Constructive dismissal – what counts as a “repudiatory breach of contract”?

September 19, 2022

If an employee brings an unfair dismissal claim, it might either be because they were expressly dismissed by the employer, because of redundancy, or conduct, or whatever the reason is. Or it could be constructive dismissal, which isn’t a formally-defined concept as such, but is what we mean when the employee has resigned and is claiming it they had no option because of the employer’s actions, therefore it amounts to a dismissal.

The claim they bring is the same – it is still an unfair dismissal claim, but the basis of the dismissal is the employee’s claim that the employer did something (or several things) that amount to what is described as a “repudiatory breach of contract”.

But what do we mean by “repudiatory breach”? What kind of actions could an employer commit that may fall into that category and place the organisation at risk of a constructive dismissal claim?

“Repudiatory” means serious enough that it gives the employee sufficient justification to consider the contract has been ended by the employer, and to therefore resign in response.

The repudiatory breach can be either of an express term of the contract (such as pay, working time, benefits or similar), or an implied term (such as trust and confidence). The breach doesn’t actually have to have happened, it just needs to be clear that the employer intends to do whatever actions the employee is claiming to be in breach.

The repudiatory breach can be one single act, or it can be a serious of acts over a period of time. Clearly, if it is one single clear act, that is easier for the employee to demonstrate as being a repudiatory breach. However many constructive dismissal claims involve what’s called the ‘last straw doctrine’, which is where there have been a series of events over a period of time, then something else, potentially minor, happens, which acts as the last straw, and entitles the employee to believe the employer has broken the term of trust and confidence through cumulative conduct.

Determining whether an act, or a series of acts, is/are serious enough to constitute a repudiatory breach is difficult, and very case-specific. Some breaches are almost always considered repudiatory, such as salary cuts, regardless of whether the employer feels this is justified. Caution should always be used when looking to cut pay for any reason and it is almost never sensible to seek to impose a pay cut.

Discrimination of some kind would often be a repudiatory breach, as would changing duties (depending on the significance of the change, and the extend to which there is provision in the contract for making changes), or demotion.

Many constructive dismissal claims are brought about less clear-cut breaches, including allegations of not having addressed bullying, of excessive workload, lack of support, or handling other formal processes ineffectively. An excessively long suspension due to failing to address a disciplinary allegation promptly would be an example.

The good news for employers is that allegations that this type of cumulative behaviour on the part of the employer were serious enough to warrant an allegation of repudiatory breach of contract are very difficult to prove, meaning a claim is perhaps less likely to be brought in the first place, and/or it is less likely that the employee would win.

However, the bad news is that those types of claims are also very difficult, stressful and expensive for an employer to defend, regardless of whether the employee wins or loses, and employees who have reached the end of their tether and are feeling so aggrieved, can also be the kind of claimant who does stick to their claim through the whole process and takes it ‘all the way’ to seek redress, regardless of whether they have received advice that it is not necessarily a sensible path.

 

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