The Employment Appeal Tribunal has recently confirmed in Singh v Metroline Limited, that an employer’s refusal to pay an employee contractual sick pay in certain specific circumstances, was a fundamental breach of contract entitling him to claim constructive dismissal.
Background
The employee, Mr Singh, worked for Metroline as a bus driver. He was invited to attend a disciplinary meeting on 24 January 2017 and the next day he was signed off sick by his GP and he produced a Fit Note. Whilst absent, an occupational health report was obtained, which did not suggest the illness was false. However, Metroline decided to withhold company sick pay and pay Mr Singh Statutory Sick Pay (SSP) only, as they believed that he was off sick purely to avoid attending the disciplinary hearing.
Metroline’s terms and conditions stated that they could withhold or stop company sick pay “where a thorough investigation has revealed that the absence was not genuine” and that “company sick pay may be withheld, for example, if an employee…submits a false plea of sickness” i.e. failure to provide documents to prove sickness. Mr Singh’s failure to attend a disciplinary hearing was not a prescribed reason set out in the terms and conditions which would allow the company to withhold company sick pay.
In addition, Metroline’s disciplinary policy and procedure stated that “where an employee fails to carry out a reasonable and lawful instruction…an employee can be suspended…normally with pay… except in the circumstances where the employee has deemed to reported sick as a hindrance to…the disciplinary process…when it will be without pay”. In this case, there was no indication that Metroline attempted to suspend Mr Singh.
On 15 March 2017 Mr Singh resigned and subsequently brought a claim for constructive dismissal, alleging that the failure to pay him company sick pay was a fundamental breach of his employment contract.
What is constructive dismissal?
Constructive dismissal claims are difficult claims to bring. The burden is on the employee to show firstly, there was a fundamental breach (a breach so serious that it goes to the very root of the contract) and secondly, they promptly resigned in response to this breach.
What did the Employment Tribunal (ET) Decide?
The ET held that whilst Metroline had breached Mr Singh’s employment contract, it was not a fundamental breach as the evidence suggested Metroline intended to continue the employment relationship by “encouraging” Mr Singh engage in a disciplinary process. Mr Singh subsequently appealed to the Employment Appeal Tribunal.
What did the Employment Appeal Tribunal (EAT) Decide?
The EAT decided that the ET’s decision that the breach of contract was not fundamental was wrong, saying that this was an error in law. The EAT held that the fundamental breach in this case, was reducing Mr Singh’s pay by such a significant degree (by paying SSP instead of company sick pay) even though there were contractual provisions which would allow the company to deal with the situation if they thought the employee was not genuinely unwell. Mr Singh could have been suspended without pay, but Metroline did not exercise this option. Metroline had therefore committed a fundamental breach of Mr Singh’s employment contract.
The EAT have now left it for the ET to decide the other component necessary for constructive dismissal – did Mr Singh resign, at least in part, in response to the breach?
Lessons for employers
The EAT’s decision here indicates that an employer’s wider intentions to continue the employment contract are not as relevant as looking at whether there has been a fundamental breach of contract.
This case acts as a warning to employers who suspect that an employee is not giving genuine reasons for their absence. Had Metroline taken their time to gather evidence and carry out an investigation to see if they could establish that Mr Singh was avoiding the disciplinary hearing, they may have been able to withhold sick pay or even summarily dismiss Mr Singh on the grounds of dishonesty.
Another option if they wanted to cut his pay was to use the provisions detailed in Metroline’s disciplinary policy and procedure and suspend Mr Singh without pay. Had Metroline taken the time to review these contractual provisions and procedures and exercise this power properly, they may have avoided this constructive dismissal claim.
It is ironic that they had at their disposal contractual provisions to help them in these circumstances but did not use them or use them appropriately.
This is not an uncommon scenario that employers face and it can frustrate a disciplinary process and make it very difficult to proceed. It is sometimes possible to proceed with a disciplinary hearing, even if the employee has gone off sick. To try and secure a sick employee’s participation with the process, disciplinary hearings can be modified. Such modifications can include: where and how the hearing is held; the structure and timing of the hearing; who is allowed to accompany the employee; the role the companion takes in the hearing; making written submissions in addition or in the alternative to attending a hearing in person. In rarer cases, it could even be necessary to proceed with a disciplinary hearing without the employee present. However, it is recommended that you seek legal advice before proceeding under this route.
If you would like assistance with disciplinary proceedings or you would like advice on any other employment matters, you can contact one of the Employment Team.
