United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 960_95_2806

Appeal No. EAT/960/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 28th June 1996

THE HONOURABLE MRS JUSTICE SMITH

MS S R CORBY

MR R H PHIPPS

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MS C L ALBONI          APPELLANT

IND-COOPE RETAIL LTD          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR T COTTLE

(of Counsel)

Messrs Turberville Woodbridge

Solicitors

122 High Street

Uxbridge

Middlesex

UB8 1JT

For the Respondents MR S GORTON

(of Counsel)

Messrs Weightman Rutherfords

Solicitors

Richmond House

1 Rumford Place

Liverpool

L3 9QW


 


MRS JUSTICE SMITH: This is an appeal from the decision of an Industrial Tribunal at London (North) dated 24th July 1995. The tribunal dismissed the appellant's complaints of unfair dismissal and discrimination contrary to the Sex Discrimination Act 1975. This appeal lies only in respect of the finding that the appellant was not unfairly dismissed.

It seems that the facts were not greatly in dispute. The appellant and her former partner, Alan White, worked together as manager and manageress of The One Bell public house at Watford, which was owned and operated by the respondents.

The couple had been employed by the respondents initially in 1992 as trainee and relief staff. In May 1993 they were appointed on a joint contract of employment to run The One Bell. A joint salary was fixed by the employer with liberty to the couple to decide between themselves how much each should receive, subject to each partner receiving a minimum amount. As to notice, two terms of the contract were relevant to the tribunal's consideration, as follows:

"NOTICE

As you have been employed over thirteen weeks, you will be required to give not less than eight weeks joint written notice if you decide to leave. Should the Company terminate your employment for reasons other than gross misconduct offences, you will be entitled to not less than eight weeks written notice from the Company.

It is an express term of this contract that your employment is inextricably bound to that of your partners, therefore if the employment of either of you terminates, the other person will terminate automatically."

On 5th May 1994, Mr White wrote a letter of resignation. It conveyed only his own resignation. The couple had had personal disagreements as a result of which it appeared that it was impossible for them to work together. Their personal relationship had broken down.

On 16th May 1994, Mr Cole, the respondents' retail area manager wrote to both the employees, Mr White and the appellant saying this:

"Dear Alan & Christina

I write to confirm my receipt and acceptance of your resignation dated 5th May 1994.

I will communicate with you personally to finalise your leaving date and take this opportunity to thank you for your hard work at The One Bell.

Yours sincerely

Alan Cole

RETAIL AREA MANAGER"

It was common ground that the date of departure was to be 6th July 1994.

On 24th May 1994, the appellant met Mr Cole, and asked if she could remain as the sole manager at The One Bell. He told her that if she were to apply for the position, her application would be considered. Indeed, the tribunal found that he encouraged her to apply. The vacancy created by the departure of the appellant and her partner had been advertised on the Company network. We have seen the advertisement, as did the Industrial Tribunal, although they have not referred specifically to it in their decision. That advertisement does not specify any requirement that the position at The One Bell need necessarily be filled by a couple. Mr Cole told the appellant that she must submit a business plan by 6th June 1994 (the closing date for applications) in support of her application.

The Industrial Tribunal found that the appellant prepared a business plan with the assistance of a friend named Mr Dooley. Mr Dooley posted the plan to the respondent. However, the Industrial Tribunal also accepted Mr Cole's evidence that he did not receive it. Accordingly, he did nothing further about the appellant's intimated application for the post. The tribunal found that the appellant had not checked that the document had arrived. They concluded that it had probably been lost in the post. In any event, the appellant was not offered the post at The One Bell.

By her application dated 4th October 1994, the appellant complained that she had been unfairly dismissed. She also complained that in failing to offer her the post at The One Bell, she had been discriminated against on the ground of her sex. That allegation seems to have been based upon her belief that Mr Cole had offered Mr White employment at two different public houses very shortly after his resignation, which Mr White had rejected. Later it appears that Mr White had been offered and accepted a post at a public house called `Harry's' in Hemel Hempstead. As we have indicated no appeal is brought against the Industrial Tribunal's rejection of that complaint.

Turning then to the complaint of unfair dismissal. The appellant in her application said that she had been dismissed and that the respondents had a duty to provide her with alternative employment following the resignation of her partner.

The Notice of Appearance asserted that the applicant had not been dismissed. The employment had terminated automatically on receipt of the resignation of her partner. The Notice of Appearance recited the clause from the contract which provided for automatic termination and asserted that the appellant had resigned. The respondent also denied at that stage that there was any duty to offer alternative employment. Mr Gorton today has accepted that although there was no specific duty to offer alternative employment, he would not suggest that the respondents were entitled simply to do nothing other than rely upon the clause in the contract. He accepted that they would have a duty to act fairly.

The Industrial Tribunal first considered whether there had been a dismissal. If there was not, no claim would have been possible. In the event, although the respondents' notice claimed that there had not been a dismissal, their Counsel very sensibly invited the Industrial Tribunal to conclude that there had been a dismissal, notified by the letter of 16th May 1994 and that the employment had come to an end on 6th July 1994. That was clearly right, and the Industrial Tribunal accepted that the 16th May 1994 letter amounted in effect to a dismissal of the appellant by the respondents. It is plain on consideration of the facts as we have recited them, that the appellant herself had not resigned; she had done nothing. The letter which purported to accept a joint resignation had had the effect of dismissing her.

At paragraph 7 of the decision, the tribunal said:

"7 Accordingly we find 16 May 1994 to be the effective date of termination of the Applicant's employment contract by the Respondent."

That, as Counsel for the respondents has pointed out, was clearly an error, but it was of no real consequence. It is plainly an error because the effective date of termination of the contract, as both parties now agree, was 6th July 1994 and not 16th May 1994. It does appear that the tribunal were at that moment confusing the date of notification of the dismissal with the effective date of termination.

They then considered whether the reason for the dismissal fell within Section 57(1) of the Employment Protection (Consolidation) Act 1978. Section 57(1) provides:

"(1) In determining for the purposes of this Part whether the dismissal of an employee was fair or unfair, it shall be for the employer to show-

(a) what was the reason (or, if there was more than one, the principal reason) for the dismissal, and

(b) that it was 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."

It was common ground that this dismissal could not have been for any reason falling within Section 57(2). The respondents' contention, accepted by the tribunal, was that this dismissal was for some other substantial reason of a kind such to justify the dismissal of an employee holding the position which this employee held.

One of the difficulties which we have had in this appeal, has been to determine exactly what the reason was, which amounted, in the view of the tribunal, to some other substantial reason which was potentially fair. At paragraph 8 the tribunal say:

"8 Also we find that the potentially fair reason for the Applicants dismissal by the Respondent is some other substantial reason and which is a reason as prescribed by Section 57(1) of the 1978 Act."

We are not sure what is meant by that. However, at paragraph 9 they go on:

"9 Mr Gorton has referred us to Kelman -v- Oram [1983] IRLR 433 which is a case very similar to that before us. Using the guidance of the Employment Appeal Tribunal in that case we are entirely satisfied that consequent upon the resignation from his employment of the Applicants partner Alan White, the Respondent was entitled to dismiss the Applicant which was the effect of its letter of 16th May 1994. It is quite clear that it was entirely impracticable for the Applicants employment to be continued in the light of the resignation of Alan White, and that is why we are satisfied that the Respondent can rely on Section 57(1)(a) and some other substantial reason as potentially fair."

After discussion between the Appeal Tribunal and Counsel today, it seems to be agreed that the respondents must, at the time of taking their decision, have relied upon the express term of the contract, which they thought provided for automatic termination of the appellant's contract following upon the resignation of her partner. Properly construed, Counsel now accepts, that clause purports to entitle the respondents to dismiss the appellant upon the resignation of Mr White. It seems obvious to us, that the employers intended to rely upon their contract. It may well be that the respondents took a general view that where they employed a couple it would impracticable for them to employ a single person following upon the resignation of one of the couple. But for our part we cannot see where lie the findings of fact which would support the tribunal's conclusion that it was, in this particular case, impracticable for the employer to continue to employ the appellant following the resignation of Mr White. We think, and Counsel now agree, that the employers were plainly relying upon the express terms of their contract. It is not disputed that to dismiss in reliance upon such an express term is a potentially fair reason which would fall within Section 57(1) of the Act.

The tribunal's finding that it was impracticable for the employer to continue to employ the appellant does not appear to us to be supported by any finding of fact. We have not seen the Chairman's notes of evidence. However such findings as were made and the evidence of which we are aware point to the contrary conclusion. We have in mind the terms of the advertisement for the vacancy at The One Bell and Mr Coles' encouragement to the appellant to apply for that post as a sole manager. In the absence of the Chairman's notes, we would hesitate to set aside the decision as perverse. However there is further matter which caused us concern.

The ground of appeal principally relied on by the appellant was that in considering Section 57(3) of the 1978 Act, the tribunal had misdirected itself by considering irrelevant and impermissible matters relating to events which had post-dated the dismissal. Section 57(3) provides:

" (3) 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.]"

We return to read the remainder of paragraph 9 in which the tribunal makes its findings in respect of Section 57(3). They said this: "As the Employment Appeal Tribunal in Kelman -v- Oram also observed, once it is accepted this is a substantial reason then it is extremely difficult to conclude that it was unreasonable in terms of Section 57(3) of the 1978 Act for an employer to dismiss on that account and in that way. We are mindful of the pressure upon the Respondent as to time, following the resignation by Mr White and in our consideration of the fairness of that dismissal, pursuant to the requirement upon us, prescribed by Section 57(3) we are entirely satisfied the Respondent did all it could in limited circumstances, and there had been considerable discussion between the Applicant and Mr Cole on behalf of the Respondent by which Mr Cole had been apprised fully of the Applicants difficulties and that at that time she too had expressed a readiness to vacate and indeed a willingness to do so in the light of the treatment she was receiving from Mr White. Accordingly, we are entirely satisfied that the dismissal was fair within the meaning prescribed by Section 57(3) and that the Applicants dismissal fell within what amounted to the only available response to it at that time."

The case of Kelman v Oram to which the tribunal referred, was a case in which a husband and wife had worked together in the management of a public house. They were not, so far as it appears from the report, on a joint contract with any express terms such as are found in this case. The husband was dismissed for alleged misconduct. The wife was dismissed because the husband was dismissed. The Industrial Tribunal had held, on the facts before them, that it was impracticable for the employer to continue to employ the wife. The dismissal was for `some other substantial reason', and was fair. The Employment Appeal Tribunal in Scotland upheld the decision. We do not consider that this authority is anything more than a decision upon its own facts. We are somewhat concerned that this tribunal may have overstated the similarities between this case and that. In particular, we are concerned by the adoption of the dictum from Kelman v Oram, that once it is accepted that impracticability is a substantial reason, then it is extremely difficult to conclude that it was unreasonable in terms of Section 57(3) for an employer to dismiss on that account and in that way. It is, in any event, whatever the Employment Appeal Tribunal has said in that particular case, incumbent upon the tribunal in any case before it to conduct its own exercise under Section 57(3) with an open mind.

Reverting now to the main ground of appeal, Mr Cottle submitted that it is plain from the passage in paragraph 9 to which we have already referred, that the tribunal took into account the events of 24th May 1994, the meeting between the appellant and Mr Cole, in reaching their conclusion under Section 57(3). In so doing, they contravened the well established rule that the reasonableness of the decision must be considered as at the time the decision was taken.

Mr Gorton at first sought to submit that the tribunal was entitled to do so because the dismissal did not take place until 6th July 1994 and therefore the meeting of 24th May 1994 preceded the dismissal. We regard that submission as quite unsustainable as a matter of common sense, and indeed also on the basis of Mr Gorton's own skeleton argument where he said, in respect of the mistake which had been made at paragraph 7 of the decision:

4 "It is plain from the decision that the effective date of termination of the Appellant's employment was later than 16th May 1994. This [i.e. 16th May] is only the date of notification of termination. The unchallenged date of termination was 7th July 1994.

"5. The tribunal have confused the date of notification of dismissal with the effective date of termination within the meaning of s.55. It is submitted this error is not material to the determination of the appeal."

That, if we may say so, is plainly right. When he refers to the date of notification of dismissal that must be the same date as the dismissal. At any rate the date of notification must be later than or contemporaneous with the dismissal; certainly it cannot be earlier than the dismissal.

Mr Gorton's second submission was that, when considering Section 57(3), the Industrial Tribunal were right to take into account events which had occurred after the dismissal, because to refuse to do so would be to draw an artificial distinction. At his invitation the Appeal Tribunal looked at the case of West Midlands Co-operative Society Ltd v Tipton [1986] ICR 192, where the court considered whether it was permissible and proper for the tribunal to consider material which came to light in the course of an internal appeal following the decision to dismiss. The House of Lords held that there was an exception in the case of an internal appeal to the general rule that the reasonableness of the decision to dismiss must be viewed, for the purposes of Section 57(3), as at the time of that decision. If there is an internal appeal, the material which comes to light in the course of that internal appeal is to be considered, but that is an exception to the general rule. We have read the speech of Lord Bridge, in particular from page 201C-204F. We do not wish to burden this judgment with citation of so long a passage. We mention only the Lord Bridge's citation from Sillifant v Powell Duffryn Timber Ltd [1983] IRLR 91 where Browne-Wilkinson J (as he then was) said this, at page 95:

"The commonsense of industrial relations demands that in considering the reasonableness of the employer's conduct account must be taken of information coming to his knowledge on the hearing of the appeal: the appeal is part of the procedural structure established by the employer to ensure fair treatment: see National Heart and Chest Hospitals Board of Governors v. Nambiar ... In our judgment this apparent exception to the rule that one can look only at facts known at the date of dismissal does not run contrary to the underlying principle of Devis v. Atkins. Although technically if the internal appeal is dismissed the original dismissal stands (and therefore information emerging on the appeal was not known to the employers at the date of dismissal), the underlying principle of Devis v. Atkins is not offended. The relevant point in time at which to assess the reasonableness of the employer is the time when he takes the final decision to dismiss."

It is clear that this Industrial Tribunal has taken into account the meeting of 24th May 1994. It appears to us that it has done so without asking itself whether that meeting should be considered as constituting an exception to the general rule, for example on the basis that it amounted to some form of informal appeal at which the decision to dismiss was under review. If that had been the case, it might have been relevant. We have asked ourselves whether it is arguable that that meeting could be viewed as a form of appeal at which the original decision was under review. We do not think that it is.

We reject Mr Gorton's submission that all matters prior to the termination of the employment are relevant to the question under consideration for Section 57(3) as contrary to the well-established authorities of Devis v Atkins and Tipton. We do of course acknowledge that evidence relating to post-dismissal matters might be evidentially relevant if they threw light upon the truth or bona fides of the employer's given reasons for the dismissal.

Turning again to the considerations brought into account by the Industrial Tribunal here, it is clear that the events of 24th May 1994 loomed large in their thinking. We are satisfied that they did take into account matters which were not properly to be considered as they post-dated the decision to terminate the employment. We add that we are concerned that this tribunal may have been unduly influenced by the Kelman case, to which we have already referred.

For this reason we conclude that this appeal must be allowed. We do not consider that we are in a position to make the necessary findings ourselves, and we are of the view that this case must be remitted to an Industrial Tribunal. We now propose to hear submissions as to whether that should be to the same tribunal or to a freshly constituted tribunal.

MRS JUSTICE SMITH: We have come to the conclusion that this case should be remitted to a freshly constituted tribunal. Quite apart from the difficulties of re-assembling the same tribunal, we think that in the interests of justice, there should be a complete rehearing.