Constructive dismissal after secret sale of business and contract changes
A sales manager who resigned after his employer sold the business behind his back and changed his contract has won £8,270 for constructive unfair dismissal.
1 min read · Last updated 18 May 2026
Case details
- #constructive-dismissal
- #breach-of-trust-and-confidence
- #oral-contract
- #sale-of-business
- #less-favourable-contract
- #misrepresentation
Key facts
- The claimant was employed from 12 March 2016 to 8 April 2021 as a sales negotiator, later Sales and Letting manager.
- The claimant had an oral contract with superior terms including additional holidays and 15% commission.
- On 24 February 2021, the claimant signed a written contract that omitted these terms, believing it was a formality.
- The respondent sold the business without informing the claimant, despite assurances the business would not be sold.
- The claimant resigned on 8 April 2021 after discovering the sale and the less favourable contract.
- The tribunal found the respondent's conduct amounted to a repudiatory breach of the implied term of trust and confidence.
Timeline
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Employment started
Claimant commenced employment as a sales negotiator.
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Promotion to Sales and Letting manager
Claimant's role changed and he took on greater responsibility.
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Sale discussions began
Alan and Adam Goldin began discussions to sell the business to Paul Ruocco.
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Heads of Terms agreed
Heads of Terms for the sale were agreed, including confidentiality obligations.
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Meeting about pay
Claimant met with Alan Goldin and was assured of a temporary pay increase and further review in April.
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Written contract signed
Claimant signed a written contract that omitted holiday and commission terms, believing it was a formality.
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Sale completed
The business was sold to Paul Ruocco.
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Resignation
Claimant resigned after learning of the sale and the less favourable contract.
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Claim issued
Claimant issued unfair dismissal claim.
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Liability hearing (day 1)
Hybrid hearing at Watford Employment Tribunal.
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Liability hearing (day 2)
Hybrid hearing continued.
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Remedy hearing
Hybrid hearing to determine remedy.
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Judgment issued
Final judgment with remedy award of £8,270.
The legal issue
The tribunal had to decide whether the employer's actions (selling the business without informing the employee, giving false assurances, and changing the contract) were a fundamental breach of the implied term of trust and confidence, entitling the employee to resign and claim constructive dismissal.
The outcome
The tribunal ruled that the sales and letting manager was constructively and unfairly dismissed.
Key reasons:
- The employer secretly sold the business despite assuring the employee it would not be sold.
- The employee was asked to sign a written contract that removed his oral entitlements (extra holidays, 15% commission) without proper explanation.
- This conduct destroyed the mutual trust and confidence needed for the employment relationship.
Compensation:
- Basic award: £2,700
- Compensatory award: £3,580
- Total: £8,270
Lessons & takeaways
- If your employer asks you to sign a new contract, check it carefully—signing under pressure or as a 'formality' may still be binding.
- Employers who sell the business without telling employees risk a finding of breach of trust, especially if they gave assurances to the contrary.
- Constructive dismissal claims can succeed even if you resigned quickly after discovering the breach—delaying too long may be seen as accepting the change.
A manager kept in the dark
For five years, the sales and letting manager worked under an oral contract that gave him extra holidays and 15% commission. In early 2021, his employer asked him to sign a written contract. He was told it was just a formality—but it omitted those valuable terms. At the same time, the company was secretly being sold, despite the owner having assured the manager it would not be sold.
When the manager discovered the sale and realised his contract had been changed without proper explanation, he resigned. He argued that the employer's conduct had destroyed the trust and confidence essential to the employment relationship.
What the tribunal found
The tribunal accepted that the manager had been given a clear assurance the business would not be sold, and that the sale was deliberately kept from him. The written contract was presented without highlighting the removal of his oral entitlements. Taken together, this was a fundamental breach of the implied term of trust and confidence—the cornerstone of every employment relationship. The manager's resignation was therefore a constructive dismissal, and it was unfair because the employer had no fair reason for its conduct.
What this means for similar claims
This case shows that employers cannot make significant changes to an employee's terms—or sell the business—without being open about it. If an employer gives assurances that turn out to be false, or presents a new contract as a 'formality' when it actually removes rights, that can amount to a repudiatory breach. Employees who resign promptly in response may have a strong constructive dismissal claim. The compensation here was modest, but the principle is important: trust and confidence cannot be sacrificed for commercial convenience.
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