Under general contract law, the innocent party is entitled to terminate a contract where there is a fundamental breach by the other party, “going to the root” of the contract. One instance of a fundamental breach is where one party communicates to the other, that he does not intend to be bound by its key terms. The innocent party may terminate the contract, be thereby discharged from further obligations and take proceedings for compensation for breach of contract.
Constructive dismissal is the termination by an employee of his contract of employment, in circumstances where the conduct of the employer is so flagrant and egregious, that it justifies the employee’s immediate resignation. The circumstances must be such that is reasonable for the employee to terminate the employment contract. He may then take proceedings for wrongful dismissal (breach of contract) or unfair dismissal at his choosing.
A claim for constructive wrongful dismissal requires that the employer commits a fundamental breach of contract. A claim for constructive unfair dismissal requires that the circumstances are such as to make it reasonable for the employee to resign without notice, whether or not as a matter of contract law it is otherwise reasonable to do so.
Constructive Dismissal Not Readily Found
Only highly exceptional circumstances will suffice for a successful constructive dismissal claim. The employee’s subjective assessment of what is justified is not determinative of the position. An employee will very rarely be justified in assuming that the employer’s conduct is sufficient to justify peremptory resignation. He runs the risk that he may be found not to have been dismissed at all.
An employee should go through internal disciplinary and grievance procedures before resigning. The Courts or WRC may conclude that the employee did not act reasonably if he fails to resort to available complaints and grievance mechanisms. If the employee does not communicate his grievance before termination, the Court or WRC is likely to find his resignation not to be dismissal by the employer.
An employee who resigns, however, runs a risk that a court or the tribunal might determine that there has not been a constructive dismissal. The employer’s conduct may not be a repudiation of the contract such that in the circumstances, instant resignation is reasonable.
Fundamental Breach of the Employment Contract
What constitutes a fundamental breach of contract will depend on the terms of the contract. Only the most serious of breaches of an employment contract are sufficiently fundamental to justify termination of the contract or make it reasonable to resign instantly. The breach must be fundamental and go to the heart of the relationship.
It is a question of interpretation of the employment contract in the circumstances, as to whether the employer’s breach is so serious and substantial as to justify immediate resignation either under the contractual basis or on the basis that it is reasonable for the employee to do so, the unfair dismissal test. In considering the reasonableness of an employee’s resignation, the WRC looks at the entire circumstances.
In some cases, the circumstances may show a breach of the fundamental requirement of mutual trust and confidence. An unjustifiable reduction in salary may constitute a constructive dismissal. An insistence upon the performance of functions of a nature which are wholly outside the scope of the contract may be sufficient.
Fundamental Changes in Employment
It is a basic principle of contract law that one party cannot change a contract without the consent of the other. A contract may be changed by express or implied consent or by acquiescence with the new arrangements.
There is a presumption that an employer may change the general nature or organisation of work. Work may be conducted in one way at one time, but technology may require a variation of the manner in which the work is undertaken. An employee is expecting to adapt itself to new working methods and techniques in the course of employment.
The contract deals with the immediate relationship such as hourly rate of pay, holidays, sick leave, etc. The law is reluctant to imply provisions in relation to promotion and career development etc. as contractual obligations. These are deemed incidental matters.
A fundamental change in the nature of employment may be a breach of contract. However, changes in work practices and the manner in which the work is done are unlikely to be a breach of contract. Generally, requiring work to be done during an otherwise idle period for which payment is made, would not generally be a breach of contract.
Risks of Resignation
Only the most serious of breaches of an employment contract are sufficiently fundamental to justify termination of the contract or make it reasonable to resign instantly. The breach must be fundamental and go to the heart of the relationship.
An employee who resigns, runs a risk that a court or the WRC might determine that there has not been a constructive dismissal. The employer’s conduct may not be a repudiation of the contract such that in the circumstances, instant resignation is reasonable. In considering the reasonableness of an employee’s resignation, the WRC looks at the entire circumstances.
Where, for example, an employee, is unjustifiably demoted, it may be possible to claim constructive dismissal, if immediately or after a short trial period, he resigns. In the latter case, he may need to show that he protested at the demotion. However, if the employment contract entitles the employer to change the scope of employment, the employer may be able to justify what would otherwise constitute a constructive dismissal. If the discretion is very wide, the WRC is likely to imply that it must be exercised reasonably.
Fixed Term Contract Expires
A dismissal under the Unfair Dismissals Act occurs where there is a termination by the employer of the employee’s contract of employment with or without notice. Where a fixed term or purpose contract terminates, there is no termination by either employer or employee. Accordingly, the legislation deems there to be a dismissal. Such contracts do enjoy statutory protection, which is discussed in other articles.
A fixed term or fixed purpose contract is one which is for a particular period or a particular purpose. A fixed term employee is one whose contract of employment terminates by an objective condition such as the date of completion of a specific task or event. A fixed purpose contract is for employment for a particular task or purpose of inherently limited duration.
If there is no express right to terminate the contract on the part of the employer, the employee may be entitled to compensation if it is terminated before the expiration of the relevant period or purpose. If the employee has not express right to terminate before the period ends or the purpose is fulfilled, the employer could, in theory, sue the employee if the loss is suffered in hiring a replacement.
Termination under Contract Law
The principles of wrongful dismissal and the termination of contracts are relevant where a repudiation arises. The general principle of contract law is that a repudiation by one party entitles the innocent party to elect to either affirm or accept termination of the contract.
There have been different opinions regarding whether an unaccepted repudiation terminates the contract. This may be of significance when entitlements are accruing, such as the entitlement to bring an unfair dismissal’s claim itself.
If as a matter of contract law an acceptance of the employer’s repudiation is required, then it is the employee who terminates the contract by accepting it, rather than the employer. On this view, the employee dismisses himself. This interpretation would undermine the scheme of the Unfair Dismissals Acts and although arguable in principle, the courts are likely to avoid reaching this conclusion.
Question over Dismissal
A person is generally dismissed where he is unequivocally told that his employment is at an end or the circumstances make this abundantly clear that this so. An employee’s repudiation of the contract is likely to be deemed a self-dismissal in highly exceptional circumstances only.
Questions may sometimes arise as to whether particular circumstances amount to a dismissal. This may raise the question as to whether there has been a dismissal or a resignation. The entire circumstances may need to be examined. If it is reasonable for the employee to believe that he has been dismissed, then this is the likely conclusion.
The date of dismissal is important in the context of qualification for unfair dismissal rights. The Unfair Dismissals Act provides that the date of dismissal is the date on which notice of termination would have expired if minimum notice had been given. Where longer notice is given, it fixes the date of termination. Where a shorter notice or no notice are given, the minimum notice legislation determines the date of dismissal.
Various Circumstances of Termination
An agreed termination agreement is not a dismissal. This may arise in the context of an agreed redundancy or termination agreement. If an employee resigns because he pre-empts an immediate dismissal in order to characterise it as a resignation, this may be deemed a dismissal.
Where a settlement agreement is entered whereby the termination of employment is on voluntary terms, there is no dismissed.
The death of an employer or employee will terminate employment.
The commencement of insolvency proceedings may terminate the employees’ contract. Under certain circumstances, continuity of employment may continue with an insolvency officer. Employees may be retained by a receiver, liquidator or other insolvency officials.
In some circumstances, it may be reasonable to infer a new arrangement has been entered between receiver / liquidator and employees. In these circumstances, continuity of service may continue.
The Acquired Rights Directive does not usually apply to transfers in the course of liquidation or insolvency. If, however, the transfer is undertaken in order to ensure the on-going continuity of the business or portion of the business, there may be a transfer of undertaking for the purpose of the legislation.
The appointment of a receiver out of court does not terminate contracts of employment. Directors and senior personnel may be impliedly removed from office or employment by the assumption of managerial powers by a receiver. The appointment of an examiner will not affect the employment relationship. However, an examiner may ultimately be unable to procure a scheme in which event liquidation may follow.
References and Sources
Employment Law Meenan 2014 Ch. 24
Employment Law Supplement Meenan 2016 Ch.24A
Employment Law Regan & Murphy 2009 Ch.22 ( 2nd Ed 2017)
Employment Law in Ireland Cox & Ryan 2009 Ch.2
Dismissal Law in Ireland Redmond 2007 Ch.10
Other Irish Books
Employment Law Forde & Byrne 2009
Principles of Irish Employment Law Daly & Doherty 2010
Employment Law Contracts (Book & CD-ROM) Beauchamps, Solicitors 2011
Unfair Dismissals Act 1977 (10/1977)
Worker Protection (Regular Part-Time Employees) Act 1991 (5/1991),
Unfair Dismissals (Amendment) Act 1993 (22/1993)
Protection of Employees (Part-Time Work) Act 2001 (45/2001
Civil Service Regulation (Amendment) Act 2005 (18/2005) (Part 6)
Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007 (27/2007)
Industrial Relations (Amendment) Act 2015 (27/2015), s. 39
Periodicals and Reports
Employment Law Yearbook (annual) Arthur Cox
Employment Law Reports
Irish Employment Law Journal
Employment Law Review
Dismissal & Redundancy Consolidated Legislation Barrett, G 2007
Irish Employment legislation (Looseleaf) Kerr 1999-
Employment Rights Legislation (IEL offprint) Kerr 2006
Dismissal & Redundancy Consolidated Legislation Barrett, G 2007
Principles of Irish Employment Law Daly & Doherty 2010
Termination & Redundancy, What is the law? Hayes, Barry & O’Mara 2005
Termination of Employment Statutes (IEL) Kerr 2016
Termination of Employment: Practical Guide for Employers Purdy 2011
Employment Law Nutshell Donovan, D 2016
Employees: Know Your Rights Eardly 2008
Essentials of Irish Labour Law Faulkner 2013
Workplace Relations Commission http://www.lrc.ie/en/
Irish Human Rights and Equality Commission https://www.ihrec.ie/
Health and Safety Authority http://www.hsa.ie/eng/
Textbook on Employment Law, Honeyball, et al. 13th Ed. 2014
Labour Law, Deakin and Morris 5th Ed. 2012
Employment Law, Smith and Wood 13th Ed 2017
Selwyn’s law of Employment Emir A 19 Ed. 2016
Employment law : the essentials. Lewis D Sargeant M and Schwab M 11 Ed.2011
Labour Law Collins H, Ewing K D and McColgan 2012
Industrial relations law reports. (IRLR): Law Section,
Employment law Benny R Jefferson M and Sargent 5th Ed. 2012
Pitt’s Employment Law 10th Ed. Gwyneth Pitt 2016
CLP Legal Practice Guides: Employment Law 2016 Gillian Phillips, Karen Scott
Cases and Materials on Employment Law 10th Ed. Richard Painter, Ann E. M. Holmes 2015
Blackstone’s Statutes on Employment Law 2015 – 2016 Richard Kidner
UK Practitioner Services
Tolley’s Employment Handbook 2017 Mrs Justice Slade 2017
Butterworths Employment Law Handbook 2017 Peter Wallington 2017
Blackstone’s Employment Law Practice 2017 Edited by Gavin Mansfield, John Bowers, John Macmillan 2017
UK Periodicals and Reports
The Employment Law Review 8th Ed. Erika C. Collins 2017
Industrial Relations Law Reports
Employment Law in Context: Text and Materials 2nd Ed. David Cabrelli 2016