Pearce v Receptek

In a constructive-dismissal claim, the tribunal must determine whether the employer committed a repudiatory breach and whether the employee resigned in response to it. A breach of the implied term of trust and confidence requires conduct, without reasonable or proper cause, calculated or likely to destroy or seriously damage that relationship. As such a breach is repudiatory, it must objectively show an intention to abandon or altogether refuse to perform the contract.

A tribunal errs if it leaves material factual conflicts and elements of that inquiry unresolved. The timing of resignation, or an expectation that the employee should have remained in employment, does not answer whether the employer's conduct was a fundamental breach or whether the resignation responded to it.

The claimant, formerly the respondent's operations manager, resigned after a sequence of events which he said showed that he was no longer wanted. Those events included changes to management and his duties, and a meeting at which his performance, future and possible departure were discussed.

Employment Judge Shulman dismissed his claim for constructive unfair dismissal in reasons delivered on 21 August 2012. The claimant appealed to the Employment Appeal Tribunal, contending that the Employment Judge had failed to make necessary findings and had adopted an incorrect approach to constructive dismissal.

The central issue was whether the reasons adequately resolved whether the respondent had committed a repudiatory breach of the implied term of trust and confidence which caused the claimant to resign.

1. Appeal allowed. The Employment Judge's reasons were inadequate and the approach was legally erroneous. The claim was remitted for a complete rehearing before a different Employment Judge.

2. Constructive dismissal requires a contractual breach. In a trust-and-confidence case, the question is whether the employer, without reasonable or proper cause, acted in a manner calculated or likely to destroy or seriously damage the relationship. Such a breach must be sufficiently serious to be repudiatory. Objectively, repudiatory conduct shows an intention to abandon or altogether refuse to perform the contract.

3. The Employment Judge did not resolve the essential factual disputes, including the parties' competing accounts of the significant meeting. He also failed to decide whether the employer had reasonable and proper cause, and did not clearly identify whether he found a breach, a fundamental breach, or that the resignation was not responsive to a breach.

4. The observation that the claimant had resigned too early, should have remained in employment, or might later have obtained a revised contract was irrelevant to the necessary inquiry. The material questions were the reason for resignation and whether the employer's conduct amounted to a fundamental breach.

5. The Appeal Tribunal could not itself determine breach because the necessary facts had not clearly been found. A fresh hearing was proportionate and appropriate because of the flaws in fact-finding and analysis, and the realistic risk of a second bite of the cherry if the matter returned to the same judge.

• Employment Appeal Tribunal: appeal allowed; the constructive-dismissal claim was remitted to a different Employment Judge for a hearing afresh.
• Employment Tribunal: Employment Judge Shulman dismissed the constructive unfair-dismissal claim in reasons delivered on 21 August 2012.