13 May 2016

High Court considers “constructive dismissal” in court claim

Leeds United, once a power in the footballing land, is now famous principally for generating stimulating court claims.

Gibbs v Leeds United is interesting for HR professionals and employment lawyers alike because it involves a High Court Judge (former Employment Appeal Tribunal President Langstaff J) dealing with a breach of contract claim.The claim has been nowhere near an Employment Tribunal, but in its judgment the court has referred to the statutory concept of constructive dismissal in its analysis of which party was guilty of breach of contract.

Constructive dismissal is defined only in section 95 Employment Rights Act 1996. It arises where “the employee terminates the contract under which he is employed … in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct”.

Over the years, higher courts have considered how ordinary contract law principles feed in to that definition. Whenever the Court of Appeal looks at a genuine constructive dismissal claim (ie one that has been through an Employment Tribunal), there is always a slight sound of crunching gears as it tries to impose classical contract law analysis on an employment situation. Is the Gibbs case a judicial attempt to reduce that crunching?

Mr Gibbs was the assistant manager of Leeds United. He had less than two years’ service when he left the club’s employment. He resigned because the club had re-assigned him to lower status duties, involving dealing with the younger players rather than the first team squad.

Mr Gibbs realised that when his previous line manager – the old manager of the club – left his post, he was likely to lose his job too. However, rather than dismiss Mr Gibbs, the club put him on to less responsible duties that were in no way normal for an assistant manager of his experience, nor indeed normal in this particular club.

Mr Gibbs had already raised the possibility of there being an agreed termination. That suggestion was not picked up by the club. Instead, when Mr Gibbs was required to carry out these more peripheral duties, he chose to leave the job and make a claim against the club for breach of contract.

Early on in the judgment, Langstaff J sets out the main issue in the case – “What is in issue is whether the claimant was constructively dismissed, by reason of a repudiatory breach of contract by Leeds, or whether he simply chose to go without there being any such breach”.

As it turned out, Langstaff J preferred the claimant’s case. He found that Mr Gibbs had not himself breached the contract by suggesting a settlement agreement, but also found that the club had acted in repudiatory breach of contract by placing Mr Gibbs on duties away from the first team squad.

This was not an unfair dismissal claim, let alone a constructive dismissal claim. In the judgment, Langstaff J reverts to more traditional contractual analysis, but it is interesting that in this case a statutory analysis of termination by resignation has been imported into a pure breach of contract claim.

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Michael Stokes, Partner
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