ACCA F4 - Corp and Business Law (ENG)

142 9: Dismissal and redundancy  Part C Employment law

If, however, they have no sufficient justification the employer is liable for breach of contract and the

employee may claim a remedy for wrongful dismissal. Whether the employee's conduct justifies summary

dismissal will vary according to the circumstances of the case.

Wilson v Racher 1974

The facts: A gardener swore at his employer using extreme obscenities.

Decision: His action for wrongful dismissal succeeded, as the employer's own conduct had provoked the

outburst. This was a solitary outburst following a history of diligence and competence.

Contrast this with Pepper v Webb 1969. The decision in this case favoured the employer as the incident

also included a refusal to obey a reasonable and lawful instruction by the employee.

2.2 Constructive dismissal

Constructive dismissal occurs where the employer, although willing to continue the employment,

repudiates some essential term of the contract, for example by the imposition of a complete change in the

employee's duties, and the employee resigns. The employer is liable for breach of contract.

2.2.1 Mobility clauses

Employers may include mobility clauses in the employment contracts of employees. These clauses state

that the employer may require the employee to work in various locations or areas, including different

countries. Very often an employee will generally be based in a single location, but a dispute arises when

the employer’s circumstances change and they invoke the clause in order to move the employee to a

different site. This may happen, for instance, where an employer decides to close down a particular office

and to avoid making an employee redundant decides to move their place of work.

Generally, these clause are valid and will be upheld by the courts if they are reasonable. If they are not

held to be valid, the employee will have been constructively dismissed.

2.2.2 Establishing constructive dismissal

To establish constructive dismissal, an employee must show that:

 His employer has committed a serious breach of contract (a repudiatory breach).

 He left because of the breach.

 He has not 'waived' the breach, thereby affirming the contract.

The breach must be serious. Examples of breaches of contract which have lead to claims of constructive

dismissal include the following.

 A reduction in pay

 A complete change in the nature of the job

 A failure to follow the prescribed disciplinary procedure

 A failure to provide a suitable working environment

 A failure to implement a proper procedure

2.3 Employer's inability to continue employment

If a personal employer dies, an employing firm of partners is dissolved, an employing company is

compulsorily wound up, a receiver is appointed or the employee's place of employment is permanently

closed, the employer may become unable to continue to employ the employee.

2.4 Repudiation of the contract by the employee

Resignation, striking or failing to perform the contract and to observe its conditions, is breach of contract

by the employee. The employer may dismiss them or treat the contract as discharged by the employee's

breach.