United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Written representations on behalf of the Appellant


 


HIS HONOUR JUDGE J McMULLEN QC

1. This case is about constructive unfair dismissal and the judgment represents the view of three members of this Tribunal who carefully pre-read the papers. We refer to the parties as Applicant and Respondent.

Introduction

2. It is an appeal by the Respondent in those proceedings against a decision of an Employment Tribunal sitting at Manchester on 10 and 17 January 2003, Chairman Mr J D Brain, promulgated with Extended Reasons on that date. The Applicant represented herself, the Respondent was represented by Mr Robert Cleeve, a Consultant. The Applicant claimed unfair dismissal, the Respondent denied dismissal, contended the application was misconceived, sought a pre-hearing review and asserted it would vigorously pursue costs against the Applicant. He contended the application was made essentially to support the Applicant's sister's complaint of unfair dismissal to the Employment Tribunal.

The issue

3. The Employment Tribunal set out the essential issue. It was simple: did the Applicant resign in response to a fundamental breach of contract by the Respondent, and if so, had she affirmed any breach on the Respondent's part prior to her resignation?

The legislation

4. The legislation is contained in sections 95(1)(c) 98(1) and 98(2) and 98(4) of the Employment Rights Act 1996:

"95. - (1) For the purposes of this Part an employee is dismissed by his employer if
(and, subject to subsection (2) and section 96, only if) -

(a) the contract under which he is employed is terminated by the employer (whether with or without notice), 
(b) he is employed under a contract for a fixed term and that term expires without being renewed under the same contract, or
(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. …..

98. - (1) In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show-

(a) the reason (or, if more than one, the principal reason) for the dismissal, and
(b) that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2) A reason falls within this subsection if it-

(a) relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,
(b) relates to the conduct of the employee,
(c) is that the employee was redundant, or
(d) is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.

 ….

(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)-

(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and
(b) shall be determined in accordance with equity and the substantial merits of the case."

Implicitly, in accordance with those relevant provisions, for it refers to parts 9 and 10 of the 1996 Act and the "relevant case law".

The Decision

5. The Employment Tribunal upheld the Applicant's complaint and set up a remedy hearing. The Respondent appeals against that finding in a Notice of Appeal and by a Skeleton Argument today, which we are asked to accept as written submissions and are happy to do so. Directions in the appeal were given in Chambers by me dated 7 April 2003. The Applicant was given the opportunity to make written submissions for the purposes of this hearing, which she has done in a document entitled "Cross Appeal"; it is properly a representation rather than a cross-appeal.

The parties

6. The Applicant was employed by the Respondent as a Senior Operations Manager at the Lucky Star Amusement Arcade on what is known as the Front at Blackpool. She worked for the Respondent between 18 July 2001 and 22 March 2002. The Respondent operates seven amusement arcades in Blackpool. It is a large concern employing three hundred people at the height of the season in this jewel of the Fylde coast. The Applicant resigned after giving four weeks' notice to bring her contract of employment to an end. The letter of resignation is dated 25 February. Previously, the business was run by Family Leisure. The principal actors in this seaside drama were the Applicant, her sister, Mrs Waterworth, who was also her General Manager and Mr Boyd, Operations Manager. There was a reference to Mr Fannon, Special Projects Director, who did not give evidence in the case but who had been involved in talks.
7. The Tribunal found that there had been a transfer pursuant to TUPE in July 2001; thereafter, things were managed very differently. Understandably the new leadership wished to see things done differently; the Applicant's duties were reduced. She accepted the reduction in the number of arcades run by the Respondent reduced her workload by about fifty per cent. Mr Boyd asked Mrs Waterworth to arrange a meeting with Mr Fannon on 7 February.
8. An issue arose about the veracity of the notes of that meeting; the Tribunal preferred Mrs Waterman's account on behalf of the Applicant and took the view that she was an honest witness. Mr Fannon used the meeting as an opportunity talk about his planned changes in its management structure, which would reduce the Applicant's work further. The position of General Manager was redundant and he wished to see Mrs Waterworth remain.
9. There were doubts, in the Respondent's view, about the experience of the Applicant. There was no skills audit, appraisal or other method by which Mr Fannon reached his conclusions about the Applicant's skills. The Tribunal went on to say as follows:

"(xvi) The notes of the meeting also make it plain that Mr Fannon was well aware that Mrs Waterworth would discuss the position with the applicant.

(xvii) Mrs Waterworth's evidence was that she told the applicant on 8 January 2002 that she was to be made redundant.

(xviii) The respondent's case is that Mrs Waterworth was not told to say to the applicant that she was redundant nor did Mrs Waterworth inform the applicant that she was redundant.

(xix) On this crucial issue we accept the evidence of Mrs Waterworth. Firstly Mr Fannon knew that Mrs Waterworth was going to tell the applicant what had transpired in the meeting of 7 January 2002. Secondly, the Tribunal find it highly unlikely in the circumstances that Mrs Waterworth would not tell the applicant, her own sister, what was going on. Thirdly, in the notes of the meeting (at page 23 of the bundle) Mr Fannon describes Mrs Waterworth as a person of integrity and honesty. It hardly lies in the respondent's mouth therefore to say that Mrs Waterworth is not now telling the truth. Fourthly, there was no evidence from Mr Fannon as to what he told Mrs Waterworth to say to the applicant. Fifthly, the Tribunal observes that according to the notes of the meeting of 17 January 2002, Mr Fannon recorded that he understood that Mrs Wentworth would speak to the applicant about the position generally."

The Tribunal demonstrated by what we hold to be cogent reasoning, its view about the facts.

10. It was apparent by 4 February that the position of Mrs Waterman was not to be continued. The Tribunal decided that it would accept the Respondent's contentions that a warning of redundancy will not constitute a dismissal nor a breach of contract, but it also decided that there was unlikely to be any matter which would be more destructive of mutual trust and confidence than for a first line manager to tell an employee that she is redundant without any prior warning or consultation having taken place.
11. It went on to say if the warning is couched in such a way that the employee is faced with a situation in which there is no prospect of his or her remaining in employment, that can lead to a finding of constructive dismissal - see Valor Heating Ltd -v- Nelder EAT/292/92. The Tribunal decided that the advice given by Mrs Waterworth to the Applicant on 8 January 2002 was sufficient to constitute a fundamental breach of contract. She announced that the Applicant was to be made redundant. The Tribunal accepted that the Respondent had made out a potentially fair reason, that is redundancy and business reorganisation. However, it failed in its duty to consult the Applicant; the Applicant did not delay submitting her resignation and her resignation was caused by the announcement by Mrs Waterworth of the redundancy.

The Respondent's case

12. The Respondent contends that the Tribunal did not follow the test for constructive dismissal, bearing in mind the cited cases in the Respondent's Skeleton and Notice of Appeal. The contribution made by Mrs Waterworth was simply a warning of potential redundancy and the Tribunal misapprehended the position the Applicant was in. It was contended that the Tribunal had misapplied Valor Heating and that the Tribunal had erred in law in its approach to the question of constructive dismissal.

The Applicant's case

13. In her submissions in opposition the Applicant contends that the Tribunal made appropriate findings and applied the law correctly.

The principles to be applied

14. We consider the relevant principles to be these:

(1) A manager may be the source of conduct by an employer which brings the contract to an end - see Hilton -v- Protopapa [1990] IRLR 316 (EAT).

(2) The essential test for constructive dismissal is that set out by Lord Denning MR in Western Excavation -v- Sharp [1978] IRLR 27

(3) Mere delay without objection does not constitute affirmation of the contract. See W E Cox Toner -v- Crook [1981] IRLR 443.

(4) An employee must leave because of the employer's breach and this should demonstrably be the case - Walker -v- Josiah Wedgwood [1978] IRLR 113.

15. It seems to us that the Tribunal cannot be faulted in its approach to the law. The Tribunal found that the Applicant had left in response to what she was told by Mrs Waterworth. It did not uphold the Respondent's case that her application had been submitted simply as a device to support her sister. The Tribunal has given cogent reasons for it preferring the evidence of the Applicant and her sister on the crucial matter to that of the Respondent. It is a task which it has carried out meticulously, in our view.
16. We reject the Respondent's contention that the Tribunal has erred in law in its approach to the principles above and thus the appeal is dismissed.