United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR C BAYLISS (Representative)


 


MR JUSTICE MORISON (PRESIDENT): The purpose of this hearing is to determine whether there is an arguable point of law in an appeal which the employers wish to make against the unanimous decision of an Industrial Tribunal held at London (North). By their decision the Industrial Tribunal, after a two day hearing, concluded that the applicant, Mr Dix who is the respondent to this appeal, was unfairly dismissed. The decision is contained in extended reason form sent to the parties on 15th July 1997.

Because this case potentially raised a question as to wrongful dismissal in addition, the matter was held in abeyance until after our jurisdiction had been restored to us to hear appeals in relation to such matters.

The background facts can be shortly stated. The applicant had been employed by the Normand Motor Group and its predecessors in title, for a number of years. The Company was acquired as from 1st August 1994 by European Motor Holdings, and after that date the applicant continued as an operations director responsible for the two Mercedes-Benz dealerships at Mayfair and in the City, and the commercial dealership in relation to commercial vehicles at Heathrow.

The Company thereafter recruited an individual who was to be in charge of the Mayfair operation. He obviously turned out to be a success in his job, and it would seem from reading the Industrial Tribunal's decision, that the applicant felt concerned as to his own position, having regard to the success of the recently recruited individual.

There were a number of matters debated in the Industrial Tribunal decision which are not directly pertinent to this appeal, but it is to be noted that the Industrial Tribunal found as a fact that the managing director, Mr Palmer, deliberately decided that the applicant should not go on a management conference which had been scheduled to take place in Phoenix, Arizona. They concluded that was a deliberate act on Mr Palmer's part, and a further attempt to reduce the applicant's status. The relevance of that was by way of background to the next event which is directly in issue. That is that on 30th October, Mr Palmer told the applicant that he had decided that from the end of the following week the newly recruited individual would run the Mercedes-Benz operation, but that he had available for the applicant a position in the North West which would result in no change to his salary or status, but which would involve relocation. The job title was "Divisional Director for the Wirral" to take over three dealerships in that area.

The applicant was unhappy about this move and there was an exchange of correspondence between himself and Mr Palmer about it. The applicant also took legal advice.

During the course of that process, on 8th November Mr Palmer announced that with immediate effect the recently recruited individual would take sole responsibility for all their Mercedes-Benz operations, thus, effectively, making it impossible for the applicant to continue his employment in the London area.

On 13th November, the applicant said that there was, in his view:

"... no reason whatsoever to remove me from the London Mercedes-Benz dealerships. Your proposal to transfer those very successful businesses to an employee who has been with the Company a mere 8 months has no sound basis other than what appears to be the Company's desire to terminate my employment."

On that same day the applicant was asked to attend a disciplinary hearing on Tuesday, 14th November.

It took place as arranged. During the course of that hearing Mr Palmer, who presided over it, emphasised that he wanted the applicant to take up the position in the Wirral, and the matter was left in abeyance for a few days.

On 20th November, which was the deadline, not having heard further from the applicant, Mr Palmer wrote saying that the new job did have a equivalent status, that they attached no credibility to his argument about the atmosphere of distrust and the letter concluded that the applicant was summarily dismissed for failure to follow a reasonable order. He was told that he had a right of appeal to Mr Roger Smith, the Chairman.

The applicant exercised his right of appeal. The procedure which Mr Smith adopted was that he first of all interviewed the applicant. Then having heard what he had to say, privately he went and consulted with Mr Palmer and another individual, to find out their version of events. It follows therefore, that the employee did not have the opportunity to answer any of the points which those two individuals may have made to the Chairman privately. He was dismissed.

It is the Company's position that they were entitled to give him the management order that he should go to the Wirral, and that his failure to agree to go constituted a repudiatory breach of the contract of employment which entitled them to bring it to an end without notice. Hence, he was summarily dismissed.

The relevant terms of the contract are set out at paragraph 4 of the Industrial Tribunal's decision:

"2.1During the continuance of the Executive Director's employment hereunder the Executive Director shall perform such executive duties and exercise such powers as shall from time to time reasonably be required of or be vested in him by the Board of Directors of the Company ... at such place or places as the Company shall reasonably specify.

2.2 If the Company requires the Executive Director to work permanently at a place which necessitates a move from his present address the Company will pay the Executive Director relocation expenses in accordance with the written policy on relocation dated July 1989 annexed hereto as the same may be amended from time to time.

12.1The Company shall have the power forthwith to determine the employment of the Executive Director in any of the following events:-

(a) if the Executive Director shall be guilty of any material dishonesty misconduct or wilful neglect of duty or shall commit any breach of this Agreement other than a breach which (being capable of being remedied) shall be remedied forthwith by the Executive Director upon his being called upon to do so by the Board ..."

The Industrial Tribunal in, what in a decision which is a model of its kind, made a number of findings which I shall summarise. They concluded that the proper interpretation of the mobility clause is that the words "as shall from time to time reasonably be required of or be vested in him" apply not only to the words "exercise such powers", but also to the words "perform such executive duties". I do not think that there can be any argument but that they were right to have arrived at that conclusion. They then construe that clause by adding sensible punctuation marks.

They then said that they have to look carefully at the reasonableness of the employer's actions. They say that where the evidence differed they preferred that of the applicant to that of Mr Palmer. And they gave a reason as to why they arrived at that conclusion, namely, that the surrounding circumstances on such issues did not support what Mr Palmer said.

The tribunal said:

"Our conclusion is that there was a very good reason indeed for the Applicant to conclude that he was being edged out and that the offer of the Wirral post was effectively demotion for him. In the run up to the disciplinary hearing Mr Palmer made it quite plain that he had made his mind up, and he was intent on achieving his ends. Our conclusion is that he was paying lip service to consultation by simply listening to what the Applicant said, but had no intention of really paying attention to it.

...

In this case our decision is that there was no reasonable or sufficient grounds for requiring the Applicant to move. Mr Palmer decided that he wanted to move the Applicant to the Wirral without taking account of the reasonableness of such a move. Secondly, there was the over riding question of confidence and trust which had been very severely eroded indeed by the earlier actions and inaction of Mr Palmer and Miss Wilson - in relation to an employee who held a very senior position in the organisation.

Furthermore, Mr Palmer had a duty to consult with the Applicant and in saying this we take account of ... [The tribunal refer then to a particular decision of the Employment Appeal Tribunal] ...

Our conclusion is that Mr Palmer's discussion with the Applicant were not serious consultation. Mr Palmer had already made up his mind, and made it clear that he would not change it. He should have consulted at the formative stage when the Applicant's contribution could and should have been considered. Similarly he was not genuine about the compelling need to move the Applicant to the Wirral. If he had been, then if he intended to consult genuinely, he would not have announced his decision about the Mercedes Benz dealership in London at the time when he did. He forced the issue through, and then made it impossible, with his prior announcement, to consider what the Applicant said at the disciplinary hearing as the matter was by then already fait accompli."

The tribunal then go on to criticise the procedural arrangements which were adopted by the Company in this case. They concluded that the dismissal was procedurally unfair for the reasons specified in subparagraph (c) of paragraph 31.

In subparagraph (d) they say that they did not consider that it was within the range of reasonable responses to dismiss the employee; that they could only dismiss an employee in the way that they did provided that there has been a reasonable and lawful request to relocate, fair consultation appropriate to the applicant's seniority, and that there had been a fair disciplinary hearing. In those circumstances, the tribunal concluded that the dismissal was unfair.

On behalf of the appellants, Mr Bayliss, without the assistance of a skeleton argument which is regrettable, submitted to us that there were three grounds for appeal. Firstly, that the tribunal had erred in law in the construction of the contract; secondly, that they erred in their approach to the procedure; and thirdly, and in particular, they had erred in their approach to the appeal process.

As we understand his first submission, it was that the clause which is set out in paragraph 2.1 namely that "the Executive Director shall perform such executive duties and exercise such powers as shall from time to time reasonably be required of or be vested in him by the Board of Directors of the Company" refers to the range of duties which he might be asked to perform. Mr Bayliss submitted to us that it is only at a later stage in the question as to whether there has been a fair dismissal, that the question of reasonableness in terms of other matters beyond the nature of the duties, come into play.

It seems to us that that is arid debate which has been raised by Counsel in his submission to us, because the mobility clause was to ask him to perform these duties as such place or places as the Company shall reasonably specify. In those circumstances, the Industrial Tribunal were manifestly entitled to take into account all the matters referred to in their decision in reaching a conclusion as to whether the Company were reasonable in specifying the Wirral as the place which they wished the employee to work.

Furthermore, as I think Counsel eventually accepted, there is implied into every contract of employment a duty of trust and confidence, and, it seems to us, clear, that the Industrial Tribunal have formed the view, in this case, that the reason why a request was made for this applicant to move to the Wirral was not for any genuine business reason, but because the Company had decided that they did not want him any more in the London area, and that this was a method by which they could cause his departure from the Company. We deduce that from the extracts to which I have referred and the references to the implied duties of trust and confidence. But in any event, the Industrial Tribunal were manifestly entitled to conclude that the Company could not reasonably have specified the Wirral for genuine business reasons without going through a much different consultative process than that which they decided to adopt in this case.

Accordingly, it seems to us that there is no merit in the first ground of appeal which is dressed up as a point of law, but is in reality a challenge to the Industrial Tribunal's findings of fact.

In relation to procedural unfairness, we can take the second and third submissions together. The essence of the Industrial Tribunal's decision was, as we read it, that before he was dismissed, the applicant was entitled, at least, to have the opportunity to put forward to a person who was not the decision maker in this case, his side of the story and to listen to the decision maker putting forward his points, and then to respond them. A fair procedure at least required that. But because the Company had sought to set about the dismissal in a different way, they had, in the end, failed to provide a fair procedure. That was a judgment call for the industrial jury which the Industrial Tribunal is on matters of this kind, and we are wholly unpersuaded that their decision on this can be faulted. It seems to us that overall this was a decision on its facts and one which fell within the competence of the Industrial Tribunal. Therefore, we are not persuaded that there is an arguable point of law and this appeal will be dismissed.