Peakquote Ltd & Anor v Levy

For constructive dismissal, a tribunal must identify the contractual breach relied on, decide whether it was repudiatory, and find that it caused or played a part in the employee’s resignation. Where the case relies on the implied term of trust and confidence, the tribunal must assess the employer’s course of conduct, including any alleged last straw, against that term and consider reasonable or proper cause.

A reduction of compensation under section 123(6) of the Employment Rights Act 1996 requires blameworthy or culpable conduct by the employee and an adequately reasoned causal connection with the dismissal.

The employee, a commercial property manager, resigned after a period of sickness absence and a grievance meeting. He alleged that the employers’ lack of communication, their response to his requests to return to work, health and safety matters, the reduction in sick pay without warning, and a statement at the grievance meeting amounted to constructive dismissal.

The London (Central) Employment Tribunal held that he had been unfairly constructively dismissed. It reduced his compensatory award by 30% under section 123(6) of the Employment Rights Act 1996. The employers appealed against constructive dismissal and the employee cross-appealed against the reduction. The central issue was whether the Tribunal had made sufficient findings on repudiatory breach, causation and contributory conduct.

1. Appeal and cross-appeal allowed. The Employment Tribunal’s decision could not stand because its reasons did not show that it had applied the necessary analysis for constructive dismissal.

2. An employee must establish a contractual breach, a repudiatory character to that breach, and that the breach played a part in the resignation. The Tribunal was entitled, as a matter of fact, to regard failure to warn of a reduction in pay as capable of amounting to a repudiatory breach of the implied term of trust and confidence. However, it made no finding that this breach caused the resignation.

3. The other matters identified by the Tribunal were not adequately analysed. It did not identify their legal character, decide whether individually or cumulatively they were repudiatory, or assess the alleged last straw by asking whether the employers’ conduct was calculated or likely to destroy trust and confidence without reasonable or proper cause. Its reference to Wright v North Ayrshire Council UKEATS/0017/13/BI did no more than identify the need for a breach to play a part in the resignation.

4. The 30% compensatory-award reduction also failed. Under section 123(6) of the Employment Rights Act 1996, conduct relied on for a reduction must be blameworthy or culpable. The Tribunal had not addressed that requirement adequately or explained how the conduct it identified caused the constructive dismissal.

5. All aspects of the unfair-dismissal claim were remitted for a fresh hearing before a different Employment Judge. The employers were awarded £1,000 towards appeal fees.

• Employment Appeal Tribunal: Allowed the appeal and cross-appeal, set aside the Employment Tribunal’s findings, and remitted the whole unfair-dismissal claim for a fresh hearing: [2015] UKEAT 0179_14_0902.
• Employment Tribunal (London Central): Decision sent on 24 January 2014. It found unfair constructive dismissal and reduced the compensatory award by 30% under section 123(6) of the Employment Rights Act 1996.