Smith v Trafford Housing Trust

Contractual disciplinary codes and workplace policies must be construed objectively. An employee must be able to understand what conduct is prohibited, including the extent to which the rules affect personal and social life.

Whether personal conduct falls within such rules depends on the wording, purpose and factual context. A social-media account remains personal where colleagues choose to access it and the account is not used as a work-related communication channel. Lawful, moderate expression of religious or political views is not necessarily promotion, disrespect, misconduct or conduct bringing an employer into disrepute.

A contractual demotion involving a substantially different role and reduced salary may amount to wrongful dismissal. Damages remain limited to the contractual notice period where wider statutory unfair-dismissal considerations cannot be imported into the contractual assessment.

Mr Adrian Smith, a housing manager employed by Trafford Housing Trust, posted comments on his personal Facebook wall about same-sex marriage in religious settings. The page identified his employment, and some Facebook friends were Trust employees. The Trust treated the postings as gross misconduct under its Code of Conduct and Equal Opportunities Policy. It demoted him to a non-managerial role and reduced his salary.

Mr Smith brought a contractual claim, contending that the Trust had no right to impose the demotion. He did not bring an unfair-dismissal claim in the Employment Tribunal. The issues were whether the postings breached the contractual rules and, if so, what damages followed from the demotion.

1. The Trust had no general contractual power to demote Mr Smith. Demotion was available only as a disciplinary sanction for misconduct involving breach of the contractual rules or failure to meet the required standards.

2. The Code of Conduct and Equal Opportunities Policy had to be construed objectively, by reference to what a reasonable employee would understand. The rules could cover conduct outside work, but their application to personal life depended on the language, purpose and consequences of the particular provision.

3. The Facebook wall was essentially a personal and social medium. The fact that work colleagues had chosen to become Facebook friends did not create a sufficient work-related context. The prohibition on promoting religious or political views was directed principally to proselytising or canvassing in a work-related context. The postings were a response to an enquiry and were not promotion.

4. The postings were not objectively judgmental, disrespectful, homophobic, or liable to cause the relevant kind of upset. Nor could a reasonable reader regard them as statements made on the Trust’s behalf or as bringing the Trust into disrepute. The Trust therefore failed on all three alleged bases of misconduct.

5. The purported demotion was a repudiatory breach amounting to wrongful dismissal. By continuing to work in the new role while protesting, Mr Smith accepted the original contract as at an end and entered a new contract in mitigation. He did not waive his right to damages.

6. The damages assessment remained confined to the financial loss during the twelve-week contractual notice period. The counterfactual approach discussed in Durham Tees Valley Airport Ltd v BMI Baby Ltd [2010] EWCA Civ 485 did not alter the established employment-law approach. Importing the employer’s potential unfair-dismissal liability would circumvent the exclusionary principle in Johnson v Unisys [2003] 1 AC 518, as confirmed in Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2012] 2 AC 22.

7. Judgment was therefore given for Mr Smith for the modest difference between his contractual salary and the sums paid during the notice period, with the amount to be agreed.

The proceedings were commenced in the Manchester County Court and transferred to the High Court, Chancery Division. The High Court determined the contractual claim at first instance.