Commentary

(a) Whether a pay cut constitutes a repudiatory breach

Division BI Pay
| Commentary

(a) Whether a pay cut constitutes a repudiatory breach

| Commentary

(7)     Consequences of a failure to pay wages

(a)     Whether a pay cut constitutes a repudiatory breach

In the absence of a contractual term allowing the employer to suspend wages in a given situation or to impose a pay cut, then if an employee has performed his services in accordance with his contractual obligations, or has at least been ready and willing to work in accordance with his contract, a failure on the part of an employer to pay the whole of the agreed remuneration will normally be a breach of contract (although cf Oyesanya v Mid-Yorkshire Hospital NHS Trust [2015] EWCA Civ 1049, [2015] 5 Costs LR 911 discussed at para [4.08] above). The question then arises whether such a failure is not just a breach but also a fundamental or repudiatory breach, thereby entitling the employee to resign and claim he or she has been constructively dismissed. The answer depends on the significance of the breach and whether the breach is deliberate or accidental. Where the employer unilaterally and deliberately imposes a substantial reduction in contractual pay, there will usually be no dispute that the breach is repudiatory. See for example Rigby v Ferodo Limited [1987] IRLR 516, [1988] ICR 29, HL, where it was common ground that a 15 per cent reduction in the employee's wages constituted a repudiatory breach. Equally, where a vulnerable employee was paid about 33 pence per hour, this was

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