Can the failure to uphold a grievance lead to a claim for Constructive Unfair Dismissal?

In this recent case decided by the Employment Appeal Tribunal the issue of grievances and constructive dismissal was dealt with and the case provides some useful points to take away for when you are dealing with grievance issues.

The Law

Constructive unfair dismissal is a term used to describe a situation where an employee resigns as result of their employer’s conduct.

It is where the employers conduct is what is known as being in ‘repudiatory breach’ of an important term of the employee’s contract. It covers a situation where the employee alleges that the employers conduct is such that they been forced to leave rather than it being the employer who is dismissing the employee.

The legal definition is found within section 95 (1)(c) Employment Rights Act 1996 which states

‘an employee is dismissed by his employer if the employee terminates the contract under which is employed (with or without notice) in circumstances in which is entitled to terminate by reason of the employers conduct.’

The law regarding constructive unfair dismissal has developed over time through various case decisions which have established that in order for a claim for constructive dismissal to succeed the employee must show:

1) that there has been an actual or an anticipatory breach by the employer which is sufficiently serious to justify the employee resigning. It therefore has to be a serious breach not just something trivial;

2) the employee has resigned in response to the breach; and

3) they must resign within a fairly limited period of time after the beach that they are alleging. The employee cannot wait and then leave it a period of time before complaining or they will be considered to have accepted the breach.

The Facts

The employee in this case Miss Nicholson was employed by a care home, Hazel House Nursing Home Limited, as a care home assistant. She was employed between 11 November 2011 and late December 2013. Miss Nicholson was given a contract for 18 hours a week, however, as is the case in many situations, she worked more than 18 hours a week.

In September 2012 Ms Nicholson became pregnant and she informed her employer. She suffered from morning sickness and as a result had to miss a few days of work. She therefore asked to move her shift from the morning to the afternoon in order to allow her to get over any morning sickness and start work in the afternoon.

The employer agreed and from 4 January 2013 she worked just afternoon shifts, however, the employer also reduced the number of shifts that she worked from 5 per week to 3 per week. Ms Nicholson was not consulted about the reduction.

A consequence of the reduction in hours was that she did not meet the minimum level of earnings to qualify for statutory maternity pay.

Statutory maternity pay is paid for the first six weeks at, what is known as the ‘earnings rate’ , of 90% of the employees normal weekly earnings. The remaining 33 weeks of statutory maternity pay are at the prescribed rate which is an amount set by the government each year (currently £139.58 per week).

As Ms Nicholson did not qualify for statutory maternity pay she had to make a claim to the JobCentre for, what is essentially a social security benefit, statutory maternity allowance. Statutory maternity allowance is paid at the lower standard prescribed rate for the full 39 weeks. This meant she missed out financially because of the change in her hours.

During Ms Nicholson’s pregnancy there were a number of other issues that took place. One of which involved the employer’s training requirements which meant employees are required to attend a number of training sessions in order to keep working at the home. Ms Nicholson missed a couple of these sessions because of her pregnancy and then a final training session clashed with her 20 week scan. She was informed by the employer that she would have to attend the training on that day as there would be no other opportunity and if she failed to attend she would be suspended from work.

In order to avoid being suspended Miss Nicholson took two weeks holiday and started her maternity leave early on 31 March 2013.

On 22 October 2013 Ms Nicholson raised a grievance about the issues that had taken place during her pregnancy and in the lead up to her maternity leave. Her complaints included the reduction in her shifts from 5 to 3 when she asked to change your hours as a result of her pregnancy.

The employer initially assigned somebody to investigate the grievance however Ms Nicholson was not happy about this person being involved as they had been involved in some of the things she was complaining about in her grievance. However despite her objections a meeting took place with the initial grievance investigator and then following that meeting the matter was referred to another manager Ms Margaret Hill who made the final decision on the grievance without actually speaking to Ms Nicholson herself.

In the grievance outcome the employer acknowledged that they had given her incorrect information about her maternity pay that initially told her that she would qualify for statutory maternity pay then subsequently told her that she would not qualify. They also acknowledged that there had been a delay in sending her the correct information about maternity allowance and the forms required to claim, but aside from these two issues they dismissed the rest of her grievance concerns.

Ms Nicholson appealed against the grievance decision and sent an email on 9 December 2013, the employer denied ever receiving an email with her appeal, and she subsequently resigned from her employment on 17 December 2013 giving two weeks’ notice.

On the 30 January 2014 Ms Nicholson wrote to the employer setting out the full reasons for her appeal against the grievance decision. There then followed some correspondence between the employer and Ms Nicholson to which there was no reply from Ms Nicholson and as a result her grievance appeal was not actually dealt with by the employer.

Ms Nicholson then made a claim in the employment tribunal for constructive unfair dismissal and discrimination on the grounds of maternity and pregnancy and also that she was owed various money by the employer.

The Employment Tribunal decided that Mr Nicholson’s claim for discrimination on the grounds of pregnancy was in fact out of time because too much time passed between the incident she was complaining of and her bringing a claim. With discrimination claims an employee is required to bring the claim within three months of the act that they are complaining of or if it is a series of acts the last in the series of acts. The Employment Tribunal were not satisfied that the claim was within time.

The claim for constructive unfair dismissal was also rejected and so she appealed to the Employment Appeal Tribunal, but only in relation to the constructive unfair dismissal decision not the pregnancy discrimination decision.

The Decision

The Employment Appeal Tribunal analysed the previous case law in this case and in reaching a decision looked at the implied duty of trust and confidence, which is something that many employees will rely on in a claim for constructive unfair dismissal.

It has been established that there is an implied term of any contract of employment that 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 between employer and employee. It is has subsequently been decided that any breach of this implied term of trust and confidence will amount to repudiation of the contract and therefore will entitle the employee to resign and claim constructive unfair dismissal.

The Appeal Tribunal also acknowledged that employees often will resign as a result of a cumulative amount of conduct, so various things that make up conduct which is a breach which could be relatively insignificant and small, but when added together amount to a breach. In these circumstances the employee resigns because of the last straw.

On consideration of the issues the Appeal Tribunal upheld the appeal on the basis that the Employment Tribunal’s reasoning for deciding that she had not been constructively dismissed was floored by material errors of law.

The Appeal Tribunal analysed the decision and concluded that there were five points of error on the approach of the Employment Tribunal in this case and in summary decided that the approach was incorrect and the resulting outcome incorrect.

The Appeal Tribunal’s view was that the decision should have been focused on what took place with the grievance and the grievance outcome rather than analysing the previous breaches. They took the view that there had been two serious issues that were considered in the course of the grievance; one being the reduction in hours and the financial detriment, and the other being that there had been an error in Ms Nicholson’s pay which meant she was paid 39p an hour less than she should have been for a significant period of time.

Ultimately it was the employers handling of the grievance and the subsequent grievance outcome that was the last straw and repudiatory breach.

Points to note

This case illustrates that the handling of the grievance process and decision making is extremely important. The employer in this case should have noted the serious issues with regards to Ms Nicholson’s treatment whilst pregnant and breaches in respect of her pay and taken steps to rectify them at the grievance stage.

The outcome of a grievance procedure could result in a successful claim for constructive unfair dismissal even if the behaviours complained of in the grievance took place some time previously.

It is also interesting to note in this case that in Ms Nicholson’s resignation letter she didn’t actually refer to the grievance as a reason for her resignation rather she gave various personal reasons for resigning including spending as much time as she could with her child her son.

When I am advising employees who are potentially making a claim for constructive dismissal I always advise them to ensure that they state in detail the reasons for their resignation within their resignation letter, however the Appeal Tribunal concluded that it did not matter that Mrs Nicholson had not stated the breaches she was relying on when resigning.

Action to take

1. If the grievance investigation reveals that there has been an error in how you have dealt with an employee in the past you should think carefully before making a finding that the grievance is not upheld;

2. Grievance investigations can be difficult to deal with and it could be the difference between resolving a dispute quickly or a costly Employment Tribunal case, so ensure that the person dealing with the grievance has some basic training or guidance from someone who knows what they are doing;

3. Check out the series of posts I have created about handling grievances for guidance on what to do. You can read them here;

4. If you would prefer to appoint someone independent and experienced to investigate and deal with your grievances, then please contact me. We can provide someone experienced to help you from £240 per day.

You can contact me on 01983 897003 or 023 8098 2006 for a no-obligation confidential discussion.

Nicholson v Hazel House Nursing Home Limited – Employment Appeal Tribunal

Please remember getting advice from a Solicitor does not have to be complicated or expensive.