Articles

20.05.2009
Breaches of the implied term of trust and confidence in constructive dismissal cases where there are mutual breaches – the case of RDF Media Group v Clements [2008] IRLR 207 QB.

The QBD has handed down a high-profile decision in the case of RDF Media Group v Clements. High-profile not only for the media personalities involved but also for the decision.

In it the court not only examined and gave a clear explanation of the implied term of mutual trust and confidence in the context of constructive dismissal and considered the effect of garden leave on questions of breach of that term, but it (perhaps controversially) appeared to create a defence to an employer in breach of that term, where it could be shown that the employee was already himself in breach of the implied term.

The context of the case was the employer attempting to enforce a series of restrictive covenants. The facts in summary were these: The employee, a television executive, argued that the TV distribution company that employed him was in breach of the implied term of trust and confidence when it made derogatory comments about him, including some to the press. He resigned, claiming that he had been constructively dismissed. The employer purported not to accept his resignation. The employer then discovered that the employee had - before his resignation - been communicating inappropriately with one of its competitors, for which he was intending to work, helping it to brief the press against the employer and informally agreeing to take some of its projects with him. The employer argued that this was a breach of the implied term and purported to terminate his contract by accepting his repudiatory conduct.

[Hence the sequence was: (1) employer’s breach; (2) employee’s breach [unknown to employer]; (3) resignation on basis of employer breach; (4) discovery by employer of prior employee breach and acceptance of that as repudiatory]

The High Court accepted that both parties had breached the implied term. But the judge drew the conclusion¹ that, since the employee was in repudiatory breach of a mutual obligation, he was not then entitled to accept any later repudiatory breach by the employer.

This is perhaps a questionable conclusion because at the time of the employee’s resignation the employer was in breach of the implied term and the employee had accepted it by resigning in response. It could be said that on a traditional reading of contract law² that should have brought the contract to an end, thereby releasing each party from its obligations thereunder. After all, the employer had only found out about the employee’s repudiatory conduct after he had resigned. Was it not therefore too late for the employer to then accept the employee’s repudiatory conduct? Apparently not. The Court found that had the employer known of Mr Clements’ breaches they undoubtedly would have dismissed him on the spot and as a matter of causation would not then themselves have been in breach by making any derogatory public comments. The Court purported to invoke an equitable “balancing act” between the respective breaches in deciding as it did. Whilst this may have seemed a not unfair result, it perhaps does not lie easily with orthodox contractual repudiation and acceptance analysis.

Permission to appeal was granted but it was not pursued. For an unknown reason.

On perhaps less controversial aspects, the case does provide a helpfully clear explanation of the term of trust and confidence [at paras 100-106]. In particular the court examined in detail what an employee must establish in order to demonstrate constructive dismissal:

The impact of the employer's behaviour on the employee was significant, rather than the employer's motives.
The impact had to be assessed objectively.
The burden of proof lay on the employee, who had to prove the absence of reasonable and proper cause for the employer's conduct.
Whether there was reasonable and proper cause had to be determined objectively, and may depend on whether the occasion on which the act occurred was one in which it was reasonable for the employer to so act.
It was not enough to prove that an employer had done something "out of order" or in breach of contract; the conduct had to be sufficiently serious and calculated or likely to cause such serious damage as would entitle the employee to regard himself as entitled to leave immediately, without notice, Malik v Bank of Credit and Commerce International SA (In Liquidation) (1998) AC 20 HL applied.
Also, as a matter of principle, an employee could, if he failed to establish the breach on which he purported to rely, cite instead matters that he had only discovered since he resigned, Boston Deep Sea Fishing & Ice Co v Ansell (1888) LR 39 Ch D 339 CA applied.

The court listed various relevant and appropriate considerations in this case, and is authority for the following proposition:

The board of directors of a company was the controlling mind of the company and representations between such individuals was equivalent to the company thinking aloud to itself. An employer was not prohibited from thinking negative and unworthy thoughts about an employee. (para 113)
Representations had to go well beyond what was reasonable and proper for the occasion before an employee could prove the absence of reasonable and proper cause.
Engaging in a campaign of vilification against your employee in the press, even on a non-attributed basis, will amount to a prima facie breach of trust and confidence - but there may be a rebuttal if the employee has, himself, first acted in breach of trust and confidence (paras. 118-120)
There may be reasonable and proper cause to put out a press release, and even release confidential information to the press, when an employee resigns and is on garden leave; and
As discussed above: importantly, an employee is not entitled to accept a repudiatory breach of the trust and confidence term in circumstances where he is himself in repudiatory breach of the same term (para. 140).

Simon John

May 2009

[1] Para 140 of judgement

[2] See Chitty para 24-105

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