Can a Demotion Constitute a Fundamental Breach of Trust and Confidence?

And ultimately be a breach of contract?

In the case of British Airways Plc v Higgins 2015 the Employment Appeal Tribunal (EAT) upheld the Employment Tribunal’s decision that the Claimant had been constructively and unfairly dismissed after he resigned in response to being demoted.

Background

The Claimant (Mr Higgins) had commenced employment with the Respondent (British Airways Plc) in 1987 as an Engineer. At the date his employment terminated he was employed as an Aircraft Maintenance Supervisor and was responsible for working on aircraft maintenance and also overseeing the work of others at British Airways Maintenance Glasgow (BAMG).

On the weekend of 1 March 2014 the Claimant attended work at the start of his shift to find the workload was significantly behind schedule. In addition, whilst two B grades (of which the Claimant was one) and four technicians or mechanics were due to attend work, only the Claimant and a technician arrived. Two further mechanic grade contractors were subsequently drafted in to assist, neither of whom the Claimant knew, but understood that they were RAF trained. Despite raising his concerns with managers the Claimant was told to do the best job that he could.

Throughout the course of his shift the Claimant was informed by one of the contractors that he had damaged a wire on the part that he was working on. The Claimant checked the Electrical Standards Practice Manual, as he is required to do, and ascertained that a splice could be used to fix the damage. Unfortunately he did not check which splice should be used and used one that he already had within his tool box, which was not the correct one.

In addition he asked the contractor to complete a defect card, which was required as part of their company process. As the contractor was uncertain how to complete this, the Claimant intended to do it himself but unfortunately forgot. The Claimant signed off the contractors wiring installation.

The wiring was subsequently found to be faulty and upon further inspection it transpired the incorrect splice had been used and the defect card had not been completed.

The Claimant was suspended and subsequently dismissed for gross misconduct. He appealed the decision and on appeal the dismissal was overturned. He was instead issued with a final written warning and demoted to a mechanic which was three grades less than his grade. This resulted in a significant decrease in responsibility as well as a huge reduction in salary and benefits. The Claimant appealed this decision but was unsuccessful.

The Claimant resigned in response to the demotion and claimed that this breached the implied term of trust and confidence of his employment relationship with his employer. He submitted a claim to the Tribunal alleging that he had been constructively dismissed and the Tribunal upheld his claim.

EAT Decision

The Respondent appealed to the Employment Appeal Tribunal arguing:

  1. The Tribunal had erred in finding that the term of trust and confidence had been breached by the demotion,
  2. The finding of breach in respect of the demotion was perverse and
  3. The Tribunal had erred in failing to ask itself if the demotion was within the range of reasonable responses.

The EAT upheld the Tribunal’s decision and made the following findings:

  1. The demotion had breached the term of trust and confidence within the contract of employment,
  2. The Tribunal was entitled to find the demotion amounted to a breach of contract despite its finding that the Claimant had contributed to the situation by his own actions (resulting in a reduction in award of up to 50%) and
  3. The test applied in unfair dismissal claims and constructive dismissal claims are different. In a constructive unfair dismissal claim it is for the Tribunal to decide whether the employer’s actions's breached the contract between the parties and if the employee accepted the breach by resigning. The test of reasonableness is applicable to unfair dismissal claims and, as such, was irrelevant.

The full judgment can be viewed here.

 Should you have a question in respect of this judgment, or any Employment Law query, please do not hesitate to contact Nicola Cockerill or our Employment Law team on 01733 882800.

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.