Constructive Dismissal and Delay in Resignation

The Employment Appeals Tribunal (EAT) recently considered a constructive dismissal case brought by an employee who resigned some 18 months after an identified fundamental breach of her contract of employment.

It is a well established principal that, in addition to there being a fundamental breach of contract on the part of the employer which results in the employee bringing the relationship to an end, the employer must not delay in accepting the breach, otherwise they may be held to have “affirmed” contract.  The longer the passage of time, the greater the argument that the employee has waived any breach of contract and the employer will be able to point to evidence such as the employee accepting pay and benefits under the contracts and calling on the employer to perform its obligations under the contract.

In the case before the EAT, an employee suffered from symptoms of stress, anxiety and depression and, shortly into her illness, presented a formal grievance alleging unfair treatment when compared to others in her team.  The employee made specific reference to considering her position but stated she was not well enough to discuss the grievance at that time.

The employee remained absent for the next 18 months before finally resigning.  She accepted contractual sick pay for the first 39 weeks of her leave and then applied to be considered for benefits under the company’s permanent health insurance policy.  The employee participated in welfare discussions and requested access to her emails on a number of occasions.

Pursuant to the employee’s resignation, she presented a constructive dismissal complaint.  The basis of this complaint was that her treatment prior to her absence amounted to a fundamental breach of the implied duty to maintain trust and confidence entitling her to resigning in response to that breach.  The company, however, argued that the contract had been affirmed by the employee.  She demonstrated a continuing intention to be bound by the contract rather than treating it as at an end.  She accepted sick pay, made repeated requests to access work emails, applied for permanent health insurance under the company’s policies and attended welfare meetings.

In response, the employee argued that she had not been well enough to consider her employment until the point of her resignation and this was supported by a jointly appointed psychologist.  The Tribunal rejected this argument however, stating that they had access to more detailed information which presented a different picture.  The employee’s claim failed and the matter was appealed to the EAT.  The EAT agreed with the conclusion that the employee was not too ill to resign at the time of the alleged fundamental breach of contract.  It then turned to the principals of affirmation of contract.  The EAT again agreed with the Tribunal in that there were a number of indicators which suggested the employee intended to continue to be bound by the employment contract which resulted in the failure of the constructive dismissal claim.

For employees, the case highlights the importance in acting quickly in response to a perceived breach of contract.  Whilst delay on its own will not be the sole factor in determining whether the contract has been affirmed, accepting benefits and continuing to act in accordance with the contract will generally be fatal.  For employers, the case presents a useful review of the authorities on affirmation and still does not rule out the possibilities that a constructive dismissal claim can be brought many months after an event.  The litigation in this matter could well have been avoided if the employer took more proactive steps to manage the employers absence rather than wait 18 months for the employee to conclude her employment.