Mr Marques resigned his position from BDK Architects claiming constructive unfair dismissal and breach of contract. His former employer counter-claimed for notice monies and training costs. The case illustrates well the four-pronged test for constructive unfair dismissal.
By the end of his employment, Mr Marques had worked for BDK for just over 4 years. During that time it was acknowledged that he was a skilled Architect. However, during 2015, Mr Marques was informed that due to cash-flow difficulties he (and the other members of the team) may not be paid full salary on time. Crucially, the employees were not kept informed or updated about the status of the cash-flow difficulties and they were not made aware in sufficient time as to when salaries would be only part-paid thereby enabling them to plan their own finances accordingly. Mr Marques was underpaid or paid late in July 2015, September 2015 and for a final time in October 2015. At this point in October Mr Marques resigned claiming constructive unfair dismissal on the grounds that the employer had breached the express terms of the contract relating to payment of full salary and payment by a certain day, and the implied term of mutual trust and confidence as he felt that he could no longer trust his employer to pay him the right amount and on time.
The Tribunal applied its usual test to constructive unfair dismissal cases:
Was there a breach of contract?
The Tribunal said yes – it stated that there was an express breach (not paid in full or on time) and an implied breach (employee could no longer trust that payment would be made).
Was the breach fundamental?
The Tribunal said yes – payment of wages is an intrinsic part of any contract of employment, there is nothing more fundamental than getting paid. Further the Tribunal said that any finding of a breach of trust and confidence will always be regarded as fundamental.
Did the employee resign in response to the breach?
The Tribunal said yes – the employee resigned in October 2015 as he did not receive his full salary on the day stipulated in his contract.
Did the employee delay in resigning?
The Tribunal said no – the employee resigned in response to the non-payment of October salary.
As a result, Mr Marques was awarded £12,802.02 for constructive unfair dismissal and £4,354.16 for breach of contract. It should be noted however that the Tribunal agreed with the employer that the training monies should be recovered from Mr Marques so these were offset from the awards.
LAW’s comment: Cash flow difficulties do not immediately mean breach of contract or claims for constructive unfair dismissal. Employers should consult with affected employees and try to obtain and record their consent to any delay – this operates to vary their terms of employment and negates claims. Further, partial payment can at least allow employees to manage their financial commitments.
Businesses should consider where possible reserving a “worst case” cash contingency in their accounts large enough to cover the payment of all salaries (and ITIS and social security) for the duration of any redundancy exercise (around one month) – the last resort in hard times.