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Constructive dismissal compensation ‘was set too high’

Posted: 8th October 2014   In: Business Employment

An estate agent was awarded too much compensation after being constructively dismissed, an appeal judge has ruled.

The agent had worked for a firm as an area manager. He had a remuneration package that was linked to the profitability of his office.

The company moved him from a successful office to one that was making a loss. This led to him earning less money despite promises by the company that he wouldn’t suffer financially.

He indicated that he wanted to leave but was pressured into taking a different role with less remuneration.

A further situation occurred which led to him resigning and a judge found that he had been constructively dismissed.

The estate agent argued that his compensation should be in line with his previous role at the successful office. It wouldn’t be fair to penalise him for staying and trying to make his employment relationship work.

The employer argued that he had voluntarily accepted his new position. He should only be compensated on the basis of his salary in that role.

The judge cited the breaches in contract by the firm and ruled that the agent’s compensation should be based on his original, higher salary.

However, the appeal judge overturned that decision and said that the agent had freely accepted his new position. The incident that led to his resignation had occurred when he was in his new role. Therefore, his compensation should be based on his new, lower salary.

Please contact Jackie Cuneen for more information or advice about the issues raised in this article, or any aspect of employment law.


Posted by: Jackie Cuneen
Luton Office