Roberts v Whitecross School

A communicated and settled intention to implement a material reduction in contractual pay is capable of being an anticipatory fundamental breach. An employer's honest but mistaken construction of the contract does not alter the character of the breach where the employer intends to act upon it. Pay is a term going to the root of the employment contract. Whether a reduction is fundamental does not generally depend upon its differing effects on individual employees, although the practical consequences may matter in particular circumstances.

The claimant, a teacher, resigned after the respondent notified him that, from 28 May 2010, it would reduce his sick pay from full pay to half pay. He maintained that the incorporated Burgundy Book entitled him to full pay for work-related psychological injury.

An Employment Judge later upheld his wages claim. The Employment Tribunal nevertheless dismissed his unfair-dismissal claim, holding that the respondent's intended underpayment was not repudiatory because it honestly, though wrongly, construed the relevant contractual clause. The claimant appealed on the issue whether the proposed reduction was a repudiatory anticipatory breach capable of founding constructive dismissal.

Appeal allowed.

1. The Employment Tribunal had found that the respondent's decision to pay half pay was finalised and that nothing before the claimant resigned suggested otherwise. Its conclusion that the respondent held an honest mistaken view of the contractual provision had no basis in the earlier Employment Judge's decision or in its own findings.
2. A party's adoption of a contractual interpretation, without more, will unlikely amount to an actual or anticipatory fundamental breach. However, acting on that view, or communicating a settled intention to do so, is different. A genuine belief that the interpretation is correct does not excuse an actual or anticipatory fundamental breach.
3. The respondent intended to reduce the claimant's pay by 50%, with effect two days after his resignation. That was an imminent anticipatory breach. Pay goes to the root of the employment contract, and a reduction by half was significant. On the unchallenged findings, no conclusion other than that the breach was fundamental was open.
4. Whether a reduction is fundamental does not turn generally on its individual financial effect on particular employees, though consequences may be material on the facts of a particular case.
5. The matter was remitted to a differently constituted Employment Tribunal. It must determine whether the claimant resigned because of the breach, whether he waived it, and, if constructive dismissal is established, the unfair-dismissal and consequential issues.

• Employment Appeal Tribunal: Allowed the claimant's appeal and remitted the constructive-dismissal issue for rehearing on the basis that the communicated anticipatory breach was fundamental.
• Employment Tribunal: Dismissed the unfair-dismissal claim, holding that the claimant's resignation did not amount to constructive dismissal.