Acts of discrimination by an employer likely to constitute a fundamental breach of contract justifying an employee’s resignation

In the case of Wainwright v Cennox plc [2023] EAT 101, the Employment Appeal Tribunal (“EAT”) assessed whether an Employment Tribunal had erred by failing to consider whether acts of disability discrimination also constituted a fundamental breach of contract which had contributed to the employee’s resignation.

Background

The Claimant was a long-serving employee of the Respondent and was the Head of Installations. She was diagnosed with cancer on 17 August 2018 and was required to take time off work for chemotherapy. During her absence, a colleague tendered their resignation. However, the Respondent wished to retain this employee and therefore offered her a permanent role as Head of Installations (i.e. the same title as the Claimant). The Claimant was not consulted about this, and the Respondent’s rationale was that there would be enough work to be split across two Heads of Installations once the Claimant was ready to return to work. The Claimant therefore only found out about this appointment through a post on LinkedIn. When the Claimant raised concerns about this, she was assured that her role would be unaffected (and she was not informed that it was a permanent arrangement).

In July 2019 there were discussions about the Claimant’s return to work. During these discussions, the Claimant was provided with a new job description and organisation chart, which reflected the fact that there was now a second Head of Installations. The Claimant was unhappy with the new job description and organisation chart and believed that she had effectively been demoted. She ultimately raised a grievance about the treatment, which was met with surprise and disappointment by the Respondent. There were also significant delays in the grievance being progressed, and the Respondent eventually resigned on 27 September 2019, referring to the treatment of her during her absence (including feeling that she had been misled or even lied to regarding the incorrect assurance that her role would be unaffected when she returned to work) and also referring to the delay in handling her grievance as the “final straw”.

The Claimant brought a number of claims, including claims relating to discrimination, but this note focuses on the constructive unfair dismissal claim.

The Law

Section 95(1)(c) of the Employment Rights Act 1996 states that an employee is dismissed by their employer if “the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct ”.

In effect, this means that an employee may be constructively dismissed in circumstances whereby they resign in response, at least in part, to an employer’s fundamental breach of contract (although the breach need not be the sole or effective cause of the resignation).

The Claimant’s argument was therefore that the Respondent had fundamentally breached her contract by employing another individual in the same role as her and effectively “demoting” her by way of the proposed new job description and organisation chart, all while she was off work. She also argued that the delay to addressing her grievance was another breach of contract and was the final straw.

Decision

The Employment Tribunal initially dismissed the constructive unfair dismissal claim, stating that her perception that she had been demoted was inaccurate, and that it was for this reason alone that she resigned.

The Employment Tribunal also dismissed claims of direct disability discrimination, victimisation and wrongful dismissal. However, it upheld a claim of discrimination “because of” something arising in consequence of disability, contrary to section 15 of the Equality Act 2010.

The Claimant appealed this decision, arguing that the Employment Tribunal had failed to consider whether the acts of discrimination were repudiatory breaches of contract which formed part of the decision to resign.

The EAT allowed the appeal. The EAT agreed with the conclusion that there were discriminatory acts contrary to section 15 of the Equality Act 2010. However, the EAT considered that the Employment Tribunal had failed to adequately explain why it felt such discriminatory acts did not amount to a repudiatory breach of contract. The EAT was not satisfied by the explanation that an erroneous perception of being demoted was the only reason for the resignation, especially given that the Claimant had referred to numerous other examples of treatment that she said caused her to resign (such as being assured that her role would not be affected, which she felt constituted being misled and lied to whilst she was off sick). The EAT therefore felt that the Employment Tribunal had failed to properly consider whether the discriminatory acts amounted to a repudiatory breach of contract.

The EAT also concluded that the Employment Tribunal had misapplied the law relating to constructive dismissal, by failing to carry out a structured analysis as to whether the discriminatory acts amounted to potentially repudiatory breaches of the implied term of mutual trust and confidence, and whether the Claimant’s resignation was influenced, even if only in part, by such breaches. The case was therefore remitted to a differently constituted tribunal.

This judgment was handed down in June 2023, but was only published by the EAT in July 2025. During this time, the case returned to the differently constituted tribunal, and the claims for constructive unfair dismissal and discriminatory dismissal were upheld. The Claimant was awarded a total of £1,224,861.94, which included an injury to feelings award.

Comment

It is perhaps no surprise that the Employment Tribunal’s original decision was overturned, as discriminatory acts will normally likely constitute a repudiatory breach of contract (although not always). Even in circumstances where a claimant resigns and argues it is due to a “last straw”, which is not necessarily discriminatory, case law suggests previous discriminatory acts are still likely to be relevant considerations. By failing to consider the full picture in this circumstance, the Employment Tribunal had erred.

It is a reminder for employers to take any allegations of discrimination extremely seriously, and to avoid circumstances where an employee could argue an act, or the failure to act in response to a discriminatory act, constitutes a “last straw”.

Case reference:   Wainwright v Cennox plc [2023] EAT 101