
  • The Claimant received a final written warning (in common with Ms Luckaine) and went on maternity leave shortly thereafter.
  • She appealed against the sanction and, after a lengthy delay because she had recently given birth, the appeal hearing took place on 14 July 2013. The appeal was dismissed on 16 July 2014.
  • She resigned the following day. Her resignation letter complained about the incident on 22 April 2013 (described as the final straw), the disciplinary process from the investigation to the appeal and the handling of her Dignity at Work Complaint

The Trust invited the Tribunal to strike out the claim on the basis that it had no reasonable prospect of success or, in the alternative, to make a deposit order because it had “little” reasonable prospect of success. At a Preliminary Hearing, Employment Judge Lancaster noted that the claim turned on whether or not the appeal outcome was capable of constituting a “last straw” which contributed to a fundamental breach of contract.

He found that there was no reasonable prospect of her succeeding with that argument because the entirety of the disciplinary process and its outcome (including the appeal) were reasonable. It was also appropriate for the disciplinary process to deal with the Dignity at Work Complaint. As the entire process had been reasonable, the Claimant could not rely on the appeal outcome to reactivate her concerns about the incident on 22 April 2013 (having waived or affirmed any prior breach).

Court of Appeal clarifies the approach to constructive dismissal

The Court of Appeal was asked to consider whether the Employment Judge had applied the law on constructive dismissal, including the last straw principle, correctly as there were conflicting decisions on that subject.

It reviewed the case law and expressed concern that the law on constructive dismissal “might seem complicated and full of traps for the unwary.” However, in a normal constructive dismissal case, it would be sufficient for the Tribunal to ask the following questions:

  • What was the most recent act or omission on the part of the employer which the employee says caused or triggered the resignation?
  • Has the employee affirmed the contract since that act?
  • If not, was the 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 the implied term of trust and confidence?
  • Did the employee resign in response to the breach?

It found that the Employment Judge had applied the correct approach. The Claimant had presented her case as a cumulative breach case, with the Trust’s handling of the incident of 22 April 2013 being the last straw. The Judge had asked whether there was anything wrong with the disciplinary handling (at both the disciplinary and appeal stage) that could form part of a cumulative breach of the implied term of trust and confidence.

Having examined each element of that process, the Judge had concluded that the Trust as “following through, in perfectly proper fashion, on the face of the papers, of a disciplinary process.” This process could not constitute a repudiatory breach of contract or contribute to a series of acts that cumulatively amounted to such a breach.

This was the correct approach and while Tribunals ought to be slow to strike out claims involving disputed issues of act this was not an absolute rule. The key evidence relevant to whether or not the disciplinary process had been handled so unfairly as to contribute to a repudiatory breach of employment contract was the documentary record which the Judge had examined. His decision to strike out the claim could therefore be justified.

The Claimant had criticised the Employment Judge for finding that there was nothing wrong with the Trust proceeding with the disciplinary process before resolving her Dignity at Work complaint. The Court of Appeal rejected this criticism and found that “where her complaint about Ms Luckaine and the criticisms of her own arose out of the self-same incident it would have made no sense to deal with the two separately.”

What are the lessons for employers?

Although the Claimant did not succeed with her claim, the case demonstrates that an employee who “is the victim of a continuing cumulative breach is entitled to rely on the totality of the employer’s acts notwithstanding a prior affirmation; provided that the later act forms part of the series... it does not ‘land in an empty scale.’”

The right to terminate once an employee has affirmed a prior breach depends on how the employer behaves subsequently. If an act or omission occurs at a later date which can be treated as part of a series for the purposes of a cumulative breach claim, the employee is entitled to treat that as the “last straw” and bring the earlier incidents into play.

Where an employee has raised concerns, which have been resolved (at least as far as the employer is concerned), the employer needs to be careful that their subsequent conduct does not give the employee an opportunity to rely on them at a later date. As the Court of Appeal stated, “cases of cumulative breach of the [implied term of trust and confidence]....fall within the well-recognised qualification to that principle that the victim of a repudiatory breach who has affirmed the contract can nevertheless terminate if the breach continues afterwards.”