McLoughlin v London Linen Supply Ltd

For constructive dismissal based on the implied term of trust and confidence, the tribunal must assess the employer’s conduct as a whole and objectively. It must decide whether, without reasonable and proper cause, the conduct was likely to destroy or seriously damage trust and confidence.

Where breach is established, the causation question is whether it played a part in the employee’s decision to resign. An "effective cause" test is incorrect. A tribunal must also read the pleaded case fairly as a whole and give reasons showing that it applied the correct test.

The Claimant, an industrial engineer director, resigned after the Respondent’s acquisition by a new owner. A significant part of his former responsibility for the design and development of major projects was transferred to a project team led by another manager. The Employment Tribunal found that communication of the new arrangements was almost non-existent and without reasonable and proper cause, but dismissed claims for constructive unfair dismissal and age discrimination.

On appeal, the central issues were whether the Tribunal had failed to determine breach of the implied term of trust and confidence, whether it had wrongly treated the failure to communicate as unpleaded, and whether it had applied the correct test for whether the breach caused the resignation.

1. Appeal allowed. The Employment Tribunal made no conclusive finding on whether the Respondent had breached the implied term of trust and confidence. It found both that a significant part of the Claimant’s role had been removed and that communication of the change was almost non-existent and lacked reasonable and proper cause. It was required to assess those matters together and objectively, rather than leave unanswered whether their cumulative effect was likely to destroy or seriously damage trust and confidence.

2. The Tribunal’s conclusion that the potential breach arising from lack of communication had not been pleaded was wrong. The particulars alleged both a change of role and the absence of warning, consultation and information. They had to be read fairly as a whole. Leave to amend the appeal grounds was granted in the interests of justice.

3. The Tribunal also erred in its approach to causation. The applicable test from Nottinghamshire County Council v Meikle [2004] IRLR 703 was whether the putative breach played a part in the Claimant’s decision to resign. Its language and reasoning instead indicated an erroneous effective-cause approach. It did not explain how the Claimant’s reduction in role could be separated from the failure to inform or consult him about it.

4. The EAT did not find that breach or causation was perverse. It could not substitute its own decision because its jurisdiction was confined to errors of law and it had no general fact-finding or review power.

5. The constructive dismissal issues, and the related age-discrimination issue, were remitted to a freshly constituted Employment Tribunal. The remitted tribunal must apply the Meikle causation test. Certain original issues were excluded from the remission.

• Employment Appeal Tribunal: allowed the appeal and remitted the constructive-dismissal and related age-discrimination issues to a freshly constituted Employment Tribunal.
• Employment Tribunal, Watford: by a judgment dated 13 July 2016, dismissed claims for constructive unfair dismissal and age discrimination.