In a recent High Court decision, the Court reaffirmed some important considerations when dealing with alleged breach of contracts by an employer.
Brown & Others v Neon Management Services Ltd and another concerned senior employees who had resigned on notice following breaches by the employer (including failing to pay salary increases and bonuses that had been awarded to them through making them conditional on accepting detrimental new employment terms). All three Claimants resigned on notice, with two Claimants having six-month notice periods and the other a 12-month notice period.
During their notice periods, the employer committed further repudiatory breaches by making (in the Court’s opinion) unjustified findings of misconduct for the Claimants having forwarded emails to their personal accounts, alleging loss of trust and confidence and reporting the alleged misconduct to the Claimants’ professional regulator (all without putting the allegations to the Claimants first). Two of the Claimants resigned on these further breaches with immediate effect, while the third Claimant worked the remainder of her notice period.
The High Court made two important findings:
- Resignation on notice where the notice period was six months or more affirmed the employment contract, thus keeping it alive in the absence of further breaches; and
- Making unwarranted findings of misconduct, reporting the Claimants to their regulator and alleging trust and confidence without giving the employees the chance to answer the allegations was a repudiatory breach, enabling the Claimants to resign without notice during their notice period.
Employers should be careful of any actions they take in this notice period which could constitute a repudiatory breach and entitle the employees to resign and claim constructive dismissal for these further breaches.
The above is important for employers, not only for any tribunal claims but to also protect their business interests. The High Court held that due to the employer’s repudiatory breaches, the post-termination restrictions within their employment contracts fell away and were no longer enforceable. While whether there is an “affirmation” of an employment contract in constructive dismissal cases where employees work some or all of their notice will always be fact and context-specific, it shows that working lengthy notice periods could affirm the contract in the absence of any further breaches.
The case is a useful reminder that employers should be careful of any actions they take in this notice period which could constitute a repudiatory breach and entitle the employees to resign and claim constructive dismissal for these further breaches.
