Monday, 8 September 2014

Constructive dismissal of an employee, himself in fundamental breach of contract

Constructive dismissal of an employee, himself in fundamental breach of contract

Atkinson v Community Gateway Association (UKEAT/0457/12/BA)

Researched by Martha Lewis of University West of England


The Appellant, Mr Atkinson, was employed by the Respondent Housing Association as a Director of Resources. An investigation conducted by the Respondent into the Appellant revealed several instances of misconduct on Mr Atkinson's part, including a breach of the Housing Association's email use policy (the Appellant had been sending e-mails of a sexual nature to his lover). Mr Atkinson then resigned before the disciplinary proceedings could be concluded.

Constructive dismissal claim

Mr Atkinson brought several claims against the Housing Association before an Employment Tribunal, including one of constructive dismissal. On this matter the ET ruled in favour of the Respondent holding that, as a matter of law, the claim of constructive dismissal must fail because the employee had himself been in fundamental breach of contract at the time of his resignation.

EAT ruling

The decision of the ET to strike out Mr Atkinson's claim of constructive unfair dismissal was successfully appealed by Mr Atkinson before the Employment Appeal Tribunal. The EAT held that, as a matter of law, there is in fact no absolute bar against a claim of constructive dismissal where the employee himself was in fundamental breach of his employment contract at the time of dismissal.


The EAT suggested that the law in this area had been cleared up by the recent  decision of the Court of Session in the Scottish case of Aberdeen City Council v McNeill ([2014] IRLR 114). The Scottish court declared that "... the notion that the principle of mutuality of contract debars the appellant from founding on a claim of constructive dismissal on the basis of the respondents' breach of their obligation of trust and confidence in the conduct of the investigation is erroneous... [T]he respondents' duty of trust and confidence remained, notwithstanding the appellant's breach of contract, and the appellant was entitled to found on the respondent's breach of their duty as amounting to constructive dismissal…"

The EAT in Atkinson v Community Gateway Association declared that the principle laid out in McNeill - despite the fact that this was a Scottish case - did in fact reflect the correct principle in English law.


The principle laid out in Atkinson v Community Gateway Association is that, it is possible for a party to a contract of employment who is himself in repudiatory breach of said contract to accept a repudiatory breach by the other party, so long as his own breach has not yet been accepted by the other party.

In this case, the principle was applied to support an employee's claim of constructive dismissal. The wording of the EAT's judgment however suggests that the principle could equally apply where an employer, which itself has breached its obligation of trust and confidence, dismisses an employee who has subsequently committed a repudiatory breach.

The judgment in Atkinson v Community Gateway Association appears at first consideration to encourage outcomes which show an unfair bias in favour of the party whose initial breach went unaccepted. A court can however take into account a claimant's original breach at the stage of awarding damages and an employee or employer who has himself breached his contractual obligations may find he only receives minimal compensation.

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