Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REF: 835/14

 

 

 

CLAIMANT: Peter Allen Hewitt

 

 

RESPONDENT: Commander Securities Limited

 

 

 

DECISION

The unanimous decision of the tribunal is that the claimant is entitled to £25,000 for breach of contract. His other claims are dismissed as recorded in the tribunal's conclusions.

 

Constitution of Tribunal:

Employment Judge: Employment Judge Crothers

Members: Mr A Burnside

Mrs T Madden

 

Appearances:

The claimant was represented by Mr B Mulqueen, instructed by A&L Goodbody Solicitors.

The respondent did not appear and was not represented.

 

BACKGROUND

 

1. The case commenced on 9 June 2015 and was postponed on 10 June 2015 until
7 July 2015 to facilitate the further attendance of the claimant (who had gone abroad) to answer questions posed by the tribunal. A Case Management Discussion had been held on 8 June 2015, a copy of which is appended to this decision. The tribunal decided to dispose of the case in accordance with Rule 27 of the Industrial Tribunal Rules of Procedure 2005, as amended.

 

 

THE CLAIM

 

2. The claimant claimed that he had been automatically unfairly dismissed or in the alternative constructively dismissed, by the respondent. The respondent had maintained that he had resigned, and was not dismissed. In addition he claimed three months' notice pay and an amount of £34,719.93 in respect of an unlawful deduction of wages. The respondent in its response and in the witness statement provided by Kenneth McFeeters denied the claimant's allegations in their entirety and also asserted that there was no unlawful deduction of wages as there was a verbal agreement between the parties that any arrears would be paid when an agreement with an American company was signed and that the claimant understood that this was the case. The claimant absolutely denied any such verbal agreement.

 

THE ISSUES

 

3. The issues before the tribunal were whether the claimant had been automatically unfairly dismissed or alternatively constructively dismissed by the respondent and, subject to same, whether he was entitled to three months' notice pay and separately, an amount of £34,719.93 in respect of an unlawful deduction of wages/breach of contract. At a further hearing on 19 August 2015 the tribunal gave leave to amend the claimant's claim to include a claim for breach of contract, pursuant to the claimant's solicitor's request attached to this decision, dated 13 August 2015.

 

SOURCES OF EVIDENCE

 

4. The tribunal heard evidence from the claimant and, on his behalf, from Michael Tennis Customer Consultant with the Bank of Ireland. Kenneth McFeeters was not present at the tribunal and therefore the statement provided by him is afforded limited weight since it was not adopted by him under oath as his evidence and he was not subjected to cross-examination. He furnished a bundle of documents to the tribunal together with further documentation in the period between the two hearing dates. Under Rule 27, where a tribunal decides to dispose of a case in the absence of a party, it nevertheless has to consider the information placed before it by that party. The tribunal was also assisted by a further folder of documents entitled "Tribunal Bundle", and another bundle entitled "Claimant's schedule of loss and mitigation of loss documentation". The schedule of loss did not refer to a holiday pay claim, and such a claim was not specifically addressed in evidence, or included in the Schedule of Loss.

 

FINDINGS OF FACT

 

5. Having considered the evidence insofar as same related to the issues before it, the tribunal made the following findings of fact, on the balance of probabilities:-

 

(i)             The claimant had been engaged as a consultant with Sanyx International Limited for a period of 15 months prior to 1 January 2013, when he became Chief Executive Officer ("CEO") in the respondent company until the cessation of his employment on 21 March 2014. Sanyx was a company owned by Kenneth McFeeters.

 

(ii)           The claimant asserted before the tribunal that he owned a 20% shareholding in the respondent company and that the turning point for him came when he was shown what he described as "a piece of paper" which had moved his percentage shareholding with Kenneth McFeeters from 20/80 to 19/81. This, according to the claimant, was in November 2013.

 

(iii)          The tribunal had before it a document signed by Kenneth McFeeters dated 18 October 2012, described as a written resolution relating to Commander Industries Limited, which reads as follows:-

 

"The following special resolution was agreed and passed by the members:

 

1. THAT pursuant to Section 551 of the Act the directors shall have power to allot 79 Ordinary shares of £1.00 each in the capital of the Company to Kenneth McFeeters such allotment to be completed by a date no later than 5 years from the date of this resolution.

 

2. THAT pursuant to Section 551 of the Act the directors shall have power to allot 19 Ordinary shares of £1.00 each in the capital of the Company to Peter Hewitt such allotment to be completed by a date no later than 5 years from the date of this resolution.

 

3. The provisions of Sections 561 and 562 of the Act do not apply to the allotments referred to above.

 

4. THAT the Company Secretary be directed to lodge a copy of this resolution with the Companies Registry at the earliest possible date.

 

We confirm that we waive any and all pre emption rights we may have in relation to the said transfer.

 

Signed: K McFeeters

Dated this 18 day of October 2012"

 

(iv)          Contrary to the claimant's assertion that he was a 20% shareholder in the respondent's company, there was no evidence before the tribunal that he ever was a shareholder. This is consistent with Kenneth McFeeters' claim that he was an employee and not a shareholder. The claimant had also negotiated a salary of £60,000 gross per annum as CEO. He had not invested any monies in the respondent company.

 

(v)           The claimant, in his witness statement, addressed the elements of the respondent's defence. In paragraph 32 of Kenneth McFeeters' witness statement, he makes claims regarding what he termed were the deliberate falsehoods and misrepresentations made in the claimant's curriculum vitae ("CV"). The tribunal had before it a copy of the CV supplied by the claimant to the respondent in which, under the heading of Training and Education, he includes as the first item, "BSc Economics". This is also reflected in another document entitled "Commanders Industries Limited Training Record". The entry reads under "Employee: Peter Hewitt position C.E.O.:- 1982 QUB - Economics" The claimant eventually conceded, having absolutely denied Kenneth McFeeters other assertions regarding his CV, that he did not in fact possess a BSc Economics qualification and that the following statement in Kenneth McFeeters' witness statement is correct:

 

"Mr Hewitt states in his CV that he obtained a BSc in Economics from QUB. I do not believe this to be true and evidence of this qualification has not been forthcoming despite requests".

 

(vi) The tribunal found the claimant to be an unconvincing and unreliable witness in the course of his evidence. Parts of his evidence were inconsistent, and he was vague and evasive when answering clarificatory questions posed by the tribunal, especially on 7 July 2015.

 

(vii) The tribunal's reservations regarding the claimant's credibility also extended to his evidence relating to correspondence dated 4 June 2014 received from an Electrical Contractor, Howard Millar, which is addressed to Kenneth McFeeters, in the following terms:

 

"Hello Ken

 

I just wanted to tell you that Mr Peter Hewitt rang me on the morning of 14 ^th May 2014 and he asked me for a copy of my outstanding invoice which was for £1000.00 for the electrical work that I carried out at St Brigids' Parish Church in January/February 2014. I asked him why he needed this and he replied that he also needed my help to help him with his plan. He wanted me to start to put Commander Securities Ltd into administration using my outstanding invoice. I asked him why he wanted to do this and he explained that he had a wealthy backer/investor backing him and who was funding him to put Commander Securities Ltd into liquidation so that when the company had gone into administration he could then with the help of the backer/investor funds, purchase the patent off the liquidator/administrator at a much reduced market value.

 

I was wanted to tell you this as I do not agree or support this idea and I was totally surprised/shocked by Mr Hewitt's approach."

 

The claimant, having read the letter, dismissed it as being totally inaccurate in content and "all wrong" apart from the reference to the £1000 owed. There was no evidence however before the tribunal that this correspondence was other than unsolicited.

 

(viii) The tribunal is satisfied, on the evidence before it, that the relationship between the claimant and Kenneth McFeeters deteriorated particularly towards the end of 2013 until the cessation of his employment. Michael Tennis' evidence highlights this. On Monday 10 February 2014 the claimant called into the Newtownards Branch of the Bank of Ireland to discuss concerns he had regarding the account. Shortly after he left the branch, the other Company Director, Kenneth McFeeters, called in to discuss concerns over the account and informed him that the Directors of the company were in dispute. Michael Tennis then rang both Directors after consultation with his internal Legal Department to inform them that the Bank of Ireland was blocking the account until the dispute had been resolved and an agreed list of payments was submitted to the bank. The tribunal was satisfied that the claimant did not go as far as to ask the bank to block the account but did raise concerns as to how the respondent could meet its obligations to its creditors and asked the bank what could be done to ensure that it did not get any worse.

 

(ix) The tribunal was also referred to the claimant's contract of employment signed by Kenneth McFeeters and the claimant dated 1 January 2013 together with a written agreement dated 23 March 2013, signed by both the claimant and Kenneth McFeeters, which is entitled "DEBT PAYMENT To : Peter Hewitt".

 

Paragraph (C) of the agreement states as follows:

 

 

" (C). Shortfall of the accumulated monthly amount to the CEO will be paid by 31 ^st March 2014. That is, the Income Structure as outlined in the GAP programme meaning that payment will be honoured in full. The Start Date for GAP and CEO Employment has been set from 1 ^st January 2013.

 

(D) . Determine and agree with KMF the time at which SIL can gradually reduce contributions providing the reductions are made up via CSL and GAP or other contributing agents.

 

Notable

This proposal is to firstly to clarify and accommodate a payment plan to avoid immediate call on Outstanding Debt from SIL to PH to be paid. Secondly, to engage all elements of the GAP Support (2 ^nd Key Worker by September 2013). Lastly, to facilitate the beginning of business commitment to employ human resource.

 

Agreement

In accordance of our open discussion and understanding of financial requirements the above has been agreed as a Debt Payment Structure between :

 

Peter Hewitt Ken McFeeters

23 March 2013"

 

The agreement also records that "Cash Flow is a worrying element and is a restriction on what can be achieved at present".

 

(x) It was a theme in the evidence and information placed before the tribunal as to whether the respondent company was insolvent or solvent. At all times, the respondent appears to suggest that there was no question of insolvency.

 

However, it is clear that the agreement between the claimant and Ken McFeeters reflects the pressures that the respondent company faced shortly after the claimant became CEO. It is also reflected in the claimant's schedule of loss, which had to be amended pursuant to questions from the tribunal. It shows that from January to September 2013 the claimant obtained half of his net monthly salary ie £1,740.14 and was still owed his full net monthly salary of £3,480.28 from October 2013 until the end of February 2014 and a further 10 days into March 2014 amounting to £1,657.27. However, in the absence of Kenneth McFeeters, the tribunal has insufficient evidence before it to conclude that there was a verbal agreement between the parties that any arrears would be paid when an agreement with an American company was signed and that the claimant understood that this was the case.

 

(xi) The claimant was aware from Kenneth McFeeters' witness statement and other documentation, that there appears to be a police investigation into certain matters. However the claimant pointed out to the tribunal that he had not been contacted by anyone from the PSNI regarding any such matters.

 

(xii) The claimant also supplied extracts from his bank statements from September 2013 onwards which showed that certain payments were made into his account from the respondent company. It appears that when company funds were insufficient, the claimant paid certain suppliers from his own bank account and then recouped these amounts from the respondent company, as he was in charge of the respondent's finances.

 

(xiii) The tribunal carefully examined the sequence of correspondence between solicitors engaged by both sides from 14 February 2014 until 29 April 2014. The correspondence from A&L Goodbody dated 14 February 2014 sets out the claimant's claim of £50,000 for unpaid salary from January 2013 to February 2014. This appears to be a gross figure. It also refers to the possibility both of issuing legal proceedings and a claim for constructive dismissal. The latter indicates that, at this time, the claimant had contemplated the possibility of resignation. He refuted Kenneth McFeeters' allegation that he had intimated a possible resignation to him in January 2014 and claimed that Kenneth McFeeters began to take steps to amend the position and with Companies House on 9 January 2014 by unilaterally engaging his wife as a director of the company. The tribunal however is satisfied that the claimant's evidence is unreliable and unconvincing on this point and that he was in all likelihood contemplating resignation in January 2014. This could explain why Kenneth McFeeters' wife was made a director at that stage. In an accompanying letter entitled "without prejudice save as to costs", also dated 14 February 2014, the claimant's solicitors state:-

 

"Notwithstanding the content of that open correspondence and the instructions that we have in relation to various legal remedies on behalf of our client, there would appear to be a clear need to look at any and all alternatives to litigation".

 

(xiv) Following a further exchange of without prejudice correspondence a meeting was held in the offices of Hewitt & Gilpin Solicitors in Belfast in an effort to resolve the differences between the claimant and Kenneth McFeeters. This proved to be unsuccessful. Prior to the meeting on 27 February 2014, the claimant's solicitors' correspondence reveals that the components relied on by him to establish a case of constructive dismissal before the tribunal, as an alternative to automatic unfair dismissal, are referred to, including failure to pay his salary, allegations regarding locking him out of the company's premises (which the respondent solicitors in their reply stated related to property belonging to Sanyx), the failure of the respondent to develop the tank commander product, the appointment of Kenneth McFeeters' wife as a director in January 2014, and, in terms, the alleged failure of Kenneth McFeeters to exercise his company functions and responsibilities and/or to engage with the claimant adequately or at all, and Kenneth McFeeters' alleged attempts to undermine the claimant's position within the respondent company. These are further articulated in Mr Mulqueen's submissions appended to this decision.

 

(xv) After the failure to resolve matters on 27 February 2014 a further robust exchange of correspondence ensued between the respective solicitors offices. Joseph F McCollum & Company Solicitors, acting on behalf of Kenneth McFeeters addressed the claimant's allegations in relation to the undernoted matters:-

 

Unpaid Salary

Non Payment of Invoices

Direction of Online Sales to Sanyx Limited

Non-delivery of product and concealment of Inherent defects

Appointment of New Director

Opening of a new Company Bank Account

Locking of the Companies Premises

Sales and Contacts

Accounts, Investments and Shares. This paragraph concludes with the following words:-

 

"The only potential investors in Commander Securities Ltd were a company called Blue Lough that your client introduced to our client. Accordingly to your client, Blue Lough insisted that he was a 20% shareholder in the company however the agreement didn't come about because of the US patent wasn't granted (at that time).

 

Please note that our client instructs that he also disputes the shareholding your client purports to have in the Commander Group of Companies."

 

The other matters addressed were:-

 

SIM Cards, and

CV and Background.

 

(xvi) The reply from the claimant's solicitors, A&L Goodbody dated 13 March 2014 was as follows:-

 

"Our Client: Peter Hewitt

Your Client: Ken McFeeters

Re: Commander Securities Limited (the Company)

 

Dear Sirs

 

We refer to the above matter. We have reviewed your correspondence dated 6 March 2014 and taken our Client's instructions in relation to same.

 

Our Client disagrees with the assertions made by your Client, and note[s] there has been no genuine attempt to address the issues to our satisfaction raised in our previous correspondence. With that being said we see no value in debating these issues further as it is clear to us that there is a huge degree of distrust on the side of both parties and there is unlikely to be a meeting of minds on those issues. No further discussion as to the alleged wrongs of the other party is likely to advance this matter further. In light of the level of distrust, which is clearly evident, it is our Client's position that the previous working relationship is now untenable and cannot be repaired.

 

Consequently and given the level of debt which exists within the Company we consider that the company is in all likelihood insolvent given that it is unable to pay its debts as they fall due. For this reason it is our Client's view that is it imperative that insolvency advice is obtained from an Insolvency Practitioner.

 

We would therefore propose that our respective clients immediately agree to take such advice.

 

For the record the creditors of the company include the unpaid salary due to our Client which, despite your client's inaccurate assertion that our Client's salary was dependent on the securing of the GIRisk licence funding, clearly remains due and owing.

 

The engagement of both our clients and therefore both clients are required to work together as regards such an instruction.

 

We would suggest that this proposal is discussed immediately with Mr Tim Bradshaw so that recommendations of Insolvency Practitioners might be made by him, in his neutral capacity, so that an engagement can be agreed.

 

In the alternative and should your client refuse to agree to this proposal, our Client reserves the right to issue legal proceedings for the recovery of his unpaid salary through whichever legal route available to him.

 

We look forward to hearing from you in respect of this proposal as a matter of urgency.

 

Yours faithfully

 

A&L Goodbody

CC. Tim Bradshaw, Hewitt and Gilpin Solicitors"

 

(xvii) The tribunal also considers it essential to set out the response from Joseph F McCollum & Company solicitors dated 21 March 2014 as follows:-

 

"Dear Sir,

 

Our client: Mr Ken McFeeters

Your client: Mr Peter Hewitt

Re: Commander Securities Limited - 'the Company'

With reference to the above matter and your letter dated 13 March 2014, we have taken our client's instructions and we now write to you in response.

 

Your letter dated 13 March 2014 (which is indicative of your client's instructions and his position in relation to the working relationship between our respective clients) was received by our client with much disappointment as your client has failed to deal with any of the issues raised in our letter dated 6 March 2014, which in itself is very informative as your client has not refuted any of our client's claims.

 

We also note from your letter that "In light of the level of distrust, which is clearly evident, it is our client's position that the previous working relationship is now untenable and cannot be repaired."

 

As your letter was dated 13 March 2014 and was received by us on the same date; our client has allowed a period of 7 days before replying to give your client a "cooling off" period in which to review his position.

 

As your client has indicated that the working relationship between the parties cannot be repaired and he has not resiled from this position, we are instructed that our client on behalf of the Company accepts your client's resignation from his post as CEO with the Company and our client has further advised us on behalf of the Company that there is no need for your client to work any such notice to bring his termination of employment to an end.

 

Our client acknowledges that it has been difficult working relationship since in and around November 2013 but that he adopted under the prevailing circumstances a very reasonable approached to your client during communications and offered realistic and mutually beneficial solutions to an impasse that was brought about by the actions of your client as follows:

 

1. In and around November 2013 and in response to your client's demands for a 25.1% share holding in the Company my client afforded your client the opportunity of certain share options. This was immediately rejected and continued to be rejected by your client.

 

2. Your client effectively resigned from his position in early January 2014 and our client instructs that he gave your client an opportunity to confirm his position in an e-mail to your client dated 8 January 2014. While your client replied to our client's e-mail the contents were far from constructive.

 

3. Our client instructs he arranged for Brian Baird to mediate between the parties to resolve the issues but your client merely made unyielding demands of our client in the form of a 25.1% shareholding of the company and the mediation failed.

 

4. Our client attended at the joint consultation at your offices to try to resolve matters but again this was not fruitful due to the unwillingness of your client to address the matters at hand.

 

As your client has resigned from his employment with the Company, we would demand that your client return:

 

(i)             all documents and other materials of whatsoever nature whether originals or copies made or compiled by or delivered to your client during his term of office and employment concerning the business, organisation, transactions, accounts, finances or affairs of the Company and that he shall not retain any copies; and

 

(ii)           all other property of the Company in your client's possession belonging to Commander Industries Limited or Commander Securities Limited or any other group companies.

 

Please be further advised that it is my client position that it is regrettable that your client has resigned at such a time that leaves outstanding conduct issues of allegations of falsity in relation to your client's background and CV and concerns in relation to his duties as a Director.

 

Yours faithfully,

 

Joseph F McCollum and Company"

 

(xviii) The tribunal considered the second letter from Joseph F McCollum & Company Solicitors also dated 21 March 2014 in relation to Kenneth McFeeters accepting the claimant's resignation as a director.

 

(xix) In their correspondence on 25 March 2014 A&L Goodbody state:-

 

"For the avoidance of doubt, our client has not resigned from his position as CEO of the company nor any of the other group companies. We deny that there was ever an intention by our client to resign, but the correspondence was designed to illustrate that in its current format, the working relationship between our clients was unworkable and that assistance, specifically from an Insolvency Practitioner was required. It appears that your client has misinterpreted this position."

 

The solicitor's letter then refers to removing the client from his position as director and to a number of other matters including a request that all payments will be made to the claimant by 31 March 2014.

 

(xx) The response from Joseph F McCollum and solicitors dated 15 April 2014 states as follows:-

 

"Dear Sir

 

Our client: Mr Ken McFeeters

Your client: Mr Peter Hewitt

Re: Commander Securities Limited (the company)

We refer to your correspondence of 25 March 2014, specifically in relation to your client's termination of employment by way of resignation as indicated in our letter to you of 21 March 2014.

 

Your letter of 25 March 2014, states that your client did not resign from his position and that there was never an intention by your client to resign and that the correspondence of 13 March 2014 was designed to illustrate that the working relationship between our clients was unworkable, that assistance was required and that our client has misinterpreted this position.

 

I have now had opportunity to take our client's instructions in relation to this employment matter and would set out the following:-

 

1. Please let us remind you of the specific wording that was used to inform our client of your client's position. Your letter of 13 March 2014 states; '... and it is clear to us that there is a huge degree of distrust on the side of both parties and there is unlikely to be a meeting of minds on those issues. No further discussion as to the alleged wrongs of the other party is likely to advance this matter further. In light of the level of distrust, which is clearly evident, it is our client's position that the previous working relationship is now untenable and cannot be repaired.'

 

2. You subsequently indicated in your letter of 25 March 2014 that this was not a resignation and that this wording was designed to illustrate that in its current format the working relationship between our clients was unworkable. If this was to have been the position of your client then why did your correspondence simply not just state this. Our client does not accept this by way of a later explanation. Given the wording used to reflect your client's position it does not make sense for this to have been the case. We would draw your attention to the particular choice of wording used '... now untenable and cannot be repaired.'

 

3. Also, your letter of 13 March 2014 indicated a level of distrust with regard to the working relationship. As you will be familiar with, there is a term of trust and confidence implied in all aspects of a contract of employment and the purpose of such a term is clear. As such you indicated on behalf of your client that the working relationship is now (as of 13 March 2014);

 

·          untenable, and

·          cannot be repaired

 

The wording 'cannot be repaired' is very clear and unambiguous. It would be the contention of our client, therefore, that this could not have been anything other than your client bringing the employment to an end.

 

4. Also, our client upon receiving your letter of 13 March 2014, (which gave clear indication as above of your client's position) left a reasonable amount of time before acting upon this clear and unambiguous statement and that our client did this quite deliberately in order to allow your client a sufficient period of time to reflect upon this position.

 

5. Our client contends, therefore, that he has not misinterpreted your client's position and would fail to see otherwise how the wording '... now untenable and cannot be repaired' could possibly be interpreted in any other way.

 

6. This very clear position was then further compounded by your client's actions in the form of issuing a Statutory Demand dated 2 April 2014 in relation to alleged outstanding salary payments. Is this the action of an employee who is currently operating under the obligation of trust and confidence?

 

To the contrary, we would state that this action is one which clearly demonstrates your client's position that the relationship cannot be repaired.

 

Furthermore, this action does not demonstrate action of an individual that remains in an employment relationship where an employee would be obliged to act in accordance with the duty of trust and confidence. Rather, this action is more indicative of an individual that is no longer operating under a duty of trust and confidence as they have ceased to continue.

 

7. Simply and unambiguously put; your client declared an untenable working relationship and made it clear that this working relationship could not be repaired in doing so he ended the employment relationship at this juncture by way of resignation, your client then issued a Statutory Demand serving it on our client and the company.

 

In conclusion of all of the above our client is at a complete loss to determine anything other than your client did in fact intend to resign from his employment on 13 March 2014.

 

We would now respectfully refer you to our previous correspondence of 21 March 2014 and would request that your client attend to the return of all company property as listed.

 

Yours faithfully

 

Joseph F McCollum and Company"

 

Further exchanges of correspondence occurred between the solicitors offices up until 29 April 2014 relating, inter-alia, to the resignation issue, the involvement of an insolvency practitioner, and the statutory demand issued by the claimant to Kenneth McFeeters and the respondent company dated 2 April 2014.

 

(xxi) In light of its findings regarding the claimant's credibility as reflected in paragraph 5(vi) of this decision, the tribunal is satisfied that substantial parts of the claimant's evidence can be afforded little weight. It was satisfied that the correspondence from Howard Millar, the Electrical Contractor, to Kenneth McFeeters reflected a certain strategy in the claimant's mind which surfaced again in the correspondence between the solicitors in relation to the engagement of an insolvency practitioner.

 

(xxii) The tribunal also considered, subject to liability, the evidence regarding the claimant's schedule of loss. The tribunal established, after a number of vague and somewhat evasive answers by the claimant, that the claim for unpaid wages was inaccurate and had to be amended. The tribunal was surprised at how this could have happened, in light of the emphasis placed upon the recovery of salary in his instructing solicitors' correspondence and by the fact that he issued a statutory demand dated 2 April 2014.

 

THE LAW

 

6. (i) Article 127 of the Employment Rights (Northern Ireland) Order 1996 ("the Order") provides that an employee is dismissed by his employer if the contract under which he is employed is terminated by the employer (whether with or without notice). Article 127 continues to provide as follows:-

"127. - (1) for the purposes of this Part an employee is dismissed by his employer 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".

 

(ii) Article 156(2) of the Order states as follows:-

 

"Where the tribunal considers that any conduct of the complainant before the dismissal (or, where the dismissal was with notice, before the notice was given) was such that it would be just and equitable to reduce or further reduce the amount of the basic award to any extent, the tribunal shall reduce or further reduce that amount accordingly".

 

(iii) The Order further states at Article 157(6) as follows:-

 

"Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding".

 

(iv) Harvey on Industrial Relations and Employment Law ("Harvey") states at Division D1 at 403 as follows:-

 

"In order for the employee to be able to claim constructive dismissal, four conditions must be met:

 

(1) There must be a breach of contract by the employer. This may be either an actual breach or an anticipatory breach.

 

(2) That breach must be sufficiently important to justify the employee resigning, or else it must be the last in a series of incidents which justify his leaving. Possibly a genuine, albeit erroneous, interpretation of the contract by the employer will not be capable of constituting a repudiation in law.

 

(3) He must leave in response to the breach and not for some other, unconnected reason.

 

(4) He must not delay too long in terminating the contract in response to the employer's breach, otherwise he may be deemed to have waived the breach and agreed to vary the contract".

 

(See also Western Excavating (ECC) Limited v Sharp 1978 IRLR 27).

 

(v) Harvey continues:-

 

"(b) The duty of co-operation

 

[461] More recently the EAT has specifically followed the Post Office case on this point ( Woods v WM Car Services (Peterborough) Ltd 1981] IRLR 347, [1981] ICR 666). The Tribunal emphasised the significance of this duty for employers not to conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of mutual confidence and trust. As it pointed out, it enables an employee who is 'squeezed out' of the company by the wholly unreasonable conduct of the employer to leave and claim that he has been dismissed even though he cannot point to any specific major breach of contract by the employer.

 

[462] This duty not to undermine the trust and confidence in the employment relationship can be subsumed under a wider contractual duty which is imposed on the employer, to co-operate with the employee."

 

(vi) Once a tribunal has established that a relevant contractual term exists and that a breach has occurred, it must then consider whether the breach is fundamental. Where an employer breaches the implied term of trust and confidence, the breach is inevitably fundamental (Morrow  v Safeway Stores plc 2002 IRLR 9, EAT). A key factor to be taken into account in assessing whether the breach is fundamental is the effect that the breach has on the employee concerned.

 

(vii) It is also possible for a tribunal to make a finding of contributory conduct in a constructive dismissal case in the event of there being a connection between the employee's conduct and the fundamental breach by the employer. As was pointed out in the Northern Ireland Court of Appeal case of Morrison v Amalgamated Transport and General Workers Union (1989) IRLR 361 NICA, since it was open to a tribunal to declare a constructive dismissal fair, there could be no inconsistency in its holding that the employee contributed to the dismissal in the first place. All that is required is that the action of the employee to some extent contributed to the dismissal. Once a tribunal has found on the evidence that an employee has to some extent caused or contributed to his or her dismissal it shall reduce the compensatory award.

 

(viii) Unlike an anticipatory breach of contract, an actual breach of contract cannot be retrieved by the employer offering to make amends before the employee leaves. Once the breach has been committed it is for the wronged party to decide how to respond ( Buckland  v Bournemouth University [2010] IRLR 445 CA).

 

(ix) In Mahmud and Malik  v Bank of Credit and Commerce International SA [1997] IRLR 606, ('Malik') the duty of implied trust and confidence was affirmed by the House of Lords 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 trust and confidence between the employer and the employee."

 

Lord Steyn stated 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 his business as he sees fit and the employee's interest in not being unfairly and improperly exploited."

 

(x) The test for breach of the implied duty of trust and confidence is an objective one. The duty of trust and confidence may be undermined even if the conduct in question is not directed specifically at the employee. The duty may be broken even if an employee's trust and confidence is not undermined. It also follows that there will be no breach simply because an employee subjectively feels that such a breach has occurred, no matter how genuinely this view is held.

 

(xi) The range of reasonable responses test is not applicable to constructive dismissal per se. However it is open to the employer to show that such a dismissal was for a potentially fair reason in which case the range of reasonable responses test becomes relevant.

 

(xii) The breach of contract must be "sufficiently important" to justify the employee resigning or it must be the last in a series of incidents which justify his leaving. It must go to the heart of the contractual relationship between the parties. Harvey comments that where the alleged breach of the implied term of trust and confidence constitutes a series of acts, the essential ingredient of the final act is that it is an act in a series, the cumulative effect of which amounts to the breach. It follows that although the final act may not be blameworthy or unreasonable, it must contribute something to the breach even if it was relatively insignificant ( Harvey Division D, paragraph 481.01). See Omilaju  v Waltham Forest London Borough Council [2005] IRLR 35.

 

(xiii) The employee must resign in response to the breach. In the recent EAT case of Wright  v North Ayrshire Council [2014] IRLR 4, ("Wright") Mr Justice Langstaff (President) states at paragraph 20 of his judgment that:-

 

"Where there is more than one reason why an employee leaves a job the correct approach is to examine whether any of them is a response to the breach, not to see which amongst them is the effective cause."

 

(xiv) In Western Excavating (ECC) Ltd  v Sharp (1978) IRLR 27 CA, it was pointed out that an employee must make up his mind regarding resignation soon after the conduct of which he complains. Should he continue any length of time without leaving, he will lose his right to treat himself as discharged from the contract. However, where there is no fixed period of time within which the employee must make up his mind, a reasonable period is allowed. This period will depend on the circumstances of the case including the employee's length of service, and whether the employee has protested against any breach of contract.

 

(xv) The tribunal also considered Article 130A of the Order in relation to automatic unfair dismissal, and, insofar as relevant, Articles 126 to 130 of the Order.

 

(xvi) The tribunal also considered Harvey at DI 225H. Paragraphs 247 -248 states as follows:-

 

"[247] Thus, the basic rule is that the subjective approach is to be adopted for unambiguous language. However, even if the 'exception' or 'cautionary reminder' discussed in the above cases does not apply, the following two practical factors may operate to limit its rigour. First, it will be necessary to establish that the words used really are unambiguous and indicate a clear and present intention to sever the employment relationship. The language used in both Gale v Gilbert and Sothern v Franks Charlesly was considered to fall into this category - though there EAT in the latter case had strenuously sought to find an ambiguity in clearly unambiguous language. But where there is any real doubt, eg as where the words used might equally constitute words of abuse or criticism then they should not be considered to be unambiguous. Second, it will obviously be difficult for the listener to establish that he genuinely thought that the speaker was intending to sever the relationship if that is an unreasonable construction. Furthermore, as the EAT pointed out in Gale v Gilbert, if it is not clear how the words were in fact understood, a tribunal might reasonably infer that they were understood as a reasonable listener would have construed them in all the circumstances.

(d) Summary

[248] To sum up, the preponderance of authority in relation to ambiguous statements is in favour of the objective view, ie that the issue is how a reasonable listener would have construed the words used in all the circumstances of the case. In relation, however, to unambiguous statements, we seem to have a combined test - one starts from the subjective position that the speaker has to take the consequences of clear words being taken at face value, even if a reasonable listener might not have done so, but this is subject to an exception (or 'cautious reminder') if there are 'special circumstances' in which the words were uttered, in which case a more objective approach may be taken to see what was reasonably meant. One obvious problem is that the width of this potentially vital exception (vital particularly for the party now wanting to avoid the consequences of what they seem clearly to have done) is a matter of uncertainty and some of the case law may appear to be contradictory on it. Arguably it is not particularly logical (one argument being that the only logical solution would be to have a test which is either subjective or objective, not both) but this may be one of those areas of employment law where the life of the law is not always logic, and that good employment practice may be just as important, as recognised by the EAT in the early case of Martin v Yeoman Aggregates [1983] IRLR 49."

 

(xvii) The tribunal also considered Article 45(ff) of the Order in relation to unauthorised/unlawful deduction of wages and, insofar as relevant, the provisions of the Industrial Tribunals Extension of Jurisdiction (Northern Ireland) Order 1994 in relation to a breach of contract.

 

SUBMISSIONS

 

7. The tribunal considered the written submissions provided by Mr Mulqueen of counsel together with the authorities referred to, insofar as relevant.

 

CONCLUSIONS

 

8. The tribunal having carefully considered the evidence and information placed before it in accordance with Rule 27, and having applied the relevant principles of law to the findings of fact, concludes as follows:-

 

(1) There is no satisfactory evidence before the tribunal that the respondent was undermining the claimant's position. The indication from the evidence points more in the opposite direction, when it is weighed alongside the credibility issues attaching to the claimant.

 

(2) The language used in the correspondence from the claimant's Solicitors, dated 13 March 2014 is unambiguous and it is clear to the tribunal that the respondent reasonably understood it to amount to a resignation despite the claimant's attempts to deny this afterwards. The tribunal is satisfied that a reasonable listener would also have understood the language to amount to a resignation in all the circumstances of the case. The tribunal is satisfied that the claimant had his own strategy in place for the future of the respondent company and his position within it.

 

(3) The claimant was therefore neither dismissed by the respondent nor constructively dismissed. He resigned from his position and was sensibly removed from his directorship by the respondent.

 

(4) The total amount claimed for outstanding wages is £34,719.93. The tribunal is satisfied that the alleged deductions were authorised by the terms of the written agreement referred to at pages 8 and 9 of this decision. The tribunal is further satisfied that the shortfall in the amount owed under the agreement (and not paid) should be categorised as a breach of contract. In the tribunal, the amount that can be awarded for breach of contract is capped at a maximum of £25,000.00. The tribunal is satisfied that the claimant is entitled to this amount. His other claims before the tribunal are dismissed.

 

9. This is a relevant decision for the purposes of the Fair Employment Tribunal (Interest) Order (Northern Ireland) 1992.

 

 

 

 

Employment Judge

 

 

Dates and place of hearing: 9 and 10 June, 7 July and 19 August 2015, Belfast.

 

 

Date decision recorded in register and issued to parties: