United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR J ASHWORTH (of Counsel) Instructed by: Messrs Dent, Raven & Marsdens Solicitors Alliance House 30 Cross Street Manchester M2 7AQ
For the Respondent	MR R BUDGEN (Representative) Croner Consulting Croner House Wheatfield Way Hinckley Leicestershire LE10 1YG


 


HIS HONOUR JUDGE RICHARDSON

1. This is an appeal against a Decision of the Employment Tribunal sitting at Liverpool promulgated on 4 June 2003. The Appellant's case was that she had been constructively dismissed by the Respondent. By a majority the Employment Tribunal held that there had not been a fundamental breach of contract so that her resignation could not be construed as a dismissal. The minority view was that a fundamental breach had taken place so that she was constructively and unfairly dismissed.

The facts

2. The Appellant was employed by the Respondent as a showroom sales assistant selling bathrooms and tiles to retail customers and the trade. On Thursday 24 October 2002 she was called at short notice to a disciplinary meeting. According to the minutes of that meeting it was convened so that she could answer questions regarding a number of serious written complaints from customers.
3. In addition it was put to her that she had failed to complete and obtain a signature on certain customer forms. She was asked, according to the minute, whether her poor performance was due to church work near her home in Preston. It was put that she spent time on long incoming telephone calls. According to the minutes she admitted some but denied other points. The meeting was adjourned for Mr Gray, the Respondent's Managing Director, to consider the matter.
4. On Monday 28 October, after the weekend, a further meeting was held. The Appellant had received minutes of the earlier meeting and challenged their completeness, but she withdrew that challenge, she would say, under pressure. She was told that she would continue to be employed but only in respect of trade customers. She was told that she would receive a written disciplinary warning. She was given detailed instructions as to her new job. On 5 November 2002 she was given a letter, together with minutes of the meeting, confirming a written disciplinary warning.
5. The next meeting of importance, the crucial meeting in this case, was on Thursday 14 November 2002. This meeting was attended by Mr Gray, Mrs Bradshaw, the Appellant's immediate manager and the Appellant herself. There is a two page minute of the meeting, signed by Mr Gray. The minute begins:

"Mr Gray reported that this meeting was not a continuation of the disciplinary meeting held some days earlier but did have connection with it and the intention of the meeting was to examine and discuss the Appellant's performance relative to the showroom, particularly to look at also whether she has felt able to continue in this job or whether there were factors making her perform well below the standard expected from her."

The minutes then alleged that further matters of unsatisfactory performance had come to light. Four were set out. The minute records the Appellant as saying that the customers were telling lies. The minute continues:

"Mr Gray said that the object of the meeting was to ask the Appellant, in the light of all the complaints that had been made about her performance, whether or not she was able to do the job. The Appellant replied that she was capable of doing the job and that she would do her best to improve her performance"

6. The minute continues; in it Mr Gray was recorded as describing the Appellant as sullen and unwelcoming. He accuses her of "grossly distorting the facts" about an instruction he had given concerning speaking to her. At the end, Mr Gray, according to the minute, comments that the Appellant should look carefully at the amount of travel to and from work and the strains put on her by her charitable work for the church. Prior to that, the minute says this:

"Mr Gray made it clear that, in the event we had any further instances as those detailed at the disciplinary meeting and those mentioned in these minutes, then the Appellant would very likely be dismissed. The company could not put up with this sort of performance and the Appellant should decide herself whether or not she was capable of doing this job. It would not be in her interests, at this stage of her career and at her age, to have a dismissal on her record. This would make re-employment much more difficult"

The minute also says this:

"The Appellant said that she would give this matter some thought and, should she decide that the job was beyond her capabilities, then she would take up Mr Gray's offer of being to resign on favourable terms, thereby protecting her curriculum vitae record. However, Mr Gray hoped that her performance would improve and that it would not be necessary to take this step."

7. Although Mr Gray signed this minute, he denied at the Employment Tribunal that he ever asked the Appellant to resign, told her to resign or even suggested that it might be a good idea. In view of this letter it is not surprising that the Employment Tribunal rejected that evidence. The Employment Tribunal found that he did indeed invite her to resign and offered her favourable terms.
8. The Appellant worked on for a while. On 22 November 2001 she received the minutes of the meeting from which we have been quoting. She said she found that they were grossly inaccurate and completely misrepresented what took place. She was distressed and became ill; she said it had been made more than clear that she was not wanted. She posted her resignation on 29 November 2002, following a period of absence.

Constructive dismissal

9. The Appellant's case of constructive dismissal was based on the well known implied term of trust and confidence. This term was defined in the decision of the House of Lords in Malik -v- BCCI [1977] ILRA 462 at paragraph 54. The term is that 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"

In Lewis -v- Motorworld Garages Ltd [1986] ICR 157 the Court of Appeal had cause to consider this term. In November and December 1981 the employer in breach of contract with the employee demoted him and adversely altered his pay structure. The employee elected to affirm the contract, but over a period of eight months the employer persistently criticised the employee and threatened him with dismissal if his performance did not improve. Upon receiving the last criticism, the employee resigned in August 1982. He alleged constructive dismissal. The industrial tribunal dismissed his claim, holding that the demotion and change in pay structure, which had been breaches of express terms of the contract, had become spent when the employee had affirmed the contract and thus could not be considered as forming part of the employer's course of conduct. It held that the criticisms and threats had not cumulatively amounted to a breach of the implied term.

10. The Court of Appeal set aside the Industrial Tribunal's decision and remitted the case for re-hearing. In his judgment, Lord Justice Neale at page 167C said this:

"….. it is now established that the repudiatory conduct may consist of a series of acts or incidents, some of them perhaps quite trivial, which cumulatively amount to a repudiatory breach of the implied term of the contract of employment that the employer will not, without reasonable and proper cause, conduct himself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee"

At page 169 Lord Justice Glidewell summarised the position as follows:

"The principles to be found in the relevant authorities can, I believe, be summarised as follows:

(1) In order to prove that he has suffered constructive dismissal, an employee who leaves his employment must provide that he did so as a result of a breach of contract by his employer, which shows that the employer no longer intends to be bound by an essential term of the contract.

(2) However, there are normally implied in a contract of employment mutual rights and obligations of trust and confidence. A breach of this implied term may justify the employee in leaving and claiming he has been constructively dismissed.

(3) 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?

(4) The decision whether there has been a breach of contract by the employer so as to constitute constructive dismissal of the employee is one of mixed law and fact for the industrial tribunal. An appellate court, whether the Employment Appeal Tribunal or the Court of Appeal, may only overrule that decision if the industrial tribunal have misdirected themselves as to the relevant law or have made a finding of fact for which there is no supporting evidence or which no reasonable tribunal could make."

Lord Justice Glidewell went on to say this:

"If the employer is in breach of an express term of a contract of employment, of such seriousness that the employee would be justified in leaving and claiming constructive dismissal, but the employee does not leave and accepts the altered terms of employment; and if subsequently a series of actions by the employer might constitute together a breach of the implied obligation of trust and confidence; is the employee then entitled to treat the original action by the employer which was a breach of the express terms of the contract as a part - the start - of the series of actions which, taken together with the employer's other actions, might cumulatively amount to a breach of the implied terms? In my judgment the answer to this question is clearly "yes". "

The Decision

11. The initial paragraphs of the Tribunal's decision, paragraphs 1 to 16, set the background to the case. In paragraphs 17 to 18 the Employment Tribunal direct themselves as to the law they have to apply. They correctly apply the contract test which is now commonly applied and very well known. They assert the implied term without setting it out in full as we have done by reference to the case of Malik -v- BCCI. At paragraph 19 their findings begin; between paragraphs 19 and 29 they deal with the events on 24 October. Between paragraphs 29 and 32 they deal with events on 28 October. They do not deal with any events prior to 24 October, and they give at paragraph 20 their reason for not doing so. They say:

"We considered the events pre-dating 24^th October 2002, as marginal to the issues in dispute"

12. Following their review of what took place in October, they set out a conclusion at paragraph 38. The conclusion appears in the middle of their treatment of what occurred on 14 November, but it belongs to their earlier consideration. They said:

"Looking at the matter in the round, and in relation to events pre-dating 14^th November, our unanimous view was that there had not been any serious mistreatment of the Appellant. The Respondent was entitled to raise the complaints with her and, in broad terms, deal with those complaints in the way that it had. Our real concern was in relation to the actions of Mr Gray at the meeting on 14^th November."

13. It is with this meeting that the Employment Tribunal deal in paragraphs 33 to 37 and 39 to 43 of the Decision. At paragraph 33, they record that it was reasonable for Mr Gray to bring further complaints to the attention of the Appellant, as he did on 14 November. At paragraph 34 they record her case as being that she was not to blame and that customers were lying. There is no detailed evaluation or setting out of this part of the case or any findings relating to it. At paragraph 35 the Employment Tribunal records that Mr Gray was entitled to take a somewhat different view, although they say that it was "less diplomatic" of him to indicate given that this was not a disciplinary meeting, that any further instances would thereby be likely to result in dismissal.
14. At paragraph 36 the Employment Tribunal importantly finds that the Appellant was invited to resign, and indeed "favourable" terms were offered if she should choose to do so. In this way the Employment Tribunal make it clear that they did not accept Mr Gray's evidence, to which we have adverted before, on an important part of the case. The Employment Tribunal concluded that the minutes of the meeting did not fundamentally misrepresent what was said, but they said:

"We think any reasonable employee on that date could have regarded the invitation to resign as being a "vote of no confidence" in her. In short, the Company was indicating that it regarded itself as better off without her."

15. It was at this point that the decision of the majority and the minority diverged. We at this Employment Appeal Tribunal are concerned with the reasoning of the majority. That is set out principally in paragraph 40 of the Decision and I will quote that, adding numbers to different propositions within the paragraph.

"(1) - The majority view was that, whilst this was not a particularly desirable tack for Mr Gray to take, it was not sufficiently serious to amount to a fundamental breach of the implied term relating to trust and confidence.

(2) - That was particularly the case given the repeated complaints that had been made about Mrs Billington.

(3)- Furthermore, it appeared that Mrs Billington was claiming that the "final straw" leading to her resignation was the inaccuracy of the notes of the meeting itself.

(4) - As we have said, we regard those notes as broadly accurate and their production as not amounting to mistreatment of Mrs Billington.

(5) - Since she asserted that what had occurred before receipt of those notes had not been sufficient to "force" her to resign, it followed that that resignation had not been a consequence of a fundamental breach."

Submissions

16. On behalf of the Appellant, Mr Ashworth submits that the Employment Tribunal erred in law in failing to make any findings as to what happened before 24 October and in its conclusion that events pre-dating 24 October 2002 were marginal to the issues in dispute. This was one of the ways in which he relied on the decision in Lewis -v- Motor World Garages Ltd. He said that it was the duty of an Employment Tribunal to take into account the whole picture from beginning to end. There were complaints, he said, raised in the Tribunal concerning what happened prior to 24 October, particularly relating to an incident of absence in July. He said that the Employment Tribunal erred in law in neither giving reasons for nor evaluating those points.
17. Secondly, he said that in finding that there was no breach of the implied term of mutual trust and confidence, the Employment Tribunal misapplied the law or were perverse. He submitted that the findings the Employment Tribunal had made in its Decision up to and including paragraph 39 led inevitably to a conclusion that there was a breach of the implied term. He said that no adequate or proper reason was given by the Employment Tribunal for concluding as it did at the beginning of paragraph 40. He was therefore, under this head, attacking propositions (1) and (2), as we have numbered them, in paragraph 40.
18. His third broad line of submission related to the final three propositions in paragraph 40. He submitted that in these paragraphs the Employment Tribunal had misapplied the "last straw" doctrine in Lewis -v- Motor World Garages Ltd. It had driven a wedge between - those are our words not his - what had taken place at the meeting on 14 November, and what happened when she received the notes. Under the Lewis -v- Motor World Garages Ltd approach it was for the Employment Tribunal to look at the whole picture when evaluating whether there had been a fundamental breach.
19. On behalf of the Respondent Mr Budgen submitted firstly that the Employment Tribunal was well within its rights to conclude that events pre-dating 24 October were marginal. He pointed out that the Originating Application and witness statement did not focus on them. He said that at the Employment Tribunal the matter had been put by the Chairman to the Appellant and she had effectively agreed that events prior to that date were marginal.
20. Secondly, he submitted that there was no error of law in the conclusion of the majority about the 14 November meeting. The majority, he said, were entitled to find there was no fundamental breach. They were the fact finding body; there was no error of approach in the way they considered the case. There are properly recorded reasons of the majority which are "Meek compliant".
21. Thirdly he says that the last part of paragraph 40 contains no error of law, and even if there were an error of law it would be immaterial because in any event the majority of the Employment Tribunal had found no fundamental breach at the earlier stage.

Our conclusions

22. We deal first of all with the submission that the Employment Tribunal should not have regarded matters prior to 24 October as marginal. In our judgment the Employment Tribunal was fully entitled to take the view which it did. The Originating Application had concentrated on matters on and after 24 October. In her witness statement, at paragraph 34, the Appellant said:

"I felt physically ill by both these minutes and the accumulation of all the events that had taken place since October"

We have no hesitation in concluding that the Employment Tribunal was well within its rights to concentrate on the period after 24 October.

23. There is no error of law that we can detect in its approach concerning matters between 24 October and 14 November. The Employment Tribunal were, in our judgment, given findings which they were entitled to make about the period between 28 October and 14 November, entitled to concentrate on the events of 14 November.
24. We turn then to the second question, whether the majority erred in law in finding that there was no fundamental breach of the implied term of trust and confidence on 14 November. We observe that a proper consideration of this implied term may involve two separate issues. Firstly there may be the question whether an employer has conducted itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between the parties. If the answer to that question is no, that is the end of the case; but if the answer is yes, a second issue arises, namely whether the employer has done so without reasonable and proper cause.
25. As to the first question, in our judgment the Employment Tribunal's findings are only consistent with a conclusion that the Respondent did conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between the parties. Firstly, we note that there is an express finding that at this meeting the Respondent, by Mr Gray, invited the Appellant to resign and offered her favourable terms if she should choose to do so. Secondly, we note the Employment Tribunal's conclusion that the Respondent was indicating on that day that it regarded itself as better off without her and that any reasonable employee on that date could have regarded the invitation to resign as being a vote of no confidence in her. Thirdly, we note that the Employment Tribunal found the minute of that meeting to be accurate, or at any rate not fundamentally to misrepresent what was said at the meeting.
26. If that is so, then the minute itself betrays a remarkable state of affairs. The Appellant was told that the meeting was not a continuation of the disciplinary meeting, but a number of further allegations were put to her and in the result it was made clear to her that if there were any further instances such as those that had already been detailed and those mentioned at this meeting, she would very likely be dismissed. The earlier meeting had ended in a written warning. This in substance is a final warning.
27. That, coupled with the invitation to resign, the "vote of no confidence" which the Employment Tribunal has found, and other things that are said in the minute as well about "sullen behaviour" and the like, lead us to the conclusion that the Respondent certainly behaved in a manner calculated and likely to destroy or seriously damage its relationship with the Appellant. If the majority of the Employment Tribunal in proposition (1) at paragraph 40 were intending to say the contrary, then we think they have misapplied the law and reached a decision which was not open to them.
28. However, it may well be that the reasoning of the majority was concerned with the second aspect of the implied term, namely the words "without reasonable and proper cause". It may be that the decision of the majority was saying that the vote of no confidence was justified by the repeated complaints. In argument, Mr Budgen, for the Respondent, was inclined to put his case this way, but even if this was the reasoning of the majority, they do not directly address the issue of whether there was reasonable and proper cause. We have considered whether the reference to "repeated complaints that had been made about Mrs Billington" could be sufficient to meet the requirement of reasonable and proper cause without any further finding or investigation. We do not think it could; we do not think it directly addresses the test We do not think that it tells the Appellant why she has lost the case.
29. We note that there was an issue as to the complaints that had been made. The Appellant has said at a meeting, to which she was called at short notice without any help, that she was not to blame and that customers were lying. When we look at the complaints that are set out on the first page of the minute dated 14 November 2002, we do not think that a mere recitation of the fact that there were complaints amounts to a finding of reasonable and proper cause. We note for example what is said about the complaint of Griffiths. Mr Gray accepts that the fitter in question had been given instructions to go himself, but Mr Gray, the Managing Director said he was under duress from the Appellant. This is such a surprising thing to find in a recitation of complaints in this way that we do not think that we can say from the mere existence of these complaints recorded in the minutes, without findings about them where there was a dispute, that the Employment Tribunal were entitled to find reasonable and proper cause.
30. What was required of the Employment Tribunal was to address itself to the two halves of the implied term which we have identified. We think that if they had done so they would have found for the Appellant in relation to the first half. What view they would have taken about the second half, we do not know, there are no sufficient findings and the matter will have to be remitted, as we think, to a fresh Employment Tribunal which will have to reconsider the whole issue. We do not think that we are sufficiently confident about the reasoning in the first half of paragraph 40 to say that only a small issue remains which can go to the same Employment Tribunal. The whole case must be remitted to a fresh Employment Tribunal.
31. Finally, we deal with propositions (3) to (5) in the majority's decision. The majority say that the Appellant was claiming that the "final straw" leading to her resignation was the inaccuracy of the notes of the meeting itself. This is certainly not precisely how it was put in her witness statement. In her witness statement she said:

"I was enormously distressed by what I read and felt that it was just further evidence of the pressure I was being placed under to resign."

The minute that was handed to her on 22 November repeated and confirmed the points that were made to her at the meeting.

32. We do not think inaccuracy of the notes can be disentangled from the other effects of receiving the minute on 22 November. Moreover, it seems to us that proposition (5) does offend against the reasoning in Lewis -v- Motorworld Garages Ltd. We think that it is wrong to say that resignation is not the consequence of a fundamental breach merely because what took place before receipt of the notes had not been sufficient to force her to resign. This seems to us to be inimical to the approach in Lewis -v- Motorworld Garages Ltd. The whole picture must be taken into account. There is no rule of law that enables a line to be drawn between what happened on 14 November and what happened on 22 November.
33. For these reasons the appeal is allowed. The complaint of unfair dismissal must be remitted as a whole to a fresh Employment Tribunal to decide. The fresh Employment Tribunal will be entirely free to reconsider the facts of this case. It is not bound by the decision of the present Employment Tribunal in any respect.