Factual and Procedural Background
The Plaintiff was employed by the Defendant as a Printer from 2 October 1995 until his resignation on 11 October 2019. His work was performed remotely at premises operated by his parents under a separate business, where he produced printed materials, primarily "Instruction For Use" (IFU) leaflets required by the Defendant for its products. In early 2019, the Defendant decided to move towards a paperless system, which led to a cessation of orders to the Plaintiff's parents' business from May 2019 onwards. Consequently, the Plaintiff’s parents' business ceased trading, resulting in the Plaintiff facing redundancy.
The Defendant offered the Plaintiff an alternative role as a Machine Operative at a different location with unsuitable shift patterns and no guaranteed flexible working arrangements. The Plaintiff declined this role due to personal circumstances, including childcare and his wife’s critical care work shifts. Despite repeated requests, the Defendant did not offer redundancy or a suitable alternative position consistent with the Plaintiff’s skills and contract.
The Plaintiff did not attend the offered role starting 1 October 2019, after which the Defendant withheld his pay, treating his absence as unauthorised. The Plaintiff resigned on 11 October 2019, citing breach of contract and the failure of the Defendant to provide reasonable notice or suitable alternative employment. The Plaintiff brought claims for constructive unfair dismissal, unlawful deduction from wages, and breach of contract (notice pay), with the breach of contract claim later withdrawn except for the unlawful deduction claim.
The tribunal heard evidence from both parties, including witnesses from the Plaintiff’s family business and the Defendant’s management and HR. The tribunal found the Plaintiff’s evidence more credible in key respects, particularly regarding the Defendant’s decision to go paperless and the handling of the Plaintiff’s employment situation.
The tribunal convened hearings on multiple dates between November 2021 and April 2022, considering written and oral submissions, including the applicability of the Polkey principle and the issue of frustration of contract.
Legal Issues Presented
- Was the Plaintiff constructively dismissed by the Defendant?
- Did the Defendant breach the Plaintiff’s contract of employment regarding notice pay?
- Did the Plaintiff suffer an unlawful deduction from wages?
Arguments of the Parties
Appellant's Arguments
- The Defendant breached the implied term of mutual trust and confidence by pressuring the Plaintiff to accept unsuitable alternative employment and failing to consider redundancy.
- The Plaintiff’s resignation was in response to this fundamental breach and was not delayed, constituting constructive dismissal.
- The Defendant unlawfully deducted wages by withholding pay for the Plaintiff’s absence despite having no contractual or statutory basis to do so.
- The Plaintiff sought compensation for loss of earnings, pension loss, future loss, and loss of statutory rights as set out in the Schedule of Loss.
Respondent's Arguments
- The Defendant denied the Plaintiff’s claims in their entirety, disputing the redundancy situation and asserting continued printing of IFUs.
- The Defendant contended that the alternative roles offered were suitable and that the Plaintiff was under no contractual obligation to accept redundancy.
- The Defendant argued that any procedural errors did not amount to unfair dismissal unless they led to actual unfairness.
- The Defendant raised the issue of frustration of contract, arguing that the Plaintiff’s role was not redundant due to ongoing printing activities.
- The Defendant relied on the Polkey principle to argue a potential reduction in compensation, although this was ultimately not applied by the tribunal.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Western Excavating (ECC) Ltd v Sharp [1978] IRLR 27 |
Defines the test for constructive dismissal including timely resignation after breach. |
Applied to confirm the Plaintiff resigned promptly in response to the Defendant’s repudiatory breach. |
| Malik v Bank of Credit and Commerce International SA [1997] IRLR 606 |
Employer’s implied duty of trust and confidence not to destroy or seriously damage the employment relationship without reasonable cause. |
Used to establish that the Defendant breached the implied term of trust and confidence. |
| Polkey v AE Dayton Services Ltd [1987] UKHL 8 |
Allows for reduction of compensation where dismissal would have occurred regardless of procedural unfairness. |
The tribunal considered but rejected applying Polkey reduction, finding no fair dismissal would have occurred. |
| Associated Tyre Specialists (Eastern) Ltd v Waterhouse [1976] IRLR 386 |
Implied employer obligation to support employee and not undermine trust and confidence. |
Referenced in relation to the Defendant’s failure to support the Plaintiff and undermining trust. |
| Buckland v Bournemouth University [2010] IRLR 445 CA |
Distinguishes anticipatory and actual breaches of contract in constructive dismissal claims. |
Applied to clarify that once a breach occurs, the employee decides how to respond. |
| Morrison v Amalgamated Transport and General Workers Union (1989) IRLR 361 NICA |
Allows for contributory conduct reduction in constructive dismissal cases. |
Applied to consider contributory fault; tribunal found none on the Plaintiff’s part. |
| Woods v WM Car Services Peterborough Ltd [1981] ICR 666 |
Formulation of implied term of trust and confidence. |
Used to support the existence of the implied term breached by the Defendant. |
| Lewis v Motorworld Garages Ltd [1986] ICR 157 |
Approves the implied term of trust and confidence formulation. |
Reinforced the legal basis for the tribunal’s finding of breach. |
| Johnston v Roller World UKEAT/0237/10 |
Clarifies approach to compensation and dismissal event for Polkey reductions. |
Guided tribunal’s assessment of whether a fair dismissal would have occurred absent unfairness. |
Court's Reasoning and Analysis
The tribunal analysed whether the Defendant’s conduct amounted to a repudiatory breach of contract entitling the Plaintiff to resign and claim constructive dismissal. It found that the Defendant, without reasonable or proper cause, acted in a manner likely to destroy or seriously damage the implied mutual trust and confidence by pressuring the Plaintiff to accept unsuitable alternative employment and failing to consider redundancy despite the closure of the Plaintiff’s parents’ business.
The tribunal preferred the Plaintiff’s evidence over that of the Defendant, particularly regarding the decision to go paperless and the handling of the Plaintiff’s employment situation. It concluded that the Defendant breached the contract sufficiently to justify the Plaintiff’s resignation, which was made promptly in response to the breach.
The tribunal also found that the Defendant’s withholding of pay for the Plaintiff’s absence was unlawful, as there was no contractual or statutory basis for such deductions. The tribunal rejected the Defendant’s argument of frustration of contract, finding no evidence that the Plaintiff contributed to any frustration and that alternative roles consistent with the Plaintiff’s skills were not offered.
Regarding compensation, the tribunal considered the Polkey principle but found no basis to reduce the award as it was not persuaded that a fair dismissal would have occurred absent the breach. The tribunal applied established principles on calculating awards for unfair dismissal, unlawful deduction, and loss of statutory rights, including pension loss and future loss.
Holding and Implications
The tribunal held that the Plaintiff was constructively unfairly dismissed by the Defendant and was entitled to a total monetary award of £50,633.50, inclusive of unlawful deduction from wages and other losses as detailed in the Schedule of Loss.
The Defendant was found to have breached the implied term of mutual trust and confidence and failed to act reasonably in offering suitable alternative employment or redundancy. The tribunal found no contributory fault on the Plaintiff’s part and no basis for reducing compensation under the Polkey principle.
The decision directly affects the parties by awarding compensation to the Plaintiff but does not establish any new precedent beyond the application of existing legal principles in the context of constructive dismissal, breach of trust and confidence, and unlawful wage deductions.