Briefings

Resignation following non-payment of salary

The Evans case is a useful reminder to employers of the need to ensure staff are paid in a timely fashion, and have backup payroll plans in the event of emergency. The highly unusual circumstances of the case were set aside and the tribunal focused on if there had been a breach of contract serious enough to amount to a material breach to satisfy the Jersey test for constructive dismissal. The non-payment of salary is clearly a material breach of contract, however, given the circumstances namely, the employee’s workplace having burnt down and the sole director having passed away it is arguably unsurprising the payroll was not run in the normal fashion.

Mr Rhees Evans Vs Gallichan Marine Limited (13th July, JEDT)
Unfair Dismissal (constructive dismissal)

A hearing (“Hearing”) was convened to consider the Applicant’s claims that the Respondent:

a) constructively and unfairly dismissed the Applicant;
b) failed to make a payment in lieu of the Applicant’s statutory notice entitlement;
c) failed to pay certain wages to the Applicant;
d) failed to pay to the Applicant’s accrued but untaken holiday pay from 2016; and
e) failed to provide itemized pay statements to the Applicant (together “Claims”).

Facts
The Applicant’s employment commenced on 1 April 2001 and terminated when he resigned without notice on 27 January 2016. On 7 December 2015, the Boatyard and all of its contents were destroyed in a fire. On 23 December 2015, the Respondent paid the Applicant his normal monthly salary. On 30 December 2015, Mr Gallichan, who was the sole director of the Respondent, passed away.

In early January 2016, the Applicant contacted the Company Secretary of the Respondent. The Company Secretary was unable to help him but was aware that the Applicant was an employee of the Respondent. On 14 January 2015, the Applicant wrote to the Respondent at its registered office confirming receipt of his December salary and notifying the Respondent that his next salary payment was due on 26 January 2016. In its Response, the Respondent stated that the First Letter did not reach the relevant personnel within the shareholder company until 16 February 2016. The Applicant did not receive his monthly salary payment on 26 January 2016. On 27 January 2016, having received no salary and no response to the First Letter, the Applicant again wrote to the Respondent stating that he was resigning in response to the Respondent’s failure to pay him his January salary.

The right to be paid for work undertaken is a fundamental term of an employment contract and the breach by an employer of that term will usually be repudiatory in nature. This is an unusual case in that the Applicant was not physically able to carry out his normal duties during January 2016 because his place of work had been destroyed. However the Respondent (which was legally represented when it submitted the Response) made no submission that the contract was frustrated by the fire and accepted that the Applicant remained as an employee until his resignation on 27 January 2016. The Applicant, having made himself available for work (as required under his contract of employment) was entitled to receive his monthly salary.

Based on the evidence, the Tribunal was satisfied that the above circumstances did amount to a repudiatory breach of contract by the employer. Having established that the Applicant was constructively dismissed, the Tribunal was then obliged to consider the fairness or otherwise of that dismissal in accordance with Article 64 of the Law and determined that the Applicant had been unfairly dismissed.

The Applicant is therefore awarded £7,141.80 by way of compensation for unfair dismissal.

As set out above, the Applicant resigned in response to the Respondent’s repudiatory breach of contract. The Respondent constructively dismissed the Applicant and, due to his length of service, the Applicant was entitled to receive 12 weeks statutory notice to terminate his employment. This was not given to the Applicant.

Respondent noted in its Response that the Applicant secured new employment shortly after his resignation. During his evidence, the Applicant confirmed that he secured new employment from 1 March 2016. The Applicant’s new monthly salary was less than his salary with the Respondent.

The Applicant is awarded £4,251.85 by way of damages for wrongful dismissal (representing his notice pay but reducing the award to take into account the wages paid by his new employer). He was also paid for accrued holidays. The total award to due to the Applicant amounted to £14,210.71

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