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Affirmation and Lengthy Notice Periods

If an employee resigns in response to a repudiatory breach of contract by their employer but then works a lengthy notice period, they will be deemed to have affirmed, or accepted, the breach. This is not new but was recently considered by the High Court in Brown & Anor v Neon Management Ltd & Anor.

In this case, three employees resigned with notice in response to the employer seeking to withhold bonus payments and pay increases unless the employee's agreed to signing new, less favourable employment contracts.

The employer then committed further repudiatory breaches by making unjustified findings of misconduct and making unfounded allegations to the employee's regulators. Two of the employees resigned with immediate effect in response to employers further repudiatory breaches but the third employee continued with their employment, albeit under notice.

The employees sought expedited proceedings before the High Court. The employees were subject to draconian restraint of trade provisions which would be invalid if it was found that the employer had committed a repudiatory breach and thereby terminated the contract.

In brief summary, the two employees who resigned with immediate effect in response to the employers repudiatory breach were found to have been wrongfully dismissed. However, the employee who continued with their employment was found to have affirmed the employer's breach (.e. accepted it) and so was not released from the post termination provisions in their contract.

There were no new principals advanced in this case but it is a salient reminder that employees seeking to bring constructive unfair dismissal proceedings must be seen to resign promptly to the employer's repudiatory breach.

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