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  • Published:
    27 May
  • Area of Law:

Can settlement negotiations prevent a constructive dismissal claim?

If an employee willingly enters into negotiations about a possible exit, does this prevent a claim of constructive dismissal? The High Court considered this question in Gibbs v Leeds United Football Club.

What was the case about?

The Claimant was Assistant Manager at Leeds United Football Club (“the Club”). He was offered the position of Head Coach after the Manager left the Club in May 2014, but declined. The Claimant then expected to be dismissed as a new manager would normally bring in his own assistant.

Although the Claimant was happy to remain in post, there were some exploratory discussions about the terms on which the Claimant might leave the Club. If terms were not agreed, he intended to stay and work out his contract.

The Claimant complained to the Club Chairman that he was not being given anything to do - he was not assigned work which fell within his contract although he was willing to do it; he was not invited to meetings, training or matches that, as an Assistant Manager, he would expect to attend; and he was excluded from taking any meaningful part in the first team’s training.

In a phone call and a subsequent email on 23 July he was informed that, from that point onwards, his role was limited to looking after the under 18 and under 21 players and that he was to have no further contact with the first team. As a result, the Claimant resigned on the basis that the Club was not prepared to honour his contract.

What did the Court say?

The High Court held that requiring a manager who had previously worked with the first team players to have no contact with them, but instead to work only with under 18s and under 21s, was not reasonable and that the email of 23 July informing him of the new arrangement was a repudiatory breach of contract. The loss of status would be obvious, not just to the parties, but to others with whom the Claimant had to deal. The Claimant resigned in response to that email and was therefore constructively dismissed.

The High Court also held that it was not a breach of contract on the Claimant’s part to initiate a discussion about consensual termination. The fact the Claimant had said he was prepared to leave if suitable terms were agreed was beside the point. He had remained ready and willing to fulfil his duties and was, therefore, entitled to succeed in his claim for notice pay.

What should I do now?

Just because an employee enters into settlement negotiations does not necessarily mean that he/she is unwilling to fulfil the terms of his/her contract. Even where settlement negotiations are in progress, employers should tread carefully and ensure that they act fairly and abide by the terms of the contract. Otherwise, they risk being in repudiatory breach of contract and being exposed to possible claims for constructive dismissal.

If you have any queries, please contact a member of the Employment Team.

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