Ciara McCormack v Medivet Group Limited

An express power allowing an employer to change an employee’s office, responsibilities or powers is subject to an implied proviso that it must be exercised honestly, rationally and for the purpose for which it was conferred. A decision is irrational where there is no logical connection between the evidence and the stated reasons, or where it is arbitrary, capricious or perverse. Removing core responsibilities and allocating an essentially different role may amount to repudiatory breach. An announced future allocation of a new role may constitute an anticipatory repudiation where the employer has decided the essential scope of the change and the employee cannot reasonably return to the former role. Conduct may also amount cumulatively to a breach of the implied term of trust and confidence.

The claimant was employed as Medivet’s Director of Clinical Operations. Following a change in senior management, the chief executive proposed a reorganisation under which substantial operational responsibilities would be transferred to other officers and the claimant would be given a clinically focused Chief Clinical Officer role.

The claimant contended that the immediate removal of responsibilities, the proposed future role, inadequate consultation and the handling of her grievance amounted to repudiatory breaches. She resigned on 8 July 2022 and claimed contractual damages. The central issues were whether the employer had validly exercised its contractual power to change her responsibilities and whether its conduct entitled her to accept repudiation and terminate the contract.

1. Outcome. The claimant accepted Medivet’s repudiatory breaches and validly terminated her employment contract. She was entitled to damages, with quantum, interest and consequential matters to be dealt with separately.
2. Clause 2.5, which permitted the board to appoint others jointly with the claimant or change her executive office, responsibilities and powers, applied unambiguously to her role. Its exercise was nevertheless subject to an implied proviso that the power be exercised honestly, rationally and for the purpose for which it was conferred. The proviso satisfied the requirements of necessity and reasonableness.
3. Applying the rationality standard identified in Hayes v Willoughby [2013] UKSC 17, the immediate removal of responsibilities for pricing and property and maintenance was not a lawful exercise of the contractual power. It was taken ad hoc, without proper consultation, meaningful assessment of interim and final responsibilities, or a discernible good-management reason. The decision was therefore void as an exercise of the contractual power.
4. Removing core responsibilities forming an essential part of the claimant’s role constituted a repudiatory breach. The proposed Chief Clinical Officer role also amounted to an anticipatory breach. Although details remained open and formal implementation had not occurred, the general scope and nature of the new role had been determined and there was no realistic prospect of the claimant reassuming the responsibilities already removed.
5. Viewed cumulatively, the failure properly to consult, the immediate divestment of responsibilities, communication of the future role, inadequate communication thereafter and failure promptly to arrange the grievance hearing breached the implied term of mutual trust and confidence. The conduct was sufficiently serious to be repudiatory.

First-instance decision. No earlier decision in the same proceedings is stated in the judgment.