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High Court rules that employee whose duties were re-assigned was constructively dismissed
Adrian Fryer
Contracts of employment often include a provision which states that employers are able to alter an employee’s powers and responsibilities. A recent High Court decision serves as a reminder that such clauses are not without limit, and must be exercised in such a way that trust and confidence in the employment relationship is not undermined.
In McCormack v Medivet, the Claimant was employed as Director of Clinical Operations. A new CEO informed her that a restructure was being carried out and that she would be moved to the newly created position of Chief Clinical Officer. The Claimant was not consulted about this change and, following the announcement, many of her previous duties as Director of Clinical Operations were taken away from her. The Respondent indicated that she would be placed into the new role of Chief Clinical Officer in due course. In the event, this did not happen. The Claimant went off sick and resigned. She brought a claim in the High Court for breach of contract, alleging that the Respondent’s actions in reallocating her responsibilities amounted to a fundamental breach of contract.
The High Court held that the Respondent should have exercised its discretion to change the Claimant’s responsibilities honestly, rationally and for the purpose for which they were conferred. Actions had to be taken in good faith and there had to be logic to the decision to make changes. The Court found that the Respondent had gone beyond the limits of its own variation clause, in the way in which it had gone about making changes. The Claimant had not been consulted with in advance, and the changes were made on the basis of a very brief assessment of the work that the Claimant had been doing. The Respondent’s conduct also breached the implied term of mutual trust and confidence. The Court held that both breaches were fundamental, and the Claimant had been entitled to resign in response to them.
This case is a reminder to employers that they need to take care when relying on express contractual variation clauses. Such clauses must be exercised honestly, rationally and reasonably. Consultation should be carried out at an early stage. Clear evidence of the business case for any change being necessary should be gathered. Employers need to make sure that any unilateral change (relying on a variation clause) does not breach the implied duty of mutual trust and confidence. Breach of this term is always fundamental and would entitle an employee, as happened in this case, to resign and bring a claim.