Hardie Grant London Ltd v Aspden

Whether conduct breaches the implied term of mutual trust and confidence is principally a factual question for the Employment Tribunal, assessed objectively by reference to how a reasonable employee would view the circumstances. A breach may arise from conduct which undermines trust and confidence, even without a clear or express intention to terminate the contract and even where later conduct is consistent with continued employment. Once a repudiatory breach has occurred, it cannot be cured by subsequent words or conduct. In calculating compensation for unfair dismissal, any adjustment to identify the claimant’s net loss must be made before applying the statutory cap in Employment Rights Act 1996, s.124(1). The capped award is not subsequently grossed up for tax.

Miss Aspden, Managing Director of Hardie Grant London Ltd, received an inadvertently forwarded email in which the parent company’s chief executive questioned her leadership and referred to addressing the issue promptly. She resigned, alleging that the email had destroyed trust and confidence. The Employment Tribunal found that she had been constructively and unfairly dismissed and awarded £87,166.67 compensation.

The employer appealed liability and remedy. The central issues were whether the Tribunal had erred in finding a repudiatory breach and whether the compensatory award could exceed the statutory cap by being grossed up for tax.

1. Liability appeal dismissed. The Tribunal correctly directed itself on the implied term of mutual trust and confidence by reference to Malik v BCCI [1997] IRLR 462 and made an objective assessment of how a reasonable employee would view the circumstances. Whether the conduct amounted to a breach, and whether it was fundamental, was essentially a question of fact. The EAT could intervene only for an error of law or perversity, applying the approach in Pedersen v London Borough of Camden Council [1981] ICR 674 and Woods v WM Car Services [1982] ICR 693.
2. The employer’s arguments that there had to be a clear and unambiguous intention to breach the contract, or that an indication of possible future termination could not found constructive dismissal, were rejected. The case concerned conduct which the Tribunal found had undermined trust and confidence at the time of communication, rather than an anticipatory breach. The breach was fundamental and the resignation was in response to it. Consistently with Safeway Stores v Morrow [2002] IRLR 9, the employee was constructively dismissed. Under Buckland v Bournemouth University Higher Education Corporation [2010] ICR 908, the breach could not be cured by subsequent assurances or conduct.
3. Remedy appeal allowed. Loss of earnings is calculated by reference to the claimant’s net earnings. Where appropriate, the reverse-Gourley adjustment is made before applying the statutory cap under s.124(1) of the Employment Rights Act 1996. The Tribunal erred by applying the cap first and then grossing up the award. The statutory scheme did not offend Article 14 of the ECHR. Barton v Sheffield City Council Services (ET 2800284/00) was wrongly decided on this point.
4. The compensatory award was varied to £65,300. The claimant’s remedy cross-appeal was dismissed.

• Employment Appeal Tribunal: The liability appeal was dismissed. The remedy appeal was allowed and the compensatory award was reduced to £65,300. The claimant’s remedy cross-appeal was dismissed.
• Employment Tribunal: Found constructive and unfair dismissal and awarded £87,166.67 compensation. The remedy judgment was varied by the EAT.