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Constructive Dismissal - Employee Conduct versus Employer Conduct

Does negotiating a termination package prevent an employee from claiming constructive dismissal?  No, confirmed the high court in the case of Gibbs v Leeds United Football Club.

Mr Gibbs was employed as the Assistant Manager of Leeds United Football Club.  In early 2014, the Club’s ownership changed and the then manager, Brian McDermott, negotiated a deal to leave.  The Club subsequently entered into negotiations with Mr Gibbs to become the Club’s ‘Head Coach’ but he declined. The Club later wrote to Mr Gibbs affirming their desire for him to remain with the Club under his existing contract. 

Mr Gibbs entered into discussions with the Club regarding a termination package but terms were never finalised and relations between the parties deteriorated. Mr Gibbs was then omitted from a fly list to travel to Italy with the first team players and was later informed by e-mail that his interaction with players was to be restricted to any non-first team players and the under 21’s and under 18’s teams only.   Three days later Mr Gibbs resigned from his position as Assistant Manager and lodged a claim of constructive dismissal.

The Club argued that Mr Gibbs had always intended to leave the Club following the departure of Brian McDermott, which was evidenced by Mr Gibbs’s initial discussions regarding a termination package.  However, the Judge stated that these discussions were ‘beside the point.’  The test for constructive dismissal is three-fold.  The Judge must determine:

  1. was the employer in breach of contract;
  2. was that breach ‘repudiatory’, i.e. did the employer’s actions display an unwillingness on part of the employer to be bound by the original contract of employment, here, by restricting Mr Gibb’s interaction to non-first team players and those in the under 18’s and under 21’s teams, the Club demonstrated that unwillingness; and
  3. did the employee resigned, at least in part, in response to that breach. 

In deciding the case, the Judge confirmed that an employee will not be in breach of contract simply by discussing a potential consensual termination and that such discussions will not prevent an employer being considered to be in breach of contract either. 

The concept of constructive dismissal exists to protect employees from being forced out of their position by the conduct of their employer.  This case is a helpful reminder to employers that the test of constructive dismissal will focus more on their actions, than on the actions of the employee.

For more information please contact Martin Sinclair or Nicola Gray or call 01224 632464.

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