Employment Cases Update

Ostilly v Meridian Global VAT Services (UK) Ltd UKEAT/0017/20/OO

Date published: 22/05/2020

Appeal against the ET’s rejection of the Claimant’s claims for breach of contract and unfair constructive dismissal. Appeal allowed in part.

The Claimant, who worked as a senior manager for the Respondent, had in previous years received an annual bonus, as provided for by clause 8 of his letter of appointment. In 2018, taking account of its poor financial position, the Respondent did not pay an annual bonus to the Claimant (or any other senior manager), and the Claimant brought claims in the ET for repudiatory breach of contract and unfair constructive dismissal. The ET dismissed the claims, finding that the Respondent's decision not to pay a bonus in 2018 was a lawful exercise of discretion and not perverse; and that, if that was wrong, the Claimant's unfair dismissal claim must fail because he would have resigned anyway. The Claimant appealed on the grounds that the ET had erred (1) in its determination of the meaning of clause 8, (2) in not finding that the Respondent had exercised its discretion in a perverse and irrational manner, and (3) in finding that the Claimant would have resigned unless offered a sum close to the bonus that he was demanding.

The EAT held that the ET's conclusion on the first ground was correct, but its treatment of the contractual discretion issue gave cause for concern, and its finding that the Claimant would have resigned in any event was not supported by the evidence and was procedurally unfair. Accordingly, the first ground of appeal would be dismissed, but the remaining matters would be remitted for reconsideration by a fresh ET.

Read the full text of the judgment on BAILII or download the file by clicking the link below.