England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
EAT045105LA

		Royal Courts of Justice Strand, London, WC2A 2LL
		10th May 2007

Lord Justice Wall :

Introduction

1. The issue underlying this appeal can be very simply stated. Did the appellant, Mr. Charlie Sandhu, resign from his employment with the respondent, Jan de Rijk Transport Limited on 6 December 2002, or was he dismissed?
2. On 7 February 2005, the Employment Tribunal sitting at Reading (the Tribunal) decided that he had resigned. It accordingly dismissed his claim for unfair dismissal. It provided reasons for its decision on 16 February 2005. Mr. Sandhu appealed the Tribunal's decision to the Employment Appeal Tribunal (EAT) which, in a reserved judgment dated 7 April 2006, dismissed his appeal, and directed that any application for permission to appeal against its order should be made direct to this court. On 8 August 2006, Sedley LJ gave a limited permission to appeal on paper, which was enlarged generally by Arden LJ at an oral hearing on 22 November 2006.
3. The Tribunal decided the case on what was, in effect, a preliminary issue, namely what had occurred at a single meeting between the appellant and two representatives of the respondent in Holland on 6 December 2002 (the 6 December meeting). The appellant challenges the Tribunal's conclusion that he resigned his employment at the 6 December meeting on the following bases:-

(1) that the Tribunal misdirected itself in law as to the proper test to be applied in determining whether the appellant had resigned or been dismissed;

(2) that the Tribunal's finding that the appellant had been dismissed was perverse; and

(3) that the Tribunal had wrongly excluded evidence properly admissible on the resignation / dismissal issue.

The facts

4. The respondent is a Dutch company with its headquarters in Roosendaal in Holland, but with a number of offices throughout Europe. It is an international road transport operation, its core work being to transfer air cargo by road between European airports. Whilst not a major European conglomerate, the respondent is a substantial organisation, and, according to the appellant's statement before the Tribunal, employs a staff of approximately 130 people, together with some 300 drivers.
5. The appellant was employed in the respondent's London office as an operations manager. He had held that post since 2000. Apart from the appellant, the five employees of the respondent who are relevant to the case are its managing director, William Heeren; a senior director of operations, Johannes Wijngaards; its European planning co-ordinator, Robert Klepper; its general manager for the UK and Ireland, Tina Pritchard; and David Kay, its aero engine division manager. Mr. Heeren, Mr. Wijngaards and Mr. Klepper are all based in Holland: Ms Pritchard and Mr. Kay are based in England.
6. On about 29 November 2002, the appellant was telephoned by Mr. Heeren's secretary, and told to attend a meeting with Mr. Heeren and Mr. Wijngaards in Roosendaal on Friday 6 December 2002. The Tribunal found as a fact (and it was not disputed by the respondent) that he was not told in advance what the meeting was to be about.
7. The Tribunal found that the appellant was summoned to the 6 December meeting by Mr. Heeren following a discussion between Ms Pritchard and Mr. Klepper about alleged misconduct on the part of the appellant which had plainly been reported to Mr. Heeren. It was not suggested at any point that any allegations of misconduct had been put to the appellant prior to the 6 December meeting, nor does the respondent appear to have taken any steps to investigate them. The allegations were contained in statements filed in the proceedings by Mr. Wijngaards, Ms Pritchard, and Mr. Kay, although on the respondent's side, only Mr. Wijngaards gave oral evidence to the Tribunal.
8. What happened at the 6 December meeting was the subject of conflicting evidence to the Tribunal, to which I will refer in greater detail below. However, what is common ground is that it began with Mr. Heeren saying to the appellant words to the effect: "Your contract, we are going to finish it". Those were the words reported to the Tribunal by the appellant. Mr. Wijngaards told the Tribunal that Mr Heeren had commenced the meeting by saying that the appellant's contract was going to end. Although the reported words are slightly different, their meaning is clear and unequivocal. The respondent's purpose in convening the 6 December meeting was to dismiss the appellant, and it is clear on any view that the meeting opened by the appellant being told that he was being dismissed.
9. It has been conceded by the respondent throughout that, had the appellant left the 6 December meeting after Mr. Heeren's opening remark, then; (a) he would have been dismissed by the respondent; and (b) the dismissal would have been procedurally unfair. However, the respondent's case was that it did not dismiss the appellant. What happened, it says, is that, having negotiated satisfactory severance terms in the course of the 6 December meeting, the appellant resigned. It was, accordingly, on the respondent's case, a parting of the ways by mutual consent, and no question of unfair dismissal arose.

The hearing before the Tribunal

10. The case has had a most unfortunate procedural history. A previous hearing, which had begun but gone part heard on 21 November 2003 had had to be aborted when counsel for the respondent was taken seriously ill, and it became necessary, as the Tribunal put it, "for the whole case to be started de novo" before a different Tribunal. No doubt it was partly for this reason that on 7 February 2005, the Tribunal decided that it would begin by addressing only what happened at the 6 December meeting. It specifically declined to investigate the merits of the allegations against the appellant, whilst accepting that he had denied them, both during the meeting itself and in his evidence to the Tribunal. Thus it was that, although it read the various witness statements placed before it, the Tribunal heard oral evidence only from the appellant and Mr. Wijngaards, both of whom had, of course, been at the 6 December meeting. I have already recorded how Mr. Heeren opened it.
11. The Tribunal set out the respective versions of what happened at the 6 December meeting in paragraphs 9 to 11 of its reasons. After the agreed opening remark by Mr. Heeren, the appellant's case was that Mr Heeren had continued by saying that he did not trust the appellant, but when pressed by the appellant to be more specific, would only say that the appellant had compromised his integrity with a supplier. According to the appellant, Mr. Heeren also said that "things were not good" between the appellant and Tina Pritchard; that they were not working as a team; and that he (Mr. Heeren) had made the decision that it would be the appellant and not Tina Pritchard who would leave.
12. Mr. Wijngaards' version of events was that he told the appellant that the reason his contract was going to end was because the respondent did not trust him as regards agency drivers. This lack of trust, he told the Tribunal, was discussed at the meeting, and it had been "indicated" to the appellant that the respondent had "strong reasons for that belief". Paragraph 10 of the Tribunal's reasons continues:-

On being questioned by the Chairman as to the specifics of what was said, Mr. Wijngaards said that they had discussed agency drivers and they were not happy with the situation. They specifically discussed the issue of the amount the agency drivers were costing, asked Mr. Sandhu if something was going on such that might compromise the company, a fact which he denied. Mr. Sandhu commented about the difficulties of unmanned trucks. Mr. Wijngaards estimated that about a third of the time they spent together of between 30 minutes to one hour was spent on discussing the company's problems and two thirds of the time was in the discussion regarding the ending of his employment.

13. The Tribunal then describes the outcome:-

11. The respondents proposed that Mr. Sandhu's employment should finish at the end of December 2002. Mr. Sandhu negotiated that he should remain employed until 31 March 2003, he should retain the use of his company car until the end of January 2003 and that he would retain the use of his mobile phone, albeit paying for the calls himself from 9 December 2002.

14. The Tribunal also records the terms of a letter signed by both Mr Heeren and the appellant on 6 December 2006 which reads:-

Dear Mr. Sandhu,

We hereby agree that we terminate your contract as per 01-04-2003. We agree that you will be paid until that same day.

You will be working till 9-12-2002 on which day you will return all property of Jan de Rijk Transport Ltd with exceptance (sic) of your company car. The car has to be returned by the end of January 2003 in good and proper condition.

By signing this letter for acceptance both parties agree that no further obligations will exist after 31-03-2005.

15. The Tribunal reached and expressed its conclusions in paragraphs 16 to 20 of its reasons, which I propose to set out in full:-

16. Conclusions of the Tribunal

The Tribunal was conscious that where an employee is effectively told you either resign or you will be dismissed that resignation would be deemed to be a dismissal. Equally, where a person chooses to resign rather than to be the subject of disciplinary proceedings as in Staffordshire County Council v Donovan [1981] IRLR 108 that will be held to be a resignation as the outcome of the disciplinary hearing would not be known. However, the Tribunal was faced with a different situation. The facts as concluded by the Tribunal were that Mr Sandhu was invited to a meeting. There he was faced with the bald facts regarding his apparent abuse of arrangements with agency drivers and made aware that the respondents no longer had any trust in him and wished to terminate his contract. At that point had Mr Sandhu walked away it clearly would have been a dismissal and, in the absence of any proper procedure, an unfair dismissal. However, Mr Sandhu spent the majority of the meeting, on both his evidence and Mr Wijngaards' evidence, sorting out a financially beneficial way for his leaving the company.

17. The Tribunal was satisfied that Mr Sandhu was fully aware of what were the concerns of the company. Despite Mr Sandhu saying he was just told that he had compromised his integrity with suppliers the Tribunal was satisfied that in fact Mr Wijngaards and Mr Heeren went into much more detail. It was on the basis of knowing the extent of those allegations that Mr Sandhu chose to negotiate a deal for his departure. If he had not been aware of the detail and merely been told his integrity was being compromised his behaviour would make no sense. Human nature would be to press for further information. It is only on the basis that he must have been aware of the extent of the allegations against him that Mr Sandhu's conduct in spending a considerable length of time in successfully negotiating a three month additional payment on top of his contractual notice period, the retention of the car and the phone for a month longer than his contractual notice period that the situation makes any sense.

18. We therefore conclude that, although the situation started off as a dismissal by Mr Heeren's statement, Mr Sandhu in fact left because of the favourable terms he negotiated. It was similar to where an enforced resignation becomes a voluntary one where an employee negotiates satisfactory financial terms and leaves because of them.

19. In reaching our view the Tribunal noted the circumstances as described in Sheffield v Oxford Controls Ltd [1979] IRLR 133 and Crowley v Ashland (UK) Chemicals Ltd EAT 31/79. We consider that this case to be on all fours with those cases and therefore, on the facts and in law, we concluded that the parting of the ways between the claimant and the respondent company was by mutual agreement and therefore not a dismissal.

20. The claimant's case of unfair dismissal, wrongful dismissal and breach of contract must all therefore fail.

16. Only one further point relating to the 6 December meeting needs, I think, to be added, namely that in his statement, the appellant says that he suggested that if the respondent was making these allegations against him, it should suspend him whilst it conducted further investigations. The Tribunal makes no mention of this.

Events post the 6 December meeting

17. On 12 December 2002, the respondent issued a "staff update" which contained the information that the appellant had left the London office "with immediate effect". It also says:-

After a meeting in Roosendaal on Friday afternoon (06.12) between Charlie and the JdR board it was mutually agreed that the parting of ways was the best solution for both parties.

We regret it has come up to this point but wish him the best for his future career.

Robert Kleppers

18. The copy of this document in our papers is endorsed in manuscript in what we were told is the appellant's handwriting with the comment: "I had a meeting with Robert Kleppers Weds 11^th December in Colnbrook and made it quite clear it was not mutual".
19. There is also in our papers subsequent correspondence between the appellant and the respondent. This begins with a letter from the appellant to Mr Heeren dated 17 December 2002 in which, inter alia; (1) he confirms his wish to appeal against the decision taken to terminate his contract with the respondent; (2) states unequivocally that the decision was not taken by mutual consent; and (3) asks to see a minute of the 6 December meeting "along with detailed reasons for my termination of contact". He also complains that he had been asked to return his car by 1 January 2003.
20. Mr. Wijngaards' response to this letter is dated 13 January 2003 and is terse in the extreme. It refers to the letter of 6 December, the terms of which I have set out at paragraph 15 above: it tells the appellant that he is free to search for alternative employment before 1 April 2003 ("it was your specific wish to terminate per date mentioned"); and it confirms that the arrangements in the letter of 6 December will be carried out.
21. On 3 February 2003, the appellant replied, pointing out that Mr. Wijngaards had not addressed any of the issues in his previous letter, confirming his willingness to continue working for the company, stating that "under no circumstances at any time was it my wish to terminate my employment", and pointing out that his request for the reasons for his instant dismissal on 6 December had gone unanswered. The response from Mr. Wijngaards of 3 March 2003 is, once again, extremely terse, and reads:-

In reply to your letter of 3-2-03 we hereby state that we clearly agreed upon ending your contract as stated in our letter of 06-12-2002.

You also agreed with the decision as well as with the terms by signing the letter mentioned.

Trusting the above is sufficient,

Yours faithfully

22. There plainly was no minute or other contemporaneous written record of the 6 December meeting, and there is no evidence of an appeal process (nor, for that matter, does the respondent appear to have had any appropriate procedure for dealing with employees it was minded to dismiss). No doubt it was for these and allied reasons that the respondent conceded before the Tribunal that if, contrary to its assertions, the appellant was dismissed and did not resign, the dismissal would be procedurally unfair. Had it found that the appellant had been dismissed, the Tribunal said that it would then have moved on to the question of the contribution which the respondent asserted the appellant had made to his own dismissal, and what the Tribunal described as "the Polkey rules". This is plainly a reference to the decision of the House of Lords in Polkey v A.D. Dayton Services [1988] AC 344 (hereinafter Polkey).
23. It should perhaps also be noted that, in addition to the cases cited in paragraphs 16 and 19 of its reasons, the Tribunal recorded in paragraph 15 that it had been referred to the cases of Logan Salton v Durham County Council [1989] IRLR 99 (Salton) and Birch v University of Liverpool [1985] ICR 470 (Birch).

Dismissal or resignation? The authorities

24. We were provided with a bundle of authorities, which included those to which the Tribunal had made reference, with the exception of Birch. In addition, we were referred to the decision of this court in Jones v Mid-Glamorgan County Council [1997] IRLR 685 (Jones).
25. The earliest case which addresses the dismissal/resignation question is East Sussex County Council v Walker (1972) IITR 280, a case under section 3(1)(a) of the Redundancy Payments Act 1965, and decided by the National Industrial Relations Court in a constitution presided over by Brightman J. In an admirably concise judgment, the court concluded:-

In our judgment, if an employee is told that she is not longer required in her employment and is expressly invited to resign, a court of law is entitled to come to the conclusion that, as a matter of common sense, the employee was dismissed. Suppose that the employer says to the employee, "Your job is finished. I will give you the opportunity to resign. If you don't, you will be sacked". How, we would ask, is it possible to reach a conclusion other than that the employment is being terminated by the employer, even though the employee takes the first and more respectable alternative of signing a letter of resignation rather than being the recipient of a letter of dismissal? We feel that in such circumstances there really can be no other conclusion than the employer terminated the contract.

26. Along with three other cases all raising the same point, East Sussex County Council v Walker was cited by Arnold J when giving the judgment of the EAT in the first case in which an employee was held to have resigned as opposed to being dismissed, namely Sheffield v Oxford Controls Company Limited [1979] IRLR 133 (Sheffield). The other three cases were Spencer Jones v Timmens Freeman [1974] IRLR 325, Scott v Formica Ltd [1975] IRLR 104 and Pascoe v Hallen & Medway [1975] IRLR 116. Sheffield was decided in the EAT on 18 December 1978.
27. Having examined the previous cases, the EAT in Sheffield then widens the discussion in paragraph 20 of its judgment, in the course of which Arnold J says:-

…… It is plain, we think, that there must exist a principle, exemplified by the four cases to which we have referred, that where an employee resigns and that resignation is determined upon by him because he prefers to resign rather than to be dismissed (the alternative having been expressed to him by the employer in the terms of the threat that if he does not resign he will be dismissed), the mechanics of the resignation do not cause that to be other than a dismissal. The cases do not in terms go further than that. We find the principle to be one of causation. In cases such as that which we have just hypothesised, and those reported, the causation is the threat. It is the existence of the threat which causes the employee to be willing to sign, and to sign, a resignation later or to be willing to give, and to give, the oral resignation. But where that willingness is brought about by other considerations and the actual causation of the resignation is no longer the threat which has been made but is the state of mind of the resigning employee, that he is willing and content to resign on the terms which he has negotiated and which are satisfactory to him, then we think there is no room for the principle to be derived from the decided cases. In such a case he resigns because he is willing to resign as the result of being offered terms which are to him satisfactory terms on which to resign. He is no longer impelled or compelled by the threat of dismissal to resign, but a new matter has come into the history, namely that he has been brought into a condition of mind in which the threat is no longer the operative factor of his decision; it has been replaced by the emergence of terms which are satisfactory. Therefore we think that the finding that Mr Sheffield had agreed to terms upon which he was prepared to agree to terminate his employment with the company — terms which were satisfactory to him — means that there is no room for the principle and that it is impossible to upset the conclusion of the Tribunal that he was not dismissed.

28. In paragraph 19 of its reasons in the instant case, the Tribunal refers to Crowley v Ashland (UK) Chemicals Limited (Crowley). Although Crowley is described as unreported, we were provided with a note of the case which discloses that it was heard in the EAT on 20 April 1979, in a constitution chaired by Slynn J (as he then was). This explains why it was not mentioned by the EAT in Sheffield.
29. Since the Tribunal in the instant case expressed the view that Crowley was "on all fours" with the case before it, I need to examine it. The facts as set out in the note read as follows:-

C was employed as a personnel manager. His employers were unhappy about his performance though they gave him no warning about it. C was invited to a meeting in London, ostensibly to discuss pay negotiation. On arrival, however, he was told that the purpose of the meeting was to discuss his own shortcomings, which had been listed in a document. This was read out to him. It was suggested that one way of resolving the problem was to part company, on a voluntary basis. It was stated thus: "What we are suggesting is a voluntary arrangement, and it is not a question of us dismissing you tomorrow as an alternative". Later that day, and over the next few days, negotiations took place, after which C was presented with a resignation letter, which he signed, and a cheque for £5,570, which he accepted. He subsequently claimed unfair dismissal.

30. Mr. Crowley's claim succeeded before the Industrial Tribunal, but failed in the EAT. The latter held that he and his employer had come to a genuine agreement, free from pressure, that there should be a resignation on suitable terms. It also held that it was for Mr. Crowley to show that the employers' conduct caused him to leave: he had not done so and could not claim constructive dismissal.
31. Giving the judgment of the EAT, Slynn J is reported as having said:-

The cases to which they (the Tribunal) were referred do not decide that an employee cannot resign pursuant to an agreement with his employers. What those cases decide is that if the departure of the employee is caused by the threat of dismissal if the man does not resign, or if the agreement to resign is not a genuine one and arrived at without pressure, then there is a dismissal. But they leave open the possibility that the cause of the departure is not the threat of the dismissal, but is the agreement which is arrived at and possibly the payment of money as a result of that agreement. So we consider here that the tribunal did on this aspect of the case properly and correctly direct themselves in law.

They considered whether there really had been a resignation free from pressure by the time it was arrived at, or whether there was here a dismissal disguised behind a request for resignation. They were satisfied that the gap between what happened on the 14 July and the decision by Mr. Crowley to accept the cheque and to sign the letter on the 18 July was sufficient for this to have been in his case a genuine resignation. They were satisfied that there had been proper negotiation and it is clear that the figures which were discussed rose substantially as we have said from the equivalent of a former salary for four months to something like a year, with a number of extras. It seems to us that there was evidence here upon which the tribunal could conclude that Mr Crowley had deliberately chosen to resign on this occasion; that it was an agreement arrived at free from the unfortunate circumstances in which the first meeting took place and arrived at genuinely.

32. In my judgment, neither Sheffield nor Crowley can be said to be anything like "on all fours" with the instant case, and the Tribunal was manifestly in error in reaching that conclusion.
33. It is, I think, worthwhile to pause at this point to note the facts of the cases which we have so far encountered. Mrs. Walker was a school cook, who was told that her services were no longer required. She was invited to resign, and did so. In Spencer-Jones v Timmens the applicant was a hairdresser, who refused to work on Saturday afternoons and was told at a meeting with her employers that they were not prepared to employ her any longer on that basis and that she would have to go. In Scott v Formica Ltd the applicant was employed as a process worker who refused to accept a transfer to a different task. He was given the choice of resigning or being dismissed. In the last of the cases, Mrs. Pascoe was a factory worker, who had been led to believe that if she did not resign voluntarily she would be dismissed.
34. If the facts of these four cases (all of which resulted in findings of dismissal) are straightforward, the facts of Sheffield (in which it was held that the claimant had resigned) are highly unusual. The respondent was a family company, owned equally by Mr. Sheffield and Mr. Raison. Neither, accordingly, had control. When the Raison family was able to subscribe for some additional issued capital, it gained effective control of the company. Both Mr. and Mrs. Sheffield were employed by the company, and following a row between Mrs. Sheffield and Mrs. Raison, the latter told the former she was gong to have to go. It should be noted that at this point there was no question of Mr. Sheffield being dismissed.
35. The threat to dismiss his wife, however, prompted Mr. Sheffield to say: "Well, if she goes, I go." Later the same day, Mr. Raison asked Mr. Sheffield how much he wanted in order to go, and the latter said £10,000, a sum which he accepted the company could not pay all at once. Arnold J then describes what happened:-

6. The idea of Mr Sheffield's going for £10,000, paid as and when the company could, was on the table at this stage although plainly not a concluded agreement. Having been determined in that way and to that extent, Mr Raison went off and prepared the next, final document which was in the form of some heads of agreement, or draft heads of agreement as they plainly were at that stage. Those were prepared, according to the evidence, about 1 pm and in the course of the afternoon (shortly after lunch, it was put by one of the witnesses) the two directors, Mr Raison and Mr Sheffield, met again and a further discussion ensued. Ultimately, the heads of agreement were initialed as an indication of what was the fact, that the contents had been agreed; 'whereupon Mrs. Sheffield signed her resignation letter', to use the phrase in the findings of the Tribunal.

7. The question is whether the resignation contained in the heads of agreement of Mr Sheffield brought about in those circumstances is really something which terminated the contract of employment on the initiative of Mr Sheffield, or whether, because it was made as a result of a threat that he would be dismissed if he did not resign, the result is that that was a dismissal by the company notwithstanding the intermediate negotiation.

36. As I have already pointed out, the EAT decided that Mr. Sheffield had resigned. I accept that Sheffield bears some resemblance to Crowley and in both cases the EAT found a resignation rather than a dismissal. But neither case, in my judgment, bears any resemblance to the facts of the case with which we are concerned.
37. What is striking in the authorities, and is amply demonstrated by the cases I have discussed so far, is that in none of the cases in which the employee has been held to resign has the resignation occurred during the same interview/discussion in which the question of dismissal has been raised, and in no case in which the termination of the employee's employment has occurred in a single interview has a resignation been found to have taken place. The reason for this, I venture to think, is not far to seek. Resignation, as the authorities indicate, implies some form of negotiation and discussion; it predicates a result which is a genuine choice on the part of the employee. Plainly, if the employee has had the opportunity to take independent advice and then offers to resign, that fact would be powerful evidence pointing towards resignation rather than dismissal.
38. Crowley contains a number of critical features wholly absent from the instant case. Mr. Crowley was not told at the initial meeting that he was being dismissed: his employers were proposing a voluntary arrangement. Negotiations then took place over a period of days, and the terms accepted by Mr. Crowley were plainly advantageous. There was manifestly an absence of pressure, and, on the evidence, a genuine agreement. The cause of Mr. Crowley's departure was not the threat of dismissal but the agreement at which he and his employers arrived, which not only gave him a year's salary but which was also "free from the unfortunate circumstances in which the first meeting too place".
39. The subsequent cases follow the pattern which I have identified. Thus in Staffordshire County Council v Donovan [1991] IRLR 108, Mrs. Donovan was an assistant principal planning officer who was subject to ongoing disciplinary proceedings which were themselves subject to a right of appeal on her part. Mrs Donovan was represented in those proceedings by her union organiser and the union solicitor. They negotiated terms on her behalf whereby she was allowed to resign at the end of six months on terms as to payment and the provision of an appropriate testimonial. The EAT, unsurprisingly, held that she had not been dismissed by the county council, but had resigned. As the IRLR headnote puts it:-

If an employee resigns upon being told that unless he resigns he will be dismissed, that is a dismissal in law. In the present case, however, the agreement which formed the basis of the employee's resignation was not arrived at under duress and there was no threat of dismissal. The disciplinary proceedings were continuing subject to a right of appeal.

Where the parties are seeking to negotiate in the course of disciplinary proceedings and an agreed form of resignation is worked out, it would be most unfortunate if the fact that that agreement was reached in the course of disciplinary proceedings entitled the employee thereafter to say that there was a dismissal.

40. Salton follows the same pattern. Mr. Salton was a social worker who had been withdrawn against his will from Durham's emergency duty team. During disciplinary proceedings, he received a letter in which Durham raised additional complaints against him and argued that he should be summarily dismissed. He decided to resign on the basis that Durham had no intention of returning him to what he described as his "contractual post". His union representative, with whom he discussed the matter, negotiated terms on his behalf which resulted in a written agreement.
41. The Employment Tribunal held that Mr. Salton had not been dismissed but that his employment had been terminated by mutual consent in accordance with the terms of a valid agreement, into which he had entered freely and without duress, and under which he benefited from a financial consideration. The EAT, in a constitution presided over by its President, Wood J dismissed Mr. Salton's appeal from that decision, holding that the agreement whereby he resigned had been entered into willingly, without duress and after proper advice, and for good consideration.
42. The most recent decision of this court is Jones. The case is complicated by the fact that Mr. Jones, who had taken early retirement following the receipt of a letter from the county council terminating his employment, had also taken proceedings in the county court prior to complaining to the Employment Tribunal that he had been unfairly dismissed. The county court proceedings related to his claim that the pension paid to him was less than that to which he was entitled. The county court judge had rejected Mr. Jones' allegation that he had accepted early retirement under duress.
43. In his subsequent complaint to the Employment Tribunal that he had been unfairly dismissed, the Tribunal rejected Mr. Jones' evidence that he had been under such pressure to retire that he had in reality and in law been dismissed. It accepted a submission made by the county council that it had no case to answer. The EAT allowed Mr. Jones' appeal and held that the Tribunal had wrongly regarded itself as bound by the findings of the county court judge. This court restored the decision of the Tribunal.
44. Giving the leading judgment in this court, Waite LJ examined the law relating to what he described in paragraph 6 of his judgment as "dismissal by enforced resignation":-

Courts and tribunals have been willing, from the earliest days of the unfair dismissal jurisdiction, to look, when presented with an apparent resignation, at the substance of the termination for the purpose of inquiring whether the degree of pressure placed on the employee by the employer to retire amounted in reality to a dismissal. In the instant case, the employee had framed his claim in constructive dismissal, and the industrial tribunal dealt with it upon that footing. There was accordingly some discussion before us as to whether the principle I have just mentioned is to be regarded as deriving from an inference of circumstances giving rise to a constructive dismissal under s.95(1)(c) of the Employment Rights Act 1996, or whether it is more broadly based as a species of direct dismissal. For my own part, while tending to favour the latter view, I do not find it necessary to resolve that question in the present case because the principle itself (whatever its origins) is well settled. It is a principle of the utmost flexibility which is willing in all instances of apparent voluntary retirement to recognise a dismissal when it sees it, but is by no means prepared to assume that every resignation influenced by pressure or inducement on the part of the employer falls to be so treated. At one end of the scale is the blatant instance of a resignation preceded by the employer's ultimatum: 'Retire on my terms or be fired' – where it would not be surprising to find the industrial tribunal drawing the inference that what had occurred was a dismissal. At the other extreme is the instance of the long-serving employee who is attracted to early retirement by benevolent terms of severance offered by grateful employers as a reward for loyalty – where one would expect the industrial tribunal to draw the contrary inference of termination by mutual agreement. Between those two extremes there are bound to lie much more debatable cases to which, according to their particular circumstances, the industrial tribunals are required to apply their expertise in determining whether the borderline has been crossed between a resignation that is truly voluntary and a retirement unwillingly made in response to a threat. I doubt myself whether, given the infinite variety of circumstance, there can be much scope for assistance from authority in discharging that task: indeed, attempts to draw analogies from other cases may provide more confusion than guidance. In cases where precedent is nevertheless thought to be of value, the authority that will no doubt continue to be cited is Sheffield v Oxford Controls Co Ltd [1979] IRLR 133.

45. The only other case to which we were referred on this point and which I have not discussed is Birch. However, in my judgment, it does not advance the argument. It concerned a premature retirement compensation scheme and its inter-relationship with redundancy payments. It is far removed from the facts of the instant case.

Dismissal or resignation? The case for the respondent

46. In able submissions made on behalf of the respondent, Mr. Ghazan Mahmood relied on the passage which I have cited from the judgment of Waite LJ in Jones. He also relied on Salton for the proposition that whether or not the appellant was dismissed or had resigned was a pure issue of fact for the Tribunal, and that it was, accordingly, for the Tribunal, applying its expertise, to distinguish between genuine and voluntary resignations and those made in response to a threat. There was, he submitted, material upon which the Tribunal could properly find that this was a negotiated resignation, and that accordingly this court should not interfere with the Tribunal's conclusion.
47. Mr. Mahmood accepted that in none of the reported cases had resignation been found where the parting of the ways and the negotiation of terms between employer and employee had occurred at the meeting at which the employer had determined to dismiss the employee. However, he submitted that this was in no sense conclusive. He posited the case in which an employer either made or accepted a proposal that the employee should resign on terms which were extremely favourable to the employee – for example that the employee was paid a large sum of money. In those circumstances, Mr. Mahmood argued, there could well be a resignation as a matter of law, rather than a dismissal.
48. In the alternative, if we were against him on the misdirection point, Mr. Mahmood submitted that we should not resolve it ourselves, but remit it to a different tribunal for re-hearing.

Dismissal or resignation? The approach of the EAT

49. Although, as Mr. Mahmood properly accepted, this court was primarily concerned with whether or not the Tribunal had made an error of law, it is instructive to see how the EAT approached the case. Its summary states that the Tribunal had asked itself the right question - what caused the appellant to leave? – and that it had been entitled to find that he had left voluntarily because of the package he had negotiated.
50. The EAT also expressed the view that whether there has been a dismissal or a voluntary resignation was a question of causation which the Tribunal had to answer by an analysis of the facts and, if there be any, of the relevant written material. The EAT examined the various authorities, and concluded that the Tribunal had not failed to apply the correct test. That test required the Tribunal to consider whether it was the existence of the threat of dismissal which caused the appellant to resign or whether the cause of his resignation was his willingness to do so on the terms offered to him.

Dismissal or resignation? Discussion and conclusion

51. Ably as Mr. Mahmood argued the point, it is in my judgment plain beyond peradventure that the Tribunal misdirected itself in law in paragraph 19 of its reasons when it decided that the case before it was "on all fours" with Sheffield and Crowley. As my analysis of the case law demonstrates, this case is wholly different from both. The appellant was being dismissed. In my judgment it simply cannot be argued that he was negotiating freely. He had had no warning that the purpose of the 6 December meeting was to dismiss him; he had had no advice, and no time to reflect. In my judgment, he was doing his best on his own to salvage what he could from the inevitable fact that he was going to be dismissed. This, in my judgment, is the very antithesis of free, unpressurised negotiation.
52. I also do not think that it can be said that the terms he was able to obtain were particularly favourable to him. He achieved three months salary, and the short term retention of the use of the respondent's motor car and mobile telephone. As Pill LJ aptly put it during the course of argument, this was pretty small beer. It certainly comes nowhere near the advantageous terms achieved in Crowley or Sheffield, the cases with which the instant case it is said to be on all fours.
53. I also respectfully agree with the way Sedley LJ put the matter when granting permission to appeal on the limited, misdirection point. If the appellant had been dismissed, the negotiation which followed about the terms of severance could not undo it. The remaining question was then whether he had justified or contributed to his own dismissal by misconduct.
54. I also take the view that the letter which the appellant signed on 6 December 2002 is consistent with dismissal rather than resignation. The "we" in the phrase "we hereby agree that we terminate your contract as per 01-04-2003" seems to me to refer to the respondent, and in my judgment reflects the fact that the appellant was being dismissed.
55. Mr. Mahmood sought to meet Sedley LJ's point by submitting that if, contrary to his primary case, the appellant had been summarily dismissed at the 6 December meeting, then his claim for unfair dismissal was out of time and should not be entertained. I cannot accept that argument. Even if (which I doubt) it is technically correct, it is a limitation point which was not taken by the respondent either in the Tribunal or in the EAT, and in my judgment it is far too late for the respondent to take it now.
56. It is, of course, normally the case that the Tribunal (often dubbed "the industrial jury") finds the facts, and that any appellate court cannot go behind the Tribunal's findings of fact. However, that proposition is subject to two important qualifications. The first is that the Tribunal must direct itself correctly in law when coming to its conclusion on the facts found: the second is that it must be open to the Tribunal on the material before it to reach the conclusion to which its direction on the law leads it.
57. In my judgment, this appeal can be wholly decided on what the EAT identified as the "causation" point. The Tribunal plainly misdirected itself on the authorities. It has thus made a fundamental error of law which the EAT has failed to correct. That is enough to vitiate its decision. So much is elementary. In my judgment, however, on the particular facts of this case, the Tribunal's error equally plainly led it to the wrong conclusion. As a matter of law, on the authorities, this is a case in which the appellant was dismissed. He did not resign. Thus the fundamental nature of the Tribunal's misdirection enables this court to go further than the conventional remedy of remitting the question to another Tribunal for reconsideration in the light of a proper direction as to the law.
58. To put the matter a slightly different way, there was, in my judgment, only one permissible conclusion the Tribunal could have reached had it properly directed itself as to the law. This was that the appellant had been dismissed. That was the purpose of the 6 December meeting, and that is what was said to him at its outset. The authorities demonstrate plainly that none of the necessary prerequisites of a freedom to negotiate were present.
59. In my judgment, the Tribunal, in the words of Waite LJ in Jones should, as a matter of law, have recognised a dismissal when it saw it. It should, as a matter of law, have accepted the respondent's concession that the dismissal was procedurally unfair and proceeded to try the respondent's Polkey/contribution to dismissal issues on their merits.

Perversity

60. As I have made clear in paragraphs 57 and 58 above, I would be minded to allow the appeal on the simple basis that the Tribunal fundamentally misdirected itself on the authorities. However, I think it must follow, that on this analysis, the Tribunal's factual conclusion that the appellant resigned and was not dismissed was perverse. This is not to substitute my assessment of the evidence for that of the Tribunal. The evidence before the Tribunal was that the appellant's contract was being terminated. As I have already stated, that was the purpose of the meeting: those were the words spoken at its inception. I therefore take the view that it was simply not open to the Tribunal in these circumstances to hold on the facts that he had resigned.
61. The decision of this court in Yeboah v Croften [2002] EWCA Civ 794, [2002] IRLR 634 on which Mr. Mahmood relies for this part of the argument is, of course, binding us. It is also a remarkable case on the facts. The Tribunal had sat in that case for 104 days, and had examined the facts before it in minute detail and with conspicuous care. In the instant case, by contrast, the Tribunal had, in less than one day, conducted a brief and incomplete assessment of one part of the case. Nonetheless, applying the principles set out in Yeboah v Croften, my judgment is that the Tribunal in the instant case reached a conclusion on the facts which was not open to it. Moreover, such a conclusion can be properly described as one which no reasonable tribunal, on a proper appreciation of the evidence and the law would have reached.

Other points

62. Given the conclusion I have already expressed, I do not think it necessary to address the arguments raised by the appellant on the evidential point. Whilst I think it unfortunate that the Tribunal limited the evidence it heard to what actually happened at the 6 December meeting, a discussion of the issues arising from that decision does not, in my judgment, advance the argument, and is unnecessary for the resolution of the appeal.
63. There is, however, a point of principle which should be mentioned. On any view, in my judgment, and whatever the appellant may or may not have done, the respondent's conduct in this case is unacceptable for a number of reasons. It does not appear to have conducted any investigation into the appellant's alleged misconduct before summoning him to the 6 December meeting. It did not tell him in advance what the charges against him were. It did not suggest that he could or should take advice before attending the meeting, or that he could bring a representative or adviser with him. It kept no record of the 6 December meeting. It made up its mind to dismiss him before it had heard him. It does not appear to have any proper grievance, dismissal or appeal structures in place. It did not properly consider the appellant's correspondence after the event.
64. Employers of the size of the respondent should not be encouraged to behave as the respondent has done, nor should they think that proper procedures for disciplining or dismissing their employees are unnecessary. This is not a case brought under section 203 of the Employment Rights Act 1996, but the principles that proper procedures should be in place, and that an employer should not be able to use its dominant position to exploit its employees' position both apply.

Conclusion

65. I would, accordingly, set aside the Tribunal's findings and remit the application for hearing before a different tribunal on the basis that the appellant was dismissed by the respondent, and that the dismissal was procedurally unfair. The Tribunal should thus hear the claim for unfair dismissal on its merits. This will, no doubt involve hearing the respondent's case both on Polkey and on the contribution which it will no doubt say the appellant made to his dismissal. I say nothing about the merits of the appellant's claim. They will be for the Tribunal to decide.

Footnotes

66. The Tribunal declined to make an order for costs in the appellant's favour. He did not appeal that refusal to the EAT, nor did it form the subject of argument in this court. I therefore say no more about it.
67. Secondly, I cannot but observe that the case is now very stale. There have already been two hearings devoted to the events of 6 December 2002. If the matter proceeds to a hearing before a third fresh Tribunal, there will no doubt have to be further investigation of events which took place between 2000 and 2002. This is most unfortunate.
68. It sadly looks, at the moment, as though it is all or nothing for both sides. If ever a case cried out to be mediated or settled in some other way, this is that case. The costs must already be disproportionate to the claim, and a sensible negotiation which obviates the need for a further, lengthy round of litigation about events prior to 2002 is manifestly called for. These matters, however, are not in our gift. All we can do is allow the appeal and remit the matter to a fresh Tribunal for consideration of the appellant's claim for unfair dismissal on its merits. That, accordingly, is the order I would propose.

Maurice Kay LJ

69. I agree

Pill LJ

70. I also agree.