Upton-Hansen Architects v Gyftaki

In a constructive-dismissal claim, the employer must show both the actual reason for dismissal and that it is a reason within section 98(1) of the Employment Rights Act 1996. If it does not, the dismissal is unfair and section 98(4) is not engaged.

The reason for a constructive dismissal is the reason for the employer’s repudiatory conduct, not necessarily the employee conduct which prompted disciplinary action. For a compensatory-award reduction, employee conduct must be a material contributing cause of dismissal; a purely “but for” connection is ordinarily insufficient. Reasonable mitigation may include relocating and starting a business. A broad-brush loss assessment remains necessary, but the tribunal must explain how it reached the amount awarded.

The Claimant, a senior architect, resigned after the Respondent suspended her pending an investigation into alleged unauthorised absence and added an earlier period of leave to the disciplinary matters. The Employment Tribunal upheld claims for constructive unfair dismissal and wrongful dismissal, and awarded notice pay, a basic award and a compensatory award.

The Respondent appealed. It argued that the Tribunal had failed to identify a potentially fair reason and to consider section 98(4) of the Employment Rights Act 1996; that compensation should have been reduced for contributory conduct; that the Claimant had failed to mitigate by moving to Greece and establishing a business; and that the loss-of-remuneration award was inadequately reasoned.

1. Appeal allowed in part. The Employment Tribunal’s liability findings, its refusal to reduce compensation for contributory conduct, and its findings on mitigation were upheld. The compensatory award was remitted solely for a fresh, reasoned assessment of loss of remuneration.

2. A constructive dismissal and an unfair dismissal are legally distinct. Under section 98(1) of the Employment Rights Act 1996, the employer must show the factual reason for dismissal and that it falls within the statutory categories. Only if that burden is met does section 98(4) arise. The Respondent had neither pleaded nor shown a potentially fair reason for the dismissal. The Tribunal therefore did not confuse the two stages or err by not undertaking a section 98(4) assessment.

3. In a constructive-dismissal case, the reason for dismissal is the reason for the employer conduct which constituted the repudiatory breach. It was open to the Tribunal to find that the reasons for suspension, and for adding the July absence to the disciplinary investigation, had not been shown to be conduct-related reasons within section 98(1). The alleged unauthorised absence was not necessarily the reason for those breaches.

4. For section 123(6), the Claimant’s failure to warn the Respondent of a possible trip was not found materially to have caused or contributed to the suspension or the inclusion of the July matter. A merely factual “but for” connection does not compel a reduction. The Tribunal was entitled to make no reduction.

5. The Tribunal was entitled to find that the Claimant’s job search in London, followed by relocation to Greece and the creation of her own business, involved no unreasonable failure to mitigate. That conclusion also disposed of the alleged break in the chain of causation.

6. Although a tribunal may assess uncertain self-employment losses broadly, it must give sufficient reasons for the final figure. The Tribunal did not explain how the 40-week figure reflected the period before the business began, expected business income, prospective expenses, or reduced living costs. The determination of underlying loss of remuneration was therefore not Meek-compliant and was remitted.

• Employment Appeal Tribunal: allowed the Respondent’s appeal only on the adequacy of reasons for the loss-of-remuneration calculation; remitted that issue to the Employment Tribunal for a fresh, reasoned determination.
• Employment Tribunal: upheld the Claimant’s claims for constructive unfair dismissal and wrongful dismissal, awarding £3,127 net for wrongful dismissal, a basic award of £1,956, and a compensatory award of £29,000. Written judgment and reasons were sent on 9 August 2018.