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What constitutes 'the final straw' for constructive dismissal?

28 June 2018 by Paul McFarlane

What constitutes 'the final straw' for constructive dismissal?

Assessing whether an old breach can be revived for constructive dismissal, while complexity abounds in parental leave cases and new clarification is issued on dress codes

Constructive dismissal is notoriously tricky. Employees often allege their employer has breached the implied term of mutual ‘trust and confidence’ in the employment contract, either through a single serious misdeed or a series of smaller incidents.

In the latter case, the employee must identify the ‘last straw’ (or the final incident that prompted them to resign) and also show they resigned relatively quickly in response to that event. Otherwise, they may be found to have accepted the breach and given up their right to claim.

In Kaur v Leeds Teaching Hospitals NHS Trust, an employee who resigned following her unsuccessful internal appeal against a disciplinary penalty was held to have no reasonable prospects of success in her constructive dismissal claim. The ‘last straw’ she had identified was ‘innocuous’ and did not breach her contract.

Ms Kaur was employed by the trust as a nurse and subject to a formal capability procedure, which she alleged was unjustified. She later complained of bullying by colleagues, and following an altercation with another staff member in April 2013, she was issued with a final written warning. Her appeal was rejected 15 months after the altercation and she resigned the next day.

What was the ‘last straw’ that triggered her resignation? The employment tribunal held it could not be the disciplinary process or appeal, as the Trust had acted fairly throughout. Neither was it the April 2013 altercation with a colleague, as she had waited too long to resign and effectively accepted this alleged breach of contract.

The EAT and Court of Appeal ultimately agreed, but this was not before wrestling with a complex point of constructive dismissal law. Can an ‘old’ breach of contract, which has apparently been accepted by the employee, be ‘revived’ if another breach occurs much later? The Court of Appeal decided it can. However, in this case, the ‘old’ incident was never brought back to life, as no further breach of contract took place.

Crucially, a properly followed disciplinary process cannot be a fundamental breach of contract for the purposes of a constructive dismissal claim. Additionally, the Court of Appeal confirmed that it is perfectly acceptable to consider an employee grievance alongside a closely related disciplinary matter, rejecting the employee’s argument that failure to deal with the grievance first was unfair.

Workplace dress codes

The Government Equalities Offices has published new guidance on dress codes
and sex discrimination.

It reminds employers that dress policies for men and women do not have to be identical, but standards imposed should be equivalent. It also warns that requiring any gender-specific items, such as high heels, make-up or manicured nails, are likely to be unlawful.

“Dress policies do not have to be identical, but standards imposed should be equivalent”

It also warns against requiring both men and women to dress provocatively which, while might not be direct sex discrimination, raises the risk of harassment.

Parental leave

When shared parental leave (SPL) was introduced, many employers who paid enhanced contractual maternity pay chose to pay statutory rates only for shared parental leave. The Employment Appeal Tribunal (EAT) recently ruled in Capita Customer Management Ltd v Ali this is not discriminatory and organisations are able to pay less to employees on SPL than to those on maternity leave.

The EAT’s rationale was that maternity leave and SPL serve different purposes: the former to protect the health and wellbeing of the mother and the latter to care for the child. The two are intrinsically different and cannot be compared.

However, the EAT has muddied waters again with a subsequent decision in Hextall
v Chief Constable of Leicestershire Police. In this case, a police officer complained about the practice of paying statutory rates to male employees on SPL in circumstances where women on maternity leave were entitled to full pay for 18 weeks. He alleged this amounted to both direct
and indirect sex discrimination.The employment tribunal rejected his claim, holding he could not compare himself to a woman on maternity leave. The correct comparison was a woman on SPL. 

However, the EAT held that, in indirect discrimination claims, this approach may sometimes be too simplistic. It was also important to consider the impact of the pay policy on any police officer with a present or future interest in taking leave to care for a newborn child. The employment tribunal should have thought more carefully and in more detail about whether men seeking leave were at a ‘particular disadvantage’ compared to women in similar circumstances.

The EAT felt it was a mistake to state so broadly that paying statutory rates only to all employees on SPL did not discriminate against employees of a particular gender.

It sent the case back to a new employment tribunal to consider all the facts and circumstances of the case. The uptake of SPL has been much lower than the government had hoped and there is currently a campaign underway aimed at increasing awareness. Employment lawyers will be keeping a close watch on the direction of travel of case law in this area.

Minimum wage abuse

Following a consultation launched last year, the director of labour market enforcement, Sir David Metcalf, has produced a comprehensive strategy document. The document makes 37 distinct recommendations, focusing primarily on tackling the issue of National Minimum Wage (NMW) abuse and underpayment.

Reassuringly for the business community, the document suggests that government agencies should review current NMW guidance and develop a more supportive approach to companies which ask for compliance advice. However, this is balanced by proposals for more robust punitive measures, including more proactive enforcement and a greater number of prosecutions for non-compliance. 

Interestingly, the strategy also advocates ‘joint responsibility’ for compliance in supply chains, suggesting the brand name at the top of the chain should take initial responsibility to correct compliance issues lower down the ladder.

Holiday pay is also in scope, with the director picking up one of the key themes of last year’s Taylor Review and proposing HMRC should have the power and remit to enforce holiday pay for all workers, including recovery of arrears.

Paul McFarlane is partner in employment, pensions and immigration at Weightmans LLP

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