Thursday, November 20th, 2008
“He hit me first!” is the usual cry of fighting children. It met its equivalent in a recent High Court case concerning a squabbling employer and employee.
Employers and employees owe each other a mutual duty of trust and confidence. Breach by an employer can entitle the employee to claim constructive dismissal. This is a shorthand way of saying that breach is so serious that the employee can view the relationship as irreparably damaged and leave. Although it looks like a resignation, in contract terms it is in fact an acceptance of the employer’s breach of contract as something which brings the contract to an end.
Constructive dismissal plays a huge part in employment law and especially in unfair dismissal cases. Rudeness or bullying are often at the heart of the matter. If the employee is treated badly, he can quit or can walk away for good. In either case, he accepts the breach and the contract comes to an end…or so we thought.
Things may have changed. In the recent case of RDF Media Group PLC & RDF Media Limited v Clements, the High Court decided that the right to claim constructive dismissal may depend on how the victim has behaved.
Mr Clements was a shareholder of a media company, IWC. IWC was taken over by RDF who entered a contract with Mr Clements for him to work as a director of content for IWC. The contract stopped Mr. Clements from working for a competitor for 3 years after he left his job but for only 2 years if he was unlawfully dismissed.
The relationship soured and Mr. Clements gave notice. RDF put him on garden leave for his notice period. Things became worse. There were accusations that RDF staff were rude about Mr. Clements in press briefings and at board meetings and it was alledged that Mr. Clements was lining up a job with a competitor and informally agreeing to poach some of his own projects from RDF when he left.
During his notice period, Mr. Clements resigned and claimed constructive dismissal because of the comments. RDF denied constructive dismissal him and said the contract continued. Mr. Clements refused to accept his pay cheque so RDF wrote to say that he was in fundamental breach of contract and had brought the contract to an end. They wanted the 3 years restriction and that depended on it being his fault. Each side blamed the other and the matter finished in the High Court.
RDF won. Whether negative comments were a breach of the trust and confidence term depended on the context and circumstances. Internal comments by directors were not a breach. Comments to the press were. When evaluating the breach it was important to look at the relationship between the parties at the time. If it had broken down altogether or if the employee was seriously in breach (as Mr. Clements was) those factors had to be balanced in deciding whose breach ended the contract. Here, it was Mr. Clements who destroyed the relationship by his own breaches and therefore it was wrong to say that RDF had broken and ended the contract however badly it may have behaved.
This is new and somewhat surprising. Ordinarily, RDF would have been taken to have waived Mr. Clements’ behaviour by not accepting it as a breach which allowed them to call time on the contract. The contract would have continued and then, if he had accepted RDF’s negative comments as a breach, he would have been entitled to claim that he had been constructively dismissed. The question is usually “who acted in response to a breach first?” Here it was “who was the real villain of the peace?” The case was due to go to the Court of Appeal but was settled before the hearing. The High Court decision is not binding but will no doubt have an effect on employment tribunals and other court decisions.
It seems that the Court may have inadvertently started to rewrite the law to cater for a case where it decided in favour of the employer. It is an unusual case and the outcome may be peculiar to the facts. However, the decision stands until the Court of Appeal says otherwise.
© Copyright 2009 Burt Brill & Cardens Solicitors