Waltham Forest v Omilaju [2004] EWCA Civ 1493

Mr Omilaju resigned after his employer refused to pay wages for days he spent attending his own employment tribunal hearing. The Court of Appeal held this lawful refusal could not constitute a 'last straw' justifying constructive dismissal, clarifying the doctrine.

Facts

Mr Omilaju was employed by the London Borough of Waltham Forest from September 1992 to August 2001, rising to the grade of SO2 Housing Officer. Between 1998 and 2000 he issued five sets of proceedings against the Council alleging race discrimination, victimisation and interference with trade union activity; all were dismissed in September 2001.

The Council operated a rule requiring employees pursuing tribunal proceedings against it to apply for special unpaid or annual leave to attend hearings. Mr Omilaju did not apply for such leave, and the Council refused to pay his full salary for July and August 2001 during his absence at the tribunal. By letter dated 7 September 2001 he resigned, describing the non-payment as a breach of contract destroying trust and confidence, and as ‘the last straw in a series of less favourable treatments’.

He subsequently brought fresh tribunal proceedings. The ET dismissed his constructive dismissal complaint but upheld a victimisation complaint relating to a reference given by the Council to Kush Housing Association. The EAT allowed his appeal on the constructive dismissal point and remitted the matter. The Council appealed.

Issues

Two issues arose:

• Whether the ET misapplied the ‘last straw’ doctrine when finding that, although there may have been earlier breaches of the implied term of trust and confidence, the final act precipitating resignation (the lawful refusal to pay wages) was reasonable and justifiable conduct in accordance with the contract.
• Whether, irrespective of the last straw analysis, the ET’s findings of fact were sufficient to entitle Mr Omilaju to resign and claim constructive dismissal.

Arguments

For the Council

Mr Weiniger submitted that although the final straw need not itself be a breach of contract, it must at least be conduct that is ‘blameworthy or unreasonable’. Anything less could not constitute a final straw. The ET had been entitled to find that the refusal to pay was reasonable, justified and in accordance with the contract, and therefore not capable of being a final straw.

For Mr Omilaju

Mr Edward argued that the final straw does not need to be a breach of contract (per Lewis v Motorworld Garages Ltd), and that requiring blameworthy or unreasonable conduct would be inconsistent with that principle. He also submitted that the ET’s finding that Mr Omilaju resigned solely because of non-payment was perverse, given the resignation letter and witness evidence referring to earlier conduct including the Kush reference.

Judgment

Dyson LJ (with whom May and Wall LJJ agreed) allowed the Council’s appeal.

Legal principles

Dyson LJ set out five propositions: (1) the test for constructive dismissal is whether the employer’s conduct amounted to a repudiatory breach (Western Excavating (ECC) Ltd v Sharp); (2) there is an implied term of trust and confidence (Malik v BCCI); (3) any breach of that implied term is repudiatory; (4) the test is objective; and (5) a relatively minor act may suffice if it is the last straw in a series of incidents.

The quality of the ‘last straw’

Dyson LJ rejected the submission that the final straw must be ‘unreasonable’ or ‘blameworthy’. The essential quality of the final straw is that, taken in conjunction with earlier acts, it contributes (however slightly) to a breach of the implied term of trust and confidence. The act does not have to be of the same character as the earlier acts. However, an entirely innocuous act cannot constitute a final straw, even if the employee genuinely but mistakenly perceives it as destructive of trust and confidence, because the test is objective. Equally, while reasonable conduct is not automatically disqualified, it will be ‘an unusual case’ where conduct judged objectively to be reasonable and justifiable satisfies the final straw test.

Application to the ET’s decision

Dyson LJ acknowledged that the first part of paragraph 90 of the ET’s reasons was erroneous insofar as it suggested the final straw had to be a breach of contract. However, the ET went on to address the last straw submission expressly and found that, viewed objectively, the refusal to pay was ‘perfectly reasonable and justifiable conduct’ in accordance with the contract. The ET was therefore saying that the non-payment did not contribute to any undermining of trust and confidence and was not capable of being a final straw. The ET was entitled to reach this conclusion without analysing the earlier conduct in detail.

Reason for resignation

On the second issue, Dyson LJ held that the ET was entitled to find that Mr Omilaju resigned because of the non-payment. The resignation letter expressly identified the failure to pay as the act destroying trust and confidence and as the ‘last straw’. The witness statement and the agreed list of issues confirmed the case was advanced as a final straw case. The ET’s finding was not perverse.

Implications

The decision clarifies the operation of the ‘last straw’ doctrine in constructive dismissal claims. The essential question is whether the final act contributes, however slightly, to a cumulative breach of the implied term of trust and confidence, judged objectively. The final act need not itself be a breach of contract, nor need it be unreasonable or blameworthy, but it must not be utterly trivial or entirely innocuous.

Significantly, the Court of Appeal confirmed that an employee’s subjective (and possibly mistaken) perception that conduct is destructive of trust and confidence is insufficient: the test is objective. Where the alleged final straw is, viewed objectively, reasonable and justifiable conduct fully consistent with the contract, it will only in unusual cases satisfy the last straw test.

The decision is of practical importance to employment practitioners, employers and employees. It enables tribunals, where the alleged final straw is incapable of contributing to a breach of the implied term, to decide the issue without conducting a detailed examination of the prior history of the employment relationship. It also affirms that employees who ‘soldier on’ after earlier breaches cannot resurrect those breaches by reference to a subsequent innocuous act.

Verdict: The Court of Appeal allowed the Council’s appeal, restoring the Employment Tribunal’s decision that Mr Omilaju had not been constructively dismissed.

Source: Waltham Forest v Omilaju [2004] EWCA Civ 1493