Industrial Tribunals Northern Ireland Decisions

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URL: http://www.bailii.org/nie/cases/NIIT/2013/1827_12IT.html
Cite as: [2013] NIIT 01827_12IT, [2013] NIIT 1827_12IT

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THE INDUSTRIAL TRIBUNALS

CASE REF: 1827/12

CLAIMANT: Jonathan Hamilton

RESPONDENT: Emerald Music (Ireland) Ltd

DECISION

The unanimous decision of the tribunal is that the claimant was not constructively dismissed by the respondent and therefore the claim is dismissed.

Constitution of Tribunal:

Chairman: Ms E McCaffrey

Members: Mr W Irwin

Mrs S Butcher

Appearances:

The claimant was represented by Mr McCabe, Union representative of NIPSA.

The respondent was represented by Mr Philips, Barrister-at-Law, instructed by Cunningham and Dickey Solicitors.

ISSUES

1. The issue for the tribunal to decide was whether the claimant had been constructively dismissed from his employment with the respondent when he resigned by letter dated 25 June 2012 with effect from 29 June 2012.

FACTS

2. The tribunal heard evidence from the claimant and from Mr Martin McBurney, former Director of the respondent company on his behalf. We also heard evidence from Mr George Doherty, Director of the respondent company and from Christine Bartley and Elizabeth Webb, two employees of the respondent company. On the basis of the evidence heard we make the following findings of fact.

3. The claimant was employed by the respondent in their Sales and Distribution Department from 1 May 2007 until 29 June 2012. During that period the nature of the business changed in that the emphasis in the business changed from the sale and distribution of compact discs to an increased emphasis on internet sales and in particular downloads of music from the internet. The claimant advised that he had been involved in distribution and that the internet end of the business had “taken off” in the last year or two of his employment. He indicated that Mr McBurney had worked largely on the area of sales and distribution while recording and downloads were more Mr Doherty’s responsibility. The claimant also indicated, and this was not disputed by either Mr McBurney or Mr Doherty, that both of them spent a considerable amount of time out of the office. The claimant alleged that from December 2011 his relationship with his employer, but in particular his relationship with Mr Doherty had deteriorated. He said that this was because differences had arisen between Mr McBurney and Mr Doherty. He further alleged that Mr Doherty saw the claimant as identified with Mr McBurney’s “camp” and that accordingly Mr Doherty wanted both the claimant and Mr McBurney out of the business.

4. It was agreed that there had been an argument between Mr McBurney and Mr Doherty in December 2011. The claimant’s version of this account was that Mr Doherty had threatened Mr McBurney with violence.

5. Mr Doherty’s account of this argument was that he had had an argument with Mr McBurney and that he had said to him “Button it or I’ll button it for you”. Mr McBurney’s account of this incident was that Mr Doherty had said “Button it or I’ll pull you over that table”. He did not recall Mr Doherty saying “Button it or I’ll button it for you”. We do not believe that anything turns on which account of this incident is the more accurate. We can say from our own observation that Mr McBurney’s demeanour in the tribunal was forceful, that he interrupted both representatives and the Chairman on a number of occasions, and he is also a large man. Mr Doherty, too, is a large man but older than Mr McBurney. While he presented a calmer demeanour to the tribunal, we can appreciate that either of them, if annoyed, would present as formidable figures. The claimant said he had been present at this altercation although not involved in it, and had been unsettled by it. We find as a fact that the argument took place, that the claimant was close enough to hear an argument and that this led him to the belief that the relationship between Mr McBurney and Mr Doherty had deteriorated.

6. There were no incidents which caused the claimant any specific concern in the early part of 2012. Mr Doherty was on holiday in Florida from 1 March until 19 April. On his return, he said that he noticed an atmosphere in the office and he spoke to Mr McBurney about this. Mr McBurney then indicated that there had been difficulties between Mr Doherty’s grandson, Matthew Crawford, who was working in the business, and the rest of the staff. Both Mr McBurney and the claimant alleged that the staff had gone to Mr McBurney with complaints in relation to Matthew Crawford’s work attitude and lack of productivity. However Mr McBurney agreed that he had approached Christine Bartley in relation to the matter rather than her approaching him. Mr Doherty then arranged to meet the staff to discuss this matter but Mr McBurney did not attend this meeting although he had been asked to attend. Mr McBurney said that he felt that it would not do any good, but the claimant’s evidence was that he would have liked Mr McBurney to be there.

7. Mr Doherty agreed that he had asked the staff if they had difficulties with Matthew Crawford’s work. He also indicated at this meeting that he would sack Matthew Crawford if there were difficulties. None of the staff, including the claimant, made any specific complaints and indeed refused to make any complaints about Matthew’s work. In the course of that meeting Mr Doherty also told the claimant, Ms Webb and Ms Bartley that he and Martin McBurney were in discussions regarding Mr McBurney buying him out of the business. The claimant said he had already been aware, in general terms, that there was an expectation that Mr McBurney would buy Mr Doherty out at some stage. Mr Doherty’s evidence was that he had told them about this to assuage any concerns or uncertainty they may have and to reassure them that if the business closed for any reason that he would make sure they got at least two months’ pay. The claimant suggested this was an incentive for staff to leave but Ms Webb was clear in her evidence that when Mr Doherty spoke to her about payment of two months’ wages, she had taken this as reassurance that if anything happened to the business they would not be left financially out of pocket.

8. At this meeting as well the claimant alleged that Mr Doherty had called him “Mr No Balls” because of his reluctance to say anything in relation to Matthew Crawford’s work. Mr Doherty denied making this comment, however, Mr McBurney did say that following the meeting, Mr Doherty had made the comment to him that “Jonny sat as usual and said nothing”. Ms Webb and Ms Bartley said Mr Doherty had not used the term “Mr No Balls”. The claimant had not included this allegation in his claim form to the Tribunal, which we find surprising, given the derogatory nature of the comment. As a finding of fact and on the basis of the evidence of the other two members of staff, we find that Mr Doherty did not refer to Mr Hamilton in front of them as “Mr No Balls”.

9. Following this, the discussions between Mr Doherty and Mr McBurney continued but these were not discussed with the rest of the staff. However, Mr Doherty was concerned that he thought there had been tampering with the respondent’s computer systems, as a result of which prices had been altered on the internet and he was concerned as to how this might have come about. He took the claimant aside to ask him about it. In the course of that discussion, he referred to Martin McBurney as a “hostile director” and urged the claimant to treat Mr McBurney’s behaviour with caution. He believed that Mr McBurney was trying to undermine internet sales at the time because there was uncertainty about whether Mr McBurney would buy him out or he would buy Mr McBurney out. He was being cautious. He completely denied that he had ever suggested to the claimant in any way that the claimant was working with Mr McBurney or that he was “in cahoots” with him. He said, and we accept that, he did not believe the claimant had acted dishonestly at any time.

10. The claimant believed that the atmosphere in work had become increasingly unsettling. Ms Webb and Ms Bartley agreed that they had regular conversations with the claimant in relation to the working environment generally and that all of them had concerns from time to time as to what would happen with the business. In particular, there had been an issue regarding non-payment of VAT on the internet sales and this had caused considerable concern. Once the respondent realised that they had not accounted for VAT, this had to be paid and it was Mr McBurney’s evidence that because of the amount involved (£200,000.00 had been underpaid), he and Mr Doherty had discussed the possibility of closing the business. Clearly both the claimant and other staff with responsibilities for financial matters were aware that the VAT was an issue. Both Ms Webb and Ms Bartley were clear that they had never heard the claimant suggest that he had been in any way singled out or treated differently from the rest of the staff by Mr Doherty. They both said that they found Mr Doherty more approachable than Mr McBurney as a boss, and indeed the claimant also said that prior to early 2012, he too had had some difficulties with Mr McBurney. Ms Bartley said that she had been shocked and surprised when the claimant resigned and despite the difficulties over the VAT, she felt that the claimant, like her, would stay on until the matters were sorted out.

11. Early in June the claimant was off for three days. He was suffering with a bad back which he put down to the stress he said he was suffering at work. Mr Doherty telephoned him while he was off to enquire as to how he was and to suggest that he might like to go and see a physiotherapist, but the claimant took this as Mr Doherty checking up on him and trying to see whether he was actually working with Martin McBurney. Nothing was expressly said by Mr Doherty to the claimant to confirm this and this appears solely to have been the claimant’s reading of the situation. We cannot see anything sinister in Mr Doherty’s phone calls, which appear to be reasonable coming from a concerned employer.

12. On 22 June 2012 there was an incident involving a charity CD which had been produced by Mr McBurney for his children’s school. Mr Doherty came into the warehouse to speak to the claimant about this CD and he asked what it was about. The claimant initially said that he was not aware of the CD and then, on further examination, asked if it was the CD Martin McBurney had prepared for his children’s school. The claimant said that Mr Doherty was quite aggressive in his manner about this. Mr Doherty said that he had come across the CD for sale in a service station on the Malone Road and that he was surprised because it appeared to be a product of Emerald Music but he was not aware of it at any time. Mr Doherty’s statement indicated “JH (the claimant) never told me about this and MMB (Mr McBurney) had never asked my permission or informed me that this was happening. This is yet another example of leaving the “sales” team of JH and MMB to get on with the job and being taken for a fool”. When the claimant was speaking to Mr McBurney later in the day, he asked him to clarify the issue with Mr Doherty. Mr McBurney’s evidence was that on that day Peter Lloyd, who had done the art design for the CD, rang the company and asked to speak to George Doherty who had been asking who had paid for the artwork etc on the CD design. Mr McBurney said he put the call through to Mr Doherty and then subsequently spoke to him about it. He said Mr Doherty was annoyed about the matter, they argued and during their argument Mr Doherty said, “I don’t care what you and Jonny Hamilton are up to”, implying that in some way they were working against him. Mr McBurney’s view on this was that because he and Mr Doherty were both 50% shareholders neither could do anything in relation to the company without the other’s agreement. Mr Doherty completely denied that he had referred to the claimant in this discussion or that he had referred to the claimant and Mr McBurney as being “in cahoots” against him.

13. Mr Doherty indicated that he had always thought that Martin McBurney would buy him out, rather than him buying Mr McBurney out because he was the older of the two. He completely denied however that he had ever tried to force the claimant out or Mr McBurney out of the office. He agreed that in the later part of May and June it was likely that there was an unsettling atmosphere in the office. Mr Doherty also indicated that he felt that he had always had a good relationship with the claimant, and added that he had given him a lift home from work on a number of occasions and had given him a lift to the dentist’s which he believed was an indication of a good rapport. The claimant agreed he had been given lifts, but did not think this was significant as he said he made deliveries of goods to shops in Belfast in his own time.

14. The claimant said that by this stage it was impossible to get his job done because he had to check everything with both Directors and was not getting proper direction. He also said that Mr McBurney was often not there and that he felt “cut loose”. On Monday, 25 June, the claimant handed in his notice verbally to Mr Doherty. Mr Doherty asked him to produce a letter of resignation and assured him that he would give the claimant two months’ pay in lieu of notice. They discussed the claimant leaving at the end of that week rather than working his full notice and it was the claimant’s evidence that Mr Doherty seemed more than happy to accept this. Mr Doherty’s account of this was that the claimant had threatened to resign on at least three previous occasions. The tribunal saw an e-mail where the claimant actually sent in his resignation in 2010, saying he could not get holidays arranged. Mr Doherty said that the claimant had verbally resigned on a previous occasion in 2011 and that he had told him at that stage that if he resigned again, Mr Doherty would accept the resignation. Mr Doherty’s evidence was that he wanted to see the resignation letter because on the previous occasion, he had talked Mr Hamilton out of resigning but had also told him that if he resigned again, he would accept the resignation. He also said however that from his point of view the resignation was totally unexpected. He confirmed Mr McBurney’s evidence that he and Mr McBurney had discussed the time for Mr Hamilton to leave and Mr Doherty said that he would prefer the claimant to leave straight away. His comment was that as with any employee, if they are going to resign there was no value for either the employer or the employee in keeping them on longer than necessary.

15. We also accept that Mr Doherty and Mr McBurney discussed the fact that they would require a letter of resignation from the claimant before a cheque was handed over, but as this came after the claimant’s resignation we do not think that anything turns on this point. The claimant handed in a letter of resignation which was addressed to both Mr McBurney and Mr Doherty and which said:-

“Dear Sirs

I hereby tender my resignation and no longer wish to be employed at Emerald Music (Ireland) Ltd.

Effective immediately.

Sincerely

Jonathan Hamilton.”

No reason was given in the letter for the resignation and no details were set out as to the perceived unfair treatment which the claimant says he suffered. The claimant never raised any grievance in relation to the alleged treatment he received.

16. The claimant said he had requested a reference letter and indeed a reference was provided, also dated 29 June 2012. This reference stated:-

“TO WHOM IT MAY CONCERN

This serves to confirm that Jonny Hamilton was employed by Emerald Music (Ireland) Ltd from June 2007 to 29 June 2012.

We wish him success in anything he may do in the future.”

The reference is signed by both Mr Doherty and Mr McBurney. While Mr McBurney said he felt the content of the reference was “minimalist”, he did not make any attempt to change it or to expand on it.

17. The claimant tried to make some issue of the nature of the reference he was given. It was provided after he resigned and so we do not accept it forms any part of the claimant’s reason for resigning. We would point out that it was not obligatory for an employer to provide a reference and secondly, in the light of the recent case law in relation to references we can understand if an employer is reluctant to give a great deal of detail in a reference. We therefore do not believe that anything turns on the reference itself.

18. The claimant gave evidence in relation to his attempts to find work after his resignation, most of which were in January and February 2013.

THE RELEVANT LAW

19. The relevant statute law is Article 127(1)(c) of the Employment Rights (NI) Order 1996 which provides as follows:-

“(1) For the purposes of this Part an employee is dismissed by his employer if (and, subject to paragraph (2) …. only if) –

(c) the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct.”

This is usually referred to as “constructive dismissal.

In a case of constructive dismissal the issues which the tribunal has to consider are as follows:-

(1) What are the terms of the contract of employment?

(2) Do the facts found by the tribunal constitute a breach of contract by the employer?

(3) Was that breach a fundamental breach of contract?

20. In this case there is no written contract. The claimant’s representative made it clear at the outset that he believed that there had been a breach of the implied duty of trust and confidence which should exist between employer and employee, and that this breach was sufficiently serious to justify the claimant’s resignation.

21. It is however clear that the breach of this duty must be fundamental, in that it must go to the heart of the contract and must be of such a fundamental nature that the employee is entitled to resign in response to the breach of contract. The duty of implied trust and confidence was affirmed by the House of Lords in Mahmud v Bank of Credit and Commerce International SA [1997] ICR 606, in the following terms:-

“The employer shall not without reasonable and proper cause conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between the employer and employee.”

22. Lord Steyn commented that:-

“The implied obligation as formulated is apt to cover the great diversity of situations in which a balance has to be struck between an employer’s interest in managing this business as he sees fit and the employee’s interest in not being unfairly and improperly exploited”.

Harvey comments that three suggested limitations to the scope of the duty were rejected in Mahmud. It should be recalled that this case related to a claim by two former employees of BCCI, who said they had suffered loss and damage when BCCI collapsed as they had been tainted by BCCI’s poor reputation and been unable to find other work. First of all, the House of Lords held that the trust and confidence may be undermined even though the conduct in question is not directed specifically at the employee. Secondly, the Court held that it was not necessary for the employee necessarily to be aware of the wrongdoing whilst still employed. However, the question of when the breach is discovered is highly relevant to the question and remedies: if a breach is not discovered until after the employment ends, the employee cannot rely out as a ground for terminating the contract and thus it will not provide a basis for an unfair dismissal claim. Thirdly, the duty of trust and confidence may be broken even if an employee’s trust and confidence is not undermined in fact. Similarly, it follows that there will be no breach simply because the employee subjectively feels that such a breach has occurred, no matter how genuinely this view is held. If, on an objective approach, there has been no breach then the employee’s claim will fail (Omilaju v Waltham Forest London Borough Council [2005] IRLR 35 EWCA). In Omilaju, the Court of Appeal noted that many constructive dismissal cases which arise from the undermining of trust and confidence will involve the employee leaving in response to a course of conduct carried on over a period of time. They noted that the particular incident which causes the employee to leave may in itself be insufficient to justify his taking that action, but when viewed against a background of such incidents, it may be considered sufficient by the Courts to warrant their treating the resignation as a constructive dismissal. It may be the “last straw” which causes the employee to terminate the relationship. However, the Court of Appeal also noted that if the “final straw” incident is not capable of contributing to a series of earlier acts which cumulatively amount to a breach of the implied term of trust and confidence, there is no need to examine the earlier history to see whether the alleged final straw does in fact have that effect.

23. Lord Justice Dyson stated: “Suppose that an employer has committed a series of acts which amount to a breach of the implied term trust and confidence, but the employee does not resign his employment. Instead he soldiers on and affirms the contract. He cannot subsequently rely on these acts to justify a constructive dismissal unless he can point to a later act which enables him to do so. If the later act on which he seeks to rely is entirely innocuous, it is not necessary to examine the earlier conduct in order to determine that the later act does not permit the employee to invoke the final straw principle.”

He went on to add that the test as to whether the employee’s trust and confidence has been undermined is objective, rather than subjective.

24. In this case, the claimant alleges that a series of acts occurred from December 2011 until his resignation on 29 June 2012. He was present at or overheard an argument between the two Directors of the company in December 2011, but this argument was not about him and the claimant was not directly involved in it. While we can see that this would be unsettling, we cannot see that it is of itself a fundamental breach of the implied term of trust and confidence. We found it difficult to clarify exactly what acts occurred when, because the claimant was unclear as to exact dates. However, having put together the chronology of events as set out above, it appears that nothing specific occurred after this until Mr Doherty’s return from holiday on 19 April 2012. Following that, Mr Doherty had discussions with Mr McBurney in relation to Mr McBurney taking over the business. Shortly after that, Mr Doherty took the claimant aside and they had the “hostile director” conversation, where Mr Doherty expressed his concerns about internet sales and whether the pricing of the company’s products on the internet had in some way been tampered with. The claimant said that he felt that this was a “plant”, but there was nothing in the conversation which we can see actually justifies his interpretation.

25. On 3 May Mr Doherty had a meeting with staff initially about Matthew Crawford. The claimant’s main concern about this meeting was that he alleged that he had been referred to as “Mr No Balls” by Mr Doherty at that meeting. Neither Ms Webb nor Ms Bartley have any recollection of that comment being made. While we note that both these women are still employed by the respondent and they may feel some loyalty towards the company, we accept their evidence on this point. We cannot see that there would be any logic in Mr Doherty referring to the claimant in this way, within a few days of having a meeting with him where he took the claimant into his confidence and expressed his concerns about Mr McBurney acting as a “hostile director”. The claimant’s interpretation of this event seems to us to be without foundation.

At that same meeting, Mr Doherty reassured the claimant about an offer of two months’ pay in the event that there was some difficulty in relation to the company. Ms Webb had a similar conversation with Mr Doherty and took it as reassurance, rather than as any kind of “push” to get staff to leave.

26. The final incident was on or about 22 June and involved the CD produced by Mr McBurney. The claimant’s account of this is that he found Mr Doherty’s attitude very aggressive and that it suggested that the claimant “knew all about it”. The claimant’s interpretation of this was that he felt that there was a degree of implication that Mr Doherty thought the claimant and Mr McBurney were “up to something.” The comments made by Mr Doherty in his statement (see paragraph 12 above) indicate to the tribunal that Mr Doherty was annoyed by this incident and that he did suspect that the claimant was involved. The question is whether his reaction is a fundamental breach of contract, such that the claimant is entitled to resign in response to it? On balance and having considered these matters carefully, we do not believe that, viewed objectively, there was a fundamental breach of contract. Nor do we consider that all of these incidents, taken together and viewed objectively, can be considered sufficient to amount to a breach of the implied term of trust and confidence, justifying the claimant’s resignation. Accordingly, we do not accept that the claimant has established a case of constructive dismissal, in that he has not demonstrated on a balance of probabilities that there was a fundamental breach of contract by which the employer breached the implied duty of trust and confidence. The claimant alleged there were a number of arguments between Mr Doherty and Mr McBurney, but we only had clear evidence in relation to one where the claimant was actually present and he was not actually involved in the discussion. The claimant gave evidence that he felt singled out and “closed out” but there was no evidence to back this up. He did not raise his complaints at any time with either of his employers nor did he complain of it to any of his colleagues even though they had regular conversations about issues in relation to their bosses. We can entirely appreciate that where a business is changing, as the respondent’s business undoubtedly was, this can be an unsettling atmosphere for employees. However, not all of the incidents which we have found occurred related directly to the claimant. Some of them were in relation to the management of the business such as the VAT issue, the potential buy-out and the CD issue. The claimant did not have any direct involvement on the VAT matter and while we can see that he may have been concerned about the financial impact on the business and so on him if it closed, we can also see that Mr Doherty made efforts to try to reassure staff by mentioning a promise of two months’ pay.

While we think it may have been indiscreet to mention the possible buy-out to staff before it was agreed, we do not see that this was a breach of contract on Mr Doherty’s part. His comments to the claimant about concerns on the internet sales were wholly justified and the claimant appeared to accept the reason for the concern, but not the suspicion that Mr McBurney may have been involved. We do not accept the claimant’s view that Mr Doherty’s comments were a “plant” and undermined the relationship. The evidence given makes it clear to us that the claimant did not know the full detail of the negotiations between Mr McBurney and Mr Doherty, nor should he have done. As it turned out, Mr Doherty bought Mr McBurney out, not the other way around, as had been expected. The fact that Mr Doherty took the claimant into his confidence with the “hostile director” comments indicates to us that Mr Doherty trusted the claimant and envisaged him staying in the business, rather than leaving.

27. In light of all of this, we believe that the claimant has failed to establish his claim and accordingly the case will be dismissed.

Chairman:

Date and place of hearing: 7-8 March 2013, Belfast.

Date decision recorded in register and issued to parties: