Following the failed case by Stella English of The Apprentice, what is required for constructive dismissal, and how can employers avoid a claim?

Now that the dust has settled on the unsuccessful employment tribunal claim brought by a former winner of BBC’s The Apprentice, Stella English, it is worth reflecting on what we mean when we describe someone as having been “constructively dismissed”. It might seem unnecessary, but some of the media reports of the case have not demonstrated a terribly clear understanding of what it is and how it happens.

“Easy for you to say”, I hear you cry, and you might be right. But the fact remains, that clients, individuals, journalists and even some lawyers still don’t always get it, and as a concept, it can cause genuine confusion and frustration.

A straightforward dismissal does exactly what it says on the tin. Employee is brought in, for whatever reason, and told that’s the end of the line. This should follow a proper process with due regard to the procedures laid down in a staff handbook, contract or at the very least the ACAS code, which provides a basic benchmark of good practice particularly in a case where conduct or performance is the issue. The situation is confirmed in writing, an appeal is offered (hopefully), and if the decision is then confirmed, the employee may choose to challenge it further, depending on what level of employment protection rights might exist in their case.

Readers please note: the cursory approach adopted by a certain well known Tottenham Hotspur supporter and peer of the realm is not recommended, unless of course “better TV ratings” was noted as an objective in your last appraisal.

If an employment tribunal gets its hands on the type of situation described above, it will need to be persuaded by the employer that dismissal was for one of the potentially fair reasons set down in statute, for example misconduct, redundancy or capability. Assuming they manage to do this, the tribunal then tries to reach a view on whether, in all the circumstances, the employer has acted reasonably, and that will look slightly different depending on the reason being relied on. If the tribunal feels the employer hasn’t ticked these boxes, an unfair dismissal finding will almost certainly be the unhappy result.

Driven out?

But there are sometimes occasions when an employee feels they have no option but to hand in their resignation and leave, either with or without notice. “Fair enough,” the employer might say, “that’s your prerogative.” But when a claim comes in, their position is almost certain to be: “But I didn’t actually dismiss you, so what’s your problem?” There’s been no hearing, no letter of dismissal as such, and no appeal. In fact nothing that bears the hallmark of a normal dismissal. And so it was with our unhappy apprentice, set to work first at Sir Alan’s subsidiary Viglen and latterly within another part of his business empire when that didn’t quite work out.

In this second type of case, the tribunal needs first to be persuaded (importantly this time by the employee) that a dismissal took place at all, and that is not always easy as the test applied is a pretty tough one. The judgment in this case encapsulated it very well, drawing on established and eminent judicial guidance.

For there to be a constructive dismissal, you have to show that the employer has committed a fundamental breach of either an implied or an express term of the employment contract. In the English case, it was the implied term known as the bond of trust and confidence. If an employer acts in a way, either deliberately or just through recklessness, that is likely to seriously undermine that bond, then that will be considered as good (or actually as bad) as a regular dismissal – but with the key difference that having followed no procedure and having been found at that point to have made a complete hash of managing the relationship, you are very unlikely to tick the “acted reasonably” box now homing into the view of the disapproving employment judge.

In many ways the case so eagerly covered by the media was not a good one, and did not do much to clarify the subtleties involved. For one thing, our budding entrepreneur didn’t win, so it was an example of something which wasn’t constructive dismissal at all. Regardless of whether you think Sir Alan and his cohorts may have been unreasonable – and I offer no opinion at all on that – what they were found to have said and done just wasn’t bad enough. The law says you need to go well beyond simply acting unreasonably, which is quite often the more accurate label to be attached to what the employer has done. This may also go some way to explaining why so few constructive dismissal claims actually succeed.

Cost avoidance

However, acting unreasonably, even if it is inadvertent, can result in big legal costs for employers, defending what might ultimately turn out to be an unsuccessful claim. And of course as things currently stand, you generally have to bear your own costs, win lose or draw.

What the case does do very well is remind us that you need to be careful in managing workplace relationships. Even little things can build up over time, so that while there may not be a single catastrophic event to provide the catalyst for resignation and claim, unchecked and unaddressed they can present just as much of a risk. This is known amongst employment lawyers as the “last straw” doctrine, and is very often used, sometimes with success, by claimants who feel they have been disregarded and legally dismissed, despite having no termination letter to appeal against. Proactive management minimises that risk and should provide regular opportunities to vent frustration on both sides. It should also allow issues to be addressed in a professional and above all, controlled way. If you appraise your employees regularly and communicate with them effectively, this type of thing should seldom if ever arise, or get beyond the point of no return.

It remains to be seen how much of an impact the imminent introduction of fees to lodge tribunal claims will have. No doubt employers like Lord Sugar hope they will put off employees from making what he would describe as a claim “that should never have been made in the first place”. But that is a whole different subject, and I suspect that if someone feels aggrieved enough by the treatment they receive from their employer, they will find a way.

The Author
Chris Phillips is a partner with Simpson & Marwick and accredited as an employment law specialist by the Law Society of Scotland  
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