Employment Flash - 26th February 2010

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What is the correct test for repudiatory conduct by the employer? Can a repudiatory breach be cured before acceptance?

Buckland v Bournemouth University H.E. Corporation [2010] EWCA Civ 121

BU re-marked some exam papers marked by B; then they re-marked them again, and again. B was unhappy with BU's approach, and as found by the ET legitimately so due to a slur being made on B's reputation, but B stayed his hand whilst an inquiry was conducted by V on BU's behalf. That started in September 2006. The report was published in January 2007 and vindicated B, but B was still dissatisfied, legitimately so as the ET found, and resigned in February 2007, such resignation to take effect in July 2007. B claimed constructive dismissal; the ET found for him. BU appealed. The EAT upheld the appeal. B appealed and BU cross-appealed.

The Court of Appeal while allowing B's appeal endorsed the EAT's approach on the correct test of repudiatory conduct of an employer ([2009] ICR 1042, paras 24-46). B, as is often the situation with repudiation, relied on the breach of the implied term of trust and confidence. The approach is: (1) the unvarnished Mahmood test applies; (2) if, applying Western Excavating v Sharp, acceptance of that breach entitled the employee to leave, the employee has been constructively dismissed; (3) it is open to the employer to show the dismissal was for a potentially fair reason; (4) if the employer does so, it is for the ET to decide whether the dismissal for that reason, substantively and procedurally falls within the range of reasonable responses and was fair. To the extent that Abbey National v Fairbrother [2007] IRLR 320 or Claridge v Daler Rowney Ltd [2008] ICR 1267 say different they do not apply.

Sedley LJ commented (para. 28) that it was arguable that reasonableness of the employer's conduct is "one of the tools in the [ET]'s factual analysis kit" for deciding if there has been a fundamental breach which will be useful in some cases but is not a legal requirement.

But could BU cure their repudiatory breach before acceptance by B? The V report was the factual basis for BU having provided such a cure. It was common ground that there was no decided case holding that a repudiatory breach once complete could be remedied so as to preclude acceptance. Sedley LJ reluctantly declined to introduce into the law of contract or even into the discrete arena of employment contracts the idea that a completed repudiatory breach could be cured by the defaulting party. Jacob LJ was not so squeamish. Carnwath LJ agreed with the reasons for the dismissal of the cross-appeal of BU and allowing B's appeal given by Sedley LJ.

Sedley LJ and Jacob LJ took a different line on the question of affirmation, often a vexed question in employment contracts. Sedley LJ is for ET's taking a "reasonably robust approach to affirmation" such that the employee, "particularly if he does not make his position clear at the outset, cannot ordinarily expect to continue with the contract for very long without losing the option of termination, at least where the other party has offered to make suitable amends." and saw the facts of the present case as an exception that proves the rule (reasonable of B to await findings of inquiry; reasonable to give long notice so students would not have their studies adversly affected). Jacob LJ took the view that repudiatory breaches put the employee under enormous pressure: if you leave, you're unemployed with a claim; if you stay, you have affirmed. Ideally an employee who stays while they think things over would say so to the employer, but it is not an ideal world, "For that reason the law looks carefully at the facts before deciding whether there has really been an affirmation" and that "...it takes rather a lot to find affirmation on the facts in an employment contract..."