Price v Revenue & Customs

In a constructive dismissal claim based on breach of the implied term of mutual trust and confidence, the correct question is whether the employer, without reasonable and proper cause, conducted itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence.

Reasonableness is relevant to whether there was reasonable and proper cause. It is not a separate standard for deciding whether the conduct was sufficiently serious. A tribunal must not require a very significant breach or apply the standard of the reasonable employer to the second part of the test.

The claimant resigned after a lengthy grievance process and claimed constructive unfair dismissal. The Employment Tribunal rejected three alleged breaches and found that the grievance delay was unsatisfactory but did not breach the implied term of mutual trust and confidence.

The Tribunal dismissed the claim, applying reasoning from Claridge v Daler Rowney Ltd, including the view that a very significant breach was required. The claimant appealed, arguing that this approach had been disapproved by the Court of Appeal in Buckland v Bournemouth University Higher Education Corporation. The central issue was whether the Tribunal had applied the correct legal test.

1. Appeal allowed. The Employment Tribunal had misdirected itself in law by applying the approach in Claridge v Daler Rowney Ltd at paragraph 30, which had been expressly disapproved by the Court of Appeal in Buckland v Bournemouth University Higher Education Corporation at paragraph 27.
2. The applicable test was the formulation approved in Malik v BCCI: whether the employer, without reasonable and proper cause, conducted itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee.
3. Reasonableness has a limited role. It concerns whether the employer had reasonable and proper cause for the conduct. It does not govern the further question whether, in the absence of such cause, the conduct was calculated or likely to destroy or seriously damage trust and confidence. The question must not be answered by applying the standard of the reasonable employer.
4. The Tribunal had found that there was no reasonable and proper cause for the grievance delay. It nevertheless had to decide whether the relevant delay, excluding the period attributable to compassionate leave, was calculated or likely to destroy or seriously damage trust and confidence. That remained a factual question for the Tribunal.
5. The EAT declined to substitute a finding of constructive dismissal. A further issue remained whether any breach caused the claimant to resign, though it need not have been the sole cause. Any finding of constructive dismissal would also require consideration of remedy, including the Polkey question. The matter was remitted to the same Employment Tribunal for reconsideration.

• Employment Tribunal: The Ashford Employment Tribunal dismissed the constructive unfair dismissal claim in a reserved judgment promulgated on 19 August 2010.
• Employment Appeal Tribunal: The appeal was allowed because the Tribunal applied the wrong legal test. The matter was remitted to the same Tribunal for reconsideration.