United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR NICHOLAS SIDDALL (of Counsel) Instructed by: Messrs Pearson Hinchcliffe Solicitors Albion House 31 Queen Street Oldham Oldham OL1 1RD
For the Respondent	MR MARTYN WEST Representative Peninsula Business Services Ltd Riverside New Bailey Street Manchester M3 5PB


 


HIS HONOUR J McMULLEN QC

1. This case is about constructive unfair dismissal. We will continue to refer to the parties as Applicant and Respondent. It is an appeal by the Applicant in proceedings against a Decision of an Employment Tribunal sitting at Manchester, Chairman Mr Brian Doyle, on 13 and 14 August 2001, promulgated with Extended Reasons on 27 September 2001. The Applicant represented himself, the Respondent was represented by a consultant, as here.
2. The Applicant claimed unfair dismissal, unlawful deductions from pay and breach of contract. The Respondent contended the Applicant resigned; alternatively that if he were dismissed it was for conduct and the dismissal was fair; it denied the other claims.
3. The essential issue relevant to the appeal was defined by the Employment Tribunal as arising under the Employment Rights Act 1996, section 95(1)(c), constructive dismissal, described as follows:

"(1) For the purposes of this Part an employee is dismissed by his employer if..

…

(c) the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct"

4. The Employment Tribunal found that the Applicant had not been dismissed by the Respondent. It upheld his claims for breach of contract and for the making of unlawful deductions. This led to an agreement between the parties that the Applicant should be paid £865; no issue arises about those two latter claims.
5. The Applicant, however, appeals against the finding that he was not dismissed on a number of grounds set out in an amended Notice of Appeal and a Skeleton Argument and oral submissions today. Essentially the Applicant claims that the Tribunal erred in finding that the Applicant had affirmed the contract; that the Tribunal did not act correctly when explaining the purpose, as the Respondent saw it, of the absence on sick leave; and that the Tribunal failed to take account of an accumulation of breaches of contract in approaching the question of resignation. The remedy sought is the substitution by our Appeal Tribunal of a Decision that the Applicant was unfairly dismissed, alternatively, that this case be remitted to a different Employment Tribunal.
6. The Respondent is a national brewer and owner of pubs. The Applicant was employed as an assistant manager from 2 June 1999 by its predecessor in title until the relationship ended by resignation on 12 June 2001. At a preliminary hearing on 16 April 2002 the EAT, presided over by Mr Justice Wall, held as follows:

"1. In this case, the Appellant, Mr Warren, was employed by the Respondents as an assistant manager of one of its public houses. At the material time the Appellant was the relief manager of the Hare & Hounds Public House in Oldham, and ran it whilst the full time managers were on holiday. During that period, the Appellant appears to have had a number of difficulties not of his own making, including considerable problems with the computerised till. The result of this was that he was unable to ascertain whether the sums he was banking from takings in the public house were accurate. He also appears to have been unable to obtain any material assistance from the Respondents.

2. The result was that on 14 March 2001, when the full time managers returned from holiday, there was an argument between them and the Appellant, during the course of which the former abused the Appellant; and accused him, amongst other things, of stealing money, lying and – in effect – of being so drunk as to be unable to manage the public house properly. The Tribunal accepted that this behaviour on the part of the full time managers – occurring as it did in front of customers – was sufficient to constitute a fundamental breach of contract.

3. The Appellant then went on sick leave, and sought to invoke the company's grievance procedures. He wrote a number of letters to the Respondents which appear to have gone unanswered. The company appears to have insisted on the Appellant being proved fit to work before it would invoke the grievance procedures and there appears to have been a degree of confusion about precisely what was being asked of the Appellant. In any event, on or about 12  June, the Appellant resigned.

4. His principal case before the Tribunal was that he had been constructively dismissed because of the way he had been treated and because the Respondents failed to deal with his grievances. He argued that this course of conduct constituted a fundamental breach of contract of employment. The Employer's case was that they had not failed to deal with his grievances and that he had resigned.

5. This, of course, is a familiar area of dispute and usually depends upon the Tribunal's finding of fact. However, in the instant case, the Appellant argues, amongst other points, that the Tribunal erred in law in particular in failing to have any proper regard to the fact that the events of 14 March and the Respondents' subsequent contact, represented a cumulative series of breaches of his contract of employment and that the fact that the Appellant did not resign then and there on 14 March did not mean that when he did resign on 12 June he was not resigning in response to a fundamental breach.

6. In very helpful argument before us this morning, Mr Glyn, on behalf of the Appellant has pointed to the fact that in his submission there were a total of some 9 breaches of the Appellant's contract of employment. There was first of all the way he was left to do the relief work between 6 and 13 March which he sets out in some detail in a letter he wrote to the Respondents. There is secondly, the fundamental breach which is agreed, namely the way he was spoken to by the regular managers when they returned from holiday. There is also an acceptance, Mr Glyn argues that the initial administrative handling of his grievance procedure was defective and in particular item 4, that when the Appellant went to see an Occupational Health Advisor, he was in fact presented with a medical examiner The manner in which that took place was, it is said, a breach of his contract. There was also, and this we feel of particular significance, a failure (as the Tribunal found) to pay sick pay. There was also a failure (as the Tribunal found) to pay holiday pay. There was a failure (as the Tribunal found) to pay relief pay and there was also an administrative change in the way payments were made from a calendar to lunar monthly payments, which again caused the Appellant expense. Finally, Mr Glyn relied on the fact that the Respondents did not tell the Appellant the reason for seeking a medical report and indeed no prior position was sought for a medical examination.

7. Mr Glyn submits that the failure to take into account these breaches as a cumulative total vitiates the Tribunal's decision. The impression, given by the reasons is that there was simply one breach and that breach, was insufficient to enable the Appellant properly to be deemed to be constructively dismissed. But taken together, Mr Glyn argues, they amount to cumulative breach, which is sufficiently fundamental to entitle the Appellant to resign. This compartmentalisation of the breaches, Mr Glyn argues, vitiates the Tribunal's decision."

On that basis the EAT ordered a full hearing, which is today.

7. It also invited the Chairman to provide notes of one aspect of the evidence. The Chairman did so; we are grateful to him. Mr Siddall did not pursue any aspect of those notes except for one small matter which arises in a subsidiary way. The Employment Tribunal directed itself by reference to the relevant provisions of section 95. It also said that it directed itself in accordance with the relevant law. This is what it said:

"Relevant Legal Principles

The relevant legal principles by which the Tribunal directed itself will be apparent from its reasoning below."

As will become apparent, we regret to say that it did not address precisely the legal principles which, in that short sentence, it said it was going to do. The Tribunal concluded that the Applicant did not resign, pursuant to a repudiatory breach by the employer.

8. The relevant authorities in this case disclose a number of principles. First, in Woods -v- W M Car Services [1981] ICR 666 Mr Justice Browne Wilkinson, giving the judgment of the EAT at 671, said this:

"Experience in this appeal tribunal has shown that one of the consequences of the decision in the Western Excavating case has been that employers who wish to get rid of an employee or alter the terms of his employment without becoming liable either to pay compensation for unfair dismissal or redundancy payment, have had to resort to methods of "squeezing out" an employee. Stopping short of any major breach of the contract, such an employer attempts to make the employee's life so uncomfortable that he resigns or accepts revised terms. Such an employer, having behaved in a totally unreasonable manner, then claims that he has not repudiated the contract and therefore that the employee had no statutory right to claim either a redundancy payment or compensation for unfair dismissal.

It is for this reason that we regard the implied term we have referred to as being of such importance. In our view, an employer who persistently attempts to vary an employee's conditions of service (whether contractual or not) with a view to getting rid of the employee, or varying the employee's terms of service does act in a manner calculated or likely to destroy the relationship of confidence and trust between employer and employee. Such an employer has therefore breached the implied term. Any breach of that implied term is a fundamental breach, amounting to a repudiation since it necessarily goes to the root of the contract; see Courtaulds Northern Textiles Ltd -v- Andrew [1979] IRLR 84."

9. The reference to Western Excavating is, of course, to the judgment of the Court of Appeal, and in particular, the reference to Lord Denning's judgment, cited in 1978 IRLR 27 at paragraph 21, where he refers to constructive dismissal and where he comes to the conclusion that the contract test for determining constructive dismissal is to be approved, rather than the reasonableness test which was in issue at that stage. The contract test is described by Lord Denning at paragraph 15 as follows:

"If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment; or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract; then the employer is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant, without giving any notice at all, or alternatively, he may give notice and say he is leaving at the end of the notice. But the conduct in either case must be sufficiently serious to entitled him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains: for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract."

10. Following that, the Court of Appeal decided Lewis -v- Motorworld Garages Ltd [1986] ICR 157. Guidance was given to all engaged in this field of endeavour by Lord Justice Glidewell, who summarised the relevant authorities at 169D - 170A. We summarise what he says (at 3), having referred to both Western and Woods.

"The breach of this implied obligation of trust and confidence may consist of a series of actions on the part of the employer, which cumulatively amount to a breach of the term, though each individual incident may not do so. In particular in such a case the last action of the employer which leads to the employee leaving need not itself be a breach of contract; the question is, does the cumulative series of acts taken together amount to a breach of the implied term? See Woods…..This is the "last straw" situation."

In addition, we have been referred to Goold -v- McConnell [1995] IRLR 516, where it was held that a failure to redress a grievance can itself constitute a breach of contract.

11. Counsel submitted that the Employment Tribunal had erred in law in that it applied only 'echoes' of the Western Excavating test, since there was no mention of fundamental breach, or of affirmation in the Reasons, see paragraphs 30 - 31. There was no direction on the 'last straw' doctrine, as enunciated in Lewis and, as the Applicant made clear in his letters complaining and seeking a grievance, there was a catalogue of issues he wished to have resolved.
12. Further, it was submitted that the Tribunal had failed to consider Goold when it held that the Applicant had wrongly thought that the grievance was not being handled properly. As Mr Siddall put it, given the way in which the Applicant presented in writing his claims to his employer, there ought to have been mention of the 'final straw' doctrine, especially because the Tribunal, the Chairman, in the Notes of Evidence, recorded this:

"The final straw was that he was getting nowhere about his grievance."

13. The Applicant further criticised the Employment Tribunal's Decision in that it compartmentalised the three claims for breaches of the contract on the one hand, and the unfair dismissal claim on the other, whereas, in truth, they were interconnected. A further criticism based on compartmentalisation was the separation of the different periods, during which the Applicant was dissatisfied. The Tribunal looked at events (1) up to and including 13 March, (2) events on 14 March, and then (3) from that date to 12 June. It made decisions about each individual period. Finally, Mr Siddall submitted, that there was a failure to consider the final straw and the accumulation of grievances together, and to consider, if they were less than breaches, the acts of the employer, referring to the judgment of Lord Justice Glidewell (above).
14. On behalf of the Respondent, Mr West submitted that the Decision of the Tribunal was correct: first, that the Applicant had not alleged that there was an accumulation of events, secondly, that the Tribunal must have had all the events in its mind, and did do so when it set out its reasoning in paragraph 31, and held against the Applicant that he wrongly believed that the Respondent was not handling the grievance properly. Mr West submitted that the Decision is 'Meek compliant' - a reference to 1987 IRLR 250, the Tribunal's duty to give reasons and let the parties know why each had won or lost - and finally, that the Tribunal did look at each aspect of the Applicant's claim as part of an accumulative claim, since it held that the grievance was itself improperly founded, or perhaps mistaken by the Applicant.
15. In our judgment, the Tribunal made decisions about each individual aspect and considered only whether each amounted to a breach of contract. So, for example,

(a) the Tribunal held that none of the events which occurred prior to 14 March, amounted to a breach of contract, whether of a fundamental or a repudiatory kind.

(b) the events on 14 March were held by the Tribunal to be a breach. It said this:

"….the joint managers of the public house in question acted in an unacceptable manner towards the applicant and this would have amounted to a breach of the implied term of mutual trust and confidence on their part However, again, the Applicant did not resign in response to any such breach".

(c) of the third phase, up until 12 June the Tribunal said:

"The Tribunal is satisfied that the respondent committed no breach of the contract of employment in the way it handled the applicant's grievance."

The Tribunal erred in failing to apply the more flexible approach enjoined by Lord Justice Glidewell, which is to look at matters beyond simply breaches in order to determine whether there was a cumulation of acts, breaches or otherwise.

16. It also erred in deciding that, since the final event (the Applicant's claim to have his grievance redressed) was not a breach, there was no breach at all. That, again, is an error, when considered against the guidelines of Lord Justice Glidewell, since the final matter need not itself be in the nature of a breach. It also appears to us that the Tribunal has, in the passage we cited at paragraph 15(b) above, misdirected itself in law.
17. As Mr Siddall engagingly put it, a breach is a breach. The response to the breach is a matter which will have varying legal consequences, but in that passage there is a finding that there was a breach by reason of the action of the Lamberts, the joint managers, on 14 March, and all that needed to be considered was whether on that occasion there was sufficient justification for the Applicant to walk out of the premises. It seems to us that the finding that the conduct of the managers invoked a breach of the term of mutual trust and confidence, is itself sufficient to find in favour of the Applicant's case that there was at least one breach of contract here.
18. However, the story does not end there because, consistent with the Tribunal's approach to segmenting its analysis of the events, it then went on to consider the other two complaints made by the Applicant, and found, in his favour, that there was a breach of contract in failing to pay him for his relief pay, in failing to pay his sick pay, in making a unilateral change to the pay date, and in failing to pay his holiday pay for 1999. Those breaches of contract are not appealed by the Respondent here.
19. It is, in our view, inconsistent of the Tribunal not to have included those findings within its general approach to the question of repudiation. Not only do they indicate conduct by the employer of an unacceptable nature, but are breaches of the contract of employment. When added to the other significant breach of the term of trust and confidence and the other events, categorised as less than a breach, they do constitute a series falling within Lord Justice Glidewell's 'last straw' doctrine.
20. It therefore makes it unnecessary for us to deal with the complaint that the Employment Tribunal failed to deal expressly with two of the four aspects of Western, but it is worth noting that the Tribunal does not say in terms that the Applicant affirmed the breach of mutual trust and confidence, and there is no consideration by the Tribunal of the doctrine in Goold -v- McConnell that a failure to follow a grievance procedure may itself constitute a breach of contract.
21. True it is that the Tribunal criticised the Applicant for having the wrong appreciation of the way in which the Respondent was handling his grievance, but all of the documents included within his grievance point to his assertion that there are many things with which he was dissatisfied. Simply to that he got the wrong end of the stick about the handling of the grievance ignores that he was adjudged by this Tribunal to be correct in a large number of the criticisms he made of his employer, and for which he was awarded compensation. In those circumstances, we hold that Mr Siddall has shown the Tribunal has erred in law in its approach and we turn now to consider the remedy.
22. Having heard further submissions by the advocates following our judgment, we have decided that this is a case in which we will substitute our judgment for that of the Employment Tribunal and decide that this is a dismissal. The next issue is fairness. Given a correct direction on the law as to all the acts and breaches or contract, the facts found by the Tribunal point ineluctably to a decision that the dismissal was unfair. Given the Tribunal itself found breaches of contract, one of which was a breach of the implied term of mutual trust and confidence, the conclusion which it would reach, if properly directed, is, unarguably, that there is a dismissal and that it is unfair.
23. For those reasons, we will allow the appeal and remit the case with our substituted judgment for a remedy hearing by the same Tribunal, or if that is not practicable, by a differently constituted Tribunal at the discretion of the Regional Chairman.