United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS LOUISE BROOKS (of Counsel) Instructed by: Messrs Hodge Jones & Allen Solicitors Twyman House 31-39 Camden Road London NW1 9LR
For the Respondent	MR DAVID JOSEPH Representative First Business Support 33 Old Woking Street West Byfleet Surrey KT14 6LG


 


MR COMMISSIONER HOWELL QC:

1. In this appeal Mr Cayetano Lopez seeks to have set aside the decision of the London South Employment Tribunal contained in extended reasons sent to the parties on 28 January 1999, after a hearing into his complaint of unfair dismissal which took place on 4 January 1999. The Tribunal's reasons are set out at pages 326 of the appeal file before us. The background to the appeal is shortly that Mr Lopez had for 7 years been employed as a chef de partie with the Respondents the Villa del Cesari Ltd, who operate a restaurant in Pimlico. The restaurant, whether because it is near the river or not, apparently had to be closed in July 1998 because of necessary building works as a result of subsidence and the consequences of that are what gave rise to Mr Lopez bringing his complaint to the Tribunal. According to the facts found by the Tribunal as set out in paragraphs 5 and 6 of their extended reasons, the closure had originally been scheduled for six weeks and the company had intended to retain 6 of their staff, including Mr Lopez. They were told that they would be required when the restaurant reopened and asked to take their annual leave to coincide with the building work. We were told that there was a meeting with the staff but, as the Tribunal recorded, the news about the effect on Mr Lopez was conveyed to him in a discussion with a Mr Oyrzinski, who is part of the management of the restaurant, about a week before the closure began.
2. After the closure the building work began and for the next few weeks Mr Lopez had been paid, although sporadically, from time to time at first by cheque and later directly into his bank account the last payment being received on August 21 1998. In the Tribunal's words in paragraph 6 of their reasons :-

6. "He rang the restaurant on about 25th August and spoke to the Managing Director, Mrs Zinn. The conversation was in Spanish. Although Mr Oyrzinski was with Mrs Zinn at the time, he does not speak Spanish. The Tribunal heard from Mr Lopez that Mrs Zinn told him that the restaurant would re-open on 26 September and that they wished him to continue working for them, but he had an option. If he wished to come back on 26 September, he could return to work then, but would not receive any additional pay. Alternatively, she would pay him an additional four weeks pay, but he would not then be employed on the re-opening of the restaurant. He did not make a choice between these options. The conversation ended with his saying that he had problems and had to think it out. He then went to the Pimlico Citizens Advice Bureau. They wrote to the Respondent on his behalf. The letter (R1) was produced to the Tribunal by the Respondent.

That letter has been included among the appeal papers before us at page 13 of the appeal file. It is dated 2 September 1998 and it reads :

Re: Your employee Mr Lopez

"We understand from out client that his last actual day of work was on the 25^th July 1998 and that his last paid week was for the week ending the 21^st August 1998.

Our client had requested that you forward the following information.

1) Our client's current employment status?

2) Why has he not paid been paid since 21.08.98?

3) Full up to date details of his holiday entitlement.

Please could you deal with this matter as a matter of urgency, we understand from our client that he has over seven years continuous service with yourselves and therefore have advised our client of his statutory rights to take this matter to the Industrial Tribunal."

3. The Tribunal's comment on that letter as recorded in paragraph 6 of their reasons was that it was clear that this letter did not constitute a resignation nor did the letter allege that the applicant had been dismissed, but merely sought to clarify the applicant's position in relation to employment with the Respondent. Although not so recorded by the Tribunal in their findings, it is apparent from the papers before us and it is indeed common ground, that the Respondents never made any response to that reasonable enquiry, or to the hint at the end of that letter that the matter would be taken to the Industrial Tribunal. That failure to communicate or comply with a reasonable request for information on the part of an employee in these particular circumstances, after the Respondents had unilaterally stopped paying the employee his wages, was in our view, unreasonable conduct on the part of the employer, particularly as this employee was by no means a casual employee but had seven years service, and the Respondents had made it clear that they wished him to continue in their employment when the restaurant reopened. Resuming the Tribunal's recital of the facts, in paragraph 7: -

7."Mr Lopez began looking for another job, in order to ensure regular income. On 5 September, he obtained work, and he did not contact the Respondent again, other than in connection with these proceedings. The Respondents tried to contact him on several occasions, leaving telephone messages for him, but without success. On 24 September, they decided that he was not going to be available for work and hired a replacement."

4. Mr Lopez's originating application to the Tribunal dated 21 October 1998 alleged that in the circumstances we have outlined, he had suffered unlawful deductions from his wages and that he had been the victim of a constructive dismissal, wrongful dismissal and an unfair dismissal. As he said himself in the statement attached to his originating application, he had been told that the Proprietor to the restaurant did not have the money to pay him after his last payment on 21 August, and he had been given two options either to return to work on 24 September but not being paid his holiday pay, or to quit, whereupon he would be paid one month's wages as compensation for his seven years with the company. When the matter came before the Tribunal, on the face of the application there were therefore two main issues for the Tribunal to consider : -

First, whether money due to the Applicant under or in consequence of his employment contract was outstanding and should be paid to him and

Second, whether that contract had been brought to an end in circumstances amounting to unfair dismissal entitling him to the normal remedies under the Employment Rights Act 1996.

5. There is a dispute of fact, so far as the first issue is concerned, between Mr Lopez and those representing him, on the one hand, and the Respondents on the other, as to whether the first issues relating to unpaid money, had been withdrawn at the outset of the hearing, on the ground that this had by now had been satisfactorily disposed off. When the matter first came before this Tribunal at the preliminary hearing, correspondence was referred to and a direction was given, that although this was not an issue to form the subject of a full hearing of the appeal before us enquiries were to be made of the Tribunal Chairman. In consequence of that his comments have been obtained and they are at page 20 of the appeal file, which appear to confirm the Respondents' recollection that the matter had not been put before the Tribunal at the hearing on 4 January 1999 as a live issue and that no evidence had been called by Mr Lopez or on his behalf on this aspect of the matter.
6. Miss Brooks who appeared on behalf of Mr Lopez at the appeal hearing before us confirmed that Mr Lopez did still regard himself as having money outstanding due to him, and that the matter had not in fact been satisfactorily disposed of as far he was concerned. She drew our attention to the fact that the Tribunal's extended reasons, issued to the parties on 28 January 1999 do not in fact mention this issue at all, or record as one might expect if the matter had been withdrawn as an issue at the hearing, that that had been done and, accordingly that there was a formal dismissal of the claim on that issue. Both she and Mr Joseph who appeared for the Respondents before us, very properly agreed that this was not an issue of fact that this Tribunal can possibly resolve and that whether or not this Tribunal allow the appeal on the unfair dismissal issue, the only way of carrying forward the question of whether any outstanding claim for money, under the contract of employment, was still a live issue was to make some further application to the Tribunal, either by way of review or to have this reconsidered at any rehearing of the main appeal which we might direct. That appears to us to be the right and proper way of dealing with that issue and we accordingly say no more about it on this present appeal, other than to record our understanding that that is a matter which both parties will wish to bring before the Employment Tribunal and make their own submissions on, possibly involving further factual evidence having to be given.
7. Returning to the issue of unfair dismissal, Miss Brooks criticised the decision of the Employment Tribunal to dismiss the claim on the ground that the Respondent had not unfairly dismissed the applicant at all. She contended that the way they dealt with it failed to make clear exactly what findings the Tribunal was making, about whether the contract had in truth been brought to an end, either by the Respondent or by the applicant; and failed to address the question of whether there had been a termination of the contract by the applicant, by his conduct in leaving his employment, at the latest by 26 September 1998 when the restaurant was due to re-open. This involves looking at the actual terms in which the Tribunal dealt with the dismissal issues which are shortly stated at paragraphs 12-13 of their extended reasons in the following terms: -

Conclusions

12. "The Tribunal was unanimous in deciding that there was no basis in fact for deciding that the Respondent had terminated the employee's contract in terms of s.95 (1) (a). At no time had the Applicant been told that he was dismissed."

13. "We then went on to consider whether the facts gave rise to a constructive dismissal in terms of s.95 (1) (c). We found that there was a clear and fundamental breach of contract by the Respondents in that they failed to pay the Applicant on a full and regular basis during the period of closure. Mr Lopez would therefore have been entitled to treat himself as constructively dismissed. In order to do so, however, he would have had to resign and, soon after the breach, communicate this to the Respondent. On his own evidence, he failed to do this. He took another job, but he did not inform his employer of the resignation. In the normal circumstances, the employer would have been able to surmise that he no longer intended to be bound by the contract of employment. In view of the closure of the restaurant, however, this was not possible. As the re-opening approached, the employer made efforts to contact Mr Lopez, but they were unsuccessful."

8. Then the Tribunal on the basis of those conclusions found that it followed that the Respondent had not dismissed the Applicant and consequently, the originating application must be dismissed. We accept the arguments of Miss Brooks on behalf of the Applicant that in determining the application against the applicant for those stated reasons, the Tribunal failed to make sufficiently clear findings showing that they addressed all the material issues about the termination of his contract, the manner in which it was done and the date at which the termination took place. In particular, we consider Miss Brooks' submission to have been right that the Tribunal's stated reasons fail effectively to address the question of whether the applicant had effectively brought the contract to an end (in response to what the Tribunal appeared to have accepted in their findings, amounted to a fundamental breach on the part of the Respondents) by his conduct by leaving their employment at the latest by 26 September 1998 and in founding to too great an extent on his failure to make express communication of this to the Respondent in writing or otherwise. Miss Brooks drew to our attention the decision of the Court of Appeal in Weathersfield Ltd v Sergeants [1999] IRLR 94 in which the Court of Appeal confirmed that where one party to a contract commits a breach such as to amount to a repudiation of its normal obligations on the contract, it is a matter of fact to be determined whether that breach has been accepted by the other party, and that it is not necessary in law for the other party to state expressly the reasons why they are leaving the employment at the time they do.
9. As Lord Justice Pill's Judgment at paragraphs 21-22 points out, the principles of repudiatory breach and acceptance by the innocent party in those circumstances are well established and set out in the judgment of Viscount Simon in Hayman v Darwin's [1942] AC 356.: -

"But repudiation by one party standing alone does not terminate the contract. It takes two to end it by repudiation on the one side and acceptance of the repudiation on the other."

Thus in an earlier case Lord Collins had said: -

"I think the true test applicable to the facts of the case and the true question is that whether "the acts and conduct of the party evince an intention no longer to be bound by the contract."

"Acceptance of a repudiation of a contract of employment will usually take the form of the employee leaving and saying why he is leaving but it is not necessary in law for the reasons to be given at the time of leaving. The fact finding Tribunal is entitled to reach its own conclusion based on the acts and conduct of the party as to the true reason."

10. In that case there was no doubt that the employee had left her employment and the Court of Appeal held that there had been no error on the part of the Industrial Tribunal, in making a finding that this was in response to repudiatory breach by the employer, notwithstanding that the employee had not said so expressly at the time. We consider the principle of that case to be applicable to the one with which we and the Tribunal in this case were concerned, and we consider that it is quite plain from the Tribunal's findings, that Mr Lopez had in fact left the Respondents' employment at the latest by 26 September 1998 and possibly before, when he sought other employment. That is a matter of fact to be gone into by the Tribunal on the rehearing we shall direct. Where the Tribunal who dealt with the case on 4 January 1999 went wrong, in our judgment, was in apparently finding that although Mr Lopez had decided to leave the Respondents' employment and had effectively resigned, he had forfeited all his rights to complain of what would have otherwise have been a constructive dismissal by failure to make some express communication before the very clear indication that he gave, at the latest on 26 September 1998, by not turning up to resume his previous job.
11. That in our judgment overlooks the possibility of an acceptance of a repudiatory breach by conduct, which is a perfectly well understood concept in the general law of contract and accordingly, we consider that the Tribunal erred in failing to address that material issue. Mr Joseph, who presented his submissions on behalf of the Respondent with conspicuous moderation and fairness, very fairly accepted that this was a point which required to be dealt with by any Tribunal considering facts of this nature and that apparently, the Tribunal's decision had failed to deal with the point. On that footing, we consider that the Tribunal's decision as set out in their stated reasons was erroneous in law on the grounds argued by Miss Brooks on behalf of the Appellant before us. We accordingly allow the appeal and remit the case, for rehearing and redetermination of the unfair dismissal issues, to the same or a differently constituted employment Tribunal. It will also be convenient if the same Tribunal which rehears the case can have before it any further issues on unlawful deductions or outstanding payments which the parties can properly raise, so that all outstanding points can be dealt with at the same time.