United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR GATT (of Counsel) Kirklees Law Centre 5 Lion Chambers John William Street Huddersfield HD1 1ES
For the Respondents	MR GARY POLLARD (Commercial Manager)


 


JUDGE PETER CLARK: V M Fabrications Ltd ["the Company"] produce sheet metal components. It is a noisy business. In May 1994 its place of business was at Victoria Mills, Woodhead Road, Holmfirth in Yorkshire. In that month the local Environmental Health Officer wrote to the Company warning that the level of noise generated by its operations could constitute a nuisance, which could lead to an abatement notice, followed by criminal prosecution.

Realising that its days at Holmfirth were numbered, the Company looked for alternative premises. They lighted on a unit at the Carlton Industrial Estate, Barnsley, some 17 miles away.

At the relevant time the Company employed about 30 shop floor workers including the three appellants before us, Messrs Pickles, Howe and Beever. A process of consultation with the workforce about the proposed relocation began with a meeting on 19th August 1994 at which the Production Direction, Mr Turner and the Works Manager, Mr Brook were present. The workforce were informed that a move was virtually inevitable but that their jobs would remain open for them at Barnsley. After 2 years without a pay increase due to adverse trading conditions the staff were told that they would receive a 6.75% increase which would help with the consequent increase in travelling expenses following relocation, although it is to be observed that new staff later recruited from the Barnsley area received the same rate of pay. No further help with travel arrangements, for example, the provision of a works minibus, was offered.

Over the next few months sections of the business and its employees transferred to Barnsley. Not all staff were willing to make the move. In particular, these three appellants declined to do so. In June 1995 the employment of each appellant ended.

They presented complaints to an Industrial Tribunal on 1st September 1995 with the assistance of the Kirklees Community Law Centre. Their applications raised three claims; unfair dismissal; redundancy payments and damages for breach of contract (wrongful dismissal).

Those complaints, together with complaints by four other former colleagues, were considered by the Industrial Tribunal sitting at Leeds over three days in January and February 1996. All claims were dismissed. Written reasons for the tribunal's decision are dated 22nd February 1996.

The three appellants now appeal to this tribunal against parts of the Industrial Tribunal's decision. There is no challenge to the finding that the appellants were fairly dismissed. However, the findings as to both the claims for wrongful dismissal and entitlement to statutory redundancy payments are attacked. We shall deal with each issue in turn.

Wrongful dismissal

The tribunal found that the appellants' contracts of employment did not contain a mobility clause; that their contractual place of work was Holmfirth; that the alteration in that place of work to one 17 miles away was a fundamental breach of contract; that the repudiatory breach was accepted by these appellants and that in the circumstances there was a constructive dismissal for the purposes of Sections 55(2)(c) and 83(2)(c) of the Employment Protection (Consolidation) Act 1978.

In reaching that conclusion the tribunal directed itself in accordance with the approach of the Court of Appeal in Western Excavating (ECC) Ltd v Sharp [1978] ICR 221, which imported the contractual test for determining questions of constructive dismissal for the purposes of the employment protection legislation.

However, when the tribunal came to consider the wrongful dismissal claim it said this at paragraph 25 of the reasons:

" ... It must be observed in this case that the respondent did not terminate the contract of employment of any of these applicants by notice. It is true that it committed a fundamental breach but this put the applicants to their election either to accept the repudiation and terminate their contracts or to have the contracts in existence and sue for damages as advised. Three of the applicants [these appellants], as we have heard, accepted the repudiation by resignation but that does not mean that the respondent was thereby in breach of an obligation in the contract to give a fixed period of notice. It did not terminate those contracts. ..."

With that approach we cannot agree.

At common law, where an employer unilaterally breaches the contract it is correct to say that the employee may affirm the contract and sue for his lost wages. See Rigby v Ferodo [1988] ICR 29. Alternatively, where the breach is so fundamental as to be repudiatory the employee may accept the breach and quit the employment, as the tribunal found happened here. In these circumstances there is a dismissal by the employer at common law in just the same way as there is a dismissal for the purposes of pursuing a statutory claim for unfair dismissal and/or redundancy entitlement.

Accordingly we accept the appellants' case that in finding that there was no dismissal at common law for the purposes of a wrongful dismissal claim the Industrial Tribunal fell into error.

Having found that an error of law has been made out to this extent, what is the correct course for us to take? We shall return to that question at the conclusion of this judgment.

Redundancy entitlement

The unchallenged findings of the Industrial Tribunal are that the appellants were dismissed by reason of redundancy and that offers of suitable alternative employment at Barnsley were made by the respondents. The issue in this part of the appeal is whether the tribunal erred in concluding, in each of three men's cases, that they had unreasonably refused those offers, whereby they were disentitled to a redundancy payment by reason of Section 82(5) of the 1978 Act.

The principles to be applied in determining that question are these.

(1) The question is subjective, not objective. Was it reasonable for this individual employee to refuse the offer, not whether a reasonable employee would have accepted it. See Executors of J F Everest v Cox [1980] ICR 415.

(2) Accordingly the offer must be considered in relation to the individual employee, even where, as here, the offer is made collectively to the workforce as a whole.

(3) The burden lies on the employer to prove that the employee's refusal was unreasonable; not on the employee to show that his refusal was reasonable. Jones v Aston Cabinet [1973] ICR 292.

It is submitted on behalf of the appellants that here the Industrial Tribunal has approached the question from the wrong direction, placing the burden of proof on the wrong party. Instead of asking itself whether the employer has shown that the refusal, in each case, was unreasonable, it has asked itself whether the employee has shown that his refusal was reasonable.

This submission focuses on paragraphs 20 to 22 of the reasons, in which the Industrial Tribunal deals with the cases of Mr Howe, Mr Beever and Mr Pickles in turn.

The ground for refusal in each case was the additional travel and difficulties which that caused to the employee. In each case the tribunal concluded that it was not satisfied that the refusal was reasonable.

Having expressed its findings in that way we are driven to conclude, and the contrary is not argued by Mr Pollard on behalf of the respondents, that the tribunal has, in this respect, fallen into error by requiring the employee to establish the reasonableness of his refusal, instead of asking itself whether the employer has satisfied the tribunal that the refusal was unreasonable.

In our judgment that was a material misdirection which vitiates the finding that these appellants are not entitled to redundancy payments. In these circumstances it has been unnecessary for us to consider Mr Gatt's further and alternative submission that the Industrial Tribunal's conclusion of this aspect of the case was perverse.

Conclusion

It follows that these appeals must be allowed and the Industrial Tribunal's findings that the appellants were not wrongfully dismissed and were disentitled to a redundancy payment be set aside. That leaves unresolved the assessment of damages for wrongful dismissal and the question of whether or not the appellants and each of them have unreasonably refused the offer of alternative employment made to them.

Our powers conferred by Schedule 11, paragraph 21(1) of the 1978 Act permit us either to remit these issues to the same or a different Industrial Tribunal, or to exercise the powers of an Industrial Tribunal and resolve theses matters ourselves.

The parties have jointly urged us to take the latter course, and having considered the detailed and careful findings of fact of the Industrial Tribunal we find that we are able to deal with the matter ourselves, thereby saving further expense and delay to the parties.

The tribunal's findings as to the personal circumstances of the appellants and their reasons for objecting the moving to the Barnsley site are set out in the reasons as follows: Mr Howe (paragraphs 8 and 20); Mr Pickles (paragraphs 9 and 22) and Mr Beever (paragraphs 10 and 21). We shall not burden this judgment by repeating those findings.

For the respondents, Mr Pollard submits that in each case the appellant's refusal to accept the offer of employment at Barnsley was unreasonable. He argues that each could easily have made the journey to Barnsley; Mr Howe could have purchased the van which he now uses in his new business; the appellants could have entered into a car sharing arrangement. They received a 6.75% pay increase, although he accepts that was not specifically ear-marked for increased travel costs incurred by the Holmfirth workforce, because it was paid to new recruits from the Barnsley area.

He also points to the fact that the Company had no option but to move premises; that it could have contracted out the noisy part of its operation, leading to redundancies, and that the move has cost the Company £1 million. He submits that whereas the Company had little choice, the employees had a real choice as to whether to move with the Company or leave. These last considerations, in our judgment, are not relevant to the question which we have to answer.

Balancing the factors on both sides we have come to the conclusion in each case that the respondent has failed to satisfy us that the refusal in each case was unreasonable and accordingly we hold that each appellant is entitled to a redundancy payment.

Further, in considering whether, in the cases of Messrs Howe and Pickles, those appellants failed to mitigate their loss for the purposes of assessing damages in their wrongful dismissal claims by not accepting the offer of alternative employment at Barnsley, looking at the same factors for and against such a finding, and bearing in mind that the onus again rests on the respondent, we have concluded that no such failure is made out.

It is accepted that Mr Beever has suffered no loss as a result of his finding new employment immediately upon termination of his employment.

Having made our findings, the parties have reached agreement as to the sums due to the appellants as follows.

In relation to redundancy payments Mr Howe £1,800, Mr Beever £1,200 and Mr Pickles £5,900. On wrongful dismissal in relation to Mr Howe £2,071.26 and Mr Pickles £2,797. We order those payments to be made by the respondent to the appellants, there being no interest due to date.