United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR S BELLM (Solicitor) Donne Mileham & Haddock Solicitors 100 Queen's Road Brighton East Sussex BN1 4YB


 


JUDGE HICKS QC: Mr Newington, the respondent to this appeal, was employed by the appellant company, Forbuoys Ltd, as a branch manager. He had been employed since August 1994 and therefore had three years of service at the date of the events with which the Industrial Tribunal was concerned. He had, as they found, a first class record with the company. Since 11th November 1996 he had been managing their Sidcup High Street branch. On 18th July 1997, at a meeting with his area manager and another member of senior management, he was asked to take over 12 newspaper rounds and a railway station kiosk which had been part of another branch which was being closed at Station Road, Sidcup. He agreed to undertake those additional tasks and prepared a list of the problems that the increased responsibility would bring, which he passed on to his area manager. Responsibility for the kiosk, in particular, was transferred to him a week later on 25th July. That additional responsibility, as the tribunal found, caused him some problems, one of which was that his branch had been operating a manual system for the newspaper rounds, whereas the Station Road branch had a computerised system, and he therefore had to operate two disparate systems side by side.

On 14th August, without any prior warning of any complaints on the part of his employers, he received a letter dated 13th August requiring him to attend, disciplinary hearing on 21st August. The letter complained of a total lack of commitment to the company, lack of management control of the kiosk, lack of security control of the kiosk and lack of man management of the kiosk. So there were clearly two areas of complaint, one a general one of lack of commitment and the other relating to his conduct of the management of the kiosk that he had taken over on 25th July.

Before the disciplinary meeting on 21st August he encountered further problems of staffing of the kiosk after 18th August, and of arranging a handover of the keys to the replacement staff member on that day, one Steve Brookes, whose father was Mr Newington's superior. When he tried to take that matter up with Steve Brookes the father told Mr Newington to leave his son alone, on the basis that that son was not Mr Newington's member of staff. It is noteworthy that that matter was fairly and squarely within one of the complaints made in the letter from the employers - lack of security control of the kiosk. Mr Newington, as the tribunal found, and not surprisingly, felt that he was not being given the proper support, certainly in that respect, and extra resources to manage the new responsibilities, and that he was not being allowed to carry on his job.

It was against that background, as the tribunal found, that the disciplinary meeting was held on 21st August by the area manager. It was, as the tribunal say:

"6 ... inconclusive in that the Applicant left with the impression that the meeting had been concluded and that Mr Gorham would announce his decision."

Since the tribunal firmly say later that in terms of any conflict of evidence they prefer and accept the evidence of Mr Newington in preference to that of Mr Gorham, the area manager, it is clear in our view that they find that that was indeed the impression that was left in the mind of Mr Newington at the close of that meeting. However, further matters relating to the kiosk had arisen and Mr Gorham in fact had decided that those needed investigation as well. He fixed a fresh hearing before an independent party and a letter was sent to Mr Newington on 28th August 1997 repeating the earlier complaints and adding two new complaints about the kiosk relating to 18th and 20th August. It is clear, therefore, as we understand the tribunal's findings, that those matters were raised by Mr Gorham after the first disciplinary hearing and at a stage when Mr Newington was expecting, and entitled to expect, that he would be receiving a decision as a result of that first meeting.

The second letter fixed a hearing for 2nd September, but that was adjourned at Mr Newington's request until 10th September and meanwhile on 6th September, by letter, he resigned with effect from 20th September.

He submitted to the tribunal that his position had been undermined in the space of two weeks and that he had gone from being a first class manager to disciplinary proceedings, and had been given no information of what was lacking in his performance. He was permanently on edge and had been made ill, and this caused him to leave. Although that is expressed by the tribunal as Mr Newington's submissions it is quite plain that some of it must have been not just submissions but evidence, and it is also clear in our understanding of the tribunal's decision as a whole that they accepted that evidence.

Having found those facts the tribunal, in paragraph 9 of its decision, directed itself as to the law which should be applied, recited the terms of s. 95(1)(c) of the Employment Rights Act 1996, which deals with what is commonly called constructive dismissal, and continued its direction to itself in these sentences:

"9 ... It is settled law that the conduct must involve a fundamental breach of [contract] by the employer. It is for the Applicant to prove that breach, applying an objective test, and to show that the breach caused the employee to resign."

That self-direction is not criticised by Mr Bellm or complained of in the Notice of Appeal, and in our judgment rightly so. It was an impeccable direction on the way in which the tribunal should address the issue whether there had been a constructive dismissal.

Then, having dealt with the matter of the credibility of witnesses and made the finding which I have already mentioned, that they accepted the evidence of Mr Newington in preference to that of Mr Gorham whenever they were in conflict, having adverted again to the fact that the first Mr Newington knew of any complaints was the letter of 13th August, and even then those complaints were general and unspecific, the tribunal in paragraph 11 record that the employers have a disciplinary procedure, which was incorporated into Mr Newington's contract of employment and which contained, in particular, three provisions which they set out. The important words in the first extract (from paragraph 1) are that the disciplinary procedure:

"will be used whenever possible as an aid to improvement rather than a means of punishment".

From paragraph 3 they quote a passage which includes the words:

"Minor misconduct or breaches of rules will normally be dealt with in the first instance by the employee's immediate superior giving informal counselling or advice".

They also quote from paragraph 4:

"The formal procedure will be invoked in cases of more serious misconduct, breaches of rules or failure to reach desired standards after counselling."

Having made those findings, the tribunal then in paragraphs 12 to 14 reach the heart of their decision. It is well to read the whole of those three paragraphs:

"12 This procedure was not followed in that the disciplinary procedure was invoked when there had been no counselling in a case of an alleged failure to reach desired standards. There was also no indication that the disciplinary procedure was being used as an aid to improvement as there was no indication in the letters or in the disciplinary interview of what improvement was required. The Respondents were in breach of contract in these aspects.

13 The next issue was whether the breach of contract was fundamental. The Applicant was a Manager who had a first class record. He had been given extra tasks and he felt that he did not have the resources to deal with those tasks. There was confusion about the management of the kiosk and whether the staff allocated to the kiosk were answerable to the Applicant or to others. There were problem areas that the Applicant had identified and raised with the Respondents in the list the Applicant had prepared that were not addressed. The Respondents were in breach of the contractual provisions by summoning the Applicant to a disciplinary meeting without prior warning that anything was wrong and without any prior discussion.

14 We find that these circumstances, and the unsatisfactory and vague outcome of the meeting on 21 August 1997, did amount to an undermining of the Applicant's trust and confidence in his employer and there was a breach by the Respondents of the implied term of trust and confidence. This is a fundamental term of the contract of employment of a Manager."

On that basis, they found that Mr Newington acted on that breach by resigning and was therefore constructively dismissed within the meaning of the Act.

Mr Bellm, on behalf of the employer, advances two broad grounds of appeal. The first is perversity. As was clear both in the Notice of Appeal and in his development of that point this is not one of those cases where the perversity is alleged to have arisen from ignoring evidence, so that one needs to look behind the decision to the notes of evidence. The case put under perversity is simply that on the tribunal's own findings of fact the conclusions which they reached were perverse, that is to say were such that no reasonable tribunal correctly directing itself as to the law could have reached.

Perversity of that kind is inherently a matter of first impression. There is really not much point in developing arguments about it. Either it seems to us that there was perversity, or it does not seem to us that that is the case. We find it perfectly plain that a reasonable tribunal was perfectly entitled to reach the conclusions which this tribunal did reach on the basis of the facts which it had found.

The second ground of appeal goes into more particular examples of errors of law, as Mr Bellm submits, in the reasons given by the tribunal for its decision. The first, as we understand it, can be put in this way, that in paragraph 12 in particular, but the matter is repeated at the end of paragraph 13, the breaches found by the tribunal relate solely to breaches of the terms of the disciplinary procedure. As to that, Mr Bellm says two things. The first is that on a true construction of the disciplinary procedure there was no breach because the requirement that matters would be dealt with in the first instance by informal counselling or advice is qualified by the word "normally".

The answer to that seems to us to be plain. Paragraph 3, which contains the word "normally", does not stand alone. There are also paragraphs 1 and 4. Paragraph 1 requires that the procedure will be used whenever possible as an aid to improvement and where the gravemen of the charges as is clearly the case here, relates to matters capable of improvement in terms of deficiencies of management then it cannot possibly be an error of the tribunal to find that it was a breach to use the disciplinary procedure, as they found, not as an aid to improvement but simply as a pretext for dismissal - or rather for potential dismissal, because of course we accept that it did not actually reach that stage. Secondly paragraph 3, with the word "normally", has to be read also in the context of and in conjunction with paragraph 4, which plainly entails that the formal procedure will only be invoked without earlier consultation in cases of more serious misconduct, breaches of rules or failure to reach the desired standards after counselling. Again, since the complaints were essentially a failing to reach the required desired standards, if there had been no counselling, then the situation could not be within paragraph 4. So on that ground of alleged misconstruction of the disciplinary procedure we see no error of law on the part of the tribunal in reaching the conclusion that there was a breach or were breaches by the employer.

The second way in which Mr Bellm develops the argument based on those findings in paragraph 12 and 13 is that they relate purely to a breach of contract in the form of the express term incorporated relating to disciplinary procedure, whereas in paragraph 14 the tribunal rests its conclusion on a finding that there was undermining of Mr Newington's trust and confidence in his employer and a breach by the employer of the implied term of trust and confidence, which they held to be a fundamental term.

It seemed from the skeleton argument that what was being complained of here was the difference between the phrase "fundamental breach" and "fundamental term", but as we understand Mr Bellm that point is not pursued. He accepts that a breach of what is commonly called the "implied term of trust and confidence" is, ipso facto, a fundamental breach justifying resignation by an employee and amounting to constructive dismissal. His point, as developed in argument, and as we understand it, was that mere breaches, as found in paragraphs 12 and 13, of the disciplinary procedure could not amount to a breach of that fundamental term.

In our judgment that is not a criticism that is justified on a fair and reasonable reading of the tribunal's decision. It is perfectly true that the decision does not spell out the steps of the argument in this respect in as great detail as might in principle or in theory have been possible, but what is actually being said is in our view perfectly plain. The tribunal finds the specific breaches of the procedural rules but then, looking at those, and also looking at the other matters which it had already found as facts in the earlier paragraphs and which it summarises in paragraph 13, it says that, all that is not just a breach of the procedural rules, it is also a breach of the implied term of trust and confidence. We find it quite impossible to say that the tribunal erred in law in reaching that conclusion on the facts as found. The term in question is summarised by that phrase "trust and confidence" in the reasons. The tribunal, so far as appears, had not been referred to any authority, and indeed the representation before them was Mr Newington, in person, and the employer's human resources manager, so it is only too likely that no authorities were cited. The term to be implied as formulated by the House of Lords in Mahmud v BCCI [1997] ICR 606 is:

"The employer shall not, without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee."

It is quite clear to us that, although the tribunal expresses itself in the brief phrase "implied term of trust and confidence", it was that term which they had in mind, and that they properly directed themselves as to what was required for a breach of it. Mr Bellm suggests that that imposes a very high test. Well, it may do, but that is not to say that the tribunal erred. The tribunal had rehearsed all the facts which it took into account and, in our judgment, it was perfectly entitled to find those facts as passing the test, however high it may be, of what is required to find a breach of that implied term.

Mr Bellm also referred us to an extract in paragraph 17 of the judgment of the Employment Appeal Tribunal, delivered by Browne-Wilkinson J., in the case of Woods v W M Car Services (Peterborough) Ltd [1981] IRLR 347. In that paragraph Browne-Wilkinson J. says this:

"To constitute a breach of this implied term, it is not necessary to show that the employer intended any repudiation of the contract: the Tribunal's function is to look at the employer's conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it. ... The conduct of the parties has to be looked at as a whole and its cumulative impact assessed."

We entirely agree. It seems absolutely plain to us that that is the exercise which the tribunal in this case performed. It did look at the employer's conduct as a whole. It did consider its cumulative impact, and it did determine, as we understand it, that its effect, judged reasonably and sensibly, was such that Mr Newington could not be expected to put up with it.

We therefore dismiss the appeal.