Fundamental Breach of Contract: Telling an Employee You’ve Lost Trust in Them Considered “Seriously Damaging”
In Mr Ben Wicken v Akita Systems Limited, an IT director has been awarded over £30,000 in a successful constructive dismissal claim after he experienced unfair grievance practices that constituted a fundamental breach of contract. Despite originally having a good relationship with his fellow directors, tensions arose between him and the company’s founder.
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The Facts in Mr Ben Wicken v Akita Systems Limited
Background to the Fundamental Breach of Contract
Mr Ben Wicken (“the Claimant”) began working as a junior network manager for Akita Systems Limited (“the Respondent”) in March 2014. After commencing his employment, he purchased 12,000 of the 100,000 ordinary shares issued by the Respondent, giving him a 12% shareholding in the company.
By August 2020, the Claimant had advanced to the position of technical director. At the time, the working environment was friendly, with many of the directors being friends, one of whom had been the best man at the Claimant’s wedding.
Emergence of Conflict with Managing Director
Unfortunately, tensions arose in 2022 between the Claimant and Mr Christophe Boudet, the Claimant’s line manager and the Respondent’s founder and managing director. This all began in January, when Mr Boudet arranged individual meetings with each director to discuss the business strategy.
Mr Boudet had recruited Ms Enser, who was a graduate, to the role of business manager. She was tasked with putting systems and processes in place, and the managing director spoke favourably about her qualifications and experience. However, given the Claimant’s far superior experience, he found it demeaning when Mr Boudet compared him to the graduate.
Then, while the Claimant was on his honeymoon between 7 and 18 February, Mr Boudet approved pay rises for two of the Claimant’s subordinates. Although, as managing director, he would have signed them off regardless, it was unusual to exclude the employees’ line manager (the Claimant) from the decision. During proceedings, it was suggested that the raises were approved without the Claimant’s knowledge to prevent discontent, as a new recruit was joining on a higher salary for a similar role, potentially prompting dissatisfaction or resignations.
Claimant Accused of Not Taking Mediation Process Seriously
Problems persisted between the pair until an initial meditation meeting was arranged for 30 March. At that time, communication issues were raised by both parties, with Mr Boudet also requesting that the Claimant lead by example, accept feedback, and learn from his mistakes rather than being stubborn.
Follow-up meetings were then held on 8, 19, and 26 April. While a further meeting was scheduled to take place on 3 May, the Claimant contacted Mr Boudet ahead of time, asking if the meeting could be held via Teams at 11 am. He had garden work being done that week and needed to stay at home.
Despite this, when Mr Boudet received the call, he was “disappointed” and accused the Claimant of “not taking the process seriously.” However, the Claimant still ended up attending the office.
When the next mediation meeting took place on 5 May, the Claimant was questioned about his priorities. While the Respondent questioned why he’d rather stay at home to sort his garden than deal with issues with Mr Boudet, the Claimant couldn’t understand what he’d done wrong. As the meeting progressed, though, he eventually conceded that his communication and decision to attend could have been better.
Grievance Raised Following Alleged Fundamental Breach of Contract
On 11 May, the Claimant had a meeting with the other Directors as well as an external HR professional. At that time, he agreed to prepare a plan aimed at improving his working relationship with Mr Boudet. Unfortunately, when the next meeting arrived, he hadn’t completed the plan. This left the directors feeling disappointed and acting “very cold” toward him.
The Claimant was then given the weekend to consider his plan and have it ready for the following week. However, while the Claimant did just that, he was informed by Ms Cruse, the HR professional, that the improvement plan did not address everything it needed to. Ms Cruse then stated that the Directors had lost trust and confidence in him. Because of this, a without prejudice meeting was held between the Claimant, Mr James, and Mr Boudet on 17 May.
Two days later, the Claimant submitted a grievance, claiming that any subsequent dismissal would “inevitably be unfair.” This was because, while his performance had come into question, he didn’t believe a proper procedure had been followed. He concluded, stating that he reserved the right to resign due to the Respondent’s “fundamental breach of contract.” This grievance was acknowledged on 24 May.
The following day, the Claimant emailed the Respondent, labelling its performance improvement process a “sham.” He then stated that it would be “unfair and pointless” to appoint Mr Charity, another HR advisor, to conduct the grievance investigation, since he was a good friend of Mr Boudet for 32 years. That same day, he was also signed off as unfit to work for a period of two months.
Final Breach and Resignation Following Grievance Mismanagement
Over the following weeks, various correspondence was passed between the Respondent, the Claimant and the Claimant’s solicitor. While the Respondent was keen to proceed with the grievance procedure with Mr Charity as the investigating officer, the Claimant and his solicitor were not.
Things ultimately came to a head, though, when Mr Charity was assigned as the investigating officer concerning the Claimant’s performance on 26 June and then closed the Claimant’s grievance two days later. On the day his grievance was closed, the Claimant provided a written resignation citing mistreatment, especially concerning unfair grievance practices.
He contacted Acas on 30 June for early conciliation and initiated employment tribunal proceedings on 1 September. At such time, he claimed constructive dismissal.
The Employment Tribunal’s Judgment
Following the proceedings, the employment tribunal turned to the constructive dismissal claim. At first, it dismissed several instances, including Mr Boudet signing off pay rises without the Claimant’s knowledge, stating they weren’t a fundamental breach of contract.
Despite this, other issues were found to be satisfactory breaches. The first breach was when the Claimant was told there had been a serious loss of trust and confidence in him. The tribunal stated this sentence was likely to destroy or seriously damage the relationship between the Claimant and his employer.
Additionally, the tribunal questioned why an independent HR professional was not appointed if the Respondent truly wanted an independent investigation. While appointing a friend, i.e., Mr Charity, who is an HR professional, was not a fundamental breach, in these circumstances, it created a perception of bias.
The refusal to remove Mr Charity, who admittedly had no experience conducting workplace investigations for the Respondent, and his closing the grievance was the “last straw” for the Claimant. All of the above contributed to a breach of implied trust and confidence, and the tribunal in its judgment concluded that the Respondent did not act reasonably.
Hence, the Claimant’s resignation and dismissal were deemed unfair.
What is Constructive Dismissal and When Can You Claim it?
Constructive dismissal arises when an employer’s serious breach of contract leaves the employee no reasonable choice but to resign. Although the employee leaves voluntarily, the law treats the situation as if they were dismissed by the employer.
Typically, someone may claim constructive dismissal if their employer commits a fundamental breach of contract, they resign because of that breach without unreasonable delay, and they have at least two years’ continuous service (unless the claim involves discrimination or other automatically unfair grounds).
What is a Fundamental Breach of Contract?
A fundamental breach is a serious violation of the essential terms of an employment contract that damages the trust and confidence between employer and employee. This might include not paying wages, tolerating bullying or discrimination, or failing to follow a fair grievance procedure. A single severe incident may qualify, but a pattern of unreasonable conduct can also amount to a breach.
How to Proceed if You Believe You Have a Constructive Dismissal Claim
Although someone may feel compelled to resign, it’s important to explore other options first, such as raising concerns informally or through a formal grievance. If the issue remains unresolved, legal advice should be sought before taking the step to resign.
Employees should keep detailed records of the employer’s conduct, as this can support the rationale for resignation and strengthen a potential tribunal claim. Any claim for constructive dismissal must usually be submitted within three months minus one day of the resignation date or the end of any notice period, so acting promptly is crucial.
If you are considering handing in your resignation because you believe your employer has committed a fundamental breach of contract, contact us now. As employment law specialists, Redmans Solicitors can answer your questions and provide expert advice. To get started, please:
- Call us on 020 3397 3603
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