20th May 2014

Q: Who can blame you for resigning?

A: An Employment Tribunal

Contributory Fault in Claims of Constructive Dismissal

The concept of contributory fault is frequently used by employers to reduce compensation awarded to an employee at a tribunal.  Essentially, if an employer can demonstrate that an employee contributed towards his or her own dismissal as a result of their conduct, an employment tribunal is entitled to reduce the award of compensation which is due to that employee.  In some circumstances, if the employee can be held to have wholly contributed towards his or her own dismissal, a tribunal can reduce any award of compensation by 100%.

However what about claims of constructive dismissal?  In cases of constructive dismissal, the employee elects to resign from employment as a result of the employer’s material breach.  Can contributory fault be found in such cases?

In the recent case of Firth Accountants v Law, the EAT held that the answer is potentially yes.  In this case, Mrs Law worked in an accountants’ office.  Her employers had concerns about her performance.  Mrs Law appeared to agree that, whilst one mistake was an error, the rest of the issues which were raised with her were unjustified.  She apparently continued to make these mistakes.  However rather than then formally addressing these concerns with her directly, Mr Firth, the principal of the firm’s practice, addressed these concerns with Mrs Law’s son.  This led to Mrs Law’s resignation and subsequent successful claim of constructive dismissal at tribunal.

Firth Accountants appealed to the EAT on the basis that, since Mrs Law had refused to accept blame where it was justified, the tribunal erred in finding there should be no reduction on the basis of Mrs Law’s contributory fault.  Firth Accountants argued that there should have been a reduction in compensation given the fault which could be attributed to Mrs Law.

The EAT held that, since constructive dismissals claims are determined by applying the law of contract, it will be unusual for a constructive dismissal to have been caused by an employee.  Claims of constructive dismissal focus on the employer’s conduct rather than the employee’s contributory fault.  Having said that, the EAT accepted that, in some unusual cases, a reduction may be appropriate in these types of claim.

So, although it will be the exception rather than the rule, employers who are faced with a claim for constructive dismissal from an ex-employee may wish to examine the extent to which the employee can be held to have contributed towards their own dismissal.  This course of action may result in the employer being able to substantially restrict the value of the employee’s claim.

Simon Allison 
Partner – Employment Law

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