In the heat of the moment : the statutory concept of dismissal and impulsive resignations – by Hugh Collins

Image by Mohamed Hassan from Pixabay

1. Introduction

Can a moment have heat?  As time lacks mass, not literally.   Yet we understand the metaphor of the distraction of intense heat.  Under pressure, angry, anxious, or upset people say things that they do not really mean.  Or, more precisely, they do mean them at that moment of intense heat, but we understand that their words exaggerate their feelings.  When the moment has passed and they have had time to cool down, they regret their hot, angry, impulsive insults and decisions. 

Contracts of employment sometimes come to an explosive end.  Summary dismissals are dispensed without caution in a moment of conflagration.: ‘You’re fired’.   Employees announce impulsively that they quit in disgust or anger at how they have been treated.  Hours or even minutes later, after a pause for reflection, these rash statements may be regretted.   Can the employment relation be retrieved or is there no way back from that pantomime manager’s incendiary dismissal?  Or, is employment like smoking – people may drop their cigarette when it burns their fingers, but do they ever really intend to quit?

These reflections on thermodynamics have been provoked by the comprehensive and learned assessment of the field of resignations in the heat of the moment by Judge Stout in the Employment Appeal Tribunal (EAT) in Omar v Epping Forest District Citizens Advice [2023] EAT [2024] ICR 301.     The case was appealed because the Employment Tribunal (ET) had not resolved crucial questions of fact about what had happened in the heat of the moment.  The EAT explained why those questions of fact were the important ones to resolve for the purpose of applying the law and remitted the case for a complete rehearing before a differently constituted tribunal.  Most of the analysis provided by the EAT is clearly sound and in some cases a useful correction to some misleading phrases that have crept into the legal analysis of impulsive resignations, though there are some loose ends that deserve further analysis. 

More importantly, we should reflect more deeply on why this topic of resignations in the heat of the moment provokes such complexity that an ET does not appear to understand the legal question.   The underlying legal problem in this area may be that ‘dismissal’ is both a common law concept that also has a statutory definition under section 95 of the Employment Rights Act 1996 (ERA 1996), whereas resignation is neither a legal concept nor does it have a statutory definition.  The underlying practical issue is that for good reason few employees and managers know or understand the complexities of the law of common law of termination of contract and how it interacts with the statutory concept of dismissal.  It might even be suggested that this is true for many lawyers.  But the deepest problem is, I will suggest, the failure of the tribunals to adopt a purposive approach to the interpretation of the statutory concept of dismissal. 

2. The graft of the statutory concept of dismissal

Although the facts of the Omar case are not entirely clear, the main events were a series of impulsive resignations by the claimant in response to perceived unreasonable demands and criticisms by his managers.  The irritability of the claimant is explicable because he was under considerable pressure at home from increasing caring responsibilities for elderly parents.  On one occasion, the claimant resigned orally in response to a letter of complaint about his timekeeping, but his manager told him to calm down and that she would not accept his resignation.  Two days later the same thing happened again, with the claimant giving a month’s notice.  Again, his manager said she would not accept the resignation.  Two weeks later, the claimant became angry again and spoke of resignation, though what actually happened remained in dispute.  The employer stated that the words used were ‘these are fucking bullshit…that’s it, from today a month’s notice’, and that on this occasion his manager accepted his notice.  The claimant conceded that he had sworn at his manager, but claimed that he had not given notice but said that he was ‘done with this organisation’ and ‘I’m off because I’d had enough’.  Later that day a senior manager met with both the claimant and his manager, but disputes about what happened at that meeting were not resolved by the ET.  The next time the claimant came into work, the senior manager met with him again and told him that his resignation would stand as his manager could no longer work with him.  The claimant then tried to retract his oral resignation because it had been given ‘in the heat of the moment’, but the employer refused to accept the retraction. 

In the subsequent claim for unfair dismissal, a crucial legal issue was whether the claimant had been dismissed. 

The premise of much of the EAT’s judgment is that this issue can be resolved by using the common law of the termination of contracts.  Judge Stout commenced her detailed and erudite analysis by declaring: ‘It is well established, and not in dispute in this appeal, that whether or not an employee is dismissed for the purposes of section 95 [ERA 1996] is to be determined by reference to “ordinary” contractual principles (cf Western Excavating (ECC) Ltd v Sharp [1978] ICR 221; [1978] QB 761 and Aberdeen City Council v McNeill [2015] ICR 27).’  Yet Western Excavating only established the narrower point that the statutory concept of constructive dismissal should be understood as requiring a fundamental breach of contract by the employer.  The Aberdeen City Council case addressed the problem that, under the influence of Roman and civil law, the law of contract in Scotland differed slightly in its analysis of fundamental breach. The divergence that was obliterated on appeal to avoid inconsistency in the application of the statute north and south of the border (cf .  H Collins, ‘Constructive Dismissal and the West Lothian Question’ (2011) 40 Industrial Law Journal 439.)  Neither case supports the broad proposition that the statutory concept of dismissal should be determined by common law principles of the law of contract.

Notwithstanding the ‘well-established’ conventional wisdom, instead of equating the statutory concepts of dismissal with the common law, it seems to me to be more accurate to follow Sedley LJ in Bournemouth University Higher Education Corpn v Buckland [2010] EWCA Civ 121, [2010] ICR 908, when he observed: ‘Modern employment law is a hybrid of contract and status.  The way Parliament has achieved this is to graft statutory protections on to the stem of the common law of contract’ [para 19].  A graft takes its nutrients from its rootstock, but the fruits of the graft are quite different from those of the genetic material of the base.  So too,  the common law of contract provides the nutrients of legal concepts that are the building blocks of the statutory concept of dismissal, but the statute produces its own distinctive fruit that defines dismissal in ways that are at variance with the common law.  To understand the complexities of this field of resignations in the heat of the moment, we should examine more closely the divergence between the common law of contract and the statutory concept of dismissal. 

3. Termination of contracts of employment under the common law 

Under the common law, there are two ways to terminate a contract of employment that has no fixed end date or has not been frustrated. 

The first route is to give notice in accordance with the terms (express or implied) of the contract.  In most contracts of employment, both employer and employee are entitled to bring the contract to an end unilaterally by giving notice to the other party of their intention.  Unless the contract states to the contrary, no formality is required: notice can be given in writing or orally, though presumably it has to be communicated in order to be effective.  Notice terminates the contract because the power is conferred expressly or by implication in the terms of the contract.  Either the employer or the employee can terminate the contract unilaterally, without the need for acceptance or consent by the other. 

The second route for terminating a contract of employment in the common law is by the acceptance of a repudiatory breach of contract.  If one party expresses an intention no longer to be bound by the contract, that amounts to a repudiation.  The intention may be expressed either by words or conduct.  In accordance with the elective approach to termination by repudiatory breach (Geys v Société Générale [2012] UKSC 63, [2013] ICR 117), the contract is not terminated until the other party has accepted the repudiation.  This acceptance can be readily inferred from conduct.  Where an employer has repudiated the contract, the employee often signifies acceptance by commencing a legal claim for unfair or wrongful dismissal.  Termination in the case of repudiatory breach must always be the result of agreement, albeit one where the choices are extremely limited.  

4. The statutory concept of dismissal

What is the relation between those common law rules regarding termination of the contract of employment and the statutory concept of dismissal?  My contention is that the relation is no closer than a grafted tree.   The divergence arises because the two branches of the law serve different purposes.  The crucial issue in the common law is whether either party to the contract is under an obligation to continue to perform the contract.  Until the contract has been terminated, the obligations are binding.  In contrast, the statutory concept of dismissal is focussed on who caused and who should be held responsible for the termination of the contract of employment.  It is only if the employer can be held responsible, either directly or constructively, that the statutory regime over dismissal can be invoked by employees.

The difference between termination at common law and the statutory concept of dismissal is apparent in section 95(1) (a) of the ERA 1996. In this first limb of the definition of dismissal, the statute states that the employee will have been dismissed by his employer if the contract under which he is employed is ‘terminated by the employer (whether with or without notice)’.  Under the statute, dismissal coincides with termination under the common law if the dismissal was carried out by the employer giving notice.  But if there was dismissal without notice, usually known as a ‘summary dismissal’, the situation is ambiguous.  If the summary dismissal is justified as a response to a fundamental or repudiatory breach by the employee, the ‘dismissal’ is properly characterised as the acceptance of a repudiatory breach by the employee and therefore the contract is also terminated.  In contrast, if the summary dismissal is not justified as a response to a fundamental breach, it is a repudiatory breach itself, which does not bring the contract to an end.  Although there is no termination of the contract of employment by an unjustified summary dismissal under the common law, the statute makes it clear that there is nevertheless a dismissal within the meaning of the statute.    There is a dismissal under the statute even though the employee has the power at common law of affirming the contract and stopping any termination.   

What is the position when the employee utters words that apparently amount to a resignation?  If the employee gives notice, the contract is terminated under the common law at the expiration of the notice period.  The employee will only be regarded as having been dismissed, however, if the case falls within the statutory concept of constructive dismissal in ERA s.95(1)(c).  For this purpose, the employee must demonstrate that the employer committed a fundamental breach of contract to which the employee responded by giving notice. 

The position is more complicated if the employee does not give notice, but merely announces words to the effect of ‘I resign’ or ‘I quit’.  In such cases of resignation without notice, which might be called ‘summary resignation,’ the conduct may be interpreted as either a repudiatory breach of contract by the employee or the acceptance of a repudiatory breach.  If the resignation is shown to be in response to the employer’s fundamental breach of contract, this acceptance of the repudiation terminates the contract and also falls within the statutory concept of constructive dismissal.  But what happens if the employee quits when the employer has not committed a fundamental breach of contract, perhaps not even any breach at all? 

In such a case, as possibly occurred in Omar, there is no constructive dismissal because the employer has not committed a fundamental breach of contract.  Under the elective theory of the common law, the contract has not yet been terminated.  Termination requires the employer to accept the repudiatory breach.  If the employer waits to see what happens and continues to expect performance of the contract, the contract is still binding until the employer accepts the repudiation.  If the employer affirms the contract, the unaccepted repudiation has no legal effect, so the contract has not been terminated at common law.    On the other hand, if the employer concludes that future performance is unworkable and accepts the employee’s repudiation, the contract is terminated.   Is there a dismissal in such a case of ‘summary resignation’? 

Most people assume that resignations without notice cannot be a dismissal under the statute.  But the statute is not entirely clear on this point.  The statute defines dismissal in the first limb (a) as when the contract is ‘terminated by the employer.’  By accepting the employee’s repudiatory breach, the employer indeed terminates the contract of employment at common law.  On that view, summary resignation that is accepted must involve termination by the employer and so fall within the statutory definition of dismissal.  But that application of the ‘well established’ proposition that the statute has to be interpreted in accordance with the common law produces the surprising result that resignations in the heat of the moment are dismissals by the employer.  Against that interpretation of the statutory concept of dismissal, it could be pointed out that the separate provision for constructive dismissal in limb (c) would be to some extent superfluous if summary resignations were regarded in law as dismissals by the employer, though the existing provision for constructive dismissals would still be needed in cases where an employee resigns by giving notice.   If we assume that ‘summary resignations’ are not dismissals by the employer, which is surely also ‘well established’, it is evident that the word ‘termination’ in s.95(1)(a) cannot mean the same as termination in the common law.

To sum up the connection between the law of contract and the statutory concept of dismissal in section 95(1) of the ERA 1996, we can say the following.  The first limb in (a) concerning a contract that is terminated by the employer either with or without notice differs from the common law in two respects: termination without notice (summary dismissal) by the employer is treated as dismissal, even though it has not been accepted by the employee, and termination without notice by the employee (summary resignation), is not treated as dismissal by the employer even though termination can only occur by acceptance by the employer.  The second limb in (b) concerning the expiration of fixed or limited term contracts does not fit easily into the language of termination of contracts.  Commercial lawyers might treat such events as discharge by performance or the expiration of the contract.   But since no further performance is required, we can label such cases as ‘agreed terminations’.    The statute reclassifies agreed terminations as dismissal or termination by the employer, thereby contradicting the common law.  The purpose of the third limb concerning constructive dismissal may not have been intended to bring the statutory concept of dismissal into line with the common law of termination, but the effect of Western Excavating v Sharp was to make the provision mean the same as the common law.    In practice, however, as Alan Bogg has pointed out, the development of the implied term of mutual trust and confidence permitted tribunals to broaden the kinds of incidents that would entitle employees to claim that there had been a fundamental breach of contract, so that the statutory concept of constructive dismissal is much closer to a test of reasonableness than would be found in the general law of repudiatory breach of contract (A L Bogg, ‘Bournemouth University Higher Education Corporation v Buckland: Re-establishing Orthodoxy at the Expense of Coherence?’ (2010) 39 Industrial Law Journal 408.) 

Given these inconsistencies and contradictions between the common law and the statutory concept of dismissal, it is surprising that the connection between them is so well established.  It seems to me that Christmas Pippin apples are growing on cherry rootstock. 

5. Ascertaining the ‘real intention’

Returning to the Omar case itself, we can now appreciate the importance of the need for the ET to have pinned down the facts of the case more carefully.  The claimant’s first impulsive resignation was a ‘summary resignation’ (or repudiatory breach) which the manager did not accept because the manager did not believe that it was really or seriously intended.  Under the common law, on these facts the repudiation has not been accepted and so has no effect.  Nor does it fit under any of the statutory definitions of dismissal.  The second impulsive resignation differed because on this occasion the claimant announced that he was giving notice.  Having exercised the power to terminate the contract by giving notice, that decision was irrevocable.  Again, on this occasion, the manager did not accept the resignation, though in fact her acceptance would have had no legal effect.  But what might have happened is that again the manager did not believe that the claimant really intended to give notice.  Concerning the third and final resignation, the tribunal did not resolve the question of whether the claimant had given notice or summarily resigned.  The employer’s evidence stated that the claimant had given notice, which in due course would inevitably bring the contract to an end.  The claimant’s evidence was that he had said that he was ‘done with this organisation’ and ‘I’m off because I’d had enough’, statements that at most might be considered to be a repudiation (or summary resignation), which was not immediately accepted and according to further evidence from the claimant may not have been accepted at all.  Since the different accounts of what happened on the third occasion had significantly different legal consequences, the failure of the tribunal to decide what had happened in fact made an order for a rehearing inevitable. 

Whatever the facts of the case were, however, the crucial legal question is what was ‘really intended’ by the claimant.  Did the claimant really intend to resign and terminate the contract of employment, or was that not his real or serious intention?   That was the key question, whether or not the claimant had given notice or merely walked out.  On the two previous occasions of impulsive resignations, one with and one without notice, the manager judged that the claimant’s dramatic resignations were not really intended, so neither had any legal effect.  But, if the words used are the same, how can a tribunal (and an employer) distinguish between an apparent intention to resign, and a real intention to resign? Judge Stout makes several valuable points about how tribunals should approach the question of ascertaining the real intention of the parties. 

The first point is that tribunals should not in fact try to surmise what was in the claimant’s mind, but approach the question objectively by examining the meaning of the words and conduct in the context in which they were spoken and how they would have reasonably been understood by the other party.  Although I doubt the relevance of the analogy drawn by Judge Stout with the interpretation of written terms of contracts, it is correct that usually in the law of contract an assessment of a person’s intention must be done objectively.  That objective approach applies when one party has to assess whether the other intended a repudiatory breach of contract (eg Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698).

Second, evidence about what happened after the words were spoken is admissible to cast light, objectively, on whether dismissal or resignation was really intended.  For instance, in the Omar case, the claimant did not in fact leave work immediately and he returned to work normally on his next working day, conduct that seems to contradict his statement that he was done with the organisation.  In addition, the senior manager asked him to put his decision to give notice in writing, which is perhaps evidence of doubt about his real intention.   

Third, there is no rule that says that in ‘special circumstances’ the objective meaning of the words can be ignored, a proposition that was perhaps accepted obiter by the Court of Appeal in Willoughby v CF Capital plc [2011] EWCA Civ 1115, [2012] ICR 1038.  Instead, Judge Stout correctly states the rule to be that there may be circumstances such as when the speaker is angry, behaves out of character, acts under intense pressure, or is immature, when an objective approach to the ascertainment of intention could lead to the conclusion that the ordinary meaning of the words was not really intended or so understood by a reasonable bystander.  That is what happened in the Omar case on the first two occasions: the manager did not believe that the claimant really intended to resign.    A new tribunal will have to determine whether that was true in the third instance of the claimant’s impulsive resignations. 

6. Reform of the statutory concept of dismissal   

To conclude, my first point is that the ‘well established’ proposition that the statutory concept of dismissal in section 95(1) ERA 1996 should be understood through the apparatus of the common law of termination of contracts is misconceived.  The statutory concept of dismissal is an autonomous concept, even though some of the language used in it is the same as that employed in the common law.  The errors involved in using the common law as the interpretative framework become especially apparent when it is applied to termination without notice.  In such cases, termination at common law is only achieved by the other party’s acceptance of the repudiatory breach.  To apply the common law’s concept of termination would mean that summary dismissal by the employer would be a termination by the employee, and summary resignation by the employee would be termination by the employer!

The statute prevents those absurd results in the case of summary dismissal by the employer by stating explicitly that it is dismissal under the statute.  But the statute is silent about resignation without notice by the employee.  Parliament wisely created an autonomous concept of dismissal, excluding most of the complexities of the common law, though admittedly they have been reinserted by the judges to some extent.  But Parliament did not complete the job of explaining the application of the statutory concept to various other situations that typically arise in the ending of a contract of employment.  One example is resignations without notice.  Another example is dismissals or resignations in the heat of the moment.  Another long-standing blemish on the law is the judicial application of the common law of frustration of contracts to immunise employers from responsibility for dismissal.  These omissions suggest that ERA 1996 s.95 needs revision in the light of half a century of experience. 

It is unfortunate that the tenor and implications of the decision of the Supreme Court in Gisda Cyf v Barratt [2010] UKSC 41, [2010] ICR 1475 have not been extended to the statutory concept of dismissal.  That case concerned the application of the opaque statutory concept of the ‘effective date of termination’ to a case of summary dismissal by post when the issue was whether the claim had been filed within the limitation period.  The unanimous court rejected the application of the general law of contract to the interpretation of the statutory concept of ‘effective date of termination’ in ERA 1996 s.97(1).  The court observed in paragraph 37 that the provision was ‘part of a charter protecting employees’ rights.  An interpretation that promotes those rights, as opposed to one which is consonant with traditional contract law principles is to be preferred.’  That decision is merely one of many pronouncements of the Supreme Court that statutes on employment rights should be interpreted purposively, recognising that the purpose of conferring rights is to protect employees.  It is unfortunate that this purposive approach is routinely ignored by employment tribunals in many contexts including the statutory concept of dismissal.  

A purposive approach to the statutory concept of dismissal would identify its central purpose as to determine whether or not an employer should be required to justify the termination of the employment relation.  It is only when there is a finding of dismissal, that the employer has to explain the substantial reason for the dismissal and argue that it was reasonable to dismiss for that reason.  Dismissal under the statute is not a question of fact or causation.  It is about whether the employer should be required to comply with the international labour law standard of giving valid reasons for dismissal.  For example, the dispute in Omar was ultimately about whether the employer should be required to justify the termination of the claimant’s employment by giving a substantial reason for the dismissal and explaining why it was reasonable to dismiss the claimant for that substantial reason.  It seems to me that in the light of this purpose, in most, perhaps all, impulsive resignations in the heat of the moment, employers should be called upon the justify their decision to regard the contract as terminated. 

If a purposive approach is not adopted by the tribunals, the statute could be rewritten around the question of whether, taking into account all the circumstances surrounding the termination of the employment (however it may have occurred), the employer should be required to justify the termination of the employment relation.  I expect that lawyers will reject this proposal and invoke Lord Denning’s famous condemnation in Western Excavating v Sharp that such a loose test would provoke ‘whimsical decisions’.  The contrary argument is that, though perhaps less predictable,  at least the tribunals (and human resources managers) would be asking a question they can understand and which is ultimately the only relevant question to be considered, which they could approach cooly and calmly without the heated distractions of the common law. 

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(Suggested citation: H Collins, ‘In the heat of the moment – by Hugh Collins,’ UK Labour Law Blog, 26 March 2024, available at https://uklabourlawblog.com/)