In an important decision last month the Court of Appeal held that an employer cannot ‘cure’ a repudiatory breach before an employee decides to treat it as the basis for resigning and claiming dismissal. Put another way, it will normally be too late for an employer to say sorry and try to mend the past if the employer’s conduct has already amounted to sufficiently serious conduct to justify an employee resigning. Why should an employee bother with a grievance procedure, after this?
In the case Prof Buckland failed 14 out of 16 students who had taken a re-sit exam. Because of criticisms made by another member of staff about this marking, the head of department, A, had the papers re-marked. B formally complained about this. The University undertook an enquiry and produced a report. The report vindicated B and criticised A for having approved the re-evaluation of B’s marking without consulting him. B resigned and claimed constructive dismissal
The tribunal upheld B’s claim based on A’s actions – not consulting B before confirming the revised marks on exam papers was an act ‘calculated to destroy the relationship of trust and confidence between Prof Buckland and the University’. The University appealed. The Employment Appeal Tribunal (EAT) held that although the University had fundamentally breached B’s contract, when judged on an objective basis, the report, in vindicating B, had ‘cured’ the breach. Accordingly, B had not been constructively dismissed. B appealed arguing that a repudiatory breach cannot be ‘cured’. The University also appealed saying that the EAT should have applied a ‘range of reasonable responses’ test when considering whether there was a repudiatory breach in the first place.
The Court of Appeal found no authority supporting the EAT’s decision that a repudiatory breach, once complete, can be remedied in order to stifle a claim. Although the Court thought that this could be ‘capable of working injustice’, it could not justify introducing a new doctrine of cure into the general law of contract. This would open a ‘Pandora’s Box’ in a relatively clear area of law. The repudiation of employment contracts is governed by the general principles of contract law. The Court did not feel that it could justify introducing a new doctrine (of “cure”) whose application would be limited only to employment contracts. The University’s report was not, therefore, capable of curing the repudiatory breach of contract. The Court of Appeal therefore restored the tribunal’s decision, allowing B’s appeal.
At the same time the Court of Appeal endorsed the EAT’s four-stage summary of the correct test to establish constructive dismissal. It held that the ‘range of reasonable responses’ – which derives from the statutory unfair dismissal regime – has no place in establishing a repudiatory breach of contract. The test for establishing constructive dismissal is objective. Although reasonableness is a factor that tribunals may take into account in finding a repudiatory breach, it is not a legal requirement. The Court therefore dismissed the University’s own appeal against the finding of a repudiatory breach.
