In Singh v Metroline West Ltd , the Employment Appeal Tribunal (EAT) determined that, with regard to a claim for constructive dismissal, a fundamental breach of an employment contract could occur even where an employer’s actions did not suggest an intention to end the employment relationship.
The case related to the withholding of contractual sick pay to an employee, Mr Singh, by Metroline West Ltd (‘Metroline’). Company sick pay was withheld as Metroline believed that Mr Singh’s absence from work was an attempt to avoid a scheduled disciplinary hearing. Statutory sick pay was paid to Mr Singh instead. In response, Mr Singh brought a claim for constructive dismissal, contending that the failure to pay him the contractual rate of sick pay was a fundamental breach of contract.
The Employment Tribunal (ET) determined that there had been a breach of contract by Metroline, albeit not a fundamental breach. Metroline had contractual rights to suspend Mr Singh without pay for an illicit absence. Additionally, his contract allowed company sick pay to be withheld if an investigation found that an absence from work was not for legitimate reasons. Still, the ET considered that Metroline’s aim in withholding contractual sick pay was to encourage Mr Singh’s involvement in the disciplinary process. The ET did not believe that it implied a desire to not be bound by the employment relationship.
The EAT disagreed with the ET’s judgment and upheld Mr Singh’s appeal on this issue. It was considered that the ET erred in law in deeming that a fundamental breach of contract could only occur if there was an intention to not be bound by a contract in such a way as to end an employment relationship. Rather, a unilateral decision to reduce pay to which an employee is entitled is a fundamental breach of contract.
