United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 205_93_2507

Appeal No. EAT/205/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 25 July 1994

Before

THE HONOURABLE MR JUSTICE MUMMERY (P)

MR J C RAMSAY

MR P M SMITH

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MISS Y MARQUES          APPELLANT

BLADES BARBER SHOPS & LADIES HAIR STUDIOS          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR P WEATHERBY

(OF COUNSEL)

Free Representation Unit

2 Garden Court

Temple EC4Y 9BL

For the Respondents MR F A LARGE

(PERSONNEL ADVISER)


 


MR JUSTICE MUMMERY: (PRESIDENT) This is an appeal from the decision of the Industrial Tribunal held at London South on the 27 November 1992. For reasons notified to the parties on the 29 January 1993 the Industrial Tribunal unanimously decided that a claim for unfair constructive dismissal made by Miss Marques against her former employers, Blades Barber Shops and Ladies Hair Studios, failed. Miss Marques was dissatisfied with that decision and appealed by Notice of Appeal dated the 9 March 1993.

The matter came before the Employment Appeal Tribunal on the 4 November 1993 by way of a preliminary hearing in order to decide whether or not the appeal raised a reasonably arguable point of law. On that ex parte hearing the Tribunal directed that the appeal should proceed to a full hearing on ground 2 only of the Notice of appeal. That ground related to the question which has been argued today on the full hearing of the appeal i.e. the finding of the Tribunal that the demotion of Miss Marques from manager to stylist would have caused only a minimal diminution of her remuneration. The ground of appeal against that finding was that it was not supported by the evidence and was therefore perverse.

The Appeal Tribunal also ordered that the Chairman's notes should be produced in respect of the examination and evidence given by Mrs Carr on behalf of the Respondents, Blades Barber Shops. In order to understand the points made on this appeal by the same persons who represented the parties below, Mr Weatherby and Miss Marques and Mr Large for Blades Barber Shops, it is necessary to examine the background of the dispute.

Miss Marques was employed by Blades as a stylist from the 6 June 1989 until her employment terminated on the 10 January 1992. The circumstances in which her employment terminated led her to present an application to the Industrial Tribunal on the 12 March 1992 complaining of constructive dismissal. According to her application she started as a stylist with Blades at various branches, primarily in Westminster, in June 1989. She progressed to the high takings bracket with a good relationship with clients. In March 1991 she was picked for the job of a manageress. She was given a written warning in November 1991 by Miss Carr. On the 15 November 1991 she was told by Miss Carr that they no longer wanted her as a manageress and she was asked to stand down. She refused to step down from her position. That would have involved a loss of status and also a substantial decrease in pay.

Miss Marques complained that on the 10 January 1992 she was asked to leave the Westminster branch and not return. She was told by Miss Carr to accept the job offer made by her. She did not accept it, involving as it did the substantial decrease in pay. That was complained of as constructive dismissal.

In the Notice of Appearance an important point arises in connection with today's arguments. There appeared to be no dispute by Blades about the level of remuneration which Miss Marques said she was receiving as manageress. According to her IT1 she was in receipt of a basic salary of £1,083.33 a month and was entitled to bonuses and other benefits amounting to £200 a month. In the IT3 in box 6 it was agreed that the details given by Miss Marques about her salary and other payments or benefits was correct. The agreement took the form of a "X" in the "yes" box.

The substantial defence raised by Blades was that Miss Marques was not dismissed. She chose to leave her employment, although considerable efforts were made to accommodate her grievances. It was common ground that she was employed as a stylist and that she became a shop manager. The main point made by Blades was that, following discussions and considerable correspondence, Miss Marques was asked to transfer to the branch in Chancery Lane with an offer that her earnings level would be protected and that mobility was in the terms of her contract of employment. But she failed to attend work and resigned, claiming that she was constructively dismissed.

In their decision the Tribunal set out the employment history. Evidence was heard by the Tribunal from Miss Marques and the proprietor of Blades, Miss Carr. There were no other witnesses. The Tribunal stated that an agreed bundle of documents was put in. We have not seen that agreed bundle of documents. We have in fact come to learn during the course of the hearing that there was no agreement on some of the documents in the bundle, in particular P60 and P45 tax forms which were relevant to the amounts on which tax was declared and paid.

The Tribunal then found the facts. They found that Miss Marques was employed at one of the three hairdressers owned by Miss Carr. Each shop had a manager. The manager spent 20-30% of the time on management duties, the rest on hairdressing. There was never any doubt that Miss Marques was a good hairdresser. She was appointed manageress when a vacancy arose in April 1991. Various shortcomings perceived by her employers about the discharge of her duties as manageress were noted in the Tribunal's findings. This dissatisfaction by the employers led to the warning, given orally in November 1991 and later confirmed by letter.

The Tribunal said this:

"At a meeting on 15 November, Miss Carr required the Applicant either to step down as manageress or accept demotion from the end of the month. In a letter dated 30 November, the Applicant stated that this was a fundamental breach of the contract of employment and looked forward to a compromise."

There were later letters. Following that, Miss Marques wrote to say that she would resign and claim constructive dismissal, unless there was a retraction or a compromise. The Tribunal stated in a sub-paragraph, which is important to the point raised on this appeal, their understanding of the position about Miss Marques's remuneration. It is in paragraph 4(j) of the decision:

"On 6 January 1992 Miss Carr offered the Applicant a transfer to her Chancery Lane branch with effect from 13 January. This would be on a trial basis for 13 weeks. Instead of her weekly pay of £250 as a shop manager the Applicant would receive £175 weekly plus a guaranteed £68.25 commission, or £243.25 in all. This amount could be exceeded once the Applicant had received the necessary client base under the normal commission arrangements."

Those proposals were rejected by Miss Marques. She demanded reinstatement as manageress in her original branch. Miss Carr directed her to report to Chancery Lane on the 13 January. She suspended her and threatened disciplinary action. The Applicant did not report to the Chancery Lane branch. She stayed at home.

On those facts, the Tribunal stated that many of the allegations against Miss Marques were denied by her, but the Tribunal preferred the evidence of Miss Carr on which most of the findings of fact were based. In paragraph 6 of the decision the Tribunal summarised the contentions of Mr Weatherby of the Free Representation Unit on behalf of Miss Marques. He submitted that Blades had been guilty of a fundamental breach of contract of employment entitling his client to leave and claim constructive dismissal.

That submission was based on demotion amounting to such a breach. It was accepted by the Tribunal that there was a resulting loss of status. They went on to say:

"However, looking at the situation in the round, we find that this loss of status did not amount to a substantial breach, particularly when coupled with the offer of a fresh start in another branch of the Respondent's business. Second, ... that the proposed new arrangement meant a reduction of remuneration."

In a key sentence the Tribunal said:

"However, with the guaranteed commission, the reduction was minimal; it was also temporary, being restricted to the trial period of 13 weeks. Third, ... that the wording of the offer was capable of meaning that the Applicant would lose continuity of employment."

The Tribunal rejected that contention as misconceived. The Tribunal repeated that it preferred Miss Carr's version of events where there was any dispute on the facts between the parties.

On the basis of those submissions the Tribunal stated that no constructive dismissal had been established. The matters complained of, neither separately nor in combination, amounted to conduct on Blades' part justifying termination by Miss Marques under Section 55(2)(c) of the 1978 Employment Protection (Consolidation) Act.

What is wrong with that decision? There can only be an appeal to this Tribunal if something is wrong in law. There is no appeal on matters of fact. As a general rule, there is no appeal against a conclusion of unfair constructive dismissal because the question of constructive dismissal is one of fact.

Mr Weatherby submitted however, that there was an error of law. The error of law was to be found in the Tribunal's conclusion that the reduction of Miss Marques's remuneration on demotion from manageress to stylist was minimal. It was crucial to the reasoning of the Tribunal that there was no fundamental breach of the contract of employment by Blades.

He submitted that that conclusion could not be squared with the evidence. The position on the IT1 and the IT3 was that Miss Marques' weekly wage was £250 basic plus £46.15 bonus. It is pertinent to mention that when the Tribunal referred to the remuneration in paragraph 4(j) of the decision they only referred to her weekly pay as a shop manager as £250. There is no mention of the bonus claimed to be payable and receivable in the IT1 and agreed to in the IT3 submitted by Blades.

When those figures of basic weekly wage and weekly bonus are added up they come to at least £50 more per week than Miss Marques would receive weekly as a stylist on demotion. That was £175 plus a guaranteed £68.25 commission, £243.25 in all. When the Tribunal came to the conclusion that the reduction of remuneration was minimal they misunderstood the position about the remuneration of Miss Marques as a manageress, as being only £250, and overlooked the fact that she claimed to have another £46 odd a week as a bonus.

The position, therefore, seems on the face of the decision that the Tribunal misunderstood the remuneration arrangements in relation to her position as a manageress and the effect of demotion. If they had correctly understood the position before and after demotion they could not have concluded that the reduction in remuneration with guaranteed commission was minimal.

The notes of evidence have been referred to by Mr Weatherby. They show, in the cross examination of Miss Carr, that Miss Marques was receiving £250 plus commission. She gave evidence that she had suggested a £175 plus commission guaranteed which could increase. She did say in her evidence that that was not so great a reduction. She went on to elaborate on the figures, but nothing in her evidence amounts to a departure from this fundamental fact that the weekly salary and bonus as shop manager was significantly greater than weekly salaries of stylist plus guaranteed commission.

We are not able to say how this error has occurred. Even before the hearing took place before the Industrial Tribunal on the 27 November 1992 a disagreement had arisen between the parties as to the remuneration position. We have been shown a letter dated the 19 October 1992 sent by Mr Weatherby to Mr Large, as Blades' representatives, raising a query as to whether or not all the payments to Miss Marques were subject to deduction of tax.

There seems to be an issue about the correctness of the tax documents. We are unable to express any view on those. They were not dealt with by the Tribunal at the hearing. Before us Mr Weatherby objected to the production of documents on the appeal which had not been the subject of evidence before the Industrial Tribunal. It appears to us that, for the reasons submitted by Mr Weatherby, there is an error of law. The Tribunal have misunderstood, the effect of demotion on Miss Marques's remuneration. They have come to a conclusion that it was minimal, when, if they had correctly understood the figures, it could not be so described. It may be that on the first hearing, in November 1992, the Tribunal did not get to the bottom of this, because, as Mr Weatherby pointed out, there appeared on the face of the IT1 and the IT3 to be common ground about the level of her remuneration, including bonuses, as a manageress.

We should allow the appeal. The matter of remuneration must be remitted to the Industrial Tribunal to look at in more detail the effect of demotion. It will be for the Tribunal, when it has found the facts, to decide whether that amounted to a fundamental breach of the contract of employment.

We do not see that it is necessary for the Industrial Tribunal to look at anything else than the effect of demotion on the level of remuneration. There seems to be no dispute about anything else.

Mr Weatherby submits in his skeleton argument that the matter ought to be remitted before a freshly constituted Industrial Tribunal. We see no difficulty in making that order, unless some objection is raised by Mr Large to that course. It is a narrow question. We hope, in view of the time that has past since the dispute arose, that the Industrial Tribunal could be assembled to deal with this matter expeditiously.

The appeal is allowed. The matter is remitted to the Industrial Tribunal freshly constituted to determine what the effect of demotion from manageress to stylist was on the remuneration of the Applicant and, in the light of that, to decide whether or not, looking at the facts found by the first decision, there has been a fundamental breach and therefore a constructive dismissal.