Compensation for post-termination losses, even though lawfully expelled from partnership

The status of professional partners in the context of employment law has exercised the courts on many occasions. Are they employees, workers, or employers or, in some cases, none of the above. Is there a difference between self-employed salaried partners and employed salaried partners? From an employment perspective, probably not. Of course, the employment rights available vary from none to most, depending on which type of employment status (if any) applies.

The same issue arises in the case of members of an LLP (or limited liability partnership), who are often referred to as partners. One such member was a solicitor who worked for Wilsons Solicitors LLP and whose claim was recently considered by the Court of Appeal.

Mr Wilson became a member of the LLP in May 2008. He held the post of managing partner, as well as being the firm’s COLP (Compliance Officer for Legal Practice) and COFA (Compliance Officer for Finance and Administration).

In July 2014 the board of the LLP received a complaint of bullying made against the senior partner, Mr Nisbet. Mr Wilson investigated the complaint, reported his findings to the board and produced a report on 7 October 2014. On 21 October the board was supposed to meet to discuss the report. However, a majority of the members refused to attend the meeting. Instead, the following month, they demanded that Mr Wilson should resign. They then voted to remove him from his post. They also removed him from the posts of COLP and COFA before he was able to submit his report.

In January 2015 Mr Wilson wrote to the other members and claimed that they had repudiated the terms of the members’ agreement by their actions and he accepted the repudiatory breaches. He gave one month’s notice of his intention to leave the membership of the LLP on the basis that their actions had made continued membership intolerable.

A bitter feud played out in the High Court

Embed from Getty ImagesOver the last few weeks the High Court has heard some astonishing evidence in the bitter wrongful dismissal claim brought by the former CEO of Signia, a wealth management company, as reported in The Independent.

High profile entrepreneur John Caudwell has frequently made the news over the last couple of decades. The founder of mobile phones retailer Phones 4U has presented himself as a forthright, no-nonsense style of businessman. According to the website (owned, registered and administered by one John D Caudwell and which is currently “down for maintenance”) he is a “successful entrepreneur and philanthropist” who “built an immensely successful mobile telecoms company”.

Signia is a wealth management company that was jointly founded by Nathalie Dauriac and six of her Coutts Bank colleagues in 2010. Another co-founder was Mr Caudwell. The business focuses on high end wealth management. All appeared to be well until details emerged of an extraordinary dispute between Ms Dauriac and Mr Caudwell, ostensibly in connection with expenses claims amounting to some £33,000. Ms Dauriac claimed that the expenses investigation was unfair and was, in effect, trumped up to deprive her of her £12 million 49% stake in the business, which was bought out for a nominal £2.00 fee.

Giving evidence in the High Court trial Ms Dauriac says that when they set up the business in 2010, “Mr Caudwell had asked me…as a last minute condition of jointly setting up the business, to give an undertaking to him not to have children, a proposal I did not agree to”.

Ms Dauriac claimed in evidence that Mr Caudwell orchestrated an “elaborate conspiracy” against her, resulting in her claim of constructive dismissal.

For its part, Signia maintained that she wrongfully claimed the expenses, that her approach to them was “brazen” and that she was “guilty of gross misconduct”.

In his evidence, Mr Caudwell said that the breakdown of his business relationship with Ms Dauriac, who he considered to be a “best friend” was like suffering a “bereavement”:

“Overpromoted” practice manager constructively dismissed following bullying by “brusque and blunt” doctor

As I have pointed out over many years. pursuing a claim for constructive unfair dismissal can be a risky course of action because, for the former employee, it brings with it the added burden of having to demonstrate that the employer’s conduct was so unsatisfactory that it established a fundamental breach of a term of the contract of employment, sufficient for the employee to be entitled to treat the breach as operating to terminate the contract. If there is no fundamental breach then there has been no dismissal, hence, there can be no unfair dismissal.

In the case of Williams v Meddygfa Rhydbach Surgery and Doctors Morris, Haque and Smits, Mrs Williams was the practice manager of a rural surgery operated in partnership by the named doctors. She had commenced work in September 1986 as a receptionist and in 1996 was promoted to practice manager at the Botwnog Pwllheli Surgery. According to the judgment, from 2014 the practice found itself in “challenging circumstances”, both financially and in terms of “difficult interpersonal relationships” between admin and clerical staff on one side and the partners on the other. Numerous complaints were raised and ten members of staff identified Dr Smits’ manner as causing distress. He was described as being “direct, brusque and blunt in his manner”. he was also described as “aggressive” and “irascible”. Employment Judge Ryan found that his management style was “at least robust and was often overbearing and, to the Claimant at least, intimidating”. Accordingly, he found that Mrs Williams’ perception that Dr Smits bullied, harassed and intimidated her was “genuine and reasonable”.

The partners had a generally low opinion of Mrs Wiliams. They thought that she was perhaps promoted beyond her ability and that she was in effect working “at the level of a glorified receptionist”. She was not pro-active or enthusiastic as a manager and she had caused concern when she overpaid a caretaker £12,000.

In June 2014 she was called into a meeting during which her performance was criticised. She was surprised and upset and was told that she was to be subjected to performance management. However, she was not offered training or professional management guidance. She was not set targets or issued with any explicit warnings.

In late 2014 Mrs Williams asked whether she could be made redundant. Her request was refused because the partners were concerned that they might not be able to find a replacement.

A practice manager, Deborah Kalaji, was brought in to conduct a “root and branch review of the practice concentrating on managerial improvement”. By this stage Dr Smits acknowledged that Mrs Williams might claim constructive dismissal.

Unfair dismissal resulting from demotion to do “officey things”

Zena Dickenson worked for 21 years at Easington Lane Primary School. From 2009 she was employed as the School Business Manager. She was responsible for a £1.2 million budget and she had 15 employees reporting directly to her.

In 2015 it became apparent that there would be an overspend and reduced income for reasons including shortfalls in the ‘pupil premium’ income and income from ‘early years’. She was approached by a clerk/receptionist, Kellie Todd, who wanted to know what her prospects were. Mrs Dickenson said that she could not be guaranteed additional hours in the future and there was a possibility that there would be redundancies. Ms Todd reported to a senior teacher, Hannah Wardle, that she was upset as a result of the conversation with Mrs Dickenson. Hannah Wardle in turn reported the matter to head teacher, Sarah Nordstrom, who commenced an investigation. The school’s HR adviser, Paula Barclay, interviewed Hannah Wardle, Kellie Todd and others and prepared draft witness statements for them. She advised Sarah Nordstrom as follows:
“I would start with

“There are some rumours in the school that there is going to be redundancies next year – what you know about this? and let her speak.

“If her response is she doesn’t know anything about it probe a little by asking if she denies having any conversations with colleagues about redundancy, reducing hours etc.

“Then ask her how this risk has not been brought to your attention and why it has not been reported on in the recent Finance meetings.

“If you believe the explanation about the budget stacks up you may choose not to suspend her. However, I think we both agree that she has stepped outside of her remit as Business Manager and SMT in divulging this information to colleagues. Therefore you can tell her you have concerns about this and an investigation will take place but you could do this with her still at work. However, unless she comes up with some plausible explanation which eliminate your concerns about funds the prudent approach would be to suspend her to allow a full and fair investigation to take place.

“Explain to her that this is not disciplinary action and that she will be paid while she is off. She will receive a letter confirming the position and she should not speak to anyone about this.”
Mrs Dickenson was duly suspended on 9 December 2015 to investigate allegations that she had a discussion with a colleague about the risk of redundancies when this had not been discussed by the senior leadership team and that, despite having the discussion she had not raised financial concerns with the senior leadership team. After a couple of false starts a disciplinary hearing took place on 26 February 2016. It was agreed that her suspension would be lifted. On attending work the following Monday she found that her security pass had been disabled. She was told not to go into the office but to wait in reception. The head teacher informed her that a performance improvement plan was to be put in place. She would no longer have any line management responsibilities and she would have to work in the main office at reception updating the school’s database until the plan was put in place.

Mrs Dickenson became distressed and said that she would like to be considered for redundancy. She was taken home and remained off sick until she resigned.

In the meantime Paula Barclay sent her two letters, one asking her to attend a formal absence review meeting and the other asking her to attend a protected conversation meeting. Mrs Dickenson did not attend the meetings. However there were negotiations via her union rep which led to a proposed termination date and settlement figure. After obtaining legal advice a revised offer was made on her behalf which the employer was not prepared to meet.

On 26 April she wrote and submitted a letter of resignation, providing the requisite three months’ notice. She set out various grounds on which she considered that both she and her position had been undermined. In particular she noted that Mr Trotter, the deputy head and occasional acting head, had effectively demoted her to the position of receptionist and that she had been told by him to do “officey things”.

ACAS early conciliation certificate can relate to a claim where the claimant resigned after the certificate was issued

Many employers will by now be familiar with the ACAS Early Conciliation (EC) process which was initially introduced in April 2014.  The concept of Early Conciliation is that ACAS will attempt to resolve any potential claim before it is formally submitted to an Employment Tribunal – indeed it is now the case that claims must have completed the process and an EC certificate issued before a claim can be lodged.

There are some exceptions to this rule – for example in cases of a claim being made against the Security Services, or another joint Claimant already having an Early Conciliation certificate in respect of the matter, however generally the Tribunals have been quite strict in imposing the rule.  It therefore may come as a surprise to learn that in the recent case of Compass Group UK and Ireland Ltd v Morgan, the Employment Appeal Tribunal held that the Claimant’s constructive dismissal claim was covered by an EC certificate that had been issued before the Claimant had resigned.

The background to the case is that in October 2014 the Claimant submitted a grievance to her employer when she was instructed to work in an alternative location in a more junior capacity to her existing role. In November 2014 she commenced the EC process and on 3 January 2015, the EC certificate was issued after no action was taken to resolve her grievance. The Claimant subsequently resigned and brought two Employment Tribunal claims – constructive dismissal and disability discrimination.

The Respondent initially argued that the Claimant’s constructive dismissal claim was not properly instituted as she had not followed the EC process given that she resigned after the EC certificate had been issued. They further submitted that any cause of action occurring after ACAS had been notified, even in circumstances where it relates to facts occurring during the EC process, could not be capable of being pursued without ACAS being notified. At first instance the Employment Tribunal found in favour of the Claimant and held that there was a connection between the matters in dispute during EC and the matters in dispute in the claim itself.

The Respondent subsequently appealed to the Employment Appeal Tribunal (EAT), this time stating that the cut-off date after which the EC Certificate does not extend is the issue of the EC Certificate (not the date of notification to ACAS as was the argument to the Employment Tribunal).

Exit discussions are no bar to a constructive dismissal claim

As you may be aware constructive dismissal occurs when an employee terminates their employment in response to their employee’s treatment of them. The employee has to show that they have resigned in response to fundamental breach of contract by the employer. The Employment Rights Act essentially say that if the employee terminates their contract in circumstances which they are entitled to do so without notice because of the employer’s conduct that termination constitutes a dismissal.

In the case of Gibbs v Leeds United FC the Court was required to determine liability for breach of contract, considering whether Leeds United FC was in breach of its contract with the Claimant, whether that breach was repudiatory and whether, when the Claimant resigned, he did so at least in partly as a result of that breach.

The Claimant (here photographed when at Tottenham) had worked as an assistant manager at Leeds United Football Club. When the head coach was dismissed it was expected that, as is usually the case, the Claimant would also be dismissed despite working under the terms of a fixed term contract which was due to expire in June 2016.

Following the departure of the head coach the claimant did enter into discussions concerning the early termination of his employment however the Chairman made clear that he wanted him to remain at the club. The Claimant returned to work as requested although discussions continued with the club in an attempt to negotiate the early termination of his contract. During this period the Claimant was not assigned work which fell within his contract to do, although he turned up ready and willing to do it. He complained and said that he had been left with nothing to do and expressed that he was unhappy about this situation. However subsequently on the 23 June he received an email from the club secretary, Graham Bean, which read as follows:

Can a demotion amount to a breach of contract/constructive dismissal claim?

In the case of Gibbs v Leeds United Football Club Ltd [2016] EWHC 960 (QB) (28 April 2016) the matter in question concerned a contract of employment between the Claimant (Mr Gibbs) and the Respondent (Leeds United FC).


The question was whether the Claimant had been constructively dismissed due to a repudiatory breach of his contract of employment by Leeds United, or whether he chose to leave the club without there being any breach of contract.  There was a also a further question in respect of whether the Claimant acted unreasonably in failing to mitigate his losses by rejecting the offer of the role of Head Coach after he had resigned.

By way of background information, the claimant’s contract of employment stated that he must “diligently exercise such powers and perform such duties as may from time to time be assigned to him by the Chief Executive and the Board at which are commonly undertaken and exercised by the managers of Professional football club companies of the Company’s status in relation to the playing, coaching and scouting aspects of the Company’s undertaking (included but not limited to player conditioning and the development of tactical instructions and playing standards generally) and in the discharge of the same he shall:…comply with all reasonable and lawful instructions and requests given:…(B) to the Assistant Manager by the Chairman; (C) to the Assistant Manager by the Company; (D) to the Assistant Manager by the Chief of the Executive…and perform such hours of work as may from time to time reasonably be required of him…”


The Claimant was engaged on a fixed term three year contract, however after around eight months of employment the Respondent Company was purchased by a Mr Cellino.  The Respondent thereafter wanted to recruit their own management team, and agreed with the Claimant’s manager to end the manager’s contract early – the Claimant therefore expected that the same thing would happen to him.


A new manager was subsequently recruited by the Respondent along with a new assistant manager, however the Claimant was not offered a termination package.  The Claimant did express during a meeting with the owner of the Company that if work was not available for him, he would be happy for his contract to be terminated if a termination package could be agreed.


An agreement was not met however and the Claimant subsequently reported to work under the new manager.  Unfortunately they did not get on and the Claimant received an email stating that his role had been changed and he was now required to train the Respondent’s youth players instead of the first team.  The Claimant felt that this instruction constituted a demotion and subsequently resigned.


Four months later, strangely, the Claimant was offered the role of manager following the dismissal of his predecessor.  He refused this offer, stating that the treatment he had received by the Respondent had undermined his relationship with his fellow employees.  The Claimant brought a breach of contract constructive dismissal claim against the Respondent.


The High Court held

can there be a finding of contributory fault following a constructive dismissal?

In Frith Accountants Limited v Mrs J Law the relatively narrow questions for the Employment Appeal Tribunal were whether someone who has been constructively dismissed can be held to have contributed to that dismissal, whether the basic award should have been adjusted to take into account the employee’s conduct and whether the assessment at 40% of the prospect of future dismissal was too low.

However, the case is noteworthy since, as observed by EAT President Mr Justice Langstaff, it “may be the first [appeal] case to deal with an alleged contribution by an employee where the breach of contract by the employer was a breach of the implied term of trust and confidence”.

Mrs Law worked in an accountant’s office and was aged 62 at the date of her dismissal. She had performed well at a performance review in 2011 but did not receive a pay rise in 2012 as a result of concerns about her performance. She accepted that she had been late in filing returns with HMRC but thought that this was an easy mistake to have made. She disputed other alleged errors. Instead of treating the matter as one of performance management and undoubtedly unwisely but equally with good intentions, Mr Frith, a principal of the practice, decided to raise his concerns with Mrs Laws’ son. As the Tribunal had said, this was not the way to go about such matters!

Unsurprisingly Mrs Laws was horrified when she found out and she resigned. Equally unsurprisingly the Employment Tribunal found that this was a constructive unfair dismissal. However, even if Mrs Laws had made errors and was unwilling to accept criticisms, these actions could be said to have contributed to the employer’s action in breaching the duty of trust and confidence. Mr Justice Langstaff noted that it will be unusual for a constructive dismissal to be caused or contributed to by an employee, since it is based on a breach of contract by the employer. Further since a constructive dismissal results from a “fundamental” breach of contract by the employer “then not only will it be repudiatory, but by definition there will be no reasonable or proper cause for the employer’s behaviour”. However, although the question of constructive dismissal is answered by seeking to establish a fundamental breach of contract, the question of compensation is dealt with by statute and covers all dismissals, including constructive dismissals.

However, in this case the Tribunal had summarily dismissed the possibility that Mrs Laws had contributed to her dismissal. Mr Frith’s decision to act as he did was “a matter entirely for him”. There was therefore no causal connection between anything done by Mrs Laws and the action taken by Mr Frith which resulted in her dismissal.

getting appeals right

In Blackburn v Aldi Stores Ltd the Employment Appeal Tribunal looked at whether a failure to provide an adequate appeal in a grievance procedure could amount to a breach of mutual trust and confidence and thus a constructive dismissal, and concluded that it could.
Mr David Blackburn commenced work with Aldi in 2006 as a light goods vehicle driver. He is a retired police officer and his background was as a vehicle examiner and health and safety trainer. Throughout his employment at Aldi he had concerns about health, safety and training at the depot where he was based. He raised his concerns in particular with Mr Gallivan, the deputy transport manager. It was accepted in evidence that on one occasion Mr Gallivan waved him away, swore at him, said the training was “shit” and told him to “fuck off home”. In fact the depot came out well in audits of vehicle inspection and health and safety.
However there was another flare up with Mr Gallivan in June 2009 and this led to Mr Blackburn raising grievances concerning both Mr Gallivan and a section manager, going back over some time. Normally, under the company’s written procedure, the section manager would have been the person to consider the grievance, but as it concerned him, the next person for it to go to was the logistics manager. But there was no logistics manager – so the regional managing director, Mr Heatherington, dealt with the grievance instead. He met twice with Mr Blackburn, notes were taken and the meetings were recorded. He also spoke with potential witnesses. He reported his findings in detail and upheld the grievance in part. Mr Blackburn was not satisfied and appealed, copying his notice of appeal to the managing director. Remarkably, Mr Heatherington dealt with the appeal himself, holding a brief appeal meeting.
What happened at that meeting was disputed, with Mr Blackburn saying that he was barely permitted to speak and was given a dressing down. Mr Heatherington put forward a rather different version. Mr Blackburn maintains that he was told by Mr Heatherington that his decision was final and he had to accept it. He also alleged that Mr Heatherington had told him that he was anwerable to no-one and that he was in overall charge.
Six days later, Mr Blackburn resigned and started constructive dismissal proceedings. Having started the claim on the basis of a breach of mutual trust and confidence, permission was sought to add an allegation that the grievance procedure had been contractual and there had been a breach of an express term – but this was refused.

discrimination, appeals and returning to work after maternity leave

A Ms Little joined Richmond Pharmacology in 2006 as an evening receptionist. In 2009 she was promoted to the post of full-time sales executive. Richmond operates in a highly competitive marketplace, relying on personal contacts and dealing with the running of pharmaceutical trials.
In September 2009 Ms Little went on maternity leave prior to the birth of her second child. As is often the case in such circumstances she applied for a flexible working arrangement on her return to work in August 2010, specifically Monday to Wednesday, 9.00 a.m. to 3.00 p.m. and remote access when she was at home on Thursdays and Fridays. Her request was rejected on the ground that “it was not feasible for a sales executive to operate on a part-time basis”.
Ms Little appealed the decision but resigned before the appeal hearing was arranged. She was asked to reconsider her resignation until the appeal hearing could take place. The hearing took place three days later and she was offered a three-month trial on the terms she had requested. She refused and confirmed her resignation.
Ms Little brought an employment tribunal claim, alleging constructive unfair dismissal and indirect sex discrimination. The effective date of termination of employment was 19 July 2010 and the claim form was presented on 29 October 2010 so the unfair dismissal claim was out of time. The discrimination claim survived because it was “just and equitable” to allow it to proceed.
Discrimination claims can be both resisted and established on the basis that there is a relevant provision, criterion or practice (PCP) which is applied to a particular job. In this case the relevant PCP was that sales representatives must work full time. That is what she was told when she applied for flexible working. On its face such a requirement would place women at a disadvantage by comparison with men on the basis of disparate impact. However the PCP had been disapplied on appeal, at least to the extent of permitting the three-month trial. Had this “cured” the discrimination resulting from imposition of the PCP?