The governors also indicated that they did not favour job-sharing.
Mrs Clay resigned and took a claim for constructive dismissal to industrial tribunal in what proved to be something of a landmark case. She won and was awarded compensation.
The tribunal noted that Leicestershire had a job-sharing scheme for teachers: tribunal members believed that the school's opposition "was to avoid the inconvenience of having to make the necessary arrangements".
Brian Carter, regional secretary of the National Union of Teachers in the Midlands, is amazed that a body made up of "well-meaning amateurs" is allowed to make employment decisions about professionals.
"What business," he asks, "would let an untrained bunch of amateurs appoint its senior staff?" There is some surprise that more cases do not surface, but those that do can be expensive for the schools concerned. There is also the attendant publicity, which can damage a school's reputation.
St Bartholomew's school in Kent discovered this to its cost when headteacher Sister Clotilde Stephens won her case for unfair dismissal. She returned from holiday to find her financial powers had been removed by governors. She resigned and accused the governors of constructive dismissal. In the row that followed parents removed their children from the school and a governor resigned.
The industrial tribunal chairman, ruling in Sister Clotilde's favour, said:
"A reasonable employer would have discussed the applicant's concerns with her objectively before constructively dismissing her."
David Hart, general secretary of the National Association of Head Teachers, welcomed that decision: "Her victory sends a message to governors that they interfere with the day-to-day running of schools at their peril."
But as the Cheryll Pepper case shows (above), governors can just as easily find themselves summoned to a tribunal for agreeing with their headteacher or following the advice of their LEA.
Many disputes never see the inside of the tribunal, being settled beforehand - sometimes on the steps of the tribunal itself. One recent case involved a teacher who returned late from holiday after a delayed flight. She later discovered that pay deductions had been made which included the holiday period. Tribunal proceedings were started but a negotiated settlement was reached.
Unions have used the unfair dismissal process to test the criteria for redundancy. In particular the "automatic" selection of part-time staff has been ruled to contravene equal opportunities legislation because part-timers are statistically more likely to be female.
Sue Nixon, employment law specialist with law firm Hammond Suddards, argues that employers need access to specialist advice and good procedures.
She recommends that an honest broker such as the Advisory Conciliation and Arbitration Service (ACAS)should investigate whether a deal can be done.
Of the cases handled by Brian Carter, only a quarter end up in tribunal. "Most cases can be solved through negotiation," he says.