Constructive Dismissal

Two constructive dismissal cases have been decided since our last newsletter which make for interesting reading. The first case serves as a reminder of how not to approach making changes to terms and conditions of employment and in the second case the Court of Appeal has provided some helpful guidance on how tribunals and courts should determine "last straw" cases.

The first case is Mostyn v. S and P Casuals. Mr Mostyn was a sales executive and between 2012 and 2016 his sales figures fell significantly. His employer addressed this drop in performance by inviting him to a meeting in February 2016 and asking him to accept a £20,000 cut in his basic pay. Perhaps unsurprisingly Mr Mostyn resigned with immediate effect and brought a claim for constructive unfair dismissal, based principally on breach of the implied term of mutual trust and confidence.

While his claim was initially dismissed by the Employment Tribunal (which found that Mr Mostyn's resignation was in response to the breach of the implied duty of trust and confidence but that the respondent had reasonable and proper cause for imposing the pay cut) the Employment Appeal Tribunal found that there had been a fundamental breach by the respondent of the express term relating to salary payment and that should have been determined before considering whether there had been a breach of the implied term.

Making changes to terms and conditions of employment can be a contentious and emotive issue. It goes without saying that employers do not have the ability to unilaterally make changes to key terms and conditions of employment - salary being the most obvious example. Full and proper consideration should always be given to the reasons for making changes which have a negative impact and properly documented in terms of a proposal before any discussion with employees. Careful thought should be given to the correct process to be followed. For minor and inconsequential changes, notification of the change, an explanation for the change and a sufficient period of notice should be given. In a case such as this where a substantial salary reduction is proposed an employer should consider whether it is a redundancy situation and proceed on that basis with the offer of an alternative position on a lower salary (which is unlikely to be a suitable alternative position but can be discussed as an option with the affected employee). For other such substantial proposed changes the employer should engage in a...