Fundamental contract breach




For a constructive dismissal claim to succeed, the breach of contract must be fundamental, in other words, very serious. It must show that the employer “altogether abandons and refuses to perform” its side of the contract (Wright v North Ayrshire Council [2013] UKEAT 0017/13/2706). More than just unreasonable behaviour is needed.




The contract term that is broken can be express (that is, specifically agreed, whether or not in writing , see page 72) or implied (see page 75). A common example is the implied duty of mutual trust and confidence, which is fundamental to every employment contract. 




Whether there has been a fundamental contract breach is a factual question for a tribunal to decide after looking at all the evidence, reading the witness statements and listening to cross-examination. Every case is different, but some examples have included:


• unilaterally cutting pay or hours;




• unilaterally relocating employees to a new site a significant distance from the old site;




• fundamentally changing duties;




• demoting;




• wrongly withholding contractual sick pay;




• using foul language;




• publicly humiliating an employee;




• engaging in bullying or harassment;




• issuing a Final Warning without investigation;


• lying about the true reason for dismissal;


• making a knee jerk decision to suspend without investigating whether this is really needed; 



• failing to investigate a grievance properly and adequately; 




• refusing to allow an employee to be represented by their chosen companion;
and


• making obtrusive and inappropriate contact with an employee on sick leave (see page 272).




Employment contracts (especially in non-unionised workplaces) sometimes include written terms that purport to allow the employer to impose unilateral changes to contract terms without the employees’ consent. These terms, discussed on page 73, Chapter 3, make it harder for members to bring a successful constructive dismissal claim. This is because they enable the employer to argue that by signing the employment contract containing the relevant term, employees have already “consented” to future changes (for example, to wage arrangements or hours), so that imposing the change cannot be a breach of contract capable of supporting a constructive dismissal claim.




An employer who forces through change without proper consultation risks fundamentally breaching the implied contractual duties of mutual trust and confidence and good faith (see Chapter 3, page 76).
Where protected groups are affected, there may also be unlawful discrimination (see Chapter 7). 



There can still be a fundamental breach of contract even if an employer mistakenly believes it is acting lawfully (Roberts v The Governing Body of Whitecross School [2012] UKEAT 0070/2/1906). 




If an employer fundamentally breaches the contract and the employee accepts the breach by resigning and bringing the contract to an end, the employee is no longer bound by the rest of its terms (for example, post-termination restrictions), except as to confidentiality.