Dismissal At Common Law and Discharge of the Employment Contract

• Pages: 134-173

CHAPTER 5

DISMISSAL AT COMMON LAW AND DISCHARGE

OF THE EMPLOYMENT CONTRACT

OVERVIEW

The employment contract may be brought to an end in a number of ways: the employee may be

dismissed outright by the employer; he may opt to leave the job; or the law may operate in a way

which results in its termination. The particular circumstances of the case will determine the

applicable legal precepts which will apply and the subsequent consequences for the parties to the

agreement. In this chapter we will focus on the common law provisions which affect the termina-

tion or discharge of the employment contract. When positive action is taken by the employer, the

concept of wrongful dismissal (also referred to as unlawful dismissal and summary dismissal)

arises. Where the end of the employment occurs by virtue of employee action, constructive

dismissal and resignations are in issue. In other instances (such as frustration of the contract,

mutual agreement, or the death of either party) technically neither of the parties is culpable in

the ensuing conclusion of the employment relationship. Whatever modality prompts the contrac-

tual termination, it is important that one is cognisant of what legal construct is at play, since this

directly impacts on the remedies available to an aggrieved party.

1 This is especially true when

viewed in the light of statutory interventions in the employment law fi eld which provide alterna-

tive remedies for unfair dismissal (also referred to as unjustifi able dismissal) in some jurisdictions.

WRONGFUL DISMISSAL

The term ‘wrongful or unlawful’ dismissal denotes a situation where the employer terminates

the employment contract in breach of the provisions which govern the expiration of the

contractual term.

2 The status quo ante modern employment law legislation was characterized by

a notice rule that hung over the nape of the employee like the sword of Damocles. At common

law, either party has the right to terminate the employment contract by giving reasonable

notice, even in the absence of a legitimate reason for doing so. Indeed, the employer was

seized of the power to terminate the employment contract for any reason, or none at all.

3 In

the Commonwealth Caribbean, this principle has been codifi ed by statute in Belize.

4 Thus, if

the employee was not given any notice, or was provided with a shorter period of notice than

required by the contract, he would be wrongfully dismissed.

5

An apt defi nition of the concept in case law is found in Wallace v United Grain Growers Ltd , 6

where it was held that:

The action for wrongful dismissal is based on an implied obligation in the employment contract

to give reasonable notice of an intention to terminate the relationship (or pay in lieu thereof) in

1 Note that, when there is no ‘dismissal’, neither party can claim wrongful/unlawful dismissal or unfair

dismissal.

2 See Halsbury’s Laws of England (5 th Ed., 2009) Volume 40, para 780.

3 See classic statement of the principle in Ridge v Baldwin [1964] AC 40 at 65, [1963] 2 All ER 66 at 71; see

also Janice Elliot v Euro Star Motors Limited, Claim No. C.L. 2000/E024 Jamaica SC (unreported) delivered

November 12, 2009.

4 Labour Act, s 37(1).

5 See British Guiana Credit Corporation v Da Silva [1965] 1 WLR 530 PC; and discussion in Taylor, S. and

Emir, A. (2006) Employment Law: An Introduction (1 st Ed., Oxford University Press), p 343.

6 [1997] 152 DLR (4 th ) 1, 39.

Chapter 5: Dismissal at Common Law and Discharge 135

the absence of just cause for dismissal … A ‘wrongful dismissal’ action is not concerned with the

wrongness or rightness of the dismissal itself. Far from making dismissal a wrong, the law entitles

both employer and employee to terminate the employment relationship without cause. A wrong

arises only if the employer breaches the contract by failing to give the dismissed employee reason-

able notice of termination.

The dismissal itself must be clear and unequivocal, indicating to the relevant party that the

contract will be determined on a particular date.

7 As cryptically stated by Widgery J in

Morton Sundour Fabrics Ltd v Shaw : 8 ‘As a matter of law you cannot dismiss an employee by

saying “I intend to dispense with your services in the coming months”.’ Conversely, in

Kwik-Fit (GB) Ltd v Lineham 9 the employee’s action of throwing down the offi ce keys and

walking out of the workplace in response to the employer’s histrionic disciplinary action was

not enough to establish the employee’s notice of resignation. When dismissal is contem-

plated, the employee must also be personally notifi ed that his contract is being terminated;

10

and, once notifi cation is given, it cannot be unilaterally withdrawn – mutual consent is

required.

11

The unlawful dismissal claim may also be sustained in circumstances where the contract

stipulates a particular procedure to be followed for termination to be effected and this was

not adhered to.

12 Additionally, if the contract restricts the grounds on which workers can be

dismissed, and they are dismissed for other reasons, there may also be an actionable claim

for wrongful dismissal.

13 Another instance where unlawful dismissal may be successfully

claimed is the termination of a fi xed-term contract before the intended expiration date when

there is no express notice clause.

14 It should also be noted that unlawful dismissal also applies

to the actions of employees who terminate their employment by giving no or inadequate

notice.

15

Notice at common law

Where there is no express provision

16 that notice be given for the termination of the employ-

ment contract or any customary practices in that regard,

17 two presumptions arise: fi rstly,

that the duration of the contract is not fi xed; and secondly, that either party can therefore

7 Hogg v Dover College [1990] ICR 39 EAT; Alcan Extrusions v Yates And Others [1996] IRLR 327.

8 [1966] 2 ITR 84; Bryan v Spence Barbados Magisterial Appeal No. 16 of 1997 (unreported) delivered

June 11, 1998 [BB 1998 CA 10], where the appellant’s actions (of locking the door to the workplace,

handing the employee her work clothes and telling her that she could no longer work for her) amounted

to dismissal.

9 [1992] IRLR 156.

10 Morris v Bailey [1969] 2 Lloyd’s Rep 215.

11 Riordan v War Offi ce [1959] 3 All ER 552.

12 See Reid v Marshall, Trinidad Aggregates et al Suit No. 3023 of 1995 (unreported) delivered May 13, 2010

[TT 2010 HC 133] – Board of Directors purported to dismiss plaintiff when this could only be done by

shareholders in a general meeting; Dietmann v Brent London Borough Council [1988] ICR 842, [1988] IRLR

299 CA; Hackett v Caribbean Examinations Council (1988) 40 WIR 38; Ballen v The Kingston and St. Andrew

Corporation (1959) 1 WIR 513.

13 McClelland v Northern Ireland General Health Services Board [1957] 2 All ER 129, [1957] 1 WLR 594, HL.

14 See discussion in Lockton, Deborah Employment Law (5 th Ed., Palgrave Macmillan) p 275.

15 Huttman v Boulnois (1826) 2 C & P 510.

16 Any express term which seeks to deny the worker his normal right to notice must be clear and unam-

biguous: see T & K Home Improvements Ltd v Skilton [2000] IRLR 595, CA.

17 George v Davies [1911] 2 KB 445; see also Jamaica Employment (Terminations and Redundancy

Payments) Act, s 3(3)(c); St. Vincent and the Grenadines Protection of Employment Act, s 14(2).

136 Commonwealth Caribbean Employment and Labour Law

terminate the contract by giving reasonable notice to the other party.

18 Accordingly, Lord

Millett, in delivering the Privy Council’s decision in Reda v Flag Ltd 19 (an appeal from

Bermuda), explained that this ‘notice rule’ did not apply to fi xed-term contracts, since the

expiration date would clearly be ascertainable. The instant case is also authority for holding

that, where a fi xed-term employment contract provided for termination without cause upon

payment of compensation, such action would be in conformity with the term.

20

Deakin and Morris posit that:

The principal function of this notice rule is to give both sides the option of escaping from the

arrangement at low cost. However, the length of notice may be set so as to grant one or both of

the parties some degree of warning of, and monetary compensation for, the ending of the rela-

tionship … In the absence of an express clause, what was ‘reasonable’ tended to be determined

by one or two rival criteria – the period by which the wage or salary was calculated, and the

custom in the relevant trade. An employee whose wage was calculated by the week might, for

that reason, be entitled to receive at least a week’s notice of termination.

21

Thus, in Mendez v The Bank of Nova Scotia (St. Kitts Branch) , 22 where the plaintiff’s contract did not

contain a notice clause, the High Court held that, given the employee’s qualifi cations, stature,

skill, training, seniority of position, length of employment,

23 and responsibilities of the post, a

reasonable notice for dismissal was nine months.

24 In The Manager Windmill Garment Manufacturing

Limited v Violet Richards 25 the Jamaican Court of Appeal used the period of time it would take

the wrongfully dismissed employee to fi nd alternative employment suffi ciently similar to her

previous post as a yardstick to measure reasonable notice. These decisions can be contrasted

with Sheraton Management Co Limited v Moree , 26 where the Bahamian Court of Appeal overruled

the award of an arbitration tribunal that the respondent was entitled to reasonable notice. The

court opined that the respondent’s promotion did not cancel the express terms and conditions

of her previous appointment, which was standard across all posts in the organisation, and

therefore there was no need to infer a reasonable period of notice upon her dismissal. Thus, if

18 See Lord Oaksey in McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594 at 599;

Fuller v Revere Jamaica (1980) 31 WIR 304 at 309 – Rowe JA stated ‘at common law a contract of service

could be terminated by reasonable notice or payment in lieu of notice unless there was some stipulation

in the contract to the contrary or the contract was to be interpreted by reason of some special custom-

ary rule’; Franklyn D Resorts Limited v Gonsalves Civil Appeal No. 9 of 1999 (CA) (unreported) delivered 31

July, 2001.

19 [2002] IRLR 747 at [757]; (2002) 61 WIR 118.

20 See Williams v National Bank of Dominica Eastern Caribbean Court of Appeal No HCVAP 2001/008

(unreported) delivered August 31, 2012 – where the Court of Appeal by majority and applying the

principles in Reda v. Flag agreed with the Dominican High Court that a provision in a fi xed-term

contract which provided for termination ‘with reasonable cause or by no fault by either party’ by giving

three months’ salary meant ‘without cause’; and therefore, relying on those terms, the employer had

not wrongfully dismissed the appellant.

21 Deakin, S. & Morris, G. (2012) Labour Law (Hart Publishing, 6 th Ed.), pp. 427–428.

22 [1990–1991] 4 Caribbean Commercial Law Reports 205.

23 See also V.G. Rose and Times (Press) Ltd (1984) 21 JLR 212, where length of service was used as the

determinative factor to fi nd that one month’s notice was insuffi cient notice for an employee of 32 years’

standing.

24 See also Rouse v Mendoza (1967) 12 WIR 1, where the courts also imputed a reasonable notice of six

months where a veteran employee of 24 years was wrongfully summarily dismissed; see also Cecil Godfrey

v Allied Stores Limited (1990) 27 JLR 420 (SC), where the court opined that the ETRPA merely prescribes

minimum periods of notice required to terminate a contract of employment – in this case, two weeks. It

was held that the common law rules may require a longer period of notice, depending on the intention

of the parties as revealed in the employment contract. Here there was no express provision as to notice,

so the court implied a term fi nding that three months’ notice was reasonable. See also Kaiser Bauxite

Company v Cadien (1983) 20 JLR 168 at p 191.

25 (1989) 26 JLR 243 (CA) – three months was considered reasonable notice of intention to terminate the

employment.

26 (1989–1990) 1 LRB 518.