Optical Express Ltd v Williams

EAT: Burton J, Sir Alistair Graham and Mr D Norman: 12 July 2007

The claimant was a dual-site manager in charge of a dental and optical service, when on the closure of the dental clinic her position became redundant. She was offered an alternative position of manager of an optical store which, though she considered unsuitable, she accepted for a four-week trial period in accordance with the provisions of section 138 of the Employment Rights Act 1996. During the trial period she expressed reservations about the position in correspondence with the employers, seeking confirmation that if she found it unsuitable she would receive a redundancy payment. No confirmation was given by the employers, but the claimant gave no notice to terminate the contract until two weeks after the four-week trial period had expired. An employment tribunal upheld her claim for a redundancy payment, notwithstanding that, as she had failed to give notice within the trial period as required by section 138(3), under section 138(1) she was not to be regarded as dismissed. The tribunal held that there was a "common law" trial period, not limited to four weeks, within which the claimant could accept or reject the new position; that the employers were in breach of the implied term of trust and confidence by imposing on her a new contract which was clearly unsuitable; and that, since she had rejected the position within a reasonable period, she had been constructively dismissed within the meaning of section 136(1)(c) and was entitled to a redundancy payment.

The employers appealed.

The Employment Appeal Tribunal held:
It was plainly good sense that, where an employer faced with a redundancy situation imposed changes on an employee which amounted to a fundamental breach, the employee would be entitlement to a redundancy payment if she resigned after working under protest for a reasonable trial period, but where there was an offer and acceptance of a new contract of employment by reference to the four-week trial period in section 138 of the Employment Rights Act 1996, an employee could not rely on the original dismissal or constructive dismissal to claim a redundancy payment unless within the trial period she exercised the rights given by section 138(2) and (3) to terminate the contract. Accordingly, the tribunal was not entitled to conclude that a right to a statutory redundancy payment survived notwithstanding the operation of, but non-compliance with, the statutory procedure. Further, even if there was a repudiatory breach of the contract justifying a finding of constructive dismissal, which on the facts was not necessarily a finding open to the tribunal, that would have led to compensation for unfair dismissal and not a redundancy payment.

The appeal was allowed.

Appearances: Rod McKenzie, solicitor, (Harper MacLeod, Glasgow) for the employers; Helen Mulholland (Forbes, Blackburn) for the claimant.