United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR J STUART (of Counsel) Instructed by: Messrs Bates Wells & Braithwaite Solicitors Cheapside House 138 Cheapside London EC2V 6BB
For the Respondent	MR C BAYLIS (of Counsel) Instructed by: Messrs Gordon Dadds Solicitors 80 Brook Street London W1K 5DD


 


HIS HONOUR JUDGE ANSELL

1. This is an appeal against the unanimous decision of an Employment Tribunal sitting at London (Central) in March 2002, who held after a seven-day hearing, when both parties were represented by the same Counsel that appeared before us today, to whom, may we say, we are really indebted for their careful and concise arguments, that the Applicant, Miss MacFarlane, had been unfairly dismissed by reason of capability and they awarded her an agreed sum of £20,000. There was an issue raised on the papers about contribution, but within the award there was no indication about whether the parties had agreed 100% an award or less.
2. Permission for this hearing was given at this Court on 24 September 2002 by a Tribunal chaired by His Honour Judge Burke QC.
3. The Tribunal had held that there were a number of incidents arising out of the employment relationship between the parties that had led them to conclude that there had been a fundamental breach of the implied duty of trust and confidence owed to the employee, which entitled her to determine the employment contract; in other words, it was a case of constructive dismissal.
4. Miss MacFarlane was a legal secretary and in fact had started to work for Mr Trott, currently a partner with the Appellant firm, as long ago as 1987, when he was then working for a different firm. She followed him on his various moves and ended up with the Respondents in September 1992.
5. Her child Emma was born on 7 June 1996 and both mother and daughter were quite unwell after the birth. Mother eventually returned to work in January 1997. Upsettingly, in February 1998 Emma was diagnosed with cerebral palsy and indeed it is that illness and the adjustments that the Respondent has had to make in her working arrangements that led to the various incidents between the parties that she relied on as amounting to a breach of the implied term, starting in 1998 and culminating in September 2000.
6. May of those incidents involved Mr Trott himself and the manner that he dealt with his secretary, against a background which we perceive and understand of his having to cope with his work problems and his clients against the difficulty for the Respondent having to cope with Emma and the clear problems that that must have created for her.
7. As I have said, a number of incidents were relied on by Miss MacFarlane, which were examined in detail by the Tribunal in the seven days of hearing that took place with the witnesses being called on both sides that are recorded in the Tribunal's decision.
8. The way the matter was put to the Tribunal was that the individual incidents themselves were capable of amounting to the breach of the implied term, but alternatively their cumulative effect was capable of amounting to such a breach, and therefore it was not in fact necessary for them to reach separate findings that each one was a breach – they could if they had so wished simply come to the conclusion at the end of the day that some or all of the incidents, when taken together, amounted to that breach. That is the principle that emerges from the case of Lewis v Motorworld Garages Ltd [1985] IRLR 465, to which we will make reference in a moment.
9. The incidents up to May 2000 were analysed by the Tribunal and were discounted, both on the basis that individually they were not breaches, but also in relation to their cumulative effect; and then analysed a meeting which took place between the parties in May 2000. It is right that I should read out in its entirety those paragraphs that relate to that meeting and to what happened the following day:

21 "The partners in the Respondent regularly met for an informal Monday lunch. At one of these lunches, concerns were expressed about Miss MacFarlane's wellbeing because she was looking increasingly tired as a result of her responsibilities towards Emma. Ms Latterman [the Human Resources Manager at the time] was asked by the partners to investigate comparable salaries in the Northolt area where Miss MacFarlane lived in order to avoid the three hours' travelling per day that Miss MacFarlane undertook. Ms Latterman identified a difference of £5,000 net per annum The partners discussed this and reached the conclusion that they would offer this sum to Miss MacFarlane as a gift.

22 A meeting took place on 23 May 2000, minuted at pages 47 and 48 of the bundle, attended by Miss MacFarlane, Mr Trott, Ms Middleton, the staff partner of the Respondent, and Ms Latterman. At this meeting Miss MacFarlane was offered a one-off tax-free payment of £5,000. The minutes state: -

"BWB would provide Wendy with a one-off tax-free payment of £5,000 which is the difference (when tax and NI is added) between working locally to Wendy's home and her current salary at BWB…If Wendy obtained local work this would greatly reduce her time away from home (travelling is taking two or three hours per day) and this payment would subsidise the difference for one year and alleviate her stress caused by commuting)."

The minutes go on: -

"It was stressed to Wendy that somehow we must find a solution, as currently both Wendy and BWB are suffering under the current arrangements. PDAT [Mr Trott] said it is very difficult to deal with his workload and the pressure from his clients when Wendy is away so much, especially when the time off is requested at short notice, when at times there is no other secretarial cover available. PDAT said he felt he could not refuse Wendy time off (and indeed he does not want to) but that the needs of his clients and BWB must also be addressed."

The offer to work one day per week at home was withdrawn at this meeting [that referred to an earlier offer that had been made]. We noted that in respect of the £5,000 payment Ms Middleton said in her evidence that this was a gesture of kindness and as an alternative to the possible need to go down a capability/disciplinary procedure if she remained working as Mr Trott's secretary. At the meeting, Miss MacFarlane misunderstood and thought that as an alternative to £5,000 cash she was being offered holiday paid up to the value of £5,000.

23 When Miss MacFarlane wrote to the Respondent on 26 May…the Respondent realised she had misunderstood the offer. At the end of the meeting on 23 May, Miss MacFarlane was given time to consider the offer with her partner but in her memo of 26 May she stated that she had decided for financial reasons that she would not be able to work locally but stated that she appreciated the Respondent's support.

24 Paragraph 46 of Miss MacFarlane's witness statement states: -

"After the above meeting took place, on my next post rota duty Andrew Phillips remarked on seeing me, 'Oh hello, what are you still doing here, haven't you left yet?' I found this terribly upsetting."

This evidence was unchallenged and we accept that Andrew Phillips, a partner in the Respondent, made a remark to Miss MacFarlane about her leaving."

10. The Tribunal in paragraph 54 considered this incident and said as follows:

54 "The next alleged breach, (k) [this is referring to the list that appeared in the submissions from her Counsel], relates to the Applicant being put under undue pressure to resign by the offer of £5,000 on 23 May 2000. The Respondent was seeking to resolve the position by offering money to Miss MacFarlane to leave. That does amount to a breach of her contract of employment because it undermines the mutual trust and confidence between the parties. As such, it must be a fundamental breach. However, Miss MacFarlane did not act upon it at that time or shortly thereafter. She continued to work as Mr Trott's secretary and in her letter which appears at page 46 of the bundle, of 26 May, says that she could not work locally for financial reasons but appreciated the Respondent's support. Whilst we find that as an individual complaint this does amount to a fundamental breach, Miss MacFarlane affirmed the contract and did not act on the breach at the time. The issue is therefore relevant in relation to cumulative breaches but not as a stand-alone breach."

I shall return to that paragraph in a moment, because serious complaint is made about it by the Appellant's Counsel today in relation to the failure to properly identify the test of mutual trust and confidence and to make proper findings of fact in relation to that implied term.

11. The Tribunal then went on to consider a number of other incidents. There was a low appraisal on 2 June. On 16 June she was offered six weeks unpaid leave but told that they could not guarantee that she would return as Mr Trott's secretary. On 1 July she only had a salary increase of £200 which was the lowest for any partner's secretary, although not the lowest in the firm. She was then off work from 6 July and there were two telephone calls from Mr Trott (2 August and 6 September) and on 6 September Mr Trott asked Miss MacFarlane how she was and pointed out she needed to understand how he was feeling because he was trying to run an office, write a book and go on holiday and whether or not that telephone call was effectively the last straw.
12. The Tribunal then dealt with those further incidents, having referred correctly to a number of the cases to which they had been referred in submissions and said this at paragraph 63:

63 "…we have already found the offer of £5,000 to lave made on 23 May 2000 does amount to a breach of contract although Miss MacFarlane did not act upon it at the time and had not acted without delay. Nonetheless, it does amount to a breach of the contract and thus within the contemplation of Lord Justice Glidewell in Lewis v Motorworld. We must take into account the matters that took place after that date and view them cumulatively with the breach of 23 May. [they then set out the further incidents to which I have made reference]. We have to ask ourselves whether these things, taken cumulatively with the breach of 23 May, amount to a breach of the implied term of mutual trust and confidence in Miss MacFarlane's contract of employment."

13. They remind themselves that the Respondents had given Miss MacFarlane sympathetic consideration because of her personal difficulties and then they conclude as follows:

65 "Miss MacFarlane tells us that the last straw was the telephone call from Mr Trott of 6 September which she took as part of the breach in relation to the offer of £5,000 and the intervening matters which amounted to pressure on her to leave. We have already accepted the offer of £5,000 as a breach of her contract of employment. The other matters, whilst not necessarily amounting to breaches in themselves, cumulatively do amount to a breach of the implied term of mutual trust and confidence, building up to the last straw, which was the telephone call on 6 September when Mr Trott was putting pressure on Miss MacFarlane to return to work. He was indicating that he could not continue in the present circumstances without some resolution of the problem."

The complaint made in this case primarily revolves around the finding in relation to the breach on 23 May.

14. The implied term of trust and confidence has been referred to in a number of leading authorities. We propose to refer to two of them. Firstly, in Woods v W M Car Services (Peterborough) Ltd [1981] IRLR 347 said thus:

17 "In our view it is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee: Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84. To constitute a breach of this implied term, it is not necessary to show that the employer intended any repudiation of the contract: the Tribunals' function is to look at the employer's conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it…"

15. Then, more recently, in the House of Lords case of Malik v Bank of Credit and Commerce International SA [1997] IRLR 462. The headnote reads as follows:

"The implied obligation extends to any conduct by the employer likely to destroy or seriously damage the relationship of trust and confidence between employer and employee. If conduct objectively considered is likely to cause damage to the relationship between the employer and employee, a breach of the implied obligation may arise. The motives of the employer cannot be determinative or even relevant in judging the employees' claims for damages for breach of the implied term."

Then in the speech of Lord Steyn in paragraph 54:

54 "The employees' primary case is based on a formulation of the implied term that has been applied at first instance and in the Court of Appeal. It imposes reciprocal duties on the employer and employee. Give that this case is concerned with alleged obligations of an employer I will concentrate on its effect on the position of employers. For convenience I will set out the term again. It is expressed to impose an obligation that the employer shall not:

'…without reasonable and proper cause, conduct itself in a manner calculated [or] likely to destroy or serious damage the relationship of confidence and trust between employer and employee.'

At paragraph 59 he goes on as follows:

59 "Secondly, given the existence of an obligation of trust and confidence, it is important to approach the question of a breach of that obligation correctly. Mr Douglas Brodie of Edinburgh University, in his helpful article to which I have already referred, put the matter succinctly (pp.121-122):

'In assessing whether there has been a breach, it seems clear that what is significant is the impact of the employer's behaviour on the employee rather than what the employer intended. Moreover, the impact will be assessed objectively.'

Both limbs of Mr Brodie's observations seem to me to reflect classic contract law principles and I would gratefully adopt his statement."

Finally in paragraph 60:

60 "The motives of the employer cannot be determinative, or even relevant, in judging the employees' claims for damages for breach of the implied obligation. If conduct objectively considered is likely to cause serious damage to the relationship between employer and employee a breach of the implied obligation may arise."

16. Finally, just to set the background of this case, I have already made reference to Lewis v Motorworld Garages Ltd [1985] IRLR 465, where, in the Court of Appeal Glidewell LJ, dealing with these cases where there is a series of incidents, paragraph 36 said this:

36 (c) "The breach of this implied obligation of trust 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 v W M Car Services Ltd. This is the 'last straw' situation.

Later, at paragraph 37 he said this:

37 "If the employer raises another issue of principle which, so far as I can ascertain, has not yet been considered by this court. 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; 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'."

Indeed, it was that paragraph that the Tribunal specifically relied on in coming to their conclusions in the case.

17. As I have already indicated, the complaint here is that in paragraph 54 where the Tribunal deal with the implied term they do not specifically set out at that stage the Malik test or the Woods test, although both cases were subsequently referred to by the Tribunal when they came to deal with the last straw doctrine and cumulative effect. It is said that not only did they not set out the test at that stage, but they did not go on to analyse the various component parts in that test, those being whether the conduct was calculated or likely to destroy or seriously damage the relationship of trust and confidence.
18. That test then has component parts; the first being to look at the subjective behaviour of the employer. Was it calculated to have that effect? Secondly, the objective test: "likely to destroy or seriously damage the relationship" where the employer's motives are o lesser importance. Thirdly, the issue of "without reasonable and proper cause." So the complaint made is one that the test was not identified, it was not properly analysed and no findings were made by the Tribunal in relation to those component parts.
19. We are reminded of course that this was a seven-day hearing and the Tribunal carefully analysed the many incidents that were put in front of them of complaint by the employee, had the benefit of extensive written submissions on the law. They have, as I have already indicated, referred to some of the cases in the later part of the their decision, but it is clear from paragraph 40 that they took into account the Skeleton Arguments that were put in front of them. It goes without saying that Malik and the tests of the implied term were very much in the forefront of those submissions.
20. Whilst the component parts of the implied term may not have been specifically referred to by reference to the Malik case, when the Tribunal referred to the implied duty of trust and confidence, as they did in paragraph 54 findings, we are quite certain that they had in mind the Malik approach.
21. We are also of the view that they had identified sufficient facts for them to draw the conclusion that this conduct on the part of the employer within the meeting and the events surrounding the meeting, viewed objectively, did indeed entitle them to come to the conclusion that they did; and the conclusion was, in our view, that they accepted that there was an alleged breach, namely the Applicant was being put under undue pressure to resign. That is how paragraph 54 starts and that has the finding that they are being asked to make on the employee's behalf is clearly set out in her list of alleged breaches..
22. We are satisfied that in coming to the conclusion in paragraph 54, whilst further detail might have clarified their approach, the clear decision, particularly when one reads it in conjunction with paragraph 65, where again they refer to pressure on her to leave, was that she was being put under undue pressure to resign. Thus the Tribunal formed the view that that was a clear breach of the implied term, without necessarily taking themselves through the individual component parts.
23. It is said on the employer's side that the only evidence that they had in relation to how the employee reacted to that meeting, which was a vital piece of evidence by which they could judge the employer's conduct, was the note that she sent appreciating that support. However, that note was sent at a time when she misunderstood what the offer was that was being made. She thought that she was accepting an offer of £5,000 cumulatively paid holiday. But we are of the view that one cannot read that paragraph in isolation and that it is important to look, as the Tribunal chose to highlight, and specifically highlight as unchallenged evidence, the meeting that took place the following day with Mr Phillips:

"'Oh hello, what are you still doing here, haven't you left yet?' I found this terribly upsetting."

We are satisfied that here was evidence, if Tribunal needed to look for evidence to judge the effect of the employer's conduct around that time, of the impact on the employee.

24. Whilst, as we have indicated, it was not necessary for the Tribunal to come to a view that this was a breach, since they could have used this as a 'trigger' incident in a chain of cumulative events without specifically finding it amounted to the breach, we are of the view that the finding of breach was open to the Tribunal on the facts they found after this lengthy hearing.
25. It is suggested, finally, that the conclusions that they came to were perverse. We have been referred to two decisions to remind us of our duties. We prefer to remind ourselves particularly of the words in Stewart v Cleveland Guest Engineering Ltd [1994] IRLR 440 at paragraph 33:

33 "Whenever an appeal is based on the perversity ground, this Tribunal must be extremely cautious not to conclude that the decision of the Industrial Tribunal is flawed because the Appeal Tribunal would have reached a different conclusion on the evidence or thinks that another Industrial Tribunal would have reached a different conclusion on the evidence...This Tribunal should only interfere with the decision of the Industrial Tribunal where the conclusion of that Tribunal on the evidence before it is 'irrational', 'offends reason', 'is certainly wrong' or 'is very clearly wrong' or 'must be wrong' or 'is plainly wrong' or 'is not a permissible option' or 'fundamentally wrong' or 'is outrageous' or 'makes absolutely no sense' or 'flies in this face of properly informed logic'."

26. We are of the view that the findings in this case, as we have already indicated, were open to the Tribunal, based on the facts they had found, specifically the minutes of the meeting, and how the employee reacted on the day after when confronted by Mr Phillips. For these reasons we would dismiss this appeal.