In the recent judgment of Ms. Nadine Hanson v. Interaction Recruitment Specialists Ltd, the UK Employment Tribunal ruled in favor of Ms. Hanson, finding her employer's actions amounted to constructive unfair dismissal. This judgment emphasizes the value of building a transparent, respectful, and fair work environment, which is universally applicable across jurisdictions, including India.
The case arose following the acquisition of Ms. Hanson's company by Interaction Recruitment, under new leadership by Andrew Gilchrist. Despite her long tenure of 20 years, Mr. Gilchrist questioned Ms. Hanson's contribution without fully understanding her role. On 2 October, 2023 Ms. Hanson handed in her resignation with eight weeks' notice while explaining that this decision stemmed from feeling undervalued by Mr Gilchrist, a sentiment she hadn't experienced before the takeover. Since Mr Gilchrist refused to place her on garden leave during her notice period, she began anxiety-related sick leave on 11 October,2023 after covering for a colleague and never returned. Ms. Hansen then filed claim for unfair dismissal arising from a breach of contract, which was presented to the UK Employment Tribunal.
From the perusal of the evidence, the Tribunal observed as under:
- When Mr Gilchrist revisited the office on 26 September 2023, Ms. Hanson was late to work due to a medical appointment, she said good morning to Mr Gilchrist three times, only to be ignored, which undermined her position and led to her feeling increasingly marginalized.
- Mr Gilchrist took Ms. Hanson into the back room and told her that if she did not want to be there, she should leave. He pushed aside her phone when she tried to explain that she was late that day because she had been to a medical appointment. He had already formed the view that she did not pull her weight and was "dumping" all the work on her colleagues and was critical of her for that. He had not had any proper discussion or conversation with her about what work she did, where, and when. When Ms. Hanson told him that she would not be leaving and that the only way she would be going after 20 years was if she was made redundant, he determined that she no longer had a future in the business and his subsequent actions were consistent with that.
- Mr Gilchrist offered Ms. Hanson's two direct reports pay rises, by sending them emails no more than an hour after this discussion, while they and Ms. Hanson were present in the office. He did not discuss this with Ms. Hanson, although it would be usual to do so. That was because he did not see Ms. Hanson as having a future in the business.
- Mr Gilchrist emailed Ms. Hanson's direct report later that day commenting on Ms. Hanson's being at work and "getting stuck in."
The Tribunal observed that the above conduct, without reasonable or proper cause, was calculated or likely to destroy or seriously damage the trust and confidence between Ms. Hanson and the Employer Company.
The Tribunal held that Ms Hanson had faced constructive dismissal on basis of the following grounds:
First, there was no reasonable or proper cause for deliberately ignoring Ms. Hanson when she arrived at work, despite her greeting him three times. That is conduct, from the owner and Director of the new employer, that is calculated or likely to undermine trust and confidence. While it might not, by itself, be a fundamental breach of contract, it was capable of contributing to such a breach.
Secondly, there was no reasonable or proper cause for refusing to look at Ms. Hanson's phone or listen to her explanation about being at a medical appointment, and no reasonable or proper cause for telling her that if she did not want to be there she should leave. Ms. Hanson had not done anything to warrant that comment. She was late into the office because she had a medical appointment. She did not know that Mr Gilchrist was coming, and there was no reason she needed to let him know in advance that she would be late in or that she had a medical appointment. Ms. Hanson had performed her work without complaint or issue under Mr Curtis's management for many years, including working from home sometimes. Further, this behaviour, in particular the comment essentially suggesting that Ms. Hanson should leave, was clearly calculated or likely to destroy or seriously damage trust and confidence. Thirdly, offering pay rises to Ms. Hanson's direct reports in the way that he did and without reference to Ms. Hanson was conduct without reasonable and proper cause. Mr Gilchrist would normally discuss this with a line manager first.
Overall, the Tribunal concluded that these matters, taken together, amounted to a fundamental breach of the implied term of mutual trust and confidence. Ms. Hanson did resign in response to the breach of contract and Mr Gilchrist's conduct was the reason for her resignation. Ms. Hanson was, therefore, constructively dismissed.
Ms. Hanson's claim for unfair dismissal and unauthorized wage deduction was upheld by the Tribunal, and a compensation hearing was scheduled for damages owed under her contractual rights.
Anhad Law Views
The judgment is significant because it illustrates principles of constructive dismissal that, while specific to the UK's legal system, can offer valuable insights for employers in India regarding employee relations, workplace culture, and dismissal practices. While UK judgments are not binding in India, the case holds persuasive value and offers insights for Indian employers regarding workplace policies and practices.
In the UK, constructive dismissal occurs when an employee resigns due to a fundamental breach of contract by the employer, such as poor treatment, harassment, or adverse changes in working conditions. While India does not have a direct equivalent, this principle underlines the importance of fair treatment and upholding contractual obligations, which are critical for fostering trust and reducing litigation risks. Although India does not have a formal law on constructive dismissal, similar principles appear in labour and civil court decisions where wrongful or forced resignations in breach of a company's policies or Code of Ethics or good conduct could lead to claims for wrongful termination.
The judgment highlights the importance of maintaining a respectful and harassment-free workplace.
For Indian employers, this aligns with the obligations under the Industrial Disputes Act, Shops and Establishments Acts, and the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013, emphasizing a culture of respect and non-discrimination to avoid grievances and legal repercussions.
The Tribunal noted that Ms. Hanson faced unresolved grievances before her resignation. For Indian employers, this is a reminder of the importance of maintaining robust grievance redressal mechanisms. Handling grievances effectively can prevent situations from escalating and help preserve trust with employees, thus avoiding potential claims of forced resignation or wrongful dismissal.
Although India does not follow the concept of constructive dismissal in the same way as the UK, if an employee resigns due to alleged employer misconduct, it could result in reputational or legal consequences. Ensuring a well-documented exit process, with opportunities for employees to voice concerns, can help Indian employers manage such risks.
The ruling serves as a reminder that decisions impacting employees must be transparent, justified, and respectful of employee rights. Indian employers can reduce legal risks by ensuring that any workplace restructuring, role changes, or relocations are handled sensitively and fairly.
Above all, this judgment highlights the importance of an employer's duty to maintain a supportive and fair work environment and underscores the importance of maintaining mutual respect and fair treatment, especially during organizational transitions, which is universally applicable across jurisdictions, including India.
Originally published by Lexology, 30 October 2024
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