Compromise Agreements and Constructive Dismissal

Following the recent Employment Appeal Tribunal (EAT) decision in Billington v Michael Hunter & Sons Limited, employers may be at risk of a successful constructive dismissal claim being brought if they mishandle an offer to employees of an "exit package" with a view to avoiding going through the disciplinary procedure.

Mrs Billington was a bathroom sales assistant. Following a number of customer complaints, she was asked to attend a disciplinary hearing and received a written warning. At a subsequent meeting held to discuss new allegations of unsatisfactory performance, her line manager said that if there were further customer complaints, she "would very likely be dismissed". She was also informed that "should she decide that the job was beyond her capabilities" then she could resign on "favourable terms" (presumably with a compromise agreement). Mrs Billington resigned, claiming constructive dismissal. The Tribunal rejected her claim.