For a claim of constructive dismissal to succeed, the employee has to show that they resigned in response to a breach of contract by their employer. In Holmes v Tellemachus Ltd, the EAT held that as the employee had asserted she had been subject to detrimental treatment and resigned in response, the judge should have considered whether she was claiming constructive dismissal.
Basic facts
Ms Holmes worked for Tellemachus Ltd from 28 January 2019 to 19 April 2019 when she resigned because of “bullying, constant criticism and excessive workload stress”. The company deducted 50 per cent from her final wages in respect of an agency recruitment fee, which amounted to almost £1,000.
She brought a tribunal claim for notice pay, holiday pay and “other payments”, including unlawful deduction from wages, a reference to the recoupment of the recruitment fee. Ms Holmes alleged that her employer was using it as a penalty clause to punish employees for leaving, whatever the reason. She attached a formal grievance letter dated 25 April to the claim form, which reiterated her complaint that because of the treatment she had suffered, her only option was to leave. Her employer defended the claim, saying that they were entitled under clause 19 of her contract to recover agency fees.
Tribunal decision
The employment judge gave an oral decision at the hearing, but subsequently asked the parties to make further submissions about the penalty clause. In response to the company’s argument that she was in breach of contract, Ms Holmes wrote that: “I have clearly outlined the reasons for my resignation, which are not a breach of contract, as I felt I had no option but to resign due to the respondent’s failure to deal with the grievance raised…”.
The employment judge rejected her claims, holding that clause 19 did not operate as a penalty clause and she had not, therefore, suffered an unlawful deduction of her wages. Nor had there been an express breach of contract on the part of her employer that would entitle her to recover the recruitment fee.
Ms Holmes appealed on the basis that the judge had not considered whether her claim (which she was pursuing herself without representation) constituted constructive dismissal. The company argued that, as she had not lodged a claim for unfair constructive dismissal, the tribunal was not required to consider it.
EAT decision
Upholding the appeal, the EAT said that although Ms Holmes had not expressly raised the issue of constructive dismissal, the judge had to take into account that she was acting in person, trying to deal with complex legal issues. Just because she failed to utter the words “constructive dismissal”, he should have realised that this was an issue, not least because the allegation was obvious from the documentation she had attached to her claim form.
The judge should, therefore, have realised that Ms Holmes was asserting that she had resigned as a result of the company’s treatment of her. If that was the case, it followed that it could not rely on a clause in her contract of employment to recoup recruitment fees. Having identified that the issue in dispute was constructive dismissal, the judge should have gone on to consider whether the company had breached the implied term of mutual trust and confidence, and whether Ms Holmes had resigned in response to that breach without having affirmed the contract.
The EAT remitted the issue to the same employment tribunal to decide whether Ms Holmes had been constructively dismissed because if she had been, the company would have to repay the fees.
Comment
This case concerned an employee’s common law right to resign and treat themselves as having been dismissed where the employer had committed a fundamental breach of contract. The tribunal in this case fell into the constructive unfair dismissal trap by failing to address the reason why the employee had resigned.