Can an Employer Cure a Breach of Trust and Confidence?

There is an implied duty of mutual trust and confidence in all contracts of employment.  If an employer acts in a way which is likely to destroy or seriously damage the relationship of mutual trust and confidence between itself and the employee, then the employee is entitled to treat his obligations under the contract as discharged.  He is therefore entitled to walk out, with or without giving notice and claim that he has been constructively dismissed.

The leading case on this issue is Buckland v Bournemouth University.  In this case the Court of Appeal held that, once a repudiatory breach of contract has been committed by the employer, it cannot be cured unless the wrong party waives the breach or affirms the contract.  If he chooses not to do either, it remains open to him treat the breach as terminal and to resign and claim constructive dismissal notwithstanding any olive branches presented to him by the employer or any other steps taken to try and rectify the breach.  The nature of trust and confidence is such that every breach will be repudiatory (i.e. fundamental).

At first sight, the recent EAT case of Assamoi v Spirit Pub Company (Services) Ltd seems to contradict Buckland.  In this case the employee’s line manager acted in a way which the Tribunal held was “likely to damage” the relationship of trust and confidence between the employer and Mr Assamoi but it nevertheless held that Mr Assamoi’s resignation did not amount to a constructive dismissal because the employer took significant steps to make amends for the line manager’s actions.  Mr Assamoi appealed against the decision, seeking to rely on Buckland.  However, the EAT distinguished the two cases by stating that the Tribunal had said only that Mr Assamoi’s line manager had acted in a way which was “likely to damage” the relationship of trust and confidence, and not that he had acted in a way “likely to destroy or seriously damage the relationship of trust and confidence”.  As a result, the line manager’s conduct was not serious enough to amount to a repudiatory breach of contract and the fact that the employer immediately took steps to rectify the damage which had been done, meant that no repudiatory breach ever occurred.  As such Mr Assamoi’s appeal failed.

This case is particularly interesting as it highlights the fine line between actions which amount to a repudiatory breach and those which are only deemed likely to damage the relationship between employer and employee but not destroy it (i.e. an anticipatory breach).  Where does one draw the line given the inherently personal nature of the employment contract?

Sedley LJ in Buckland acknowledged the difficulties of treating all breaches of trust and confidence as repudiatory and expressed disquiet about the possible injustice of applying this rule to employment contracts, which are “inherently personal” in nature, and thought the law was perhaps out of step with “sensible industrial relations” in which a conciliatory approach is key. Nevertheless, he held that the law should not create a separate rule for employment contracts.  The Assamoi case arguably demonstrates that a conciliatory approach can still be key provided the breach is only anticipatory and has not yet actually taken place.


About Belinda Lester
I am the managing director and founder of Lionshead Law, a boutique virtual law firm specialising in employment, immigration, commercial and IP law.

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