Lay-off without pay upheld: 17-year employee loses constructive dismissal claim over unsigned contract
A CAD/CAM designer with 17 years' service lost his constructive dismissal claim after being laid off for four weeks without pay. The tribunal found he had accepted a 2018 contract with a lay-off clause by his conduct.
2 min read · Last updated 19 May 2026
Case details
- #constructive-dismissal
- #lay-off
- #unsigned-contract
- #custom-and-practice
- #breach-of-contract
- #unpaid-wages
Key facts
- The claimant was employed as a CAD/CAM Designer and Machinist from 6 December 2004 until 19 January 2022.
- The respondent laid off the claimant for 4 weeks from 18 October 2021 to 15 November 2021 due to financial difficulties and lack of work.
- The claimant objected to the lay-off, asserting that his 2005 contract did not allow lay-offs and that he had not accepted the 2018 contract which contained a lay-off clause.
- The tribunal found that the claimant had accepted the 2018 contract by conduct, including marking up amendments and continuing to work without objection for over two years.
- The claimant resigned on 20 December 2021, citing loss of trust and confidence, but the tribunal held that the respondent had not breached the contract or the implied term of trust and confidence.
Timeline
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Employment started
Claimant began working for the respondent as a CAD/CAM Designer and Machinist.
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2018 contract issued
The respondent issued a new contract (2018 Contract) to all staff, including the claimant, which contained a lay-off clause at clause 7.3.
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Claimant returned marked-up contract
The claimant returned the 2018 Contract with handwritten amendments; he was told the contract would not be reissued and the amendments were agreed.
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Working pattern change agreed
The claimant agreed verbally to reduce to 4 days a week on the same pay, without requesting a revised contract.
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Lay-off notice sent
The respondent wrote to the claimant informing him of a temporary lay-off starting 18 October 2021, asking for his agreement.
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Claimant objected to lay-off
The claimant replied, refusing to agree to the lay-off and asserting that his 2005 contract applied.
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Claimant raised grievance
The claimant submitted a formal grievance about the new contract and the proposed lay-off.
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First grievance meeting
A grievance meeting was held; the respondent later advised the lay-off would end on 12 November 2021.
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Claimant returned to work under protest
The claimant returned to work but stated he did so under protest pending resolution of his grievance.
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Claimant resigned
The claimant submitted his resignation, giving one month's notice, citing loss of trust and confidence.
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Employment ended
The claimant's employment terminated.
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Grievance outcome
The respondent sent the grievance outcome, not upholding the complaint.
The legal issue
The tribunal had to decide whether the respondent's decision to lay off the claimant without pay breached his contract or the implied term of trust and confidence, and whether the claimant was constructively dismissed.
The outcome
The tribunal dismissed the claims for constructive unfair dismissal and unpaid wages. It found that the claimant had accepted the 2018 contract by conduct, which contained a lay-off clause. The lay-off was therefore lawful and did not breach the implied term of trust and confidence. No compensation was awarded.
Lessons & takeaways
- If you receive a new contract and do not object in writing, your continued work may be taken as acceptance of its terms.
- A lay-off clause can be valid even if you have not signed the contract, as long as your conduct shows acceptance.
- Resigning without waiting for a grievance outcome can weaken a constructive dismissal claim if the employer is still investigating.
- Long service does not automatically protect you from lay-offs if a valid contractual term allows them.
- Objecting to a lay-off after it has started may not be enough if the contract permits it.
When a contract is accepted by conduct
This case shows that employees cannot rely on an unsigned contract if their behaviour over time suggests they have accepted its terms. The claimant, a CAD/CAM designer with 17 years' service, was laid off for four weeks without pay when his employer faced financial difficulties. He argued that his original 2005 contract did not allow lay-offs, and that he had never signed the 2018 contract that included a lay-off clause. However, the tribunal found that by marking up amendments to the 2018 contract and continuing to work without further objection for over two years, he had accepted it by conduct.
What the employer did right
Arrow Precision Manufacturing Ltd handled the situation carefully. It issued the new contract to all staff, discussed the claimant's amendments, and agreed to them without reissuing the document. When financial problems arose, it wrote to the claimant explaining the need for a temporary lay-off and asked for his agreement. When he objected and raised a grievance, the company held a meeting and ended the lay-off early. The tribunal noted that the respondent had reasonable and proper cause for its actions and had not breached the implied term of trust and confidence.
Why the claim failed
The claimant resigned before the grievance process was complete, citing loss of trust and confidence. But the tribunal found that the lay-off was lawful under the 2018 contract, and the respondent's conduct did not destroy the trust and confidence required for a constructive dismissal. The claim for four weeks' unpaid wages also failed because the lay-off was contractually permitted.
Key takeaway for employees
This case is a reminder that contracts can be accepted through conduct, not just by signature. If your employer issues a new contract and you continue working without formally rejecting it, a tribunal may find you have agreed to its terms. It also highlights the importance of completing internal grievance procedures before resigning, as resigning early can undermine a constructive dismissal claim.
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