United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr J Harris, Solicitor Of- Messrs Ross Harper & Murphy Solicitors 163 Ingram Street GLASGOW G1 1DW
For the Respondents	Mr D Fairley, Advocate Instructed by- Messrs West Anderson & Co Solicitors 92 Bath Street GLASGOW G2 2EJ


 


MR JUSTICE LINDSAY (PRESIDENT):

1. We have before us the appeal of Miss Annette Marenghi in the matter Marenghi against The Western Baths Club. Today Mr Harris has appeared for Miss Marenghi and Mr Fairley for the Club.
2. On 22 May 2000 Miss Marenghi presented an IT1 for unfair dismissal, redundancy payment, breach of contract, holiday pay and failure to provide written reasons for dismissal "in terms of the Act". She claimed she had been a barmaid at the Club for some 19 to 20 years. She said she had been dismissed ostensibly for redundancy but that, she said, was not the true reason.
3. On 7 June the company by its IT3 said that the bar at which she had worked had been losing money for years. The Club had spent some £70,000 on alterations which led to provision of food and provision at the bar being to some extent combined. There was, said the company, a true redundancy as to the bar work itself but that Miss Marenghi was offered a job keeping the bar but occasionally being now required to serve food. That, said the Club, she had said she would not do. She had therefore, said the Club, lost the right to any redundancy pay on unreasonably refusing a suitable alternative job. She had left voluntarily, said the Club, on 5 March 2000.
4. On 7 August 2000 the Club added that, alternatively to redundancy, Miss Marenghi had been dismissed for "some other substantial reason" within section 98 of the Employment Rights Act 1996, namely for failing to accept a reasonable alternative to her duties. On 13 September 2000 there was a hearing at Glasgow. On 11 December 2000 the Tribunal, under the chairmanship of Mr C S Watt, SSC, sent its decision to the parties. The unanimous decision of the Tribunal was that the dismissal was not unfair, that no redundancy payment was due to Miss Marenghi, that no damages were due to her for any breach of contract, that no holiday pay was due to her and that the respondent Club had not failed to provide written reasons for dismissal. On 19 December Miss Marenghi lodged a Notice of Appeal.
5. Before going to the grounds asserted in the Notice of Appeal it is necessary to look at some of the facts found by the Employment Tribunal. There was a bar at the Club. It was run by a full-time steward and, part-time, by Miss Marenghi. The bar was at one end of the social area, the kitchen at the other. The Club believed the bar lost money. It decided there needed to be changes; it believed the bar was not attractive enough as it was. The changes involved that the kitchen and bar should both be at the same end and that the bar staff should then assist the kitchen staff in serving but (be it noted) not in preparing food. This idea was put to Miss Marenghi at first in or about November 1999. Her response was that she simply would not serve food. The Tribunal said:-

"Mr Mann [the Honorary Secretary of the Club and the only person who gave evidence on the Club's behalf] told the applicant that there would be no change in her hours and that the only change would be that she would be asked to assist in serving the food on some occasions. The applicant's shifts were to remain the same and there was to be no cut in her hours. Mr Mann said also that there would be no question of her preparing food and this was explained to the applicant. Mr Mann said that he spoke to the applicant on occasions between November 1999 and February 2000. He thought he spoke on about half a dozen occasions to the applicant but these were informal approaches and the applicant's attitude was still the same. She was refusing to have any dealings with food at all."

On 24 February 2000 there was a more formal meeting with Miss Marenghi and a letter was given to her. It said:-

"You and the other staff presently employed in the bar, dining and social area serve drinks, crisps, confectionery and the like, in future you will serve food as well. We are changing the layout of the bar to make the restructuring as convenient as possible for the staff. I should emphasise that serving food does not mean cooking food. All food served by a person employed as a bar/food person will be pre-cooked and will only require heating and serving. Any necessary training will be provided to the employee who, if required, will be sent on an appropriate course with the Baths paying the cost of the course. Your present job function will therefore not be required from Monday 6 March 2000 but I do have much pleasure in offering you a new position as such a bar/food person commencing on Monday 6 March 2000. The terms and conditions will be exactly the same as for your current position with the exception that, following the restructuring you will be required to serve food during all of the hours that you work. I do hope that you can accept this new job and will ask you to confirm this as soon as possible and no later than 1 March."

The Tribunal then recorded that:-

"Between 24 February and 3 March, Miss Marenghi intimated to Mr Mann that she had declined the offer of the new position and Mr Mann wrote by letter dated 3 March, intimating that the applicant's employment would cease at the Baths after working on Sunday 5 March. The applicant ceased working on 5 March and was paid one weeks pay in lieu of notice."

On 28 March 2000 Miss Marenghi's solicitors wrote requesting written reasons for the dismissal. By their letter of 30 March the Club's solicitors answered:-

"We act for the Western Baths Club and the Secretary, Mr Mann, has sent us your letter to him of 28 March (letter requesting written reasons). Our clients tell us that your client was not dismissed. She was made redundant but was offered a new job. She rejected the new job and left voluntarily. The circumstances are fully explained in Mr Mann's letters to your client of 24 February and 3 March. We enclose copies."

6. The Notice of Appeal raises several grounds, not all of which Mr Harris has chosen to pursue. First, the argument is that the Tribunal erred in law in not looking solely to the reason which the Club gave for the dismissal. Initially the Club had said that there was no dismissal but a voluntary resignation. Then it said that there was a dismissal but that it was for a redundancy. Then the Club had said alternatively that it was "for some other substantial reason" and it was that last formulation to which the Tribunal had paid attention. That was the argument which the Tribunal accepted. It was wrong, argues Mr Harris on behalf of Miss Marenghi, to look only at that last reason.
7. The Tribunal plainly had this point put before it. They said:-

"Mr Fairley, for the respondents, submitted that if the Employer has wrongly labelled the reasons for the dismissal, but still seeks to justify the label on the factual grounds originally stated, he will not be bound by the label."

He referred us to the case of Abernethy v Mott Hay & Anderson [1974] IRLR 213 where Lord Denning put the matter as follows:-

"I do not think that the reason has got to be correctly labelled at the time of dismissal. It may be that the employer is wrong in law in labelling it as dismissal for redundancy. In that case, the wrong label will be set aside. The employer can only rely on the reason in fact for which he dismissed the man, if the facts are sufficiently known or made known to the man. The reason in this case was – on the facts – already known or sufficiently made known to Mr Abernethy. The wrong label of "redundancy" does not affect the point."

The factual basis on which the Club relied remained the same throughout although the way it characterised that basis plainly varied from time to time. It is not a case where the employer was suddenly relying on a quite different story. The Tribunal thus concluded:-

"In this case the Tribunal were satisfied that the wrong label was placed on the reason for dismissal by the respondents. However, the Tribunal were also satisfied that neither party was in any doubt as to the factual reason for the dismissal, namely the applicant's refusal to agree to a variation in her duties."

An Employment Tribunal should be encouraged to look at substance, not form, when no one has been misled by the form. It would be wrong to encourage too much "nominalism", to use a word used in the Court of Appeal recently in the not wholly dissimilar context in England – see Wilson v Post Office [2000] IRLR 834 CA, which emphasises – see its para 15 reference to Cairns LJ in Abernethy supra - that a reason for the dismissal for the purposes of section 98 is a set of facts known to the employer or, it may be beliefs held by him which cause him to dismiss the employee. In Miss Marenghi's case the facts known, the beliefs held, on the employer's part which caused the dismissal remained the same throughout. Given, as the Employment Tribunal held, that neither party was in any doubt as to the factual reasons for the dismissal, the Employment Tribunal was entitled to look behind the earlier use of wrong labels. We see no error of law in this part of the case.

8. To move on to a second ground of appeal, the Tribunal had held:-

"The Tribunal were satisfied that, in this particular case the reason for dismissal was the re-organisation and that there were sound and important business reasons for such a re-organisation.

The Tribunal then had to consider Section 98(4) of the Act. The Tribunal were satisfied that the employers in this case had good and sensible reasons for wanting to amalgamate the bar and the kitchen. It also made sense, in the Tribunal's view, to ask the bar staff to, at least, help out with the food."

They came to that conclusion immediately after their reference to Hollister v National Farmers Union [1979] IRLR 238 CA. Miss Marenghi complains through Mr Harris that the Tribunal failed to expand on their reasoning and to provide justification for their decision.

9. The appropriate test as to how full a Tribunal's reasons have to be is set out in the well known case of Meek v City of Birmingham District Council [1987] IRLR 250 CA. In context, in our view the Tribunal's reasoning here is sufficiently shown to satisfy that test. The Club believed the bar was losing money and had been doing so for some years. It believed the bar should be refurbished to make it more attractive. The bar and the kitchen should thus be joined together. Food would be offered at all times when the bar was open. Bar staff would need to both serve drinks and, sometimes, serve food. The object was to make the bar more attractive because it was the fact that the Club members were not using it enough that had caused it to make losses. All those are findings which the Tribunal made or represent evidence given that they recite as having received yet do not reject. Mr Harris complains that all that evidence came from one person, Mr Mann, but we fail to see why that should be a reason for the Tribunal's having to disbelieve it. In context the Meek test is satisfied and no error of law here appears.
10. Next the appellant urges that the bar only made what she calls "a paper loss" and:-

"It is submitted that the Tribunal failed to take into account a material part of the applicant's case, namely, that the respondents' bar only made a loss on paper and not an actual loss as the respondents were failing to take into account the profits made from the gaming machines in the bar."

A little later the appeal adds:-

"The Tribunal do not mention, in their decision, whether they have given any consideration to this issue. They also fail to consider what changes the respondents proposed to make, the costs of these changes and whether those would reverse the downward trend in the respondents' bar profits."

The Tribunal had referred to Mr Mann's evidence and the letters he had written; he was, as we have mentioned, the Secretary of the Club and gave evidence to the Tribunal. The Tribunal recorded:-

"At the end of 1999 Mr Mann stated that the bar had been making losses for the last two or three years. The Club decided that there should be a change and that the bar should be refurbished to make it more attractive. Mr Mann said that the Club thought that the reason why the bar had been making losses was because the members weren't using it enough because it wasn't attractive enough."

Mr Mann's letter, which the Tribunal quoted in full, added:-

"As you know, the bar of the Baths has been losing money for quite some time and the turnover continues to decline. This has forced us to take action. We have decided that we must restructure the way the bar and food services are provided to the members."

Whilst the Tribunal does not in terms say that it accepted his evidence, it plainly did not reject it and their view that the Club was acting upon good and sensible business motives was, one can only assume, at least in large part based on Mr Mann's evidence. The fact that the Employment Tribunal did not expressly mention gaming machine profits does not show that they did not have the point in mind – Retarded Children's Aid Society Ltd v Day [1978] IRLR 128 CA, per Lord Russell. Moreover, if bar profits were to be meticulously calculated, one would guess that gaming machine profits would need to have been apportioned, if a truly exhaustive analysis were to be attempted, at least between such profits as were derived from those who came only to drink but then played the machines, those who came only to play the machines, those who came to eat but then played the machines and those who came to both eat and drink and then played the machines, a ludicrously speculative exercise without there being extensive evidence on the point. In the absence of that the Tribunal was entitled to act upon the fact that the Club had a belief that was not shown to be unfounded that the bar lost money. We are told, and it would seem to be the case, that the Tribunal had the Club's accounts before it and also that those accounts showed that the bar lost money. There seems to be no hint of any ground for a belief that the bar's accounts had been "rigged" to build a case against Miss Marenghi.

11. As to whether the Employment Tribunal sufficiently investigated the costs of the Club's proposed changes and whether they would in fact reverse the downward trend in bar profits, the Employment Tribunal is not required exhaustively to test apparently sensible business reasons as long as it is satisfied that they are just that and are bona fide believed in. As to that the Tribunal heard evidence and was so satisfied; it is not issued with a crystal ball to find out whether the apparently sensible business plans adopted would, in fact, turn out as it had been hoped that they would. No error of law appears in this part of the case.
12. Turning to another ground of appeal the Tribunal held:-

"The Tribunal considered that, by February 2000, the Respondents were in the position where the only sensible thing they could do was to terminate the existing arrangement and to offer new terms. This is what the respondents did on 24 February, but the applicant refused the new terms and accordingly was dismissed. The Tribunal are satisfied that in this case the respondents have satisfied the test under Section 98(4) of the Act. The Tribunal, therefore, hold that the dismissal was not unfair."

The appellant complains:-

"In this case the Employment Tribunal considered whether the contract offered was a reasonable one. It is submitted that they failed to consider why, once the appellant had refused the offer of a new contract, it was reasonable for the respondents to dismiss her. In paragraph 30 of page 5 of the decision the Employment Tribunal accepted that the changes to the appellant's contract were very minor. The Employment Tribunal failed to provide further reasoning or justification as to why the appellant's failure to accept such minor changes in her terms and conditions of employment, would entitle the respondents to dismiss her for some other substantial reason."

However, the alternative to dismissing Miss Marenghi would seem to have been to keep on, as one of a bar staff of only two, an employee, thus 50% of the bar staff, who would not do the tasks required of the bar staff and against a background in which historical losses believed to have been suffered in the bar had led to a situation in which the Club reckoned it needed changes to be made to make the bar more attractive. Further, there is no hint that evidence was given that there were practical alternatives open to the Club other than to dismiss Miss Marenghi if food was to be served at all times during which the bar was open, as was the Club's business plan, a plan held to be good and sensible and involving, to some extent, an amalgamation of the bar and the kitchen. The Tribunal quoted Lord Denning's dictum in Hollister supra that:- "it must depend upon all the circumstances whether the re-organisation was such that the only sensible thing to do was to terminate the employee's contract unless he would agree to a new arrangement."

It plainly had that passage in mind when, a little later on in the very same page, it concluded that the respondents were in the position where the only sensible thing to do was to terminate the existing arrangement and to offer new terms. Moreover, whilst the changes were minor viewed from Miss Marenghi's viewpoint – she accepted the request made of her was reasonable – there is no record of evidence that the changes proposed to her work were not significant from the Club's point of view, as part of the sensible amalgamation of bar and kitchen with a view to turning the bar from loss to profit. In our view, the reasoning of the Tribunal sufficiently appears and there is no error in this part of the argument.

13. Now we turn to breach of contract. The Club paid only one week's notice. They should, under statute have paid 12 weeks. But the Employment Tribunal held that Miss Marenghi could and should have mitigated her loss by accepting the alternative job offered to her. The Tribunal held (with our emphasis):-

"The House of Lords held that a claim for a failure to give the minimum statutory notice is a claim for wrongful dismissal. The employee may recover damages, calculated with regard to his or her statutory rights, if he or she had not been given due notice, but subject to a duty to mitigate those damages."

We accept that as, pro tanto, an adequate summary of Westwood v The Secretary of State for Employment 1985 ICR 209 HL. It is to be remembered that at this point we are dealing only with a purely contractual claim. But Miss Marenghi submits that by offering her one week's notice the Club estopped itself from asserting that it need not pay a further 11 weeks. No authority is given to support there being such a personal bar and in our view Mr Harris was right in abandoning this argument. For all that, it is difficult to be gratified by a result in which a Club which had employed a person for upwards of 15 years could so easily escape after so mean an offer as an offer of only one week's pay. That, though, is not the end of argument in this area.

14. Miss Marenghi indicated that she would not accept the new job offer at some point between 24 February and 3 March 2000. The Tribunal held:-

"The Tribunal also considered that the applicant had failed in her duty to mitigate in this case by refusing to accept a reasonable offer of employment."

The Notice of Appeal urges:-

"The Employment Tribunal failed to take into account established legal principles, which provide that pre-dismissal refusals of offers of further employment, after the dismissal, are not relevant to the question of mitigation of loss."

We were not referred to authority for that proposition but it may be that Savoia v Chiltern Herb Farms Ltd [1981] IRLR 65 was in mind. Mr Savoia was not claiming in contract as such but for unfair dismissal. He was offered a promotion which he refused. He left and claimed constructive dismissal. He was held to have been fairly dismissed. At paragraph 16 in his case the Employment Appeal Tribunal said:-

"A complainant before the industrial tribunal does not have to show that he took steps to mitigate before he was actually dismissed."

But what is relevant in the case before us is that there was nothing unreasonable about the new job and that it was offered to begin exactly as the old one expired. What counted against Miss Marenghi was not that it was declined before the old one expired but rather that it was not accepted despite being open to be taken up exactly as and when the old one ended. We hold that the Employment Tribunal, in the essentially factual task of determining whether for contractual purposes there had been inadequate mitigation of loss by Miss Marenghi, was entitled to take that into account. Moreover, Mr Fairley adds that, properly construed, the dismissal was on 24 February albeit that the effective date of determination was not until 5 March. On that basis Miss Marenghi was at risk if she chose, after 24 February, not to mitigate. We see no error of law in this part of the case.

15. That leaves only one ground left of the Notice of Appeal. We need first to look at section 92 of the Employment Rights Act 1996. It provides:-

"(1) An employee is entitled to be provided by his employer with a written statement giving particulars of the reasons for the employee's dismissal –

(a) if the employee is given by the employer notice of termination of his contract of employment ….

(2) Subject to subsection (4), an employee is entitled to a written statement under this section only if he makes a request for one; and a statement shall be provided within fourteen days of such a request."

Section 93 provides:-

"(1) A complaint may be presented to an [employment tribunal] by an employee on the ground that-

(a) the employer unreasonably failed to provide a written statement under section 92, or

(b) the particulars of reasons given in purported compliance with that section are inadequate or untrue.

(2) Where an [employment tribunal] finds a complaint under this section well-founded, the tribunal-

(a) may make a declaration as to what it finds the employer's reasons were for dismissing the employee, and

(b) shall make an award that the employer pay to the employee a sum equal to the amount of two week's pay."

Sections 92 and 93 form part of Part IX of the Act headed "Termination of Employment" and not, therefore, part of Part X "Unfair Dismissal". It is to be noted that if the Tribunal finds a complaint under section 93 well-founded then whereas the making of a declaration is discretionary ("may make a declaration …"), the making of an award of a sum equal to the amount of two week's pay is mandatory ("shall make an award …"). The Tribunal held that the wrong label had indeed been applied when the Club answered by its letter of 30 March as we have already cited. If the wrong label was thus applied then, surely, the particulars given were either inadequate or untrue. The particulars, after all, first of all asserted that the client was not dismissed at all and then that she was made redundant. The Tribunal below and Mr Fairley seek to avoid the consequences of what would seem to us to have been inadequate or untrue particulars by allowing the same flexibility in relation to the particulars given under section 92 as is appropriate in relation to the Tribunal determining the reason or, if more than one, the principal reason for dismissal within section 98. But the passage from Abernethy in 1974, which we have cited and which the Employment Tribunal here relied upon, was not dealing with a mislabelling under section 92 (the predecessors of which did not even exist until 1978) but with ascertaining the reasons "shown" for the purposes of the contemporary antecedent of section 98(1). The two sections are dealing with different cases. Section 93 is simply concerned, so far as relevant, with whether the given particulars of reasons were or were not inadequate or untrue. Where, as here, the Tribunal, after hearing evidence, concluded that the dismissal was "for some other substantial reason" and not for redundancy and was a dismissal, we quite fail to see how particulars stating that the client was not dismissed and had been made redundant could be other than regarded as either inadequate or untrue. The fact that the Club's letter giving the particulars referred to an earlier letter of Mr Mann's, that of 24 February, which set out the facts more fully seems to us no defence against the inadequacy or untruth of the particulars because plainly the letter of 30 March, which gave the particulars and which stated that the client was not dismissed and that she was made redundant, was intended to either supercede or to summarise the earlier letters that were referred to. Unlike the position in Kent County Council v Gilham [1985] IRLR 16, the particulars given were far from "crystal clear" – see paragraphs 12 and 18. We conclude that the Tribunal erred in law in applying the Abernethy flexibility to section 92 particulars. Section 92 particulars are intended to make clear to the employee at the outset what sort of case he has to meet if he challenges his dismissal and here they failed to serve that purpose but inaccurately suggested that whether there had been any dismissal and whether there had been a redundancy were to be the battlegrounds.

16. Mr Harris indicated that there was no wish for a declaration on Miss Marenghi's part and it would in our view be entirely disproportionate to remit the matter to the Employment Tribunal. So far as concerns her appeal under sections 92 and 93, we set aside the judgment below and award her a sum equal to two week's pay under section 93(2)(b). We would expect the parties to be able to agree that figure; if not the matter is to be restored to us in writing but at risk of a liability in costs should either side have conducted this further part of the case unreasonably. That modest change apart, we have detected no error of law in the Tribunal's extended reasons, and, that change apart, we dismiss the appeal.