This is an appeal in relation to a case we have covered previously here.
The SEB sought to appeal the decision on two grounds:-
1. AA had repudiated his contract; and
2. The Royal Court ought to have concluded the SEB could terminate the employment contract of AA on three months’ notice (as under the contract of employment) for ‘some other substantial reason’ which is one of the potentially fair reasons for dismissing an employee.
In relation to the first ground of appeal (that AA repudiated his contract) the appeal court has helpfully confirmed that when assessing if there has been a repudiatory breach the test is an objective one as set out in the UK case of Malik v BCCI. The question is if the employee’s conduct when viewed objectively goes to the root of the contract or is sufficiently serious to justify the termination of the contract. The question is answered by reference to a test of reasonable foreseeability i.e. the question is if it was reasonably foreseeable to an employee performing that particular function that the particular conduct would be regarded by that employer as repudiatory (which would entitle them to terminate).
The court was not convinced AA’s conduct had reached a sufficient level to satisfy the above test.
In relation to the second ground of appeal (termination for some other substantial reason) the court noted that in circumstances where the true reason for the employee’s dismissal is alleged misconduct, the employer cannot side step the consequences by classifying it as ‘some other substantial reason’. If an employer’s true reason for dismissal is his concern over the employee’s conduct but on analysis the employer does not have objectively good reasons for dismissal based on misconduct, and thus a purported dismissal on that basis would be unlawful, it is perverse to interpret the contract as nevertheless enabling the employer to dismiss for some other substantial reason.
The category of some other substantial reason should not be interpreted in an open ended way as to allow the employer to terminate effectively without good reason. The words “other” and “substantial” must each be given real value, and it would deprive both words of any value if the contract were interpreted as allowing the SEB to terminate the contract in reality on the basis of conduct but in the circumstances where there was on analysis no legitimate basis for terminating for misconduct.
As AA’s dismissal was not caused by him repudiating his contract and was not for ‘some other substantial reason’ there was no need to limit AA damages and the original court ruling on damages was correct.