United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR L GUYER (Solicitor) Messrs Warner Goodman & Streat Solicitors Commercial Chambers 1 Portland Street Fareham Hampshire PO16 0JU
For the Respondents	MR M F BARRATT (Solicitor) Instructed by: Ms J Eaglen Legal Department Friends Provident Life Office Pixham End Dorking Surrey RH4 1QA


 


JUDGE COLIN SMITH QC: This is an appeal by Ms Brenda Connolly against a decision of an Industrial Tribunal held at Southampton after a hearing over three days in April and May 1996, when the Industrial Tribunal held that the appellant had not been dismissed by the respondents, Friends Provident Life Office, from her employment as an insurance consultant in October 1995. By a majority the Industrial Tribunal held that the appellant had not been constructively dismissed. The decision of the minority was that the appellant had been constructively dismissed. Extended reasons for the majority decision were sent to the parties on 3rd July 1996, and reasons for the minority decision were sent to the parties on 24th September 1996.

Put in summary form, the appellant's case before the Employment Appeal Tribunal is that on the facts found by the Industrial Tribunal they were bound by as a matter of law on application of the correct legal principles to have concluded that the appellant had been constructively dismissed, so that the majority erred in law in not so finding. Further, it is submitted that on the facts found by the Industrial Tribunal, they were bound to conclude that the appellant had been constructively dismissed by reason of redundancy. Finally, so it is submitted, they were bound to have concluded that the dismissal was unfair by reference to section 57(3) (now section 98(4)). Thus it was submitted to us by the solicitor for the appellant that we should substitute such findings.

By way of response, the solicitor acting for the respondents submitted that on the facts found by them, the Industrial Tribunal could reasonably conclude that the appellant had not been constructively dismissed, and further, could reasonably conclude that the appellant had not been made redundant. The solicitor for the respondents submitted that since there was no constructive dismissal on the findings of the Industrial Tribunal, there was no requirement for the Industrial Tribunal to consider the fairness or otherwise of a dismissal under section 57(3) of the 1978 Act. It is further submitted that should the question of fairness of the dismissal arise, it should be remitted to the Industrial Tribunal.

Before considering those submissions, it is necessary for us to set out the Industrial Tribunal's findings sufficiently for an understanding of the submissions made and for the reasons for our judgment in relation thereto to be understood clearly. For the full details of the Industrial Tribunal's findings of fact, reference is of course made to the extended reasons themselves.

Put shortly, it appears from the Industrial Tribunal's findings that the appellant had been employed as an insurance inspector since 28th March 1988, initially at the respondents' Southampton branch, but latterly at their sub-office at Poole, Dorset. She dealt as an inspector with IFAs (Independent Financial Advisers) and covered a substantial geographical area. No doubt, we presume, she was primarily acting as a sales person selling or explaining the respondents' financial products. She had the use of a company car, and the Industrial Tribunal found that she would usually travel from her home in Bournemouth to the office, collect papers and make telephone calls from there, and then make visits to the IFAs during the day; returning in the evening to deal with any paperwork. Some days she spent all day in the office, on others perhaps half a day. On average she made four visits a day to her IFAs.

As appears from paragraphs 3 to 7 of the decision, between February and September 1995, the Industrial Tribunal found that the respondents were forced by commercial pressures and due to the development of new technology, to produce and implement a comprehensive restructuring plan. The effect of it is set out in paragraph 6 of the decision. It appears from those findings that the respondents' 27 branches were to be reduced to 10 area offices; and sales and sales administration personnel were to be reduced from 592 to 320. Clearly there was to be a large scale redundancy. Those who were to remain, who included the appellant, were to be renamed consultants, but their basic job function, i.e. personal contact with their IFAs was to remain unchanged. Importantly for the purposes of this appeal, those consultants who lived more than 30 miles away from the new area offices were, as a result of the restructure, to become 'Resident Consultants' and to be required to work from their private homes. The appellant fell into that category.

It is apparent from the findings of the Industrial Tribunal that the respondents' management took a decision that total secrecy would be maintained about these restructuring proposals until very shortly indeed before they were put into effect. Thus the Industrial Tribunal found that the recognised trade union, MSF, was not informed of the proposed redundancies until 7th September 1995, and even at that stage, nothing was said about the position of individuals. Line managers were briefed between 8th and 10th September 1995, and on 13th September the appellant's line manager, Mr Coffield, informed the appellant for the first time of the new proposals as far as they affected her, and although nothing specific was said, the shared assumption was that the appellant would be required to work from her home with immediate effect instead of working from the office at Poole, which was to be closed. Altogether the new scheme involved 60 sales personnel working from home. The Industrial Tribunal recorded in paragraph 9 that Mr Bebo, the respondents' assistant general manager who had been a member of the steering group responsible for the restructuring, fully accepted that management had failed to anticipate the considerable difficulties which the introduction of home working would cause to their staff.

By paragraphs 10 to 15 of the decision, the Industrial Tribunal made very detailed findings as to the course events then took over the ensuing weeks as far as relations were concerned between the appellant, the MSF representative, Mr Abbott, on the one hand; and Miss Sarah Blake, a personnel officer of the respondents, and Mr Stuart Patterson, the personnel manager, on the other; and also between the appellant and Mr Coffield, her line manager. Those findings can be summarised as follows. From the first the appellant was extremely concerned about the difficulties of working from home and took up her concerns straight away with Miss Blake, with whom she sought to explore the possibility of redundancy. At the same time, and against the advice of Miss Blake and indeed Mr Abbott, the appellant did not take up her concerns directly with Mr Coffield, and requested that personnel did not do so either, since she did not want to "rock the boat", as the Industrial Tribunal put it. Meanwhile, for a period of just over a month the appellant attempted, unsuccessfully, to come to terms, on a trial basis only, with working from home. At the same time by 19th September 1995, Mr Abbott had sent a memo to Miss Blake indicating the appellant's rejection of the alternative working arrangements, which it appears, did not reach Mr Coffield. By 13th October 1995, Mr Patterson had notified the appellant that the steering committee had refused to treat her as redundant. According to the findings of Industrial Tribunal, on 18th October 1995, the appellant orally informed Mr Coffield, on the telephone, that she was very unhappy with working from home, and that unless he came up with a solution by the next day she would resign. Mr Coffield gave evidence that the appellant did not indicate to him what she required, and explained to him that she had not brought the matter up before because she felt he had enough on his plate.

The Industrial Tribunal went on to find that on 19th October 1995 the appellant sent a letter of resignation to Mr Coffield, which he received in the late afternoon of that day. That letter, which is not referred to any detail in the Industrial Tribunal decision, is in our judgment, an important document and is in the Employment Appeal Tribunal bundle at pages 20 to 21. It is clear that the appellant was treating herself as dismissed due to the requirement that she be required to work from home.

The Industrial Tribunal refer to the fact that Mr Coffield had set up a meeting on 20th October 1995, and this meeting seems to have taken place. The Industrial Tribunal described the sequence of events thereafter as follows:

"14. ... Simultaneously, Mr Coffield sought to set up a meeting which he succeeded in doing for Friday 20 October at which he, the Applicant and Sarah Blake attended. Meanwhile, Mr Coffield discussed the matter with Mr Proctor who proposed that the applicant should work out of the Salisbury office.

15. On 19 October, Mrs Connolly wrote to Mr Coffield (R58), at letter which can only be construed as one of resignation. This letter was received in the late afternoon of 19 October. Mr Coffield, however, successfully persisted in his attempt to arrange the meeting. Clearly the resignation had not been accepted at the time of the meeting and the Respondents were still endeavouring to reach a satisfactory solution; Mr Coffield actually asked the applicant if she was withdrawing the letter of resignation. The letter of 20 October (R60) was then sent to the Applicant confirming the proposals put to her and she responded on 23 October (R63) in terms which seek to establish constructive dismissal. Again simultaneously with these events, the Respondent received a letter dated 20 October from a firm of insurance brokers regarding a reference for the applicant (R62)."

Having set out the submissions made to them by the legal representatives of the parties in paragraphs 16 and 17, the Industrial Tribunal made its findings in paragraphs 18 to 22 of the decision. In paragraph 18 the Industrial Tribunal found that the requirement that the appellant should work at her home was a material change in the appellant's terms of employment. It appears to be clear from this paragraph and from paragraph 21 of the decision, that the Industrial Tribunal found that such a requirement was a breach of contract which had occurred on or immediately after 12th September 1995.

By paragraph 19 the Industrial Tribunal found that it was as a consequence of the imposition of home working that the appellant was caused to resign, and by paragraph 20, the Industrial Tribunal found that there was no unreasonable delay on the part of the appellant in rejecting the new terms.

For the remainder of the reasoning of the Industrial Tribunal relating to constructive dismissal, it is necessary to set out their reasons in full.

"21. There remains the question as to whether the change in working arrangements amounted to a breach of contract. It has already been indicated at para. 17 that there had been a breach which occurred on, or immediately after the meeting on 12 September. The issue posed to the Tribunal is whether that breach was capable of remedy. The majority of the Tribunal find that there was an adequate arrangement in place for negotiation and consultation. The misfortune is that the people who could probably have offered a reasonable solution at an earlier stage (the line managers) were deliberately kept out of the picture by the Applicant. Ms Blake of Personnel, kept the Applicant's confidence, although she advised Mrs Connolly of the importance and the need to contact the Line Manager. It is also apparent that Mrs Connolly set her sights on redundancy as a solution to the apparent exclusion of all others, thereby forcing the continued inactivity of Mr Coffield and Mr Proctor until after the decision on 13 October refusing Mrs Connolly's redundancy. On that day Mr Patterson, the Personnel Manager, in informing her of the decision advised her again to contract her Line Manager. It is not until 18 October when she telephone Mr Coffield with an ultimatum that he was appraised of the situation. The majority of the Tribunal find that the Applicant did not make use of the consultation procedure provided in a constructive manner and indeed rendered it impotent by her insistence on confidentiality. The ultimatum given on 18 October was in these circumstances unreasonable. What happened thereafter was a genuine attempt to resolve the problem and the majority find that the proposals put on 20 October were reasonable working arrangements and would have remedied the breach. Were they too late in coming? The answer in the circumstances of this case must be "no". The Applicant has therefore failed to establish that this is a case of constructive dismissal."

By paragraph 22, although the Industrial Tribunal had already held by a majority that there had been no dismissal, the Industrial Tribunal nevertheless went on to hold, presumably in the alternative, that the appellant had not been made redundant. They put the matter this way:

"22. There remains the claim that the Applicant was made redundant. The Tribunal have looked carefully at the changes in the Applicant's terms of employment and find that the job she did before was effectively the same as the job she did after 12 September. The only change of substance was the proposal that she should work from home, which arrangement would have been altered had the Applicant accepted the proposals of 20 October. In these circumstances her job continued very much as before and for those essential changes made she was to receive additional payment. The Tribunal therefore finds that the Applicant was not made redundant."

It is against those findings and those conclusions by the Industrial Tribunal that we have considered the submissions made to us on both sides today, which have been made helpfully and briefly, and we can now express our unanimous conclusions in relation to those submissions under various headings.

Was there a repudiatory breach?

We have no doubt at all that on the findings of the Industrial Tribunal there clearly was a repudiatory breach of contract by the respondents' requiring the appellant to work from home with effect from 12th September 1995. In our judgment, to require the appellant to work from her own private home instead of in the office premises provided by the respondents, was plainly a fundamental breach of the appellant's contract which defined her place of work as the Southampton branch as later modified to include the Poole sub-office. It seems to us to be clear that the Industrial Tribunal were finding that there was indeed such a breach.

Was the appellant constructively dismissed?

In our judgment the Industrial Tribunal in paragraph 21 of the majority decision have, with respect to them, failed correctly to analyse the issues with regard to constructive dismissal, and have made findings on that issue based on some generalised concept of reasonableness, with the result that such conclusions, once the correct contractual test is applied, are, with respect, clearly erroneous. We accept Counsel for the respondents' arguments that all questions of fact are for the Industrial Tribunal, and that the sole question for this appeal tribunal is to look to see whether the Industrial Tribunal have analysed the issues correctly, looking at their decision not in an over-technical or formalistic way. However, in our judgment, the Industrial Tribunal here have not correctly analysed the essentially contractual issues relating to constructive dismissal. Thus in posing to themselves the issue as to whether the breach was capable of remedy, the Industrial Tribunal have asked themselves what is, with respect, an irrelevant question with regard to constructive dismissal. From the contractual standpoint, once there is a serious enough breach of contract as there plainly was here in the appellant being required to work from home, there is no requirement whatsoever on the innocent party to bring this to the attention of the party in breach, so as to give the defaulting party an opportunity to put things right or to remedy the breach. The innocent party has an unqualified right, from the contractual standpoint, to accept the repudiatory breach and bring the contract of employment to an end by way of constructive dismissal. This is the effect of the clear adoption in the cases, of which of course Western Sharp (ECC) Ltd v Sharp [1978] ICR 221 is the leading authority, of the "contract test" with regard to constructive dismissal, as opposed to the "reasonableness test". Thus on the findings of fact of the Industrial Tribunal, the appellant was, in our judgment, entitled to accept the respondents' breach of contract, as she plainly did by her letter of 19th October 1995. As a matter of contract, the respondents could not decide whether or not they would accept that letter. The legal effect of that letter was to bring about the constructive dismissal of the appellant on 19th October 1995, once it had been received by Mr Coffield. It amounted to notice to the respondents of an acceptance by the appellant of the respondents' continuing breach of contract. To describe it as an ultimatum, to find that it was unreasonable to send such a letter at the time that it was sent, and to find that the proposals were put forward after receipt of the letter which would or might have remedied the breach, were findings which were, with respect, not relevant to the contractual issues relative to the issue of constructive dismissal which the Industrial Tribunal had to decide. In our judgment, we should exercise our statutory power to substitute a finding that the appellant was constructively dismissed.

What was the reason for the dismissal?

Strictly speaking, since the majority of the Industrial Tribunal had decided that the appellant was not constructively dismissed, they need not have gone on to consider whether the reason for dismissal was redundancy. On their findings such an issue did not arise. However, since we have decided that the appellant was, on the findings of fact of the Industrial Tribunal constructively dismissed, it is clear from the decision of the Court of Appeal in Berriman v Delabole [1985] ICR 546 at page 550 G-H, that even in a case of constructive dismissal section 98(1) of the 1996 Act imposes on the employers the burden of showing the reason for the dismissal, notwithstanding that it was the employee, not the employers, who actually decided to terminate the contract of employment, as Browne-Wilkinson LJ put it at 550G:

"First, in our judgment, even in a case of constructive dismissal, section 57(1) of the Act of 1978 imposes on the employers the burden of showing the reason for dismissal, notwithstanding that it was the employee, not the employers, who actually decided to terminate the contract of employment. In our judgment, the only way in which the statutory requirements of the Act of 1978 can be made to fit a case of constructive dismissal is to read section 57(1) as requiring the employers to show the reasons for their conduct which entitled the employee to terminate the contract thereby giving rise to a deemed dismissal by the employers. We can see nothing in the decision in Savoia v. Chiltern Herb Farms Ltd. [1982] I.R.L.R. 166 which conflicts with this view."

We consider that there are sufficient findings of primary fact made by the Industrial Tribunal to enable us properly to decide in this case what the reason for the deemed dismissal was. In our judgment, on the proper interpretation and application of section 139(1)(a)(ii) of the 1996 Act to the circumstances obtaining at the time of the deemed dismissal, i.e., on 19th October 1995, it follows that applying the findings of fact of the Industrial Tribunal as set out in paragraph 2 of the decision, and the fact that the Poole office was closed by the respondents as a result of the reorganisation, that the appellant's dismissal was wholly or mainly attributable to the fact that the respondents had ceased to carry on business in the place where the appellant was employed by the respondents. We consider that it is plain that, before she was required to work from home, the place where the appellant worked for the respondents was the Poole office. That was on the findings of the Industrial Tribunal her base with the respondents, and the place where she worked when she was not out on visits. In consequence of the restructuring, that place of work disappeared, and the respondents no longer carried on its business from the place where the appellant was required to work. In our judgment, once the statutory definition is applied to the facts, the conclusion must be that the appellant's deemed dismissal was by reason of redundancy. In our judgment, in paragraph 22 the Industrial Tribunal, with respect, did not ask themselves the relevant questions with regard to this issue; neither the fact that the job function remained in essence the same, nor the fact that proposals were made to the appellant after the deemed dismissal that she should work out of the Salisbury office were relevant to question as to whether her deemed dismissal on 19th October 1995 was due to redundancy. It was the closure of the Poole office, which on the findings of the Industrial Tribunal, was the place where the appellant worked which brought about her dismissal for redundancy within the meaning of section 139 of the 1996 Act once she had been constructively dismissed. Accordingly, we unanimously agree that we should substitute a finding that the reason for the appellant's deemed dismissal was on the grounds of redundancy as defined by section 139 of the 1996 Act.

Was the deemed dismissal a fair dismissal?

There remains of course the issue of reasonableness under section 98(4). Although the Industrial Tribunal did, as we have noted, give consideration to the question of redundancy, despite the fact that they had held there was not dismissal, they did not of course consider whether the dismissal was fair under section 57(3) (now 98(4)). Here again, we have had to consider very carefully indeed whether this is a case where there are sufficiently clear findings of fact made by the Industrial Tribunal to enable us to take the step of making a finding ourselves as to whether the dismissal was fair or unfair in the exercise of our statutory powers under section 35 of the Industrial Tribunals Act 1996. We have reminded ourselves of course that it does not follow at all that because there is a finding of constructive dismissal, that such a dismissal is automatically unfair. See in particular, Savoia v Chiltern Herb Farms Ltd [1982] IRLR 166 and Crawford v Swinton Insurance Brokers Ltd [1990] ICR 85. In our judgment, however, on the findings of fact of the Industrial Tribunal, it is beyond argument in our unanimous view that this was an unfair dismissal. No doubt for very good and sensible commercial reasons, the respondents adopted a policy of absolute secrecy with regard to the very substantial restructuring involving large scale redundancies which they were planning between February and September 1995. However, in our judgment, it is clear, on the Industrial Tribunal's findings that the result of that decision was that there was no effective consultation with the staff concerned. The fact of the reorganisation or restructuring was simply presented to the staff, including the appellant, with immediate effect on 12th September 1995 as a "fait accompli". It is of course trite law that one of the most, if not the most, important requirement of good industrial relations practice in a situation of this kind, is that there should be proper consultation with the staff affected in good time before the reorganisation involving redundancy is put into effect. In our judgment, it is self-evident from the findings of the Industrial Tribunal, and indeed the evidence of Mr Bebo, that no such consultation took place before implementation of the restructuring. Mr Barrett, for the respondents, has submitted that in the weeks immediately before the deemed dismissal a measure of fault lay at the appellant's door by reason of the fact that, as the Industrial Tribunal found, because of representations she made to them, the respondents personnel department did not communicate her concerns to her line manager, Mr Coffield. It is submitted that it was this omission on the part of the appellant to ventilate her concerns that deprived the respondents of the chance of consulting with her and putting forward the Salisbury proposal. In our judgment, however, it cannot be said that the appellant acted unreasonably in taking the course she did in the circumstances in which she found herself due to the antecedent failure of the respondents properly to consult her. She properly took up the possibility of redundancy with the personnel department of the respondents, and was eventually informed that the respondents were refusing to deal with her on that basis. In our judgment the onus was plainly on the respondents' management, who had failed to consult at all at the proper time, to inform one another as to the problem which had arisen and to set in motion effective consultation with the appellant, if that is what they intended to achieve. They were in no way bound to respect the appellant's wish for confidentiality, and they cannot, in our judgment, put any blame on her shoulders. In those circumstances, in our unanimous judgment, the respondents have only themselves to blame for the fact that they could not put forward the Salisbury offer until their letter of 20th October 1995, by which time it was too late, since the dismissal had occurred on 19th October 1995. Additionally, assuming that the terms of the Salisbury offer are taken into account on the issue of reasonableness, which in our judgment they should not be because they post-date the dismissal, we are of opinion that the respondents were still not acting reasonably in putting forward an offer which required the appellant to travel from Bournemouth to Salisbury, and yet required her to service the same number of visits to IFAs despite the far greater distances involved. In our judgment, on the primary findings of fact of the Industrial Tribunal, it is overwhelmingly clear, in this particular case, applying the wording of section 98(4), that the respondents here acted unreasonably and outwith the range of responses of a reasonable employer in bringing about the deemed dismissal of the appellant for the reason of redundancy by reason of their failure properly to consult with the appellant, and their failure to ensure that efforts were made to meet her reasonable requirements which regard to her place of work. Accordingly, we substitute a finding of constructive dismissal for the reason of redundancy and a finding of unfair dismissal, and we remit the case to the same Industrial Tribunal for them to consider the question of remedy.

Application for costs by the appellant refused.

Application for leave to appeal by the respondents refused.