United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 180_95_1602

Appeal No. EAT/180/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 16 February 1996

HIS HONOUR JUDGE PUGSLEY

MR A C BLYGHTON

MR K M HACK JP

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MR C MICELI          APPELLANT

SIGNAL HOUSE LIMITED          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MS F STONEY

Messrs Foinette Quinn

For the Respondents MR M McCOURT

(Solicitor)

Messrs Giffen Couch & Archer


 


JUDGE PUGSLEY: This is an appeal from the decision of the Industrial Tribunal sitting at Bedford on 6 December 1994, by a decision promulgated on 12 January. The factual background may be summarised very briefly. The Respondents are an engineering company and management has changed hands a number of times over the last few years. The present management has been in situ since in or about 1991.

It seems that the Applicant had been involved in a scheme whereby money, which was secured for waste, had been used initially to fund a party. This had happened when Mr Middleton was the Chairman and Managing Director to the Respondents. The money had been used for funding parties at Christmas. There was an incident at such a party, so the practice was stopped. However, the money was still collected by the Applicant. At Christmas he divided a total money so collected, amongst all those working in the sheet metal section. That was a practice that had taken place when Mr Middleton was the Chairman and Managing Director. He subsequently sold the company.

The Tribunal note there was nothing furtive about it. It was a practice that had been going on for some considerable time. However, in November 1993, Mr Roberts, a Director, was asked by one of the store supervisors about this practice. He made enquiries and as a result of that, Mr Miceli, the Applicant, was brought into a meeting with Mr Roberts. The Tribunal made the finding of fact that, the procedure the Respondent employer adopted was seriously flawed. The Applicant was called into a disciplinary hearing without being told what case it was he had to meet. He was not given an opportunity to be represented. Nor was he subsequently appraised of any right to appeal. The Tribunal go on to say in paragraph 9:

"... The sanction imposed by the respondents, albeit less than dismissal, was severe in that the applicant was demoted with an attendant consequent loss of pay."

The result of that hearing was that Mr Roberts and the others party to that decision, demoted the Applicant and in a letter of 23 November 1993 they said to Mr Miceli:

"After carrying out investigations into the theft of money resulting from the sale of scrap metal from our premises, we have determined that you have knowingly conspired to defraud the Company of such monies. At our meeting, you offered no mitigating circumstances to support any claim that you were due to these monies or had been given permission by the Management of the Company."

It goes on to make a subsidiary allegation that Mr Miceli had been a disruptive influence. The upshot was they gave him a final warning for gross misconduct and they demoted him from his position as chargehand and also required all monies to be repaid from 1993.

Mr Miceli had told the Tribunal that he did not believe himself to have done anything wrong. He had operated this practice for the disposal of ferrous scrap for over 20 years. He told the Tribunal Mr Gaskin's skip was prominently positioned and there was nothing furtive in his actions. The Tribunal accepted that had he been told the practice must cease, he would not have continued it.

The Tribunal summarise constructive dismissal in paragraph 12, after outlining the definition of dismissal under Section 55 of the Employment Protection (Consolidation) Act 1978 say this:

"... For an employee to be able to claim that he has been constructively dismissed four conditions have to be met. First, there has to be a breach of contract on the part of the employer. Secondly, the breach has to be repudiatory that is sufficiently serious to justify a resignation. Thirdly, the employee must leave in response to the breach and lastly the employee must not delay for too long."

13. Applying these criteria we have already found that the respondents breached the contract of employment by their actions in November and that the breach was sufficiently serious to justify the applicant's resignation."...

We note at this stage, that nowhere in the Tribunal (and we have the benefit of assistance in Ms Stoney and Mr McCourt) is the term of the contract ever identified - although as Ms Stoney said, it was certainly put to the Tribunal that it was a breach of the mutual trust and confidence. Moreover the breach is never identified. Clearly, the Tribunal were critical of the procedure, but there is a hint and it may be said to be implicit in their decision that they were concerned whether a reasonable employer could reach a decision on the facts before them, that the Applicant had been guilty of what was described as a conspiracy to defraud the company of such monies. Nowhere is it spelled out as to whether the Tribunal did make that finding, and if so, whether it was a breach, and if so, whether it was a fundamental breach of the term.

We move on to paragraph 13 of the Tribunal's decision where it said:

"... In the leading case of Western Excavating (EEC) Ltd v Sharp (1978) ICR 221 Lord Denning pointed out that an employee "must make up his mind soon after the conduct of which he complains; for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged". There is no set time limit within which the employee must make up his mind. To determine what is reasonable, we must look at the particular facts. The breach in this case occurred on 23 November. Other than Mr Micelli telling Mr Roberts that he was unhappy with the latter's decision on that day, the applicant took no step until he spoke to Mr Roberts some 2 weeks later and asked him `how he was doing' and `whether he could be returned to the status of chargehand'. Thereafter on 20 December, the applicant posted his letter of protest to the respondents. That letter did not reach Mr Roberts until January. Then on 11 January Mr Micelli went to see Mr Roberts to enquire whether he had received the letter and whether it had changed anything. He resigned when he received a negative reply and at a time when he was reasonably confident that he had secured alternative employment.... In these circumstances we are of the unanimous view that Mr Micelli delayed for too long and thereby lost his right to treat himself as discharged. We therefore find that Mr Micelli resigned on 11 January and was not dismissed. In the absence of a dismissal we have no further jurisdiction."

In a very able argument, Ms Stoney has argued that there is a fundamental error of law in the Tribunal decision, in that the Tribunal misdirected itself in that they found that delay in itself, indicated it was affirmation of the contract, and was not merely capable of being evidence of it. We have come to the view that that is a well-founded submission.

Lord Denning's compendious summary of constructive dismissal is of course, much beloved of all employment lawyers, but like many short definitions it is capable of being misconstrued; as was remarked by Mr Justice Browne-Wilkinson in W E Cox Toner (International) Ltd v Crook [1981] ICR 823:

"[Lord Denning's summary] is not, and was not intended to be, a comprehensive statement of the whole law."...

The general principles of contract are, that an innocent party must at some point elect either to accept repudiation, or to affirm the contract. But as was said in the case of Cox Toner (International) Ltd v Crook:

"But he is not bound to elect within a reasonable or any other time. Mere delay by itself (unaccompanied by any express or implied affirmation of the contract) does not constitute affirmation of the contract; but if it is prolonged it may be evidence of an implied affirmation: [see page 828 paragraph G] ... However, if the innocent party further performs the contract to a limited extent but at the same time makes it clear that he is reserving his rights to accept the repudiation or is only continuing so as to allow the guilty party to remedy the breach, such further performance does not prejudice his right subsequently to accept the repudiation: [paragraph A page 829].

In Marriott v Oxford & District Co-operative Society Ltd [1971] QB 186, it was held that provided an employee makes clear his objection to what is being done, he is not to be taken to having affirmed the contract by continuing to work and draw pay for a limited period of time, even if its purpose is merely to enable him to find another job. Further, the case of G W Stephens & Son v Fish [1989] ICR 324, was cited to us in which the E.A.T. emphasised that the length of the employee's service, and a suggestion that an employer might remedy its breach, are all relevant matters which a Tribunal has to consider.

Mr McCourt has referred us to those decisions, which it is unnecessary for us to deal with at length, which gently remind the E.A.T. that it is not their task to substitute their decision for that of an Industrial Tribunal. He referred us to the case of Hereford and Worcester County Council v Neale [1986] IRLR 168, where Lord Justice May (in a celebrated phase) said:

"My goodness, that was certainly wrong".

It is right to say that the Master of the Rolls, as he then was, Lord Donaldson in Piggott Brothers & Co Ltd v Jackson [1991] IRLR 309 at 312, pointed out that there was a danger even in that approach, and that it was always necessary for an Employment Appeal Tribunal to be able to identify the finding of fact which is unsupported by evidence, or a clear self- misdirection in law, by the Industrial Tribunal. Moreover we accept that it was quite wrong to expect Industrial Tribunals to set out in extenso every proposition of law and every subsidiary finding of fact that flowed from their primary findings of fact. In this case, we have come to the view there was a serious misdirection. That is not of merely academic significance. It is quite clear that the Tribunal asked themselves the simple question, that had the employee delayed too long? The question is not that. The question is, did the employee affirm the contract?

The Tribunal made no findings of fact as to the significance of his conversation with Mr Roberts, whether he could be returned to the position of the status of chargehand, and his letter of 20 December 1993, in which he invited his employers to withdraw their allegation. This was a letter written after he had seen a solicitor, and he pointed out in his letter:

"... This is a wholly unreasonable conclusion [to whit that he had intended to defraud them] and I would invite you to withdraw the warning that you have given me and to restore my status as Charge Hand."

The Tribunal do not consider whether that conversation with Mr Roberts, in which he sought to enquire when he could have his status back as a chargehand, and then his letter of 20 December, could be construed as an attempt by him, to ask the employers to remedy the position.

What happened in this case is, that the Tribunal equated delay with affirmation. They did not ask the questions that were necessary, to decide whether in the context of this case, the delay, together with all other matters, including the nature of the breach, the length of service of the employee, could in all the circumstances, be regarded as electing to treat the contract as affirmed. The result is, that we have come to the view there was a fundamental misdirection. We accept that an employee is entitled to continue to work and draw pay for a limited period of time, even if his purpose is merely to find another job, as was pointed out in Cox Toner International Ltd v Crook.

Mr McCourt with great realism and integrity, accepts that there are difficulties with his position. His submission is that although the Tribunal did not explicitly make a finding of fact that the Applicant had affirmed the contract by continuing to work, he says that that is an inference we could draw. However, Mr McCourt accepts that that is requiring this Tribunal to read a certain amount into the decision. The prime question, has he affirmed the contract, was never asked. What was asked was, was there delay? Has he delayed too long? It is not lawyers semantics to say that whilst delay might be evidence of affirmation, it is not in itself affirmation.

In those circumstances, we feel we have no alternative but to remit this case to a differently constituted Tribunal, to consider the whole question again. It is not a case, as has been accepted by Ms Stoney where she could ask us to substitute a finding of unfair dismissal. She certainly would not seek to deflect us. This is a case which, in our view, should be remitted to a differently constituted tribunal, to rehear the case in the light of our findings as to the misdirection of law that has taken place.