A Tale of Two Breaches: breach of a statutory right or obligation – does this amount to a breach of contract?

I am the HR manager of a medium sized company based in London.  One of our employees has claimed disability discrimination, stating that since the diagnosis of his rare medical condition we have not made sufficient reasonable adjustments to take into account his illness.  He has now also brought constructive dismissal proceedings, alleging that by not making the additional adjustments, we have breached his contract of employment.  We have been anxious to try and make all appropriate adjustments for him.  Is it correct that in these circumstances he can claim that we have breached his employment contract and that he has been constructively dismissed?

From Concerned about Contract.

Dear Concerned about Contract

You have raised an interesting question.  Whether or not an employer’s breach of (i) its statutory obligations (in this case the duty to make reasonable adjustments under the Disability Discrimination Act 1995) or (ii) an employee’s statutory rights (see the brief reminder below) is also a breach of the employee’s employment contract was precisely the subject of two Employment Appeal Tribunal decisions reported last month.

In the case of Doherty v British Midland Airways Ltd [2006] IRLR 91, a GMB representative at Heathrow airport resigned and claimed constructive dismissal, alleging abuse of her trade union rights by her employers.  The employee argued to the EAT that there is, as a matter of contract, a right which corresponds in language to the range of an employee’s statutory rights, including those protecting trade union activities.  However the EAT considered that this proposition was “wholly misconceived”. There was no authority that such an implied contractual term existed.   It stated that if there was an implied contractual term which covered precisely the same territory as the range of statute, it would mean that every single breach of a statutory right would be actionable as a breach of contract by an employee.

Therefore good news for employers – breach of a statutory right is not always inherently also a breach of contract.  However is the flip-side true?  In other words is it the case, as in your situation, that an employer’s infringement of a statutory obligation can never be regarded as also amounting to a breach of contract?

Not surprisingly, in Greenhof v Barnsley Metropolitan Borough Council [2006] IRLR 98, the EAT held that this was not the case.  The facts in Greenhof were similar to your own.   A project manager for the Council went off work with clinical depression.  When he returned, his employer suggested that he take a lesser but less stressful role.  He resigned, stating that his employer had discriminated against him “for being ill” and claimed disability discrimination and constructive unfair dismissal.  The Employment Tribunal found that the employer was in breach of its duty to make reasonable adjustments under the Disability Discrimination Act 1995 (that is, instead of pressuring Mr Greenhof to take a lesser role, it would have been a reasonable adjustment to give him such duties as he could cope with without stress).  Nevertheless the Tribunal rejected Mr Greenhof’s constructive dismissal claim.  It found that his contract had not been undermined by any conduct on the part of his employer sufficient to enable him to leave on account of it.  The EAT, however, allowed Mr Greenhof’s appeal.  Although (helpfully for employers) the EAT acknowledged that there may be circumstances in which there can be a breach of the obligation to make reasonable adjustments which might not be regarded as a repudiatory breach of contract entitling the employee to claim constructive dismissal, in this case there had been a serious breach of the obligation to make reasonable adjustments which the EAT considered was “almost bound to be a breach of the implied term of trust and confidence” entitling Mr Greenhof to claim constructive dismissal.

So where does this leave employers?

The good news for employers is that if they have breached their statutory obligations (or an employee’s statutory rights), this does not mean that they have automatically fundamentally breached the employee’s employment contract entitling the employee to claim constructive dismissal.  However, at the same time, employers cannot assume that by breaching their statutory obligations/employee’s statutory rights, they have not committed a repudiatory breach of the employee’s contract entitling the employee to claim constructive dismissal.  In fact, it will probably be safer for employers to consider, in the first instance, that trust and confidence may well have been breached in such a case.  Whether or not such a breach has in fact occurred will depend on the circumstances of the case as the decision in Greenhof shows.  In your case, assuming that the employee is successful in his disability discrimination claim, it may depend on the adjustments you had made to date, the extent and nature of the ones you did not make, and accordingly whether the Tribunal considers that the failure to make such additional adjustments was a breach of trust and confidence or not.

Statutory rights – a brief reminder….

The reference to statutory rights in employment law is generally a reference to those statutory rights to which special protection is given by virtue of section 104 of the Employment Rights Act 1996.  This section states that the dismissal of an employee will be automatically unfair if the reason or principal reason for it was that the employee brought proceedings against the employer to enforce a relevant statutory right, or alleged that the employer had infringed a right of his which is a relevant statutory right.  The relevant statutory rights include, for example:-

• the right to statutory minimum notice
• the “trade union” rights (e.g. regarding deductions from pay, union activities and time off)
• the rights conferred by the Working Time Regulations 1998