Out To Get You? – What Makes A Constructive Dismissal

It is well established that within every employment relationship there is an implied contractual term of “trust and confidence”.  It is this term that sets an employment contract apart from a commercial one.  It accounts for the fact that because the arrangements involve people, not lifeless commodities, an extra degree of care is needed.
 
Any breach by the employer of the implied term of trust and confidence will be a fundamental breach of contract.  Its failure to respect its employee will destroy the relationship.   That employee will be entitled to resign and claim unfair “constructive dismissal”.

There is of course no hard and fast rule as to what conduct destroys trust and confidence.  Believe it or not the judgements from the Courts are divided!  The rule has traditionally been:

 The employer shall not without reasonable and proper cause conduct  itself in a manner calculated or likely to destroy or seriously damage  the relationship of trust and confidence.

This is a clear objective test.   If the employer’s conduct is unacceptable and unjustified the employee may resign.  However, some years ago one of the Law Lords stated the test was that an employer should not “conduct itself in a manner calculated and likely to destroy the relationship of confidence and trust”.  The test had now changed to a subjective one.  Not only must the conduct be unacceptable, it must be “calculated”.  In other words it must be targeted at the employee.

Take the example of a promotion process that is run in an incompetent and abrupt manner, leaving the best candidate ignored and feeling insulted while less able colleagues are promoted over them.  Under the first test, there could well be a claim for constructive dismissal.   The employer’s incompetence has been of such magnitude as to destroy trust and confidence.  Under the second interpretation there is no claim.  Despite the incompetence and financial impact on the employee, there was no “calculated” campaign against that person.

At present we have one wing of the Employment Appeal Tribunal favouring the first approach and another the second!  When acting for employers, it is tempting to rely on the more subjective second approach. Unless the employer has deliberately decided to target the employee, why should that person be able to resign?  A fair argument, but the correct approach has to be the first objective one. There need not be any intention or “motive” for an employer’s conduct to ruin the employment relationship.

We need not fear this test, the employee will still have to show that the employer’s conduct amounted to a fundamental breach.  This will not allow work-shy or extra sensitive employees easy access to Tribunal.  Hard management and unpopular decisions are part of business life.  So long as an employer ensures that at no times is its conduct personal or offensive, as opposed to merely forceful, it need not fear. 

If you have any employment related issues, contact our employment Partner Tom Walker for further information on 020 8296 6878 or Tom.Walker@colemans-ctts.co.uk