Resigned to set up rival business: constructive dismissal claim fails
An International Business Account Manager who resigned after 12 years claimed constructive unfair dismissal, but the tribunal found she left to compete, not because of any breach by Churchills International Consulting Limited. All claims were dismissed.
1 min read · Last updated 18 May 2026
Case details
Key facts
- The claimant and respondent had a close working relationship for 12 years, with the claimant describing Mr Meagher as 'best boss'.
- The claimant and a colleague announced they were considering leaving in October 2016, leading to negotiations for a new contract.
- The claimant accepted a new package on 27 November 2016 but later failed to sign the contract by the deadline.
- The claimant resigned on 15 January 2017, citing breach of mutual trust and confidence.
- The tribunal found the claimant resigned to set up a competing business, not due to any repudiatory breach by the respondent.
- The tribunal dismissed all claims including unfair dismissal, sex discrimination, harassment, victimisation, and unlawful deduction of wages.
Timeline
-
Employment commenced
Claimant started work as a Research Assistant/PA at Churchills.
-
Meeting at Bicester
Claimant and Michelle Lane told Mr Meagher they were considering leaving, shocking him.
-
Inappropriate comment
Mr Meagher jokingly suggested claimant 'sleep with' a client to secure business.
-
Claimant threatens to leave
Claimant told Mr Meagher she might walk out, causing distress.
-
Negotiation meeting
Claimant and Mr Meagher negotiated a new package; claimant said 'it's all about money'.
-
Claimant accepts offer
Claimant texted acceptance of the new package.
-
Deadline missed
Claimant failed to sign the new contract by 5:30 pm; Mr Meagher withdrew the offer.
-
Grievance lodged
Claimant submitted a grievance alleging bullying and inappropriate behaviour.
-
Grievance meeting
Greg Cheshire heard claimant's grievance; claimant said she could not return to work.
-
Resignation
Claimant resigned by letter, citing breach of trust and confidence.
The legal issue
The tribunal had to decide whether the employer's conduct amounted to a repudiatory breach of contract that caused the employee to resign, or whether she resigned for other reasons, such as to start a competing business.
The outcome
The tribunal dismissed all claims, including constructive unfair dismissal, sex discrimination, harassment, victimisation, and unlawful deduction of wages.
The key reason was that the claimant resigned to set up a competing business, not because of any breach of contract by the employer. The tribunal found that the employer's actions, including an inappropriate comment and a withdrawn contract offer, did not amount to a repudiatory breach that would justify resignation.
No compensation was awarded.
Lessons & takeaways
- To succeed in a constructive dismissal claim, you must show that your employer's conduct was a fundamental breach of contract that caused you to resign.
- Resigning to pursue a competing business opportunity will likely defeat a constructive dismissal claim, even if there were some issues at work.
- A single inappropriate comment, while unprofessional, may not be enough to amount to a repudiatory breach of contract.
- Failing to sign a new contract by the deadline can lead to the offer being withdrawn, and this is unlikely to be a breach by the employer.
This case shows the importance of the reason for resignation in constructive dismissal claims. The employee had worked for Churchills International Consulting Limited for 12 years and had a close relationship with her boss. When she and a colleague announced they were considering leaving, negotiations for a new contract began. She accepted a new package but failed to sign the contract by the deadline, leading to the offer being withdrawn. She then resigned, citing a breach of mutual trust and confidence.
The tribunal found that the real reason for her resignation was to set up a competing business, not the employer's conduct. While the employer had made an inappropriate comment and the contract negotiations were handled poorly, these did not amount to a fundamental breach of contract. The tribunal noted that the employee had told her boss 'it's all about money' during negotiations, indicating her focus was on financial gain rather than any breach.
What the employer could have done differently
The employer could have avoided the inappropriate comment and handled the contract withdrawal more sensitively. However, the tribunal found that these actions were not sufficiently serious to justify resignation. The employer's decision to withdraw the offer after the deadline was reasonable in the circumstances.
Why this matters for similar claims
This case highlights that constructive dismissal claims require a clear link between the employer's breach and the resignation. If an employee resigns for other reasons, such as to start a competing business, the claim will fail. It also shows that not every workplace issue amounts to a breach of contract, and employees should consider whether they can continue working before resigning.
Similar cases
Social worker's race discrimination claim over 'aggressive' stereotype dismissed
A black social worker with 15 years' service lost her claims of race discrimination and constructive dismissal after an altercation with a white colleague. The tribunal found no evidence of stereotyping or unfair treatment.
Black psychiatric nurse passed over for dual diagnosis lead role: race and sex discrimination upheld
A Black African community psychiatric nurse with 15 years' service was found to have been discriminated against when two white female colleagues were appointed to a specialist lead role he was qualified for. The tribunal upheld his claims of direct race and sex discrimination and harassment.
Firefighter forced out by sex discrimination and victimisation: constructive dismissal upheld
A firefighter with five years' service was constructively dismissed after being subjected to sex discrimination, harassment, and victimisation by colleagues. The tribunal upheld her claims and awarded a basic award of £2,284.
Dental nurse's constructive dismissal and discrimination claims rejected by tribunal
A dental nurse who resigned after securing another job failed to prove she was constructively dismissed or that her employer discriminated against her. All claims were dismissed.