What’s the answer? Constructive dismissal?

Annie Hayes

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What’s the answer? Constructive dismissal?

By Annie Hayes

This week Helen Badger, employment law expert, Browne Jacobson and Nicholas Snowden, senior solicitor at Clarkslegal LLP present their ideas on whether a case of ‘bumping’ justifies a constructive dismissal claim.

The question:
“A Director has recruited someone outside of the company to do a role already being done by two existing staff. This person is due to start in two weeks and the existing members of staff are not aware of what their roles are when the person commences employment – they were not consulted before the recruitment, their role has changed without their knowledge or reason as to why. Therefore is it right/legal that the director recruits?

“I feel that both of these people are perfectly capable of doing this position also.

“He has also sent out terms and conditions of employment to the new person (without consulting HR)it is all wrong – there is no job description (to my knowledge) he is also recruiting on a much higher salary than existing staff who perform similar positions.

“If one of these exisiting employees – puts in a grievance – gets nowhere and leaves can they claim constructive dismissal?

“I do not feel comfortable with the process, and feel that the company has let existing employees down, due to one person’s ignorance to procedure and morals. Can anyone help with this?”

Emma Paish

The answers:
Helen Badger is an employment law expert at Browne Jacobson

You are right to be concerned about the Director’s actions. Legally speaking, they would appear to leave the company at risk in several possible ways.

Whilst an employer is entitled to vary an employee’s duties if legitimate business interests necessitate, this should not happen without meaningful consultation and the consent of the employee concerned.

Varying an employee’s duties without their agreement could certainly amount to a fundamental breach of contract, entitling the employee to resign and treat themselves as dismissed.

If the Director presses ahead with his plan to recruit this new person, and this has an impact on the duties carried out by the two existing employees, there could be a very high risk of a constructive dismissal claim. To avoid such a claim, you would need to consult with the employees with a view to obtaining their consent to the variation in duties.

Should they object, however it will be difficult to establish that the consultation was genuine, especially given that the new recruit has already received terms and conditions of employment.

A further concern is the fact that no job description appears to have been created for the new post, and there is no consistency in the level of salary. Whilst you do not specify the sex of the individuals concerned, there would certainly be a risk of an Equal Pay claim in these circumstances.

If, for example, the two existing employees are female and the new recruit male, there would be a legitimate argument that they are not being paid an equal salary for the same work or work of equal value. Equally, the pay inconsistency could be open to interpretation as discriminatory on various grounds.

Without a job description identifying objective differences in the role, establishing that the work is not the same and not of equal value would be that much harder. This could certainly render the director’s decision arbitrary and unable to be objectively justified, exposing the company to significant risk of both discrimination and equal pay claims.

Helen can be contacted at: hbadger@brownejacobson.com

Nicholas Snowden, senior solicitor at Clarkslegal LLP

The first thing to say about constructive dismissal claims, is that they are very difficult to win. The employee has to show:

a fundamental breach of contract

that the person has resigned in reliance upon the breach

that they have not waived the breach by allowing too much time to pass before resigning

The first hurdle is usually the most difficult to overcome for an employee. In this case, if the status of the employees concerned is undermined (for example, if they are in effect being demoted), then they could argue that this amounts to a breach of the implied duty of mutual trust and confidence, which amounts to a fundamental breach of contract.

Much will depend on whether there are any material differences between the role that the new recruit is being brought in to do and the jobs which the two existing employees have been doing.

In practice, if some justification for bringing in a new level of management above the two existing employees can be shown, it is unlikely that the employees will want to resign their positions and cut off their income, in order to run a risky claim against the company.

Nevertheless, to reduce the risk of claims, the company would be wise to think about what it is doing and the way it is doing it. The director doing the recruiting may have a valid reason for recruiting the new employee, but may have simply failed to make the business case.

Whether or not the director has a strong business case for the recruitment and the reorganisation it will seemingly entail, communication is very important and can avert claims. Everybody needs to be clear about what they will be doing in the new structure.

From a management perspective, without any improvement in communication, even if no claims are brought, there could be resentment in the team which could have a detrimental impact on motivation and performance. Further, you may want to make management aware of your feelings on the way this has been handled, although whether you feel able to speak openly about this will depend on the culture within your business.

Finally, you should also consider whether there are any risks of unlawful discrimination or equal pay claims as a result of the proposed action of your director.

Nicholas Snowden can be contacted at nsnowden@clarkslegal.com

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HRZone highly recommends that any answers are taken as a starting point for guidance only.

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