Will an ongoing grievance process impact a claim for constructive unfair dismissal?

In the recent case of Nelson v Renfrewshire Council, the Employment Appeal Tribunal (EAT) criticised a ruling by the Employment Tribunal dismissing a constructive dismissal claim simply because the employee had not completed the grievance process. The EAT emphasised that it is the employer's conduct, not the completion of grievance procedures, that is the key factor in determining a repudiatory breach of contract​.

Constructive unfair dismissal

In order to claim unfair dismissal, an employee must first show that they have been dismissed. In the absence of an express dismissal, an employee may be able to rely on the concept of constructive dismissal.

Constructive dismissal occurs when an employee resigns because their employer’s actions have seriously breached the employment contract. Often, this involves a breach of the implied term of trust and confidence (for more information see: The Implied Term of Trust and Confidence: key points to know). The employer’s behaviour must be significant enough to damage the employment relationship and make it untenable for the employee to continue working. To bring a constructive unfair dismissal claim, the employee must resign specifically in response to this breach, and the resignation must be directly caused by the employer’s conduct.

If an employee can prove they have been constructively dismissed, the Employment Tribunal must then decide if that dismissal was fair or unfair, having regard to the usual statutory tests for unfair dismissal (though in reality, it will be hard for an employer to establish reasonableness in a situation where it is found to have fundamentally breached the employee’s contract of employment).

The Tribunal Decision

The case of Nelson v Renfrewshire Council involved Ms Jen Nelson, a teacher, who was employed by Renfrewshire Council from February 2012 until her resignation in November 2022. A dispute arose in October 2021 and in November 2022 Ms Nelson resigned citing a “serious material breach” of her employment contract. She cited the behaviour of the Head Teacher and the handling of her grievance by the Council as her reasons for her resignation. Ms Nelson claimed that the Head Teacher’s aggressive and intimidating behaviour, along with the inadequate handling of her grievance (which included ignoring eyewitness evidence and admission of bias in the process), constituted a repudiatory breach of the implied ‘trust and confidence’ term. The Employment Tribunal dismissed the claim holding that the grievance process had not been exhausted and that, whilst the Head Teacher’s behaviour was aggressive, it concluded that this was a one-off incident and out of character. It held that it did not therefore amount to a serious breach of the relationship of trust and confidence justifying Ms Nelson’s resignation.

The EAT Decision

Ms Nelson appealed to the EAT who allowed the appeal finding that the Employment Tribunal had misapplied legal principles and failed to properly assess the cumulative effect of the employer’s conduct on the employment relationship. The EAT emphasised that the Employment Tribunal should have assessed the situation at the time of Ms Nelson’s resignation. It should not have speculated on hypothetical future events such as the potential outcome of a grievance appeal. The EAT ruled that the employer’s failures in handling the grievance procedure were serious enough to breach trust and confidence, entitling Ms Nelson to resign and claim constructive dismissal. The EAT emphasised that Ms Nelson’s failure to appeal the grievance outcome did not affect her right to claim constructive unfair dismissal.

Key takeaways for employers

     1. Handling Grievances

Employers should ensure that they handle grievance processes fairly, thoroughly, and without bias. Failure to do so can significantly damage trust and confidence, which could give rise to a claim of constructive dismissal.

     2. Impartial Investigations

Appointing an impartial investigator is crucial. The investigation should be transparent and lead to a clear, well-reasoned outcome. Ideally, the grievance should be investigated by someone who has not been closely involved in the events that have given rise to the grievance.

     3. Significance of Employer Conduct

This case underscores that it is the employer’s actions and conduct that are critical in assessing breaches of trust and confidence for the purpose of a constructive dismissal claim, not what the employee does. Employers should consider implementing comprehensive training for managers on handling grievances.

     4. Cumulative Effect of Conduct

Aggressive or intimidating behaviour, as highlighted in this case, can significantly damage the relationship of trust and confidence. Employers should be aware that the cumulative effect of their actions can lead to a breach of trust and confidence, even if individual incidents might not seem significant on their own.

     5. Grievance Process Exhaustion

The EAT has confirmed in this case that an employee’s failure to exhaust the grievance process does not prevent them from claiming constructive dismissal if the employer’s conduct has already breached trust and confidence. It is crucial therefore that grievance processes are handled fairly and that employers do not rely on an employee needing to exhaust the grievance process in order to bring a claim for constructive dismissal.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, November 2024