Welch v The Taxi Owners Association (Grangemouth) Ltd (Unfair Dismissal : Constructive dismissal)

A constructive dismissal may arise from an employer’s fundamental contractual breach, including an attempted material variation of contractual hours. That breach does not itself make the dismissal unfair. The employer may establish a potentially fair reason, including some other substantial reason, and the tribunal must then assess fairness in all the circumstances.

A redundancy question concerns whether the employer’s requirement for employees to perform work of a particular kind has ceased or diminished. A change in working hours or other terms does not, without more, create redundancy. In any event, an unfair-dismissal claim cannot succeed on the basis that the employer should have dismissed the employee as redundant where the employee resigned for a different reason and did not challenge the fairness finding.

The claimant was a radio control operator whose employer proposed reducing her contractual hours after a downturn in night-time business. She resigned and claimed unfair constructive dismissal.

The Employment Tribunal accepted that the proposed reduction was a fundamental breach of contract. It nevertheless found the constructive dismissal fair because the employer had a genuine business reason, had consulted the claimant and sought to retain her. It also held that there was no redundancy situation because the employer still required the same number of radio operators.

The claimant appealed, contending that the employer ought to have dismissed her by reason of redundancy. The central issue was whether that contention could undermine the unchallenged finding that her constructive dismissal was fair.

1. Appeal dismissed. The Tribunal’s conclusion that the constructive dismissal was fair was not challenged. The employer had a legitimate business reason for reducing hours, sought to retain the claimant, gave notice and consulted her. Those findings supported fairness for some other substantial reason under Employment Rights Act 1996, section 98(1)(b).

2. A material unilateral variation may be a fundamental contractual breach and can entitle an employee to resign and claim constructive dismissal. However, a fundamental breach is not inevitably an infringement of the statutory right not to be unfairly dismissed. Once constructive dismissal is established, the employer may show a potentially fair reason and the tribunal must determine fairness in all the circumstances.

3. The redundancy argument did not assist the claimant. She had resigned; she had not been dismissed as redundant, sought a redundancy payment, or alleged that any redundancy selection was unfair. Her pleaded reason for resignation was the proposed reduction of hours, not the employer’s failure to dismiss her as redundant.

4. An employer cannot in principle commit a fundamental breach merely by retaining an employee rather than dismissing that employee for redundancy. There was also no evidence that the claimant would have been selected from the pool of eight radio operators had a redundancy process occurred.

5. The Tribunal’s discussion of redundancy was therefore irrelevant to the appeal. In any event, the statutory inquiry is whether the employer’s requirement for employees to undertake work of the relevant kind has ceased or diminished. The Tribunal had found that the relevant work was radio operation and that the employer still needed the same number of employees to perform it.

• Employment Appeal Tribunal: Appeal dismissed: [2012] UKEAT 0001_12_1506.
• Employment Tribunal, Glasgow: In a judgment registered on 4 November 2011, the Tribunal dismissed the claimant’s claims. It found a fundamental breach of contract but held that the resulting constructive dismissal was fair.