United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR WESTGATE (Of Counsel) Instructed by: Messrs Ole Hanson & Partners Solicitors 153 Kennington Road London SE11 6SE
For the Respondent	MR P MEAD (Of Counsel) Instructed by: Messrs Batchelors Solicitors Charles House 35 Widmore Road Bromley Kent BR1 1RW


 


MR JUSTICE HOOPER

1. This is an Appeal against the decision of the Employment Tribunal held at London (South) chaired by Mr D Booth. It was the unanimous decision of the Tribunal that Mrs Cooper's application be dismissed. She had alleged that her resignation on 30 June 1999 as an employee of the partnership amounted to constructive dismissal which, in all the circumstances, was unfair.
2. She further claimed breach of contract, failure to provide itemised pay statements and unlawful deductions from pay. Following a preliminary hearing, there are now only three grounds. They can be briefly described in following way. A ground relating to sick pay, a ground relating to the Appellant's occupation of a flat and the unfair dismissal claim.
3. Dr Kakad joined the Practice in 1981. In 1988 Dr Dickinson joined the Practice. They are the 2 named Respondents. In 1989 the Appellant joined the Practice as an Assistant/Receptionist. In 1993 she moved into a flat above the surgery. The flat was vacant at the time and the Practice charged no rent and met the bills for Council tax, heating and electricity.
4. In 1996 the Appellant was promoted to Practice Manager. In 1998 things started to go wrong. The Practice asked the Appellant for the use of a room in the flat. The doctors, so they claim, needed it for the Practice. That request was refused by the Appellant. In October 1998 there was an argument about the use of that room in the flat. On 30 November 1998 the Practice served 14 days notice to quit in respect of the flat. The covering letter claimed that she was a licensee only as she was not paying rent or providing any consideration. That was disputed by the Appellant's solicitors who took the view that the occupancy of the flat was part of the terms of her contract.
5. In December 1998 there was a meeting following which the Appellant complained that she was given a verbal warning about the matter of the flat. Six days later, on 7 December 1998 the Appellant went off sick and never worked again for the Practice. After 12 weeks the Respondents reduced her pay to half pay. Thereafter she continued on half pay for a further 8 weeks.
6. In March 1999 there was a solicitors' letter requiring possession of the flat. Thereafter in May and June there was a series of acrimonious letters between solicitors for the Respondents and solicitors for the Appellant particularly about payslips and other complaints being made by the Appellant.
7. On 7 June 1999 the Appellant found other accommodation and moved out. On 21 June 1999 the Appellant's solicitors wrote requesting the payslips and stating that she would resign on 25 June if she did not receive these. On 30 June a letter of resignation was sent by the Appellant to which we shall refer in detail later in this judgment.
8. We turn to the first ground relating to sick pay. At page 6 of the bundle will be found the words "THE FACTS" followed by the words: "We found the facts to be as follows." The balance of paragraph 8 sets out the facts to which we have already referred and various other matters. It also sets out the history of the occupancy of the flat and we will return to that briefly later.
9. Although the opening words of paragraph 8 suggest that the Tribunal was making findings of fact in the succeeding paragraphs, paragraph 10 rehearses the case for the Appellant and the Respondents as well as setting out various findings of fact. Paragraph 10 reads as follows:

"Originally the staff did not have written contracts of employment. When Mrs Cooper went on a course leading to qualifications in practice management, she was taught the elements of employment law and in particular that staff should have written particulars of their employment contracts. She therefore copied a precedent obtained from the course and put it to the Respondents as a suggested contract. The Respondents agreed in respect of all the other staff who duly signed their contracts. However, Mrs Cooper wanted a contract with more beneficial terms to her than the rest of the staff. She therefore left blank the clauses relating to leave and sick pay because she was hoping to get more leave than the rest because of her status and seniority. This was not discussed and agreed and the Respondents did not sign this contract. Mrs Cooper was paid on Grade 5 of the practice managers' scale agreed by the Department of Health for the purpose of State financing of general practitioners. It was the Respondents case that she enjoyed the same terms as other staff"

It can be seen therefore that, although the paragraph 10 does include a number of findings of fact, it includes the final sentence setting out the Respondents' case without making a finding of fact about it. We shall return briefly to the words "this was not discussed and agreed" in a moment.

10. We turn to paragraph 23(i)(a) of the reasons in which the decision as to the sick pay issue was decided. The paragraph also refers to holiday entitlement and we shall include that although there was no appeal from that part of the decision.

(i) The contractual terms

(a) Salary sick pay and holiday. It is clear that the Applicant wanted better conditions than the rest of the staff and the Respondents did not accept this. We can either decide that there was no agreement at all and therefore nothing to enforce or we can decide that what the Respondents were prepared to grant and did grant was what was agreed. Section 1 of the Employment Rights Act requires them to provide details of holiday in a contract and the low now requires paid leave. We prefer the Respondents' evidence and we decide that the legal allowance was 20 days and sick pay was eight weeks on full pay and 16 weeks on half pay. [In fact the Appellant was treated more generously than that in practice] It is clear to us that the Respondents by refusing to sign her contract or to accept her suggestions did not agree that she should have better terms and conditions with regard to holidays and sick pay than the rest of the staff. The Respondents were not therefore in breach of contract by paying what they did after the Applicant went sick on 7 December 1998. The salary position remained confused but reference to the amount actually paid revealed an open salary of £15,620, which was more than the Applicant was claiming. … We therefore cannot find for her."

11. Before examining that in more detail we ought to look at the Appellant's case which will be found set out at page 46 of the bundle. It was the Appellant's case first of all that other people had been paid while off sick. However, there was no evidence as to the length of the periods during which they had been paid whilst off sick and (as we were told by both Counsel in the case) no other employee has been off work for as long as the Appellant.
12. It was submitted to the Tribunal that the Appellant, not having agreed with the Respondents that she should be subject to the same terms in so far as sick pay is concerned as the other staff members, the Tribunal ought to exercise its skill and judgment and determine for what reasonable period should she be entitled to sick pay. The Appellant put forward a period of 1 year given her status and long standing. We find that a somewhat extraordinary proposition.
13. The Respondents' case can be found first of all in the statement given for the Tribunal by Dr Dickinson. In paragraph 9 of that statement (page 110) he wrote:

"As set out in Paragraph 4 of the Notice of Appearance dated 12 August 1999 Dr Kakad and myself met with Lisa Cooper in or about November 1996. The purpose of the meeting was to agree Lisa's contract of employment. As referred to above she had become Practice Manager in October 1996 and we had paid for her to go on a course. At the meeting she produced to us a contract on which she had written her name, address, salary details and so on. We all agreed that the contract as drafted reflected the basis on which she was employed and would indeed continue to be employed. Subject to the salary, the basis of her employment was exactly the same as for the other members of staff and I do not recall her saying that she should have any holiday entitlement that was different to anybody else. We would not have agreed this if she had. She said nothing about sickness entitlement at this meeting and I recall that she was told that she should fill in 20 days as to holiday (as per everybody else) and that I reconfirmed our agreement that her entitlement to sickness pay was as drafted in the contract she produced to us."

14. That contract included, under the heading "sick pay", the same terms as were being offered to the other staff. However, against the Appellant's title as practice manager there was a footnote and under the footnote the periods had not been set out. Notwithstanding this, it was Dr Dickinson's evidence that they had agreed that her entitlement to sick pay would be the same as the others.
15. Mr Westgate referred us to the Respondents' submissions which can be found at page 53 of the principal bundle. In paragraph 7 of the submissions it was being argued that there was no contractual entitlement to full sick pay. Alternatively, it was being suggested that the Appellant was paid in accordance with her entitlement namely 8 weeks at the basic salary, and 16 weeks at half salary. In fact she received more generous treatment than that.
16. We turn back therefore to the decision. We have already indicated that paragraph 10 did not resolve all the factual issues. We turn to the sentence in paragraph 10: "This was not discussed and agreed". It is difficult to make sense of those words. There is, we accept, contradiction between these words and what we find set out in paragraph 23. Nonetheless, the Tribunal did reach a conclusion in paragraph 23(i)(a) namely:

"We prefer the Respondents' evidence and we decide that … sick pay was eight weeks on full pay and 16 weeks on half pay."

It was submitted on behalf of the Appellant that the third sentence of the paragraph starting with the words: "We can decide that there was no agreement …", suggests that the Tribunal did not really understand what it was having to do. It is not easy to follow that sentence. However, we have no doubt that the Tribunal was making a factual finding that agreement had been reached on the issue of sick pay. Mr Westgate sensibly accepted that if the Tribunal did so decide then that would be fatal to this ground of appeal. We find it was so decided and that this ground does not succeed.

17. We turn to the ground concerning the flat and we start with the paragraph at the top of page 7:

"The flat had had various uses and most recently had been occupied by the daughter of a former partner. It was vacant in 1993 and Mrs Cooper moved in with her husband and child. She was not charged rent and the practice met the bills for Council tax, heating and water. It was Mrs Cooper's claim that the consideration for this agreement was that she would be available for phone calls and minor tasks outside her working hours and the occupation of the flat would add to the security of the building. It was the Respondent's case that the flat was provided to her as a favour only because of her then accommodation problems and that they required no additional duties of her. Even if she had answered the phone out of hours originally there was no need to do so now because they subscribed to a calling service. She therefore had no more than a bare licence to occupy which could be withdrawn at any time."

Notwithstanding that this passage appears under the heading "THE FACTS", there are no findings of fact there other than the general and uncontroversial findings at the beginning. The Tribunal was setting out the two competing claims which it had to resolve. It resolved the issues in paragraphs 23(i)(b) and 24:

"23(i)(b) The flat. We ask ourselves whether the arrangement over the flat was a contractual benefit attached to the job or was it, as claimed by the Respondents, a favour granted to her for no consideration.

We balance the following factors. Against the Applicant is the fact that there was no provision in the unsigned contract of employment for accommodation even though she herself drafted that contract. There was no rent payable, there was no written agreement, there was no evidence that the occupation depended upon employment or that employment depended upon the occupation of the flat. The duty as described by the Applicant particularly after night calls ended could not be proper or even nominal consideration for such a valuable benefit as a flat in London inclusive of outgoings. In favour of the Applicant is that she was given the flat because she was an employee and that initially the out of hours calls were an essential part of her job and that this established a contractual element which continued to 1999.

"24 On balance we hold that this was not an entitlement which could be seen as part of her contract of employment and therefore the Respondents in seeking to repossess it were not acting in breach of the employment contract. We considered below whether the Respondent's behaviour over the flat could be considered as eroding the implied clause of trust and confidence."

We return to the last sentence when we consider the third ground relating to unfair dismissal.

18. Mr Westgate "jumped on" the use of the words "established a contractual element" in the last sentence of paragraph 23. He said that the Tribunal was there concluding that there was some contractual relationship relating to the flat which had come to an end in 1999. It seems clear to us that the Tribunal was merely setting out the two competing cases and not deciding that there was a contractual element. The issue was resolved against the Appellant in paragraph 24.
19. Some criticism is made of the failure to articulate more clearly the reasons why the Tribunal preferred the Respondents' case over the Appellant's case. In his skeleton argument, in paragraph 10, Mr Westgate submits that the Tribunal was wrong to take into account the adequacy of consideration provided by the Appellant and to conclude that this was not a proper consideration for so valuable a benefit as a flat. He submitted that this was an error in two respects. Whether or not there is a contract does not depend on the adequacy of the consideration and, secondly, it is wrong to analyse the position only by considering additional tasks which were expressly related to the occupation of the accommodation. We take the view that there is no merit in this argument.
20. The Tribunal was entitled to look at all the circumstances including the absence of rent, the value of the flat and the omission from the unsigned contract of employment and to decide whether or not the parties had agreed that she had a right to occupy the flat as part of her contract of employment. We see no merits in this ground.
21. We turn finally to the ground relating to unfair dismissal. In paragraphs 19 and 20 the Tribunal summarises the letters regarding the payslips and in paragraph 20 sets out the letter of resignation. The letter reads as follows:

"I am writing to advise you that I am resigning from my job with immediate effect. It is clear from the way that you have behaved towards me that I can no longer have any trust and confidence in you as my employers. You have intimidated and harassed me causing me ill-health. You threatened me with eviction from my lawfully held accommodation putting forward a series of bogus reasons for wanting the property back. This forced me to move out. You have stopped paying my full wages while I have a contractual right to sick pay. I have been unable to provide for my family as a result. You have not given me any payslips and so I have no idea what I have been paid. You have not paid me since April 1999 and I have not even received any statutory sick pay. I did not even get a P60 at the end of the financial year. You have failed to deal with any of the matters raised in correspondence with your solicitors despite the clear urgency of the things raised. Even your solicitors have ignored my solicitors' letters. You have failed to respond to a question from the DSS to provide information and have caused me immense distress and personal and financial inconvenience. All this had added to my ill-health. My solicitors wrote to your solicitors on the 21 June 1999 making it obvious that I have had enough and asked for a reply to my concerns by 25 June at the latest. There has been no response to date. You are clearly acting in a repudiatory breach of contract and I accept this as bringing the employment relationship to an end. I regard myself as constructively dismissed."

22. To understand the submissions being put forward by the Appellant, it is helpful to look at the closing submissions prepared on her behalf by Mr Tsamados. In paragraph 1.2 can be found a passage from Lord Denning's judgment in Western Excavating (ECC) Ltd v Sharp (1978) IRLR 27 CA, in which he states that an employee is entitled to treat himself as constructively dismissed if the employer is guilty of conduct which is a significant breach going to the route of the contract of employment or which shows that the employer no longer intends to be bound by one of more of the essential terms of the contract.
23. In 1.5 it is submitted that "this essentially involves a significant breach going to the route or which shows the employer no longer intends to be bound by one or more of the essential terms of the contract." Set out in paragraph 1.6 are the breaches of the express and implied terms of the contract of employment upon which reliance is placed:

(a) the provision of employment

(b) the payment of wages

(c) her statutory entitlement to itemised pay statements.

As to (a) and (b), we have upheld the decision of the Employment Tribunal. That leaves (c), her statutory entitlement to itemised pay statements. In paragraph 1.7 it was submitted that there had been a breach of the duty of mutual trust and confidence to be implied into a contract of employment. Reference is made to a passage from the speech of Lord Steyn in Mahmud v The Bank of Credit and Commerce International SA (1997) IRLR 462 HL:

""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 was submitted that the Appellant's case of constructive dismissal was based on a course of conduct by the Respondent over a period of time, namely:

"(a) the attempts to obtain possession of the flat

(b) Dr Dickinson's behaviour in particular

(c) not receiving her full wages and the ensuing financial difficulties

(d) deducting alleged over paid wages and not indicating at what rate

(e) not providing pay slips

(f) not co-operating with the DSS/Council

(g) creating difficulties in claiming benefit

(h) creating difficulties in obtaining alternative accommodation

(i) not answering correspondence

(j) not showing any concern for the Applicant and the difficulties she was facing"

In so far as (a) is concerned the Tribunal had already found that there had been no a breach of any contractual term in relation to the attempts to obtain possession of the flat. As already indicated in the passage in paragraph 24, to which we have made reference, the Tribunal had to consider whether the Respondent's behaviour over the flat could be considered as eroding the implied duty of trust and confidence.

24. In so far as Dr Dickinson's behaviour is concerned, it is to be noted that this was not referred to in the letter. In so far as (c) and (d) are concerned, the allegations which she was making were not upheld by the Tribunal. As far as (e) (f) (g) and (h) are concerned that essentially related to the issue of the pay slips and the alleged consequence of not providing the pay slips. (i) was not answering correspondence, although one must remember that the correspondence was (by the large) between solicitors. (j), in our view, adds little to the overall picture. The Respondent, in its skeleton argument prepared for the hearing, submitted that the issue was whether or not any breach was so sufficiently serious as to constitute a fundamental repudiation of the employment relationship.
25. We turn now to in the reasons given by the Tribunal:

"26. We come finally to the complaint of unfair dismissal. We have found that the Respondent was not in breach of the contract terms relating to pay, holiday and sick pay and have held that occupation of the flat was not part of the contract.

27. We therefore turn to the way in which the Respondents dealt with the Applicant as listed in her letter of resignation, namely harassment by false claims of needing the accommodation, giving unduly short notice, not giving her itemised wage statements on time or a P60 for 1998/9 until the end of June and failing to deal with her letters when all the time she was unwell.

28. The first thing we say is that we are not convinced that the Respondents acted malevolently towards the Applicant in the dealings over payslips and sick pay. She after all was in charge of wages and her absence in this small concern was bound to cause problems. The delay in the payslips was because they were kept at the surgery and she could have picked them up at any time. The delay in reacting to the DSS enquiry was because of the need to refer payment to accountants. It clearly does not reflect well on the administration of the practice but is it so fundamental that the Applicant could properly resign without notice?

29. So far as the flat is concerned we note that Mr Cooper himself told the Respondent that they would not leave without a Court Order. The Applicant could therefore hardly complain of the Respondents took recourse to law. Furthermore they did not implement the time limits and she left before any proceedings were commenced.

We therefore find although distressing the separate matter of the flat was not a breach of her employment contract.

30. The Applicant had lost a flat, she run out of sick pay, she was not fit to return to work. Her solicitors had been in antagonistic correspondence with her employers and it was against this background that she resigned. The overall situation could have been more sensitively managed but that does not account to a fundamental breach of her contract of employment."

Mr Westgate attacks in paragraph 28 the use of the word "malevolently" and suggests that the Employment Tribunal did not understand that the proper test to apply is an objective test as he sets out in paragraph 15 of his skeleton argument relying on a passage from Mahmud. We cannot accept that submission. It is quite clear that what the Tribunal was only responding to the allegations of harassment summarised by them in paragraph 27. Harassment requires deliberate conduct. It was important that the Tribunal made a finding of fact about the alleged harassment. It held that the Respondents had not acted malevolently towards the Applicant in the dealings over the payslips and sick pay.

26. Both in paragraphs 28 and 30 reference is made to the word "fundamental". It is submitted that the Tribunal did not understand that it had to examine the whole course of conduct rather than look for breaches of contract and ask whether they were fundamental. In our judgment, the Tribunal did know what test to apply, as the last sentence of paragraph 24 shows. We unanimously take the view that the Tribunal met its obligations to state the law and to apply it.
27. Having decided that, in so far as the pay slips were concerned, the matter was not so fundamental that the Appellant could properly resign, the Tribunal went on in paragraph 29 to consider the conduct about the flat. Mr Cooper had told the Respondent that they would not leave without a Court Order. It is not surprising therefore that the Tribunal reached the conclusion that the Appellant could hardly complain that the Respondents "took recourse to law". The Tribunal also pointed out that Mr and Mrs Cooper did not in fact comply with the time limits and that they left before proceedings were actually commenced.
28. The Tribunal did not find a breach of the employment contract. Given that it had already found that there was no contractual obligation to a flat under the terms of her contract of employment, it must follow that the Tribunal was asking itself whether the conduct of the Respondents amounted to a breach of the duty of trust and confidence.
29. In paragraph 30 the Tribunal refers to the "antagonistic correspondence". The Tribunal concluded that the reason why the appellant resigned was the fact that she lost her flat, that she had run out of sick pay and was not fit to return to work. That, according to the Tribunal, was the background against which her resignation should be understood. Whilst accepting that the overall situation could have been more sensibly managed, it did not amount to a fundamental breach of her contract of employment.
30. Matters such as this are essentially matters for the Employment Tribunal. The members constitute an "industrial jury". These are matters particularly within the knowledge of a Tribunal. This Appeal Tribunal would be extremely reluctant to interfere with findings of fact of this kind and we see no justification for doing so in this case. We add, although it is not necessary to do so, that the decision reached by the Tribunal on unfair dismissal was, in our view the only possible conclusion.