Pentland Motor Company Limited v McKenzie

Clear written employment terms are strong prima facie evidence of the parties’ agreement. A party alleging that the terms no longer reflect that agreement must identify a proper evidential basis, such as mistake, error, or express or implied variation.

For constructive dismissal, the question is objective: whether the employer’s conduct evinces an intention not to be bound by, or to perform inconsistently with, an essential contractual obligation. A settled statement that agreed sick pay will not be paid may amount to an anticipatory repudiatory breach. It is more than a mere assertion about contractual interpretation, particularly where it is not attributable to a simple error.

The claimant had worked for the respondent’s predecessor for many years and transferred to the respondent under TUPE in August 2015. His signed written terms entitled him to full pay during absence through sickness or injury.

After he was absent through illness, the respondent stated that it would pay only statutory sick pay. He resigned and the Employment Tribunal at Aberdeen, in a judgment promulgated on 25 May 2016, upheld claims for constructive unfair dismissal and unpaid sick pay.

The respondent appealed, contending that the Tribunal had misunderstood [2011] UKSC 41 and had failed objectively to assess repudiation. The claimant cross-appealed against the application of the statutory cap to his basic award.

1. The respondent’s appeal was dismissed. The Employment Tribunal was entitled to treat the clear, signed sick-pay clause as strong prima facie evidence of the agreement. It did not treat the absence of a sham as decisive. It also considered whether mistake, error, or variation could show that the written term failed to reflect the parties’ true intentions.

2. The respondent had not articulated a proper basis for departing from the written term. The predecessor’s untested email did not establish an agreed verbal arrangement inconsistent with it. The claimant’s understanding, the repeated written terms, and the payment of full salary during earlier lengthy absences supported the Tribunal’s finding that full sick pay had been agreed.

3. The Tribunal correctly applied the objective approach in Eminence Property Developments Ltd v Heeney [2010] EWCA Civ 1168. The respondent’s formal communication did not merely advance an interpretation open to correction. It stated a fixed intention to pay only statutory sick pay, despite an essential and unambiguous pay term. The Tribunal was entitled to find an anticipatory repudiatory breach and therefore constructive dismissal.

4. The cross-appeal was allowed. Under Employment Rights Act 1996 section 124, the statutory cap applied to the compensatory award, not the basic award. The total monetary award was substituted at £87,732.

• Employment Appeal Tribunal: respondent’s appeal dismissed and claimant’s cross-appeal allowed.
• Employment Tribunal at Aberdeen: judgment promulgated on 25 May 2016. The Tribunal upheld the claimant’s constructive unfair dismissal and unpaid sick-pay claims.