A senior manager threatening to sack you outside any fair process can itself be unlawful.
“Court of Appeal upheld that the CEO's abusive threats of dismissal amounted to constructive dismissalWhen your employer's behaviour is so serious that you feel you have no choice but to resign, the law may treat that resignation as a dismissal. The most common basis is a fundamental breach of the imp....”
Threatening dismissal outside a fair process can itself breach your contract.
- Keep a written record of any threats or abusive treatment, including dates and, where you can, exact words used.
- If you are thinking about resigning because of how you are being treated, act reasonably soon after the breach rather than waiting months. Try not to carry on as normal in the meantime, since that can look like you have accepted the treatment.
- Get advice before you resign if bonus, commission, or other variable pay forms a significant part of what you would lose, since valuing this can be complicated.
The situation
A senior manager at an investment bank was employed on a three year fixed term contract. Over several months, his chief executive subjected him to repeated verbal abuse, including threats to dismiss him, none of which followed any fair or genuine process. Matters came to a head over a minor error in a bonus schedule, when the chief executive launched a severe verbal attack on him. He resigned around nine months into his contract, believing he had no choice.
What the court found
The chief executive's conduct destroyed the trust and confidence that has to exist between an employer and an employee. The court judged this objectively, looking at the effect of what he did rather than what he actually intended. Employment contracts carry this duty automatically, as a term the law implies whether or not anyone put it in writing. Using threats of dismissal as a tool of intimidation, rather than as part of a fair process, formed part of that breach. Because the breach was fundamental, the manager was entitled to resign and treat himself as dismissed. On appeal, the Court of Appeal upheld this finding and confirmed that even where a bonus is stated to be discretionary, the employer must exercise that discretion honestly and rationally, not arbitrarily, when working out what the employee has lost.
Horkulak v Cantor Fitzgerald International [2004] EWCA Civ 1287