Repeated underpayments after TUPE transfer: a shunter's constructive dismissal claim succeeds
A bus depot shunter with 16 years' service resigned after repeated payroll errors. The tribunal found the persistent underpayments were a fundamental breach of contract, making his constructive dismissal unfair.
1 min read · Last updated 18 May 2026
Case details
- #constructive-dismissal
- #repeated-underpayment
- #low-paid-worker
- #payroll-errors
- #tupe-transfer
- #last-straw
Key facts
- The claimant transferred to the respondent's employment on 1 December 2021.
- The claimant experienced repeated underpayments due to payroll system errors.
- The claimant resigned on 31 May 2022 citing repeated underpayment.
- The tribunal found the persistent underpayment was a fundamental breach of contract.
- The respondent failed to show a potentially fair reason for the breach.
- The claimant's claim for automatically unfair dismissal was dismissed.
Timeline
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Transfer to respondent
The claimant's employment transferred to Bidvest Noonan (UK) Limited under TUPE.
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First underpayment
Payslip showed a shortfall of £70.14 due to incorrect clocking; corrected within two weeks.
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Second underpayment
Shortfall of £71.07; corrected within two weeks.
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Overtime rate error
Shortfall of £23.64 due to incorrect overtime rate.
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Overtime resolved
Overtime shortfall of £47.26 resolved; claimant considered it closed.
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Underpayment of 0.8 hours
Shortfall of £7.38; rectified on 20 March 2022.
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Under-recording of hours
Shortfall of £10.46 due to missing 6 minutes per shift; later authorised for correction.
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Bank holiday rate complaint
Claimant complained about not being paid enhanced bank holiday rate.
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Further shortfall
Shortfall of £23.98 identified; not clearly rectified by resignation.
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Meeting with CEO
Mr Phillips agreed to pay £23.98 shortfall and 12 hours compensatory overtime.
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Resignation
Claimant resigned on 2 weeks' notice citing repeated underpayment.
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Employment terminated
Claimant's employment ended at the end of notice period.
The legal issue
The tribunal had to decide whether the employer's repeated failure to pay the correct wages amounted to a repudiatory breach of contract entitling the employee to resign and claim constructive unfair dismissal.
The outcome
The tribunal upheld the claim of constructive unfair dismissal.
The key reason was that the respondent's persistent underpayment of wages, due to payroll system errors, constituted a fundamental breach of the implied term of trust and confidence. The employee resigned in response to that breach.
Compensation will be determined at a separate remedy hearing.
Lessons & takeaways
- Repeated underpayment of wages, even if each individual amount is small, can amount to a fundamental breach of contract.
- Employees who resign in response to a serious breach by their employer may still claim constructive dismissal even if they do not follow a formal grievance procedure.
- Employers should ensure payroll systems are accurate and promptly correct any errors to avoid breaching the implied term of trust and confidence.
- A pattern of underpayments over several months is more likely to be seen as a repudiatory breach than a one-off error.
When small errors add up to a big breach
This case shows how a series of relatively modest underpayments can, over time, destroy the trust and confidence that is essential to the employment relationship. The claimant, a shunter with 16 years' service, transferred to Bidvest Noonan (UK) Limited under TUPE in December 2021. Almost immediately, payroll errors began – shortfalls of £70, £71, £23, and so on. Each was corrected, but new errors kept appearing.
By May 2022, the claimant had had enough. He resigned, citing the repeated underpayments as the final straw. The tribunal agreed that the persistent failure to pay the correct wages was a fundamental breach of contract, making his resignation a constructive dismissal.
What the employer could have done differently
The respondent's payroll system was clearly not fit for purpose. A single, promptly corrected error might not have been enough to justify resignation. But the pattern – nine separate underpayments over five months – showed a systemic failure. The employer could have conducted a thorough audit of the payroll system after the first few errors, or at least communicated more effectively with the claimant about how the problems would be fixed permanently.
Why this matters for similar claims
This case is a reminder that the 'last straw' does not have to be a major incident. It can be a relatively small event, as long as it is part of a series of breaches that cumulatively undermine trust. For low-paid workers, even small underpayments can be significant. The tribunal's decision also confirms that a TUPE transfer does not give an employer a free pass on payroll accuracy – the same contractual obligations apply from day one.
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