United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR S CHAWATAMA (of Counsel) Instructed By: Dexter Montague & Partners 105 Oxford Road Reading Berkshire RG1 7XR
For the Respondents	MR O CAMPBELL (of Counsel) Instructed By: Messrs Sharp & Pritchard Solicitors Elizabeth House Fulwood Place London WC1 6HG


 


JUDGE PETER CLARK:

1. This is an appeal by the applicant before the Reading Employment Tribunal sitting on 9 – 10 September 1999, Mr Asamoah-Boakye, against that tribunal's decision, promulgated with extended reasons on 13 October 1999 dismissing his complaints of unfair dismissal and breach of contract brought against his former employer, the respondent Walter Rodney Housing Association Ltd.

Adjournment

2. Prior to this appeal hearing counsel originally instructed on behalf of the appellant, Mr Jeremy Hyam, lodged a detailed skeleton argument in support of the appeal in good time, as did Mr Campbell on behalf of the respondent. We therefore had a full opportunity to pre-read the case.
3. Late in the afternoon preceding this hearing, held on 30 June 2000, a request was received in the listing office for this case to be put back until 2 pm because Mr Hyam had unexpectedly gone part-heard in the Family Division. That was followed by faxed letters from both Mr Hyam and his instructing solicitors. The respondent did not object to this course.
4. Without obtaining a direction to that effect Mr Hyam retained his brief in this matter and attended before Mr Justice Cazalet in the Family Division on the morning of 30 June. We therefore had no realistic alternative but to put the matter back until 2 pm. The other business in this court was completed at noon.
5. It then transpired that Mr Hyam's other case had run over into the afternoon. A member of his chambers, Mr Chawatama, was dispatched to apply for this case to be taken out of our list for the day.
6. We were initially sympathetic to that application, provided that the respondent was protected in costs. However, it was pointed out by Mr Campbell that the appellant was legally aided; an order for costs thrown away would be of little value to the respondent, a charity. There is no power in the Employment Appeal Tribunal to make a wasted costs order. Mr Chawatama was unable to give us an assurance that any costs order would be met by Mr Hyam.
7. Instead, he submitted that this was not a case falling within Employment Appeal Tribunal rule 34 (1). The position in which Mr Hyam found himself was wholly unforeseen. It could not be said that the appellant, through his representative, had conducted these proceedings unreasonably within the meaning of the rule.
8. We rejected that submission. The Bar Council Code of Conduct. 6^th Edition. Paragraph 601 (e) (ii) requires that a barrister must return his brief if there is an appreciable risk that he may not be able to undertake that brief. In this case, it seems to us, there was such a risk, first that we would not grant an adjournment to 2 pm and secondly that his case elsewhere might overrun. He should not have retained this brief.
9. In these circumstances we were not prepared to put the respondent to the expense of a further hearing through no fault of their own. We required the appellant to proceed. After a further short adjournment Mr Chawatama indicated that he would rely on Mr Hyam's skeleton argument. We heard oral submissions from Mr Campbell. Having done so we reserved our judgment in order to consider the matter fully, in the absence of oral submissions from Mr Hyam.

The Issues

10. The issues before us in this appeal are (1) whether the tribunal erred in law, in finding that the appellant was not dismissed by the respondent for the purpose of his claim of unfair dismissal; instead, his employment was terminated by mutual agreement and (2) whether the tribunal erred in finding that the respondent was not in breach of contract in failing to pay him a sum of £3,600.

The Facts

11. The factual background to these claims is as follows. The appellant commenced employment with the respondent in January 1993 as their Finance Officer.
12. In autumn 1998 a review of the respondent's functions was undertaken and it was decided that they no longer had need of a Finance Officer. As a result he was given 60 days notice of redundancy to expire on 14 December 1998. He was told that he would receive a payment, expressed to be a redundancy payment but in excess of his statutory redundancy entitlement, in the sum of about £3,500. There was no contractual entitlement to an enhanced redundancy payment.
13. Before that notice expired the respondent received an offer of funding from another Housing Association which would secure the appellant's post for a further 12 – 18 months. In these circumstances the respondent decided to withdraw the appellant's notice of dismissal.
14. The appellant was on sick leave until 19 January 1999. He then returned to work and carried on working normally. On 11 March 1999 he presented an Originating Application (the first complaint) to the Employment Tribunal claiming a redundancy payment. As to that claim the tribunal accepted a submission by the respondent that, although notice once given cannot be unilaterally withdrawn, by returning to work the appellant assented to the continuation of his employment. He agreed to the respondent withdrawing their notice of dismissal by conduct. Accordingly the claim for a redundancy payment, which was dependent upon the appellant having been dismissed, was rejected. There is no appeal against that finding. Similarly, there is no appeal against the tribunal's finding that no enforceable agreement for the payment of £3,500 to the appellant was then reached.
15. On 12 May 1999 the appellant attended what is described as a mediation meeting. By that time, the tribunal found, the relationship between the appellant and the respondent, in particular his immediate line manager, Miss Andrade, had broken down.
16. At that meeting the respondent made this offer to the appellant, to pay him £3,600 as soon as possible as and when he entered into an agreement to waive his case at the Employment Tribunal and end his employment with the respondent. He was told that he would have to "run it past" his advisor (a reference, we think, to the provisions of section 203 (3) (c) of the Employment Rights Act 1996 (ERA)).
17. A letter dated 13 May setting out proposed terms of settlement, in a form which complied with the requirements of section 203, was drafted by solicitors acting for the respondent, Sharpe Pritchard, and sent to the appellant.
18. On 14 May the appellant wrote to the respondent's solicitors, stating that he agreed to the terms and conditions outlined in their letter subject to these amendments:

(1) salary to be paid up to 31 May, the proposed date of termination of the employment and

(2) a good reference in a mutually agreed form of words.

19. On 18 May the Respondent sent a revised form of draft agreement, which provided for the respondent to provide to the appellant a copy of their reference from which they would not depart, asking for him to return a signed copy; that is, signed by the appellant and his solicitor, whose reasonable fees the respondent agreed to meet up to a maximum of £250 inclusive of VAT.
20. On 19 May the appellant wrote to the respondent's solicitors, informing them that he had agreed an amendment dealing with accrued time off in lieu (TOIL) and had arranged for his solicitor to sign the agreement at 10 am the following day. He further agreed in principle to proceed on leave from 20 May (until 31 May) provided the agreement was signed the next day.
21. A further amended draft agreement was sent to the appellant and dated 19 May. On that day he cleared his desk, handed over the respondent's property, said goodbye to the staff and left the office, never to return.
22. On 21 May solicitors acting for the appellant, Rowberry Morris, faxed the respondent's solicitors, indicating that they were unable to advise the appellant to sign the draft agreement without making the following points:

(1) the draft did not deal with his entitlement to pay in lieu of notice

(2) the respondent had not provided the appellant with a copy of their reference.

23. Until those points were dealt with the first complaint could not be withdrawn.
24. The respondent's solicitors replied on 24 May, pointing out that the sum of £3,600 provided for in the draft agreement included pay in lieu of notice. A copy of the proposed reference would follow.
25. By their reply of that date the appellant's solicitors accepted the respondent's point on pay in lieu; the appellant required a copy of the reference before signing the agreement.
26. A copy of a reference prepared by Miss Andrade was faxed to the respondent's solicitors on 26 May. It read:

"To Whom It May Concern

Yaw Asamoah-Boakye commenced employment with Walter Rodney Housing Association (WRHA) as Temporary Finance Officer in January 1993. His main duties were to maintain the finance systems of the organisation, by carrying out trial balances, cash flow forecasts, annual budgets and utilising a double-entry bookkeeping system.

His position was made full time, and during the course of his career at WRHA he was promoted to the post of Accountant in February 1995. This gave him more responsibility over the production and maintenance of the financial system at WRHA.

His attendance at work has always been good, with the minimum time off sick. He has always been punctual in his time-keeping."

27. On 27 May the appellant's solicitors faxed the respondent's solicitors, stating that he would like to see certain alterations to the reference, particularly some comment on the performance of his duties.
28. The respondent's solicitors replied that day. The proposed alterations were agreed, save that the respondent was not prepared to include any comment in the reference as to the appellant's performance.
29. The appellant himself wrote to the respondent's solicitors on 27 May. He required all payments to be made to him by 28 May. Failing agreement being reached and payments made by 28 May he would return to work on 1 June and, or "take whatever action I deem appropriate".
30. On 28 May the respondent's solicitors replied, indicating that the respondent would not make any further changes to the reference. The appellant was asked to let them have a copy of the signed Agreement. They added that:

"Terms having been agreed to end your employment, it will not be appropriate for you to attempt to return to work on 1 June."

31. No agreement was then reached as to the reference. The compromise agreement was never signed. The appellant was barred from entering the respondent's premises. No money was paid to him.
32. He then brought his second complaint, alleging unfair dismissal and breach of contract (non-payment of £3,600) by way of an application made on 3 June 1999 to amend his first complaint. That was treated by the Employment Tribunal as a fresh application.

The Employment Tribunal Decision

33. On these facts the tribunal found:

(1) That although there was a small area of dispute between the parties, not unimportant to the appellant, on the wording of the reference, the tribunal concluded that there was an agreement in principle between the parties for the termination of the employment. The appellant had left the offices of the respondent on 19 May, not anticipating that he would return. The employment relationship had broken down. There was neither a dismissal by the respondent nor a resignation by the appellant. There was a termination by mutual agreement. Accordingly the claim of unfair dismissal failed; there was no dismissal under section 95 ERA.

(2) Although there was broad agreement that the respondent would pay the appellant a lump sum of £3,600, that was subject to the appellant leaving, signing a section 203 compromise agreement and withdrawing his first complaint. He did not sign the agreement, nor did he withdraw the first complaint. In these circumstances the tribunal held that the respondent was not in breach of the agreement reached between the parties during May 1999. The breach of contract claim was dismissed.

Parties Submissions

Dismissal or termination by mutual agreement?

34. It is submitted on behalf of the appellant that for there to be termination by mutual agreement, as opposed to a dismissal under section 95 ERA, there must be a binding agreement between the parties. We note that that proposition is advanced by the Editors of Harvey on Industrial Relations in Employment Law, volume 1, D325-330, without authority being there cited.
35. It is contended that on the facts which were agreed or found by the tribunal no binding agreement was ever reached between the parties.
36. We have been referred to the standard cases in contract for the propositions, first that the terms of a valid compromise agreement must be sufficiently complete or certain. Foley v Classique Coaches Ltd [1934] 2 KB1, and secondly to the words of Parker J in Von Hatzfeldt-Widenberg v Alexander [1912] 1 Ch.284, 288 where he said:

"… It is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored."

37. In summary, it is here submitted for the appellant that

(1) there was a failure to agree a material term, that is, the terms of the reference to be provided by the respondent and

(2) that the signing of a compromise agreement, upon which an enforceable withdrawal by the appellant of the first complaint depended, was a condition precedent to an effective and binding agreement to terminate the appellant's employment mutually.

(3) further, a key requirement of a compromise agreement which complies with section 203 ERA is that the employee must have had independent advice. On the facts, the appellant received advice, which was not to sign the draft agreement.

38. Alternatively, it is submitted that even if the parties did reach a binding agreement to mutually terminate the employment, that agreement was void by operation of section 203 ERA. Igbo v Johnson Matthey Chemicals Ltd [1986] ICR 505. At any rate, that term which required the appellant to withdraw the first complaint was void by virtue of section 203.
39. In response, Mr Campbell submits that the question as to whether or not the respondent dismissed the appellant was essentially one of fact. Absent perversity the Employment Appeal Tribunal, whose jurisdiction is limited to correcting errors of law, cannot and must not interfere with an Employment Tribunal decision on this question.
40. He submits that a distinction must be drawn between an agreement between the parties that the employment should terminate and a (void) agreement precluding an employee from bringing a claim of unfair or wrongful dismissal. It is contended that a mutual termination of an employee's employment is not rendered void for the purpose of section 95 by the provisions of section 203. See Martin v Glynwed Distribution Ltd [1983] ICR 511; Scott v Coalite Fuels & Chemicals [1988] ICR 355, to which we might also add Birch v University of Liverpool [1985] ICR 470.
41. Mr Campbell submits that there was ample evidence before the tribunal to justify the conclusion that the employment here was terminated by mutual agreement. Specifically an agreement was reached on 19 May 1999 on all material points to terminate the employment. The tribunal was entitled to apply a pragmatic test, not an overly contractual approach. In particular, on 19 May the appellant surrendered the items of the respondent's property which he held, cleared his desk and said goodbye to the staff. Earlier, on 12 May the appellant said that he had "reached the end of the road", he was very unhappy and agreement in principle was then reached that he should leave. On a proper analysis of the facts everything had been agreed by 19 May. The question of a wording for the reference only arose after 21 May.
42. Mr Campbell accepts that in many cases an employee will not finally agree to the termination of his employment until all matters are finalised. However, the facts here were unusual; there was no condition precedent to an agreement being reached between the parties that the appellant would enter into a valid compromise agreement in accordance with section 203.
43. As to the Appellant's alternative submission, that any agreement was void under section 203, Mr Campbell argues that all that was rendered void by that statutory provision was the appellant's promise to withdraw the first complaint (and, we would add, any further complaint arising out of the termination of his employment; the list of potential claims appears at clause 6 of the draft agreement dated 19 May 1999).

Our Conclusions

44. On this first point in the appeal we have not been assisted by the absence of effective oral argument on behalf of the appellant. The point is not an altogether easy one. Nor are we, in these circumstances, swayed by any sympathy for the position in which the appellant finds himself in the unfortunate events which occurred in this case. On the contrary, our sympathies lie, if anywhere, with the respondent, who did all it could to reach agreement with the appellant. However, these appeals are not decided on the basis of sympathy but the law.
45. We accept that the question as to whether employment was terminated by dismissal or by mutual agreement is essentially one of fact. See Scott. However, the tribunals should be reluctant to find mutual agreement to part company when such a finding precludes the employee from pursuing a claim of unfair dismissal. See the observations of Sir John Donaldson P in McAlwane v Boughton Estates Ltd [1973] ICR 470, 473 E – F, a case in which a finding by an Industrial Tribunal of termination by mutual agreement was reversed by the NIRC and a finding of dismissal substituted.
46. It seems to us that the critical question for this tribunal was whether the parties had reached a binding agreement to terminate the employment. On the facts as found and agreed we have concluded that the tribunal was bound to answer that question in the negative. Our reasons for so finding are as follows:

(1) The tribunal found that the relationship between the parties had broken down by 12 May. That state of affairs may lead to a resignation by the employee, not amounting to constructive dismissal. The tribunal expressly found (reasons: paragraph 8) that the appellant did not resign, contrary to the respondent's case. It may lead to a dismissal, actual or constructive, by the employer. The tribunal did not make that finding either. They found termination by mutual agreement.

(2) We look at the non-controversial evidence before the tribunal in the form of the correspondence exchanged between the parties. It is absolutely plain that the respondent required the appellant to sign a valid form of compromise agreement, which their solicitors drafted, after he had taken independent advice (for which they agreed to pay). They wished to be assured that the appellant would (a) withdraw the first complaint and (b) not present any further complaint arising out of the termination of his employment. We accept the appellant's submission that this was not simply a case where the written agreement confirmed the terms already agreed between the parties, it was a condition precedent to agreement being finally reached.

We do not base our reasoning on the appellant's alternative submission that any agreement reached between the parties was void by virtue of section 203. On the facts of this case it was a necessary precondition that his existing and future employment tribunal claims were validly disposed of.

On this ground no binding agreement was reached such as to found the tribunal's ultimate conclusion.

We compare and contrast cases where nothing is said about a "section 203 agreement" and the parties reach agreement on all terms such as to amount to termination by mutual agreement. For example, in Sheffield v Oxford Controls Ltd [1979] ICR 396, an employee, having been told that if he did not resign voluntarily he would be dismissed, signed an agreement to resign in return for certain financial benefits. On his complaint of unfair dismissal an Industrial Tribunal held that he had resigned and had not been dismissed. That decision was upheld on appeal to the Employment Appeal Tribunal. The principle issue was whether he had resigned under duress, but it is nowhere suggested that the absence of the equivalent of a section 203 compromise agreement prevented the agreement between the parties operating as the terminating event, rather than dismissal. Birch is a further example on its facts.

(3) In any event, the parties did not in fact reach an agreement, as the tribunal found. At paragraph 8 of their reasons they refer to an agreement "in principle", recognising that there remained a small area of dispute, small but not unimportant to the appellant, concerning the wording of the reference. Mr Campbell has submitted that that issue did not arise until 21 May. That is not correct. It was raised by the appellant in his letter to the respondent of 14 May in the form of an amendment to the proposed draft compromise agreement.

(4) In short, we are driven to conclude that the tribunal did take a pragmatic approach, as Mr Campbell submits they were entitled to do. Their feel for the case, not unlike ours, was that the respondent had acted reasonably and that the just result would be reflected in the agreement which the respondent sought to achieve. However, that is not the law. Absent agreement, termination cannot be said to take place by agreement.

Breach of Contract

47. On our finding that there was here no agreement reached between the parties the second issue in the appeal may be dealt with quite shortly. Absent agreement the appellant has no claim in breach of contract for the sum of £3,600 payable under the terms of the proposed agreement. In any event, there was a total failure of performance by the appellant. He did not withdraw the first complaint, on which the payment by the respondent was conditional. Instead he brought an additional complaint of unfair dismissal and breach of contract.
48. In these circumstances we shall dismiss this part of the appeal.

Order

49. If the employment was not terminated by mutual agreement, was the appellant dismissed by the respondent for the purpose of section 95 ERA? On the facts plainly he was. In the absence of mutual agreement to terminate the employment the respondent's action in refusing to allow the appellant to return to work on 1 June was either an actual dismissal on 31 May under section 95 (1) (a), or it was a repudiatory breach of contract entitling the appellant to treat himself as discharged. He accepted that repudiation at the latest by seeking permission to amend the first complaint to add a complaint of unfair dismissal on 3 June 1999. See Gunton v Richmond LBC [1980] ICR 755.
50. At paragraph 7 of their reasons the tribunal posed these questions; was there a dismissal; if so, has the respondent established a (potentially fair) reason for dismissal; if so, was the dismissal fair under section 98 (4) ERA?
51. They stopped at the first of those three questions, incorrectly as we have found, and did not go on to answer the further questions under section 98.
52. Accordingly, we shall remit this case to a fresh Employment Tribunal for an enquiry into whether or not the appellant's dismissal was fair.
53. The appeal is allowed to this extent.