The High Court has recently held that an employee's willingness to negotiate a termination package does not prevent a claim of constructive dismissal.

Facts

Mr Gibbs was the assistant manager at Leeds United Football Club (the ‘football club’) engaged under a fixed term contract due to run until 30 June 2016. The manager of the football club, who had worked closely with Mr Gibbs at other clubs, left the football club on agreed terms. As it is common for new managers to bring assistant managers with them, Mr Gibbs expected to be dismissed. Instead, he was asked whether he would be interested in becoming the head coach at the football club.  However, Mr Gibbs indicated that he would decline the position.  

Mr Gibbs made it clear he was prepared to negotiate an early termination of his contract, but was also equally content to remain as assistant manager at the football club for the remainder of the contractual term. In the absence of any resolution, Mr Gibbs began to be excluded from meetings and other duties he would expect to perform as assistant manager. He was given little to do, and was subsequently told he was to have no involvement with the football club’s first team and would instead work with the youth academy.   

Mr Gibbs subsequently resigned and brought a claim for unfair constructive dismissal. The claim was brought in the High Court to side-step the compensation cap in the Employment Tribunal.

The High Court's Decision 

The High Court upheld Mr Gibbs' claim and found that the football club’s' conduct was a repudiatory breach of Mr Gibbs' contract of employment, which prompted his resignation.  The court found that merely raising the prospect of an amicable termination did not thwart Mr Gibbs’ claim for constructive dismissal. It was irrelevant that Mr Gibbs had initiated such discussions, as throughout those discussions he had remained ready and willing to fulfill his duties. 

As Mr Gibbs’ fixed term contract could not be ended earlier by the parties, he was entitled to the pay he would have received had he not been dismissed and was awarded £331,426 as compensation.   

Comment 

Where an employee expresses a willingness to negotiate a termination package, employers should ensure that they treat the employee as they would any other and in accordance with their contract of employment.  The employer in this case tried to argue that Mr Gibbs could not claim breach of contract, as he had already breached it by suggesting that he would be amenable to a termination package. This argument was rejected. 

Until an employee signs a valid Settlement Agreement, the employee is not prevented from bringing a potentially costly claim.

Gibbs v Leeds United Football Club