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CHAPTER IV
DISMISSAL AT THE INITIATIVE OF THE EMPLOYER AT COMMON LAW– WRONGFUL DISMISSAL
INTRODUCTION
At common law, the termination of a worker’s employment is premised upon an understanding of the employment
relationship as one between a master and a servant. Thus, the concept of “employment at will” is central to the common
law rules on termination. The employer is free to hire and fire as he or she pleases and the law does not intervene. Dismissal
law, therefore, is characterized by this voluntaristic, laissez faire model. Overtime, intervention came in the form of some
kind of notice before termination at the initiative of the employer, dismissal, but this did not challenge the employer’s
right to fire, just the way in which he or she did so. It was left to Parliament through statute to “ameliorate this harsh
position” and to import notions of fairness and reasonableness into this significant event.
LEGISLATION
Antigua Labour Code
Grenada Employment Act 1999
Barbados Severance Payments Act CAP 355A
St. Lucia Contracts of Services Act 1975 [merely codifies common law forms of dismissal e.g.
wrongful dismissal].
CLEAR INDICATION OF DISMISSAL
Cumberbatch [1994] has noted that if an employee resigns in the heat of the moment and special circumstances exist, then an
employer should investigate the matter and ascertain the employee's true intention. 'Special circumstances' may include particular
pressures on the employee or the employee's personality. In this regard, the decision of In Kwik-Fit v Lineham is illustrative. In
this case, where the employee, a line manager, used a depot toilet on his way home from his employer’s pub one night,
causing the alarm to be reactivated, the employer presenting the manager with a letter of termination after he walked out
upon a director who gave him a written warning in front of a junior colleague, the court held that special circumstances
existed in this case and therefore the employee had not resigned; rather his contract had been unfairly terminated by his
employer. The court indicated that the employer should have waited a reasonable time before accepting the purported
resignation at face value.
In any event, unilateral and fundamental changes have the effect of rescinding an old contract of employment. In Alcan
Extrusions v Yates, the court held that the where the employers unilaterally imposed a radically different shift system,
wages and holidays schemes, they had thereby terminated the employees' contracts. The factual basis was such that the
employees had stipulated that they would work the new system under protest, reserving their rights to claim unfair
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dismissal and redundancy payments. In any event, the Tribunal went on to consider the issue of whether or not the
action of an employer in imposing radically different terms has the effect of withdrawing and thus terminating the original
contract. The Tribunal stated that the answer to this question is ultimately a matter of fact and degree for the industrial
tribunal to decide provided always they ask themselves the correct question, namely, was the old contract being withdrawn
or removed from the employee?
In Morton Sundour Fabrics Ltd v Shaw, where the respondent foreman had been told by his employers that they had
decided to close the department in which he worked and that his employment would then cease, but they had not specified
the date when that would occur, in circumstances where the respondent then found other employment and left the
appellants' employ after giving them 28 days' notice in accordance with his contract, the court held that the employers
had not terminated the respondent's contract of employment within the meaning the relevant statutory provision. The
respondent was therefore not entitled to redundancy payments. Widgery J delivering the lead judgment pointed out that
as a matter of law an employer cannot dismiss his employee by saying "I intend to dispense with your services at some
time in the coming months". In order to terminate the contract of employment the notice must either specify the date or contain
material from which that date is positively ascertainable.
WRONGFUL DISMISSAL
Wrongful dismissal is a common law form of dismissal which describes a dismissal without notice. There is no inquiry into
the merits of the decision to dismiss. The common law has simply developed an implied term to give notice before dismissal, such
notice period to be in accordance with the type of work and work arrangements. A finite amount of notice is usually stated in a
contract of indefinite tenure. If not, reasonable notice is inferred. Where statute prescribes minimum notice, a worker is
entitled to compensation to the tune of the amount of wages he would have received during the notice period.
In Noakes v Doncaster Amalgamated Colliries Ltd, the court held that where the worker absented himself form work
without reason and the defendant in turn deducted money from his wage, a claim against the defendant employer could
not be upheld. In fact, the court further cited the transfer of the old company to a new company as indicating that there
was no contract of service between the parties, and as such, the deductions made were governed by the common law. In
any event, the general principle in area appears to be the reasoning provided by their Lordships in Godfrey v Allied
Stores Ltd. Here, the court stated the where an Act merely prescribes minimum periods of notice required to terminate,
common law rules may require a longer period, the length of which may depend on the intentions of the parties as revealed
in their contract. Suffice, where there is no express provision as to notice, the court will imply an appropriate term.
However, a different position obtains where a contract of employment is silent on the requisite notice period. In Waithe
v C’bean Int Airways Ltd, where the employee’s contract was silent on the issue of notice, the court had to decide what
was a reasonable period of notice in the circumstances, the character of the plaintiff’s employment and the availability of
similar employment, having regard to the plaintiff’s experience, training and qualifications.
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WHAT IS PAY?
A contentious question is what constitutes pay for the calculation of compensation for wrongful dismissal. The general
rule is that items such as bonus pay, commissions, life insurance, health insurance, car allowances etc. are to be included only if they
can be viewed as contractual entitlements. However, the worker is normally entitled to his holiday pay and this will often be
mandated under statute. Other important considerations in this regard include the date of termination. In Lavarack v
Woods, the plaintiff failed in a claim for bonus as it was discretionary scheme afforded by his employers. It was held that
even though he was wrongfully dismissed, he had no entitlement to the discretionary bonus scheme, although he may
have reasonably expected such entitlement.
Conversely however, in Horkulak v Cantor Fitzgerald Int’l the court located a contractual entitlement to a bona fide
and rational exercise of the employer’s discretion to award bonus as opposed to a wide discretion which was in fact
exercised. On the facts of the case, it was held that where plaintiff was wrongfully dismissed as a result of being insulted
and humiliated by his employer, he was entitled to bonus payment even though it was discretionary scheme. Such
discretion was subject to an implied term of the rationality and genuine exercise.
In Shove v Downs Surgical Plc, a case which concerned a claim for insurance coverage, the court held that where the
former director became ill and was wrongfully dismissed by his employer, he was entitled to recover the financial loss
which he incurred. However, in Godfrey v Allied Stores the court held that an end of year profit was not a benefit to
which the worker was contractually entitled. But in Allied Stores v Godfrey, it was held that amount for the use of the
company’s car was to be subtracted from the final total of damages for wrongful dismissal. In any event, in Hackett v
C’bean Exam Council, a case which concerned a claim for vacation pay, it was held that, where CXC refused to pay the
last two months of the plaintiff’s vacation leave because she accepted a new post, CXC was not entitled by reason of the
plaintiff’s letter of resignation to unilaterally to treat her employment as having come to an end and, if it wished to
terminate her employment without taking disciplinary proceedings against her in accordance with the staff rules, it was
obliged to give her three months’ notice or payment in lieu.
EXTRA COMPENSATION FOR BREACH OF IMPLIED TERM
Attempts have been made to award more compensation for loss of reputation, stigma, etc. using the doctrine of implied
terms, in particular, breach of the implied term of trust and confidence. However, the courts have been reluctant to do so
as this enlarges the common law concept of wrongful dismissal, as will be discussed below. It is however important to
note that an independent common law action for breach of an implied term may still arise.
PAYMENT IN LIEU OF NOTICE (PILON)
An employer may, upon termination of his employee’s contract of employment, elect to pay compensation in lieu of notice.
He is required however to pay the full amount of the notice period, thereby getting rid of the worker more quickly. Suffice,
it must be noted that more often than not, both parties will agree to this arrangement.
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However, the courts today have been more concerned with the situation where the worker does not wish to accept the
PILON; in effect, he does not agree to waive the right to notice. The question arises: can the worker be compelled to accept
the PILON? It has been suggested that the court will only hold that the worker was entitled to refuse the PILON where
the contract’s performance holds some special benefit for Worker, such as where he needs the skills / training, or where
the work is essential for maintaining his reputation, such as an actor, or singer. In these rare cases, the courts may be
moved to order specific performance of the contract. Further, it must be noted that the courts have begun to accept that in
such cases the worker may also be entitled to further damages. For example, in Dunk v Waller, the court held that the
apprentice was entitled to damages not just for the lost wages but also for the loss of training opportunities and the
consequent harm done to his chances of obtaining a good job.
NEW DIRECTIONS IN WRONGFUL DISMISSAL LAW
1. There are implications where the employer fails to observe contractual disciplinary procedures. In these circumstances,
the question arises as to whether compensation could be enlarged. In Boyo v Lambeth, where the plaintiff was
suspended for alleged fraud for which he was later acquitted, he succeeded in an action for his salary for the period
of notice plus five months, which was deemed a reasonable time for the disciplinary proceedings.
2. Attempts have also been made to expand the notice rule and award extended damages where the contract
embodies a job security clause. For example, where the contract provides for three months notice as well as saying
that the worker can be dismissed for cause via a disciplinary procedure. Courts have tended toward the view that
the notice rule will prevail unless explicitly limited by the contract itself. 1
3. A further question arises as to whether an implied term of trust and confidence can be used to limit the notice rule
thereby undermining the employer’s power to dismiss an employee merely by giving notice. There is a novel
suggestion that this implied term should be interpreted to mean a duty of fair treatment in the manner of dismissal
which could imply dismissal only for a good cause. This is projected to significantly expand the common law concept
of wrongful dismissal. In any event, the courts have been reluctant to so expand this area. Thus, in Johnson v
Unisys Ltd it was held that the plaintiff could not claim damages for the manner of his dismissal which caused
him psychiatric injury. Instead, the court stated, he could only claim damages for the dismissal itself (which
entitled him to his salary).
In Magnox Electric Plc McCabe v Cornwall Country Council, it was held that although it would be desirable if the
implied obligation on an employer at common law to act fairly towards his employee be applied to a decision to dismiss
him, such a development could not co-exist satisfactorily with the statutory code regarding unfair dismissal. In fact, it was
stated that where an employee had, prior to his unfair dismissal, whether actual or constructive, acquired a common law cause of
action against his employer in respect of the employer’s failure to act fairly towards him, and financial loss had flowed directly from
that failure, he could, subject to the rule against double recovery, bring an action at law in respect of that loss and such action was not
1
Boyo, supra.
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barred by the availability of a claim in the employment tribunal under the unfair dismissal legislation.
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Suffice, it was stated in
Reda v Flag Ltd, that although a term that the employer would not without reasonable and proper cause destroy the relationship of
trust and confidence between the employer and employees could be implied in the employee’s contract of employment, such implied
term must yield to the express terms of the contract, and in particular the implied term could not be used to
circumscribe an express power to dismiss without cause.
RESTRAINING BREACH OF CONTRACT
Courts have been prepared to move in equity to restrain certain breaches of contract by the employer, for example, where
the employer purports to dismiss the worker in breach of a contractual procedure such as notice, the worker may refuse to
accept that employer’s conduct or repudiatory breach has brought the contract to an end and may file for an injunction in equity to
restrain the employer from doing so, forcing the employer to carry out the correct procedure or give good cause. It is also important
to note that, in respect of the duty of trust and confidence, the court may examine whether, for example, the employer
retains trust in the worker’s ability to perform the job before granting the injunction.
In Jones v Lee, it was held that the summary dismissal of the Claimant was invalid and accordingly an injunction lay for
failure of the employer to honour his contractual procedural prerequisites. Similarly, in Jones v Gwent, the suspension
of a university lecturer was held to be a breach of the requisite contractual procedure thus the employer was compelled to
dismiss the employee using only the appropriate procedure. On the facts of the case, it was held that the letter from the
defendant purporting to dismiss the plaintiff, a lecturer, after she had been cleared of misconduct by two disciplinary
hearings, was invalid because it did not comply with relevant contract of employment. The court further considered that
the letter which asked the plaintiff to attend a disciplinary hearing was not a sufficient notice. However, in King v The
Buzzer, the court held that while the employer had the power to dismiss the worker, they had no right to suspend him.
In any event, the dictum by their Lordships in NMU and Campbell v JBC, is instructive. Here, it was held that the
plaintiff’s dismissal without notice was ineffective to terminate their contracts of employment and such circumstances constituted an
exception to the general rule that the law would not enforce, whether by specific performance or by injunction, a contract of employment.
SUMMARY DISMISSAL
Under the common law, the authority to dismiss without notice is retained in the situation where the worker engages in serious
misconduct which is sufficient to repudiate the contract. There must be demonstrated disregard of the “essential conditions of
the contract of service.” In Laws v London Chronicle, L, who was a secretary in the firm, was present at a meeting in
the company of her boss and a senior director. The meeting was very hostile, and accordingly, L left accompanied with
the support of her boss. She was later dismissed for allegedly disobeying the senior director. The court held that she was
wrongfully dismissed and pointed out that a single act of disobedience in the circumstances of the case was not a sufficient
ground for dismissal.
It has been held that an act which violates the implied term on the duty of confidence and trust between employer and
employee will also be sufficient. Suffice, the nature of the conduct which will be sufficient to ground summary dismissal is
not static and will reflect changing values. In Wilson v Racher, the respondent/plaintiff was the head gardener on the
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appellant/defendant's estate. He was employed for a period of not less than six months according to the terms of his
engagement. In the circumstances of the case, he was dismissed following an incident in which the defendant accused the
him of shirking his work, and in the course of the ensuing argument, the plaintiff used obscene language. The defendant
claimed that his dismissal was on the grounds of his use of "obscene four-letter words in the direct presence of my wife
and in particular my children." It was held that the language employed by the plaintiff during the course of the argument
with the defendant did not constitute such conduct as was incompatible with the continuance of the contract of service.
The defendant's summary termination of the plaintiff's contract of employment before the expiration of the fixed period
of his employment was therefore a wrongful dismissal.
However, it must be noted that while the particular grounds for summary dismissal may be varied and broadly defined,
the principle itself is a narrow one and has been treated thus by the courts. Generally however, cases fall into categories
of extreme behaviour such as stealing, disobedience to instruction, negligence, and abusive language, amongst others.
FREQUENCY OF CONDUCT
Here, the principle appears to be that a single act of misconduct is generally insufficient. In Equipment Mtce v NMU it
was stated except in the case of gross misconduct dismissal in the first instance of a breach is not consistent with the Labour Relations
Code (b) which stipulates that no worker should be dismissed for a first breach of discipline except in the case of gross misconduct.
Their Lordships affirmed that “gross misconduct” generally presupposes intentional and deliberate misconduct in breach of
an important contractual obligation. It was further stated in Lasley and Partners v Bayley Barbados that as a general
principle, there is good ground for dismissal of a servant if he is habitually neglectful in respect of the duties for which he is engaged,
but not if there is only an isolated instance of neglect, unless attended by serious consequences. Similarly, in Henry v Mount Gay
Distilleries, it was pointed that a single act of carelessness or negligence can provide grounds for summary dismissal if the
negligence itself or the circumstances surrounding it show that there has been a “deliberate flouting of the essential contractual
conditions.” And finally, in Grants Hotel Inc v Shepherd, it was indicated that a single act of dishonesty is not enough to
warrant summary dismissal.
WHETHER NATURAL JUSTICE PRINCIPLES ARE ATTACHED TO SUMMARY DISMISSAL
It appears that in the absence of unfair dismissal law, natural justice principles, though important, do not attach to
summary dismissal. This point was made in White v Victoria Mutual Big Social et al and Knight v BWIA where it
was held that the rules of natural justice are public law principles which do not apply to master / servant cases.
COMPANY HANDBOOK OR CONTRACT PERMITTING SUMMARY DISMISSAL
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In OWTU v Federation Chemicals it was stated that a company handbook or contract permitting summary dismissal
in designated situations is not conclusive and will not preclude the court from inquiring into whether summary dismissal
was justified.
WAIVER
The court in Kelly’s Bakery v Fines BS outlined the general principle that an employer may waive his right to dismiss
summarily. However, the court also accepted that this would be restricted to the same conduct and not other types of
misconduct.
CONSTRUCTIVE DISMISSAL
Constructive dismissal describes a situation whereby because of the conduct of the employer, the worker is contractually
entitled to leave the employment. He can then claim compensation in damages for having been constructively dismissed.
However, the employer must be seen to have breached a fundamental term of the contract or demonstrated an intention
to no longer be bound by the contract, that is, an anticipatory breach. In COURTS (Barbados Ltd) v Innis, it was stated
that in determining the issue of constructive dismissal, the court must carefully scrutinize the employer’s conduct and determine whether
the employer is responsible for some conduct which objectively constitutes a fundamental change in the employment or a unilateral
change of a significant nature, evincing an intention on the part of the employer not to continue the employment contract upon its
previous terms. Some situations which have been held to amount to a significant breach going to the root of the contract are demotions,
reductions in remuneration and benefits and changes in status, power and authority of the employee. However, it is also
pointed out by the court that it is not every instance where these changes occur that leads to constructive dismissal.
Actions for constructive dismissal must be founded on conduct viewed objectively by the employer and not the subjective
perception of that conduct by the employer. Accordingly, the court must scrutinize the conduct of the employer to
determine whether it is of such nature and degree as to satisfy the test of constructive dismissal.
Lord Denning in Western Excavating ECC Ltd v Sharp has stated that where an employer is guilty of conduct which is a
significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by
one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further
performance. If he does so, then he terminates the contract by reason of the employer’s conduct. He is, in other words, constructively
dismissed. In any event, it is accepted that an employer is allowed a certain degree of latitude in respect of the corporate reorganization of his business. Such re-organization will invariably alter the employment relationship; job description and titles,
supervisory responsibilities and duties may be changed. However, not every change in the employment relationship upon corporate
re-organization constitutes a unilateral change sufficient to evince an intention on the part of the employer to repudiate the
contract.
Suffice, more recently, situations such as sexual harassment, causing mental distress, amongst others, which relate to the
implied terms of trust and confidence will be sufficient to ground a claim for constructive dismissal.
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CAUSATION TEST
The dismissal must be a direct result of the employee’s conduct. In Jones v Sirl and Son, the court held that although
there was in fact an offer from a rival firm to the plaintiff, it was in fact the employer’s conduct which made the worker
leave and claim constructive dismissal.
QUALITY AND DEGREE OF THE EMPLOYER’S ACT
The employer’s conduct must be sufficiently serious to repudiate the contract. In Waite v Caribbean Confection CO,
changes requiring the worker to punch in figures into an automated system coupled with the incorporation of a new
method of payment were held by the court to have been acceptable changes geared at improving the efficiency of the
company and accordingly, were not sufficient as to amount to constructive dismissal. However, in Boyce v Brewster, a
failure to give an employee fourteen days’ notice of the date on which the employee’s annual holiday was to have
commenced was accepted as a breach of the relevant statutory provision. The court referred a suggestion by the employer
that the employee should use the holiday period to seek other employment, and held that this constituted constructive
dismissal.
Suffice, a single act or series of acts may be sufficient to justify a claim for summary dismissal. The “final straw” cases
suggest that it is the cumulative effect of the acts that matter. The final straw need not itself be sufficient. In Omilaju v
Waltham Forest LBC, the employee worked for the local authority as a housing officer. Between February 1998 and
August 2000, he lodged five sets of complaints to the employment tribunal against his employer. All his complaints were
dismissed. He resigned from his post in September 2001 when he was advised of his employer's decision not to pay him
for days spent at the tribunal hearing and lodged a further application which included a complaint of unfair constructive
dismissal. In the circumstances of the case, the court held that the employer's refusal, in accordance with the employment
contract, to pay an employee while he was absent without leave was perfectly reasonable and was not related to the
previous series of acts; it therefore was not a "final straw" and the employee had not been constructively dismissed.
Further, the court was careful to point out that in a 'last straw' situation matters turned to some extent on the perception
of the employee at the time when he felt that he had been treated unreasonably or unfairly by his employer; it was that
which caused him to decide to resign, usually bringing into the picture previous actions by the employer.
In any event, it must be noted that the function of the employment tribunal when faced with a series of actions by an
employer is to look at all the matters and assess whether cumulatively there had been a fundamental breach of contract
by the employer. The tribunal has to answer the question whether the previous acts of the employer, together with the final act in
refusing to pay the employee's salary, for example, cumulatively constituted a fundamental breach of the employee's contract of
employment. Suffice, the "final straw" need not itself be a breach of contract and does not even have to be unreasonable or
blameworthy, although it will be unusual for reasonable conduct to be sufficient.
However, it must also be noted that, as illustrated in Re Hogg, an employee may accept the breach and continue working
under a new contract.
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FRUSTRATION
Frustration of an employment contract is one way of escaping liability for unfair dismissal. However, the courts have
warned against too easy a finding of frustration. The principle is a general one which can apply to several categories of
dismissals. Common examples of frustrating events include imprisonment or illness. In Wood v Caribbean Label Crafts
Ltd, for example, in imprisonment proceedings, the court noted that frustration occurs whenever the law recognizes that without
default of either party a contractual obligation has become incapable of being performed.
● SICKNESS
Sickness may also serve as frustrating event. In Notcutt v Universal Equipment, the appellant, a milling machine
operator aged 63 with over 20years service, suffered a heart attack and was off sick for 6 months. He received no sick pay.
At the end of that time the employers wished to replace him as he was not likely to return to work within the near future.
With his consent the employer’s obtained a medical report from m his doctor which stated that he was unlikely ever to
work again. Following discussions in which the appellant admitted that he could not go on working, he sent three months
notice of termination of his contract of employment. The appellant was subsequent advised that under the relevant
employment Act, s 50 (1), he was entitled to payment during his period of notice notwithstanding the fact that he had not
previously received any sick pay. In these circumstances, it was held that his contract had been terminated by frustration
without notice.
In White v Heywoods Hotel Barbados, the worker suffered from migraine and missed several days of work, in one year,
38 days. The issue was whether the appellant’s incapacity from her migraine illness was of such a nature that further
performance of her obligation under the contract would either be impossible or would be radically different from that
undertaken by her and accepted by the respondent under the agreed terms of her employment. Put another way, were the
chanced circumstances so fundamental as to strike at the root of the relationship? The case was remitted to the
employment tribunal for determination taking into account the factors highlighted on appeal.
● IMPRISONMENT
In Shepherd Ltd v Jerrom, the contract in question was a contract of apprenticeship. Suffice, the apprentice was convicted
of an offence which had nothing to do with his work. He was later sentenced to a term in a Borstal - a type of prison for
young offenders. When he got out he asked to resume his training but the employer refused. The apprentice then brought
an action for unfair dismissal. The employer argued that the contract had been frustrated by the sentence to Borstal and
that therefore he had not been dismissed. The apprentice argued that frustration could not work because it was selfinduced frustration. In the circumstances of the case, the court held that the sentence of Borstal training was an event
which was neither foreseen nor provided for by the parties at the time of contracting and it had rendered the performance
of the contract radically different from what the parties had contemplated when they entered into it. There was no fault
or default on the part of the employers nor could the employee rely on his own default. Accordingly, the imposition of the
sentence of Borstal training was capable in law of frustrating the contract.
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CHANGE OF TERMS
In Harley v Blue Waters Beach Hotel (Antigua) the employee, a house maid, was informed by her manager that she
could "either take her years of service" that is her severance pay, or accept a transfer to the laundry. She accepted the
transfer to the laundry. Following this meeting she was summoned to a meeting with the general manager who told her
that there were no vacancies in the laundry but that he could offer her a position in the gardening department as a weed
picker or she would have to be dismissed. She accepted the transfer to the gardening department but told her employer to
put it in writing. In any event, she took the letter to her solicitor, and having been confronted, the general manager
reviewed the matter and decided to re instate her as a house maid. Suffice, her work program was subsequently changed and
she was moved to cleaning the lobby area, management having concluded that this was in the best interests of the hotel, as the
chances of her being suspected of having been responsible for the disappearance of money from a safe of a room to which
she had access. In any event, she was later detained by the police. Because of the foregoing the relationship between the
employee and the other maids became strained and unpleasant as they thought she was the one who committed the thefts
and the whole affair had cast suspicion on and aroused mistrust of all of them. Accordingly, when she did not show up to
work on a date stipulated by her employer [for her return after her detention by the police], she was informed that her
term of service had been terminated. In these circumstances, the court held that she was entitled to compensation as she
had been constructively dismissed.