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Demotion and constructive dismissal

Background

Mr Gibbs was assistant manager at Leeds United Football Club (“the Club”) and had signed a three year fixed-term contract. Part way through the fixed term, Mr Gibbs had discussions with the Club’s chairman in which he explained that he would be willing to discuss a mutually agreed exit on suitable terms. However, no agreement was reached and Mr Gibbs made it clear that he was willing to remain at the Club and carry on with his role.

Soon after, Mr Gibbs received an email from the Club Secretary informing him that he was to have no further contact with the first team and his role would be confined to working with the under-18 and under-21 football teams in the future.

Mr Gibbs subsequently resigned and brought a claim in the High Court for the balance of the salary due to him under the remainder of the fixed-term contract.

High Court decision

Mr Gibbs claimed that his employer had demoted him and that this was a repudiatory breach of contract.

The High Court found that the Club was in fundamental breach of contract as it had refused to perform the contract of employment as it had originally been made and from its conduct it showed that it no longer intended to be bound by its essential terms. The fact that Mr Gibbs had looked to enter into negotiations to leave the Club was not important as he had nevertheless been willing to uphold his end of the contractual bargain.

Summary

An employee’s expression of dissatisfaction and wanting to leave is not in itself breach of contract where they continue to do their role as normal. Undermining a disgruntled employee or taking away responsibilities may well give rise to a claim against employers for constructive dismissal, so employers should be cautious in how they deal with “unhappy” employees.

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