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Reinstating an employee who has been dismissed might not prevent an employer from facing an unfair dismissal case, if the employee resigns and claims constructive unfair dismissal. This article looks at the risks an employer faces and gives guidance on reducing those risks, following the recent decision of the Employment Appeal Tribunal (EAT) in the case of Thomson v Barnet Primary Care Trust.

Constructive unfair dismissal definition

An employee is considered as being constructively dismissed if they resign because their employer has breached the contract of employment in such a serious way that they are entitled to leave without necessarily giving notice. Although the breach of contract has to be very serious, it does not have to be a one-off act. It may be that the effect of a number of breaches over a period of time taken together is found to amount to a very serious breach.  This is referred to as the ‘last straw’ doctrine.

The employer may argue that the constructive dismissal was nevertheless for a potentially fair reason and that it was, therefore, not an unfair dismissal, but this can be difficult to establish.

Facts in Thomson: dismissal procedures and reinstatement

Ms Thomson was summarily dismissed on capability grounds and then reinstated following a successful appeal, with full back-pay. When reinstating Ms Thomson, her employer downgraded the original sanction of dismissal to a three-year written warning and imposed a series of conditions on her return, including a training programme and a competency assessment.

Ms Thomson resigned her employment over the terms of her return to work. The EAT held that Ms Thomson’s resignation was a constructive dismissal.

Reinstatement on appeal

Where a dismissed employee is reinstated following a successful appeal, they are treated as having being suspended during the period between the dismissal and the decision to reinstate. The dismissal is, in effect, regarded as never having occurred (this is sometimes referred to as the ‘vanishing dismissal’), and the employee’s continuity of employment will not have been broken. InRoberts v West Coast Trains Ltd [2005],  it was held that, where an employer is permitted under a contractual disciplinary procedure to impose a different decision on appeal in place of dismissal, the decision does not involve terminating the existing contract and entering into a new contract. The position is likely to be different if the disciplinary procedure does not refer to the possibility of demotion. It is therefore important to consider the sanctions available to the employer under the employee’s contract.

The employment tribunal found that Ms Thomson’s acceptance of the back-pay indicated acceptance of a new contract or, in the alternative, if the original contract continued, Ms Thomson had waived any prior breaches and accepted the varied terms of her employment. The conditions imposed did not amount to a further breach of contract and so Ms Thomson’s claim for constructive unfair dismissal failed.

The EAT considered that the tribunal was wrong to infer a new contract from the acceptance of back-pay. Applying the principle in Roberts, the effect of the reinstatement was to revive the original contract of employment.

Given its finding that the contract continued, the EAT held that the earlier breaches of contract were neither waived nor accepted, so there was no reason why Ms Thomson could not rely on them in her complaint and she was entitled to add together all of the events which she had found unsatisfactory about her relationship with her employer at the time of her resignation. The EAT found that the reason for Ms Thomson’s resignation was this culmination of breaches and that the imposition of the conditions on her return to work amounted to the last straw.

Applying the decision in Thomson, employers who reinstate an employee upon appeal should be mindful that there may not have been a break in the continuity of employment and should consider carefully what conditions are imposed on an employee’s return to work. Employers should also take steps to ensure that if the employee has any grievance at work, those are investigated properly and the findings communicated to the employee on their return to work.

If you have any questions about the issues raised in this article or would like your disciplinary policy reviewed please contact our Employment Law team or call us on 0117 904 6000.