United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 845_92_2309

Appeal No. EAT/845/92

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 23 September 1994

Before

HIS HONOUR JUDGE J HICKS QC

MR L D COWAN

MISS A MADDOCKS OBE

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DICKENS LTD          APPELLANTS

MRS P BROADBENT          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR THOMAS FINCH

(OF COUNSEL)

Bhagwandeen & Co

331 City Road

LONDON EC1V 1LJ

For the Respondent MR M KIRBY

(REPRESENTATIVE)

Stockton and Hartlepool Law

Centre

76 Norton Road

Stockton on Tees

Cleveland

TS18 2DE


 


JUDGE J HICKS QC: The Respondent to this appeal, the employee Mrs Broadbent, was employed by the Appellant employers from April 1975. From November 1977 she was designated personnel secretary, being at first secretary to the personnel/training officer. That officer left in 1990 and she, Mrs Broadbent, then took over most of her duties as well.

The Appellant company is a retail trader. It has three sites and employs about 700 people. The personnel department when first formed dealt with personnel matters for all the respondent's sites but more recently the individual sites have become more independent and engaged and dismissed staff on site. In 1991 it was decided to make individual sites even more independent and to treat each one as a cost centre and responsible for its own administration, including personnel matters. The result of this was to make it unnecessary to have a personnel department and by 1991 the Applicant had effectively become the personnel department, no one else being employed there, and she had her own office.

On 17 January 1992 Mr Patterson, the Managing Director of the Appellants, discussed the position with the Applicant; he told her that the personnel department was to cease to exist and said she could take over the job of a clerk in the buying department who was taking maternity leave. It was common ground that that clerk intended to return and that the position offered to the Applicant was therefore temporary.

There were then further exchanges between the parties in discussion and by letter and on 7 February the Applicant was dissatisfied with the latest reply from the employers and wrote a letter of resignation. A number of conflicts of evidence on issues of fact arose, in particular whether Mrs Broadbent was ever given the assurance that she sought as to the permanence or otherwise of her future with the employers.

The Industrial Tribunal preferred the evidence of the Applicant and in particular, on the question of permanency, found that the position was left vague and unsatisfactory so far as she was concerned.

The Industrial Tribunal correctly directed itself that it had first to consider whether there had been a dismissal as defined in section 55 of the Employment Protection (Consolidation) Act 1978, the Respondents having denied dismissal. The tribunal was satisfied that the circumstances did not fall within section 55(2) (a) or (b) of the Act, which left it to consider whether the matter fell within section 55(2)(c) which provides:

".....an employee shall be treated as dismissed by his employer if, but only if,-

(c) the employee terminates that contract, with or without notice, in circumstances such that he is entitled to terminate it without notice by reason of the employer's conduct."

The tribunal then reminded itself, in terms of which the Appellant does not complain, of the basis on which, on the authorities, that question should be approached, namely by posing the question had the employer repudiated the contract? In paragraph 9 they reached this conclusion:

"The Tribunal was satisfied that, treating the issue of whether repudiation of the contract had occurred entitling the applicant to terminate her employment was [sc.`as'] a matter of mixed fact and law, there had been such a repudiation."

Mr Finch, for the Appellants, accepts that he is bound by that finding and does not challenge it.

Having found a dismissal, in the form of constructive dismissal, the Tribunal had next to consider the questions, first, under section 57(1)(a) of the Act:

"(a) what was the reason ............. for the dismissal"

and secondly, under section 57(1)(b), whether that reason was:

"(b) .......... a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."

and thirdly, if so, whether that dismissal was fair or unfair determined in accordance with section 57(3).

Paragraph 10 of the Tribunal's reasons reads as follows:

"Mr Finch, counsel for the respondent made the submission that the dismissal was for some other substantial reason within section 57(1) of the Act and was fair under section 57(3) of the Act because the applicant was offered other employment. This submission, ably made, was an attractive one, but the Tribunal, having carefully considered it, rejected it on the fairness point under section 57(3) of the Act."

In our view it is implicit in the words "on the fairness point under section 57(3)" that the Tribunal accepted the first part of Mr Finch's submission that the dismissal was for some other substantial reason within section 57(1). It is also implicit in the context, including a reference in paragraph 11 which we have not yet reached, and is in accord with what Mr Finch tells us was the way in which the employers' case was presented to the Industrial Tribunal, that the "other substantial reason" referred to was the business re-organisation which we have summarised above and which is more fully set out in the preceding paragraphs of the Tribunal's reasons.

For the sake of clarity we interpose that although the employee's application was originally advanced on the basis that the reason for dismissal was redundancy that had been abandoned by Mr Kirby for the Applicant before the Industrial Tribunal - that is to say during the hearing - for reasons which he explained to us but which we need not set out or evaluate at this point.

Before we turn to the Industrial Tribunal's reasons for rejecting the Appellants' submissions under section 57(3) we summarise Mr Finch's submissions on the correct approach to that issue in the circumstances of this case and our own conclusions. Section 57(3) reads, omitting words which do not affect the present issue:

"Where the employer has fulfilled the requirements of subsection (1), then, the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case."

Mr Finch submits first that the test of reasonableness is the same whether the dismissal is actual or constructive. We agree, with the qualification, which Mr Finch, accepted that in cases of constructive dismissal the words "a sufficient reason for dismissing the employee" must be understood by reference to section 55(2)(c) as reading "a sufficient reason for the conduct which entitled the employee to terminate the contract of employment without notice".

Mr Finch submits secondly that the Industrial Tribunal failed to approach this issue, as he says they should have done, in the way indicated by the Employment Appeal Tribunal in the case of St John of God (Care Services) Ltd v Brooks & Others [1992] IRLR 546 where, in paragraph 14 of the judgment of the Appeal Tribunal, Mr Justice Knox delivering that judgment said:

"The second reason why the majority of us consider that treating the nature of the offer of new terms and conditions as the crucial question is difficult to reconcile with the statutory provisions of s.57(3) of the 1978 Act is that such an approach tends to lead to giving undue importance to the factor that the employee is acting reasonably in refusing the offer. The situation may very well be one in which the employer's legitimate interests and the employee's equally legitimate interests are irreconcilable. If there is a sound good business reason for the particular reorganisation (see Hollister v National Farmers; Union [1979] IRLR 238) the unreasonableness or reasonableness of the employer's conduct has to be looked at in the context of that reorganisation. To look at the offer as the crucial question is apt to blur that aspect of the matter."

We are content to adopt what we take to be the statement of principle in that case that the unreasonableness or reasonableness of the employer's conduct has to be looked at in the context of the reorganisation, where that is the reason for dismissal. We add the following comments upon the application of that principle to the present case.

First, St John of God was a case of actual dismissal not constructive dismissal, but we have already dealt with the significance of that difference.

Secondly, the Industrial Tribunal there had expressly directed itself that the crucial question:

"Is whether the terms offered were those which a reasonable employer could offer"

and that explains the opening words of paragraph 14 and the closing sentence of that paragraph of the Employment Appeal Tribunal's judgment. No such express direction appears in the present case.

Thirdly, the danger which the Employment Appeal Tribunal there was drawing attention to was giving undue importance to the fact that the employee is acting reasonably in refusing the offer. We think it is only fair to this Industrial Tribunal to point out that as far as we can see there is no indication whatsoever that that was the test they applied under section 57(3), although of course they had previously considered, perfectly properly, the issue of constructive dismissal.

Fourthly, we prefer the Employment Appeal Tribunal's words in the St John case that the unreasonableness or reasonableness of the employers' conduct has to be looked at in the context of the reorganisation to Mr Finch's gloss of a "balancing exercise" because he, as we understood it, paraphrased that requirement as requiring that the Tribunal should have balanced the reasonableness from the employers' point of view against the reasonableness from the employee's point of view. Moreover we remind ourselves, as did the EAT in the St John, case that the starting point and ultimate authority must be the words of section 57(3) itself.

Fifthly, the St John case had not been reported at the date of the Industrial Tribunal's decision here and so was not cited. Although it helpfully sets out the relevant principles therefore, and they were part of the law before as well as after it was reported, it is not to be expected that either the arguments before the Tribunal in this case or its own reasons should be expressed in the precise phraseology of the judgment in the St John case.

In order to make good this his principal attack on the Industrial Tribunal's decision, Mr Finch must show that on the face of their reasons they misdirected themselves in law in dealing with this issue, for he does not argue that in the absence of misdirection it can be set aside as perverse. The misdirection, he says, and we do not dispute that he is entitled to put it in this way, is by omission rather than by expressly stating some wrong principle.

The Tribunal dealt with the matter in paragraphs 11-13 of their reasons as follows:

"11. A constructive dismissal will not always be an unfair dismissal. The Tribunal must consider whether the respondent has acted reasonably: [and then they refer to a case, slightly mis-stating the name, but the full title of which is Stephenson & Co (Oxford) Limited v Austin [1990] ICR 609]. It is necessary, the Tribunal considered, to look at the offer made to the applicant and all of the circumstances. The Tribunal, in considering the question of reasonableness and fairness within section 57(3), was conscious that the applicant felt that the respondent, in the form of Mr Patterson, was evasive and was in reality attempting to demote her permanently with only vague promises about the future. The respondent was entitled to reorganise its business but was bound, in the view of the Tribunal to have more consideration for the applicant. [I interpose that we take that as meaning to have more consideration for the applicant than they gave to the applicant rather than as meaning to have more consideration for the applicant than to their own business reorganisation.] The Tribunal found as a fact that Mr Patterson's evidence was unsatisfactory on the matter of the applicant's long term future, if any with the respondent. She was entitled to a frank answer.

12. There were very real problems over the transfer of the applicant to the Buying Department. It was a serious demotion. The work would be uncongenial to the applicant. There was the problem over the disparity in hours. By its actions the respondent had seriously damaged a working relationship built up over the years by a loyal and satisfactory employee.

13. Although not raised by either representative, the Tribunal had to consider the belief of the respondent as to its right to transfer the applicant within the terms of her contract of employment. The Tribunal had no doubt that the respondent, again in the form of Mr Patterson, was aware that the transfer of the applicant would be in contravention of her contract as Personnel Secretary."

We remind ourselves of the way in which the Employment Appeal Tribunal should approach the decisions and reasons of Industrial Tribunals. Although that has been set out repeatedly in decisions of the Court of Appeal none of those decisions was in the event cited to us, although there is a statement in the judgment of the Employment Appeal Tribunal in the case of Wadham Stringer Commercials (London) Ltd v Brown [1983] IRLR 46, which was cited to us by Mr Kirby for another purpose, but in which he did rely on a passage from paragraph 11 of the judgment in which the Employment Appeal Tribunal say that they adopt the approach which the Court of Appeal has often urged upon us of not assuming an error just because the matter is not expressly referred to in the decision, so that they think it right to read the decision below as having been reached in accordance with correct legal principles.

We approach the matter on the basis that we should not lightly assume that by not expressly mentioning some point the Industrial Tribunal has overlooked it; still less should we assume that by dealing with a point in summary form at one point in its reasoning the Tribunal should be taken to have overlooked more detailed findings bearing on that point which it has made elsewhere. On that basis we reach the following conclusions:

1. .By the opening sentences the Industrial Tribunal made it clear that they had fully understood the distinction between the issues arising when considering whether there had been a constructive dismissal and those arising under section 57(3), a distinction already indicated by the way they had summarised Mr Finch's argument in paragraph 10. The Stephenson case, which was not as we understand it cited to them and was not cited to us, but at which we have looked and invited comments, was correctly understood by the Industrial Tribunal to be authority for the propositions which they had set out immediately before citing it and this further emphasises the point that they were considering the section 57(3) issues quite separately from the constructive dismissal issue.
2. .In the next sentence the Industrial Tribunal accept that "all of the circumstances" must be looked at and later in the paragraph they expressly find that the Respondent was entitled to reorganise its business before going on to deal with considerations which tended in favour of the Applicant.
3. .The references to Mr Patterson's evasiveness on the issue of permanence and to the matters discussed in paragraph 12 of the Reasons no doubt indicate that the Industrial Tribunal considered those points significant but they do not in our view justify, still less require, the inference that the Tribunal disregarded the context of reorganisation to which they expressly refer in paragraph 11 and as to which they had made detailed findings elsewhere in their Reasons.
4. .The significance of paragraph 13 is perhaps not so clear. Mr Finch submits that it shows the Industrial Tribunal harking back to a point which was really relevant to constructive dismissal rather than to reasonableness, but it is at least equally susceptible to the interpretation that the Tribunal is considering, as part of the whole issue of reasonableness, whether the employer was being frank with the employee as to the extent to which it was contractually entitled to require her to accept the proposed changes in circumstances in which, as the Tribunal finds in that paragraph, Mr Patterson was aware that they were not so entitled. It would in our view, to use a word familiar in this context, be "nitpicking" to hold the Industrial Tribunal to have made any error of law on the basis of that paragraph either alone or in combination with paragraphs 11 and 12.

We therefore reject that, which was, as I say, the principal ground upon which the Appellants sought to overturn the decision of the Industrial Tribunal.

Mr Finch's second point was that the Industrial Tribunal wrongly failed to consider section 74(1) and (6) of the 1978 Act. That is a section dealing with compensation and subsections (1) and (6) provide that, subject to certain other matters not here relevant:

"(1) .......the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.

(6) 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."

The Industrial Tribunal, having dealt with the issues which I have already mentioned in dealing with Mr Finch's first point, went on in paragraph 14 to say that after they had announced their decision on those issues they had gone on to consider the question of compensation and continue:

"The parties were invited, as they were both ably represented, to attempt to come to some agreement as to quantum. It has been indicated that they have done so."

It is common ground that by the words "went on to consider" the Industrial Tribunal did not mean, nor was it the case, that it had reached any conclusion, or indeed expressed any provisional view, on the question of compensation. Mr Finch's submission is that issues under section 74(1) and (6) are issues of liability, not compensation, and were therefore implicitly decided against the employers by the Industrial Tribunal's failure to mention them. Without going into technical questions of demarcation between liability and compensation, which we regard as irrelevant to the present point, we are satisfied that it was neither the effect of the Industrial Tribunal's decision, nor understood to be so by the parties in the successful negotiations which they undertook as to compensation, that the employers were debarred from canvassing in those negotiations, and if they failed in a further hearing, the issues arising under section 74 (1) and (6). Indeed Mr Finch was constrained to concede that in a letter of 24 September 1992 forming part of those negotiations the employers' solicitors expressly advanced what one might call a section 74(1) argument.

In our view the whole question of compensation, not just the matter of calculation, and including all matters not expressly covered by the Tribunal's decision and Reasons, were open to agreement between the parties and were settled and agreed between them and cannot be re-opened, subject only to the issue whether the employers would be liable to compensate the employee at all at the end of the appellate process, including any rehearing which might have been ordered. In the event, as we have dismissed the appeal and there will be no rehearing, that agreement as to compensation therefore binds unconditionally.

For those reasons we dismiss the appeal.