United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ANTHONY KORN (of Counsel) Instructed by: Messrs Irwin Mitchell Solicitors Imperial House 31 Temple Street Birmingham B2 5DB
For the Respondent	MR PHILIP THORNTON (of Counsel) Instructed by: British Telecommunications Plc Group Legal Services 81 Newgate Street London EC1A 7AJ


 


MR RECORDER HAND QC

1. This is an appeal against the decision of an Employment Tribunal sitting at Stratford on 1, 2 and 3 May 2002, a written decision by way of Extended Reasons having been entered in the register and sent to the parties on 29 May 2002. The Appellant, Mr Woodfine, resigned his employment as Vice President of Sub-Sea Cables System and Planning with British Telecommunications PLC, the Respondent ("BT"), on 31 January 2001. On 7 March 2001 he submitted an Originating Application to the Employment Tribunal complaining of constructive dismissal, breach of contract and what was described as "victimisation". Later that was refined, by way of amendment, so as to add a claim for a statutory redundancy payment.
2. The fundamental issue, given that he had resigned, was whether or not he had been dismissed and this was heard as a preliminary issue by the Employment Tribunal in May 2002, three days having been allocated to the hearing. At the close of the Appellant's evidence, the Employment Tribunal entertained, and then accepted, a submission of no case to answer with the result that it dismissed the Appellant's case. Against that decision, Mr Woodfine now appeals.
3. At the end of the second day of the hearing before us (4 August 2003), we reserved our decision; although by then the Court of Appeal had delivered its reserved judgment in the case of Logan v Commissioners of Customs and Excise [2003] EWCA Civ 1068, its existence did not come to our attention until it was reported in The Times on 4 September 2003. Because the parties had had no opportunity to refer to it during the course of their oral submissions, we asked for written submissions, if any, to be received by 30 September 2003. In the event, both parties did lodge written submissions within the time stipulated, although for reasons for which nobody can be criticised, one of them did not reach us until 10 October 2003.
4. The Employment Tribunal decision, some 7 pages in length, comprises, mainly, an analytical discussion of the points at issue. Paragraphs 2 to 9 consist of a reasoned account as to why the Employment Tribunal refused to order disclosure of documents relating to the decision to accept applications for voluntary redundancy from other employees. Paragraph 8 summarises the Employment Tribunal's reasoning in these terms:

"Absent some express term, can a term be implied into a contract of employment the effect of which is to place the employer under a duty to accept an application for voluntary redundancy? We remind ourselves that a voluntary redundancy will, in most cases, be a dismissal of the employee. If an employee chooses to dismiss some employees but not others, it is not open to the retained employee to challenge the basis for doing so. The "Why me" question so familiar in cases involving selection for dismissal by reason of redundancy is available to the dismissed employees but not to those retained. It cannot be the law or good industrial practice to require an employer to explain to those he seeks to retain, the reasons for doing so."

5. The factual findings of the Tribunal are not the subject of a discrete passage in the decision but have to be distilled from the general discussion. The reason for this appears to be that, because it had heard only the Appellant's case at the time of reaching its decision, the Employment Tribunal felt the evidence was in some sense provisional. At paragraph 11 the Tribunal say:

"We proceed to consider the submission on the basis that the whole of the Applicant's evidence is to be accepted save where a particular assertion, being for the Applicant to prove and being challenged, is so devoid of a rational, arguable basis, as to require that it be rejected".

6. Right at the outset, in paragraph 1 of its decision, the Employment Tribunal records Mr Woodfine's complaint as being:

"….that he was constructively dismissed when organisational changes removed him from most of his responsibilities and when, although redundant, his application for voluntary redundancy was refused".

This, whilst only a summary of the Appellant's case, indicates that the Employment Tribunal recognised that the factual background against which the allegations of breach of contract arose, was, in the most general terms, that of a series of changes occurring in respect of Mr Woodfine's employment. This is reinforced by paragraph 15 of the Employment Tribunal's decision which reads as follows:

"On the Applicant's evidence, the Respondent undertook reorganisation of its business operations, including a very substantial outsourcing to a joint venture company established by BT and the American Company AT&T, and, for present purposes, we assume that the effect of that was, to a very substantial extent, to remove from the Applicant the key responsibilities of his post".

These had been recognised at paragraph 13 of the decision in the following terms:

"Mr Woodfine was employed in a senior management role within BT. He had risen to that position because of his ability, considerable experience and acknowledged expertise in a range of fields especially that of Sub-Sea communications".

7. Although no further detail appears in the decision, Mr Woodfine's witness statement, which was before the Employment Tribunal and has been placed before us, does give more detail. Given the Employment Tribunal's approach to the evidence, as disclosed by paragraph 11 of the decision as quoted at paragraph 3 above, we think it permissible to supplement the Employment Tribunal's brief recital by reference to it. From that statement it emerges that Mr Woodfine had specialised in sub sea cable engineering from 1976 to 1985. He had then spent the next 11 years in management posts in the Maritime and, later, the Aeronautical arms of BT. These he described as "niche business" areas. In 1996 he went back to what he described as the core area of sub sea cable systems; initially he shadowed the then head of that part of the business and a year later he replaced him, when he retired.
8. The job description of that post, dating from 21 May 1998, and a later, and much briefer, job description, reflecting some changes, and, in particular, the change of title to Vice President, dating from 27 August 1999, were also before the Employment Tribunal. They, too, have been included in the bundle placed before us and, although these documents are not referred to by the Employment Tribunal, for the same reasons as we think it proper to look at the witness statement, we think it is proper to consider them. Their significance is they show that Mr Woodfine, by then 50 or so years of age, had arrived at a very specific position in the upper management structure of BT.
9. The Employment Tribunal, although they did not make any detailed findings about the changes, which took place after 1999, obviously understood and appreciated their result was that Mr Woodfine's specific position ceased and they make factual findings to that effect at paragraph 16 of the decision, which reads:

"When the last in the sequence of those changes had had its impact, Mr Woodfine might reasonably have taken the view that his role had so diminished that it was, for all practical purposes, redundant. His case is that, so recognising, he applied on 8 December 2000 for voluntary redundancy under the scheme then in operation. That application, renewed at a meeting on 28 January 2001 was refused and those refusals lie at the heart of his complaint. The IT1 adds an additional concern, namely that 'with no work and responsibilities and an uncertain future I was forced to resign' (passage taken from the IT1) and he asserts the contractual duty of the Respondent to provide him with work".

10. The Voluntary Redundancy Scheme being referred to there was called the VR 2000 Scheme. The Employment Tribunal knew enough about that Scheme to be able to say at paragraph 17:

"The entitlement of an employee to the benefits of the VR 2000 scheme depended upon that employee's manager confirming that his services were not required".

11. It appears that the Employment Tribunal found BT did not want to dispense with the services of Mr Woodfine. Paragraph 18 of the decision deals with what the Appellant was actually doing and what he was being told by the employer in the last few weeks before his resignation in these terms:

"…considerable efforts…[were]…made by Mr Woodfine to demonstrate a practicable and profitable way forward for a consultancy business, albeit he maintains that was never a viable proposition for someone of his seniority. He was told that he was considered important in the Respondent's future plans, albeit those may have lacked ascertainable shape. He remained at work and he remained involved in the business of the Respondent and in related activities. In January 2001 he went on a business trip to New York and Hawaii and he had secured the approval of his manager for a business trip to Japan both for himself and his team, albeit that his proposed budget for the trip was reduced significantly."

12. The Tribunal considered the resignation at paragraph 21 finding that:

"Whilst we well understand the reasons prompting Mr Woodfine to seek a career elsewhere, that a good reason for his decision existed is not to be equated with a fundamental breach of some express or implied duty of the employer. As in the cited case, Mr Woodfine resigned his employment because of uncertainty over his future and because he had secured the imminent prospects of alternative employment. He began discussion with a recruitment agency in December 2000 and he was made an offer by letter dated 5 February 2001. The offer was of employment in a senior capacity, which attracted benefits and a salary some 50% greater than that enjoyed with the Respondent. There is an issue between the parties as to the precise date, relative to the decision to resign communicated by letter dated 31 January 2001, that offer letter came to his notice. Evidence from the respondent can add nothing to this issue. Whilst prepared to accept that notice of the precise offer did not reach Mr Woodfine until after he informed the Respondent of his intention to resign, we are quite unable to accept that he was not already aware of the broad terms of the proposed offer and that it represented the prospect of congenial employment at an improved salary".

13. Finally, the Employment Tribunal appear to have summarised its thinking at paragraph 22:-

"Thus, we cannot find that Mr Woodfine has established that which he set out to establish. We cannot find that the Respondent failed in any duty imposed by law or contract to find work for Mr Woodfine. We cannot find that in refusing to accept his application for voluntary redundancy the Respondent, objectively judged, was in serious breach of the implied term of trust and confidence. Thus, there is no case for the Respondent to answer and we should say so before putting the parties to unnecessary expense."

14. As is apparent from the above, this was a conclusion that the Employment Tribunal felt able to reach without hearing evidence from BT. This had been addressed by the Employment Tribunal in more detail at paragraph 10 of its decision, which reads:-

"After the case for Mr Woodfine had closed the respondent submitted that there was no case to answer. Employment Tribunals are cautioned against the exercise of such a power without hearing the whole of the evidence in the case. In many cases falling within the jurisdiction of the tribunal, and a complaint of unfair dismissal may be one, it will rarely if ever be appropriate to take such a course. However, as was said in Coral Squash Clubs Ltd v Matthews [1979] IRLR 370, where one party on whom the onus of proof lies has clearly failed in law to establish what he set out to establish, an employment tribunal is entitled to decide the case at that stage. Were there to be a reasonable prospect of completing the evidence in the case within the time available, the inclination to allow it to continue would be great. It is a factor we take into account that the evidence and argument is likely to require another two days, at significant expense to the parties and with a delay likely to be of several months' duration. It will ill serve the interests of the parties to put them to that trouble and expense unless there remains the possibility that Mr Woodfine will succeed. Thus, we have given the submission greater care than we might have been disposed to do, ere there a prospect of finishing the case in the time available."

Mr Woodfine's case closed at the end of the second of three days, which had been allocated for the hearing, and the submissions were heard on the morning of the third of those days. As we understand it the reference in the above passage to two further days is an estimate by the Employment Tribunal of the time needed to complete evidence and argument in the case. It is not completely clear to us whether that estimate means that without the submission of no case on the morning of the third day, the case would have required one day to finish or a further two days. Be that as it may, it is clear that the case could not finish within the allotted time and that there would be a delay before it could be resumed.

15. The points raised on this Appeal on behalf of Mr Woodfine by Mr Anthony Korn of Counsel, can be summarised thus:

(i) it was an error of law for the Employment Tribunal to have decided this case on a submission of no case to answer without hearing evidence from the Respondent; such evidence would have been particularly relevant to the conclusion that there was no implied right to work, that there was no breach of the implied term of trust and confidence and to the nature of the VR 2000 scheme;

(ii) it was a misdirection of the part of the Employment Tribunal to have taken into account that if the Employment Tribunal were to hear oral evidence from the Respondent the Hearing could not be completed within the time allocated to it;

(iii) the Employment Tribunal erred by considering only the implied terms of trust and confidence and failing to consider whether the express terms of the contract had been breached;

(iv) in concluding that the Appellant's contract was that of a general manager who had no right to be provided with work the Employment Tribunal failed to make the necessary factual findings and thus failed to provide an adequately reasoned decision; one particular aspect of the failure to make findings was that the Employment Tribunal did not consider the extent to which the Appellant needed to work in order to exercise his skills;

(v) the Employment Tribunal erred by excluding evidence about employees who applied for voluntary redundancy under the VR 2000 Scheme and had been accepted;

(vi) the Employment Tribunal erred in refusing disclosure of documentary evidence about employees who had applied for voluntary redundancy and been accepted;

(vii) looked at in the round, this was a decision, which no reasonable tribunal properly directing itself could have reached.

16. There were said Mr Philip Thornton, Counsel for the Respondent, in his submissions in response, two insurmountable obstacles, which he referred to as "fatal flaws", in the way of this Appeal. In other words, if there were any imperfections in the decision of the Employment Tribunal, these would never be sufficient to upset the decision because there were two unanswerable reasons why the Employment Tribunal was correct to reach the conclusion, which it did. If he was right in this submission, there was no need to answer the detailed criticisms, which Mr Korn made of the decision, because these points disposed of the appeal. In particular, the debate about whether or not the Employment Tribunal should have acceded to a submission of no case to answer would be rendered unnecessary.
17. The strongest, he submitted, was in fact the second of the "fatal flaws", as set out in his Skeleton Argument. The Respondent contends that the Appellant cannot succeed because the Employment Tribunal has found that he did not resign because of any breach of contract. If this were to be accepted then there would be no need to consider any of the matters raised by Mr Korn because the point is so fundamental that it cuts right across his criticisms of the decision.
18. Mr Thornton referred us to the well known passage in the judgment of the Employment Appeal Tribunal in Walker v Josiah Wedgewood & Sons Limited [1978] ICR 744; in giving the judgment of the EAT, Arnold J said (see p.751H):

"We think for our part that it is at least requisite that the employee should leave because of a breach of the employer's relevant duty to him, and that this should demonstrably be the case. It is not sufficient, we think, if he merely leaves – at any rate in any circumstances at all similar to the present. And secondly, we think it is not sufficient if he leaves in circumstances which indicate some ground for his leaving other than the breach of the employer's obligations to him".

Here, submits Mr Thornton, the Tribunal has found that Mr Woodfine resigned for reasons other than the breach of contract by BT. This, submits Mr Thornton, is the only way to understand paragraph 21 of the ET's decision (see paragraph 12 above).

19. There are, submitted Mr Thornton, two reasons found for the resignation in the second sentence of paragraph 21 of the decision. The first, uncertainty as to the future, is not important on this aspect of the appeal, being part of the Employment Tribunal's analysis that there was no breach of contract. We should say that the reference by the Employment Tribunal in this context to the "cited case" is a reference to the case of British Leyland v McQuilken [1978] IRLR 245, which, the Employment Tribunal said, had "striking similarities" to the instant case (see paragraph 19 of the decision); whilst nothing turns on this we ought to make it clear that we think the resemblance between this case and McQuilken is faint, to say the least. The second, the new job on better terms, is crucial to Mr Thornton's argument because it is a reason for resignation, which has nothing to do with breach of contract; it, says Mr Thornton, constitutes a "break in the chain of causation".
20. Mr Korn answers this by submitting that when one reads the decision overall and juxtaposes paragraph 21 with paragraph 22 it becomes apparent that paragraph 21 is not intended to be a separate basis for finding against the Appellant. Looked at overall, the ET has concluded that there was never any fundamental breach of contract. Paragraph 21 is not setting out an alternative view of the case; it is not intended to be another reason for finding against the Appellant. Paragraph 22 describes the reason why Mr Woodfine fails; it is that he has not made out any fundamental repudiatory breach of contract on the part of BT not that the breach did not cause him to leave.
21. We think Mr Korn is right in his submission. It is difficult to understand the relationship between paragraphs 21 and 22 of the decision and how they are meant to fit together. The "causation point", if it is right to call it that, would only be determinative if there existed a repudiatory breach of contract on the part of the employer and that breach had not caused the employee to leave. What is abundantly clear here is that the Employment Tribunal concluded that there was no breach of contract on the part of BT. Sequentially one would expect the "causation point" to follow on from findings about breach of contract; if a breach had been found, lack of causation would be the sole reason for rejecting the employee's case and one would expect the decision to deal first with breach and then, despite breach being established, reject the employee's case because the resignation was not caused by that breach. On the other hand, if there were no breach, lack of causation might be expressed as an additional reason as to why the employee's case could not succeed.
22. Here, the Employment Tribunal's discussion about the new job precedes its finding that there was no breach of contract. Moreover, in the first sentence of paragraph 21, the Employment Tribunal does not doubt that Mr Woodfine thought he had good reason to seek new employment, only that his reasons, on analysis, could not amount to a fundamental breach of contract on the part of BT.
23. We recognise that the Employment Tribunal were at pains to emphasise that Mr Woodfine was likely to have known he would have a new job to go to when he resigned. Nevertheless, looking at the sequence of the decision, we take the view that the Employment Tribunal cannot have regarded the fact he had obtained another job as a conclusive finding against Mr Woodfine.
24. Alternatively, if, contrary to the sequence of the decision, the Employment Tribunal did intend to find Mr Woodfine had resigned because he had got a new job and his belief that BT were in breach of contract was not a cause of his resignation, then we think that the Employment Tribunal misdirected themselves in law. Whilst anything emanating from Sir John Arnold will always command close attention and deserve the utmost respect, we think that his remarks in the Wedgwood case need to be carefully applied in the factual context of any particular case, if confusion between lack of causation, which would render the employer's breach inoperative, on the one hand, and events explaining the timing of a resignation, which, despite those events, is still a reaction to the employer's breach of contract and caused by it, on the other hand, is to be avoided. When faced with a repudiatory breach of contract, some employees might well leave immediately; others might look for and obtain other employment and then leave. In the latter case, the fact of having obtained another job, cannot, of itself, be equated with a break in the chain of causation between breach and resignation. It will be a question of fact as to whether the breach remains the operative cause; in some cases, the employee would never have looked for other work had the breach not occurred and, whilst the new job might govern the timing of the resignation and, in that sense, be the immediate cause of the employee leaving then, the real and operative cause of him leaving remains the breach of contract.
25. We feel confident that Sir John Arnold would be dismayed to think that the remarks made by his division of the Employment Appeal Tribunal in Wedgwood were being read in a prescriptive way so as to lead Employment Tribunals to conclude that there is no constructive dismissal simply because the employee has found new work or looked for it before tendering the resignation. Here, it seems to us that the Employment Tribunal fell into error; if Mr Woodfine thought BT's conduct towards him (irrespective as to whether it was a breach of contract or not) gave him reasons to seek another job, as the Employment Tribunal have found was the case (see the first sentence of paragraph 21 of the decision), we fail to see how those reasons were not the operative cause of his resignation. We think that here the Employment Tribunal have fallen into the trap of equating the fact that the employee has got another job with a break in the chain between the employer's conduct and the employee's resignation.
26. Mr Thornton's submission is that paragraph 21 of the Employment Tribunal's decision is to be read as a clear finding of fact on causation and so there cannot be any question of misdirection. As we have said, we do not accept that analysis. If we are wrong to reject it, there still remains Mr Korn's general submission as to whether the decision is adequately reasoned. We deal with this in some detail later in this judgment in the different context of construction of the contract. What we say there in the context of breach of contract applies equally here. It seems to us that Mr Woodfine cannot be clear from the wording of paragraph 21 of the decision as to why this finding has been made. Although we find it difficult to understand why his evidence on this matter should be so devoid of a rational basis as to require that it be rejected (see that part of paragraph 11 of the Employment Tribunal's decision quoted at paragraph 5 above), we recognise that the last three sentences of paragraph 21 amount to a rejection of Mr Woodfine's evidence as to his state of knowledge at the time of his resignation. What cannot be understood from the decision, however, is how or why that should lead to the conclusion that Mr Woodfine had resigned not because of BT's conduct towards him but because he had got a new job on better terms and that without such an offer he would have remained working for BT indefinitely. Linking that factual finding to the conclusion as to causation may or may not be a classic non sequitur. Because of the lack of reasoning it is impossible to say whether it is or not and, in our judgment, that gives rise to a yet further error of law.
27. The first "fatal flaw" falls into two parts. Firstly it is said that it cannot be a breach of contract on the part of BT not to dismiss Mr Woodfine. This is a reference to the fact that when he applied for voluntary redundancy pursuant to the Scheme then in force, which scheme was known as "VR 2000", he was not accepted. Secondly the Employment Tribunal have found that, on a proper construction, the contract of employment here did not require BT to provide Mr Woodfine with any work, so the fact that he no longer had a definable job could not amount to a breach of contract.
28. Mr Korn's answer to these submissions as to the first part of the first ""fatal flaw" is twofold. Firstly he argues that in relation to voluntary redundancy the ET has failed to consider, as it should have done, whether this was a discretionary benefit, which should be exercised in a reasonable manner. Secondly, the Appellant's case was never so narrow as to depend solely on a causal connection between the refusal of voluntary redundancy and resignation. The refusal of voluntary redundancy was but one step in a series of steps, all of which had to be considered together in order to ascertain whether or not there was a repudiatory breach of contract by BT; in other words one of a number of "straws", if not the "last straw".
29. His answer to the argument that there was no breach by BT when they plainly had very little for Mr Woodfine to do because of the demise of the part of the BT enterprise, over which he had been Vice President, was that the finding was inadequately reasoned. He accepted that the Employment Tribunal had found that, on analysis, the contract of employment did not require BT to provide Mr Woodfine with any work; this is clear by considering the words of paragraph 22 of the Employment Tribunal's decision :–

"We cannot find that the Respondent failed in any duty imposed by law or contract to find work for Mr Woodfine."

in the context set by paragraph 13:-

"There is normally no duty upon an employer to provide his employee with work. That duty may be inferred or it may be express on the face of the contract between the parties. No express duty is relied upon and therefore the question is whether or not such a duty can be inferred. Mr Woodfine was employed in a senior management role within BT. He had risen to that position because of his ability, considerable experience and acknowledged expertise in a range of fields especially that of Sub-Sea communications. We cannot infer, on the available evidence, that this contract was such as to impose the duty to provide work and there is nothing in this upon which a response from the respondent could be required. We have Mr Woodfine's expressed concern that his skills, with disuse, 'began to wither away'. Mr Woodfine's role, for all the background knowledge and expertise brought to bear, was a management one. As in Langston v. Amalgamated Union of Engineering Workers (No 2) [1974] IRLR 182, the correct proposition is that the employer must not unreasonably withhold work that is available and that is not the case advanced here."

30. Nevertheless, submits Mr Korn, the Employment Tribunal has erred; firstly it has failed to give an adequately reasoned decision as to how and why it construed the contract of employment in the way set out at paragraph 13 and secondly it has decided the case on a submission of no case to answer. These submissions are central to the appeal and are interconnected.
31. The Employment Tribunal has found at paragraph 13 that Mr Woodfine was employed as a senior manager and, as such could be assigned whatever work was available, and, if none was available, then he need be assigned no work at all, so long as he was paid. Mr Thornton, as well as referring us to the Langston (No 2) case, also took us to Turner v Sawdon [1901] 2KB 653 and to the summary of the law contained in the latest edition of Harvey on Industrial Relations and Employment Law at A380 - 393. These established, he argued, that there is a type of contract, which can be characterised as a "simple retainer contract", under which the employer is obliged to pay the employee and is further obliged not to withhold work unreasonably but is not under any obligation to provide work. The Employment Tribunal had construed the contract here as falling into that category. Moreover, as the Employment Tribunal pointed out at paragraph 13, this was a matter, which required no evidence from the employer and could not be changed by any such evidence. Therefore, neither in terms of contractual analysis nor of disposing of the case on the basis of no case to answer, could there be any error of law.
32. Mr Korn relied on Breach v Epsylon Industries [1976] ICR 316. That was a case where the Industrial Tribunal, although it had held that there was no breach by the employer in not providing work, had not expressed itself with sufficient clarity as to what it found the contractual duty to be, so that the Employment Appeal Tribunal could not discern whether there might have been a misdirection or not (see 320D – 321C per Phillips J). In this case, the Employment Tribunal have not fallen into that trap and we do not think that Breach really helps Mr Korn, except perhaps in emphasising the need for a tribunal construing a contract to establish a factual matrix against which to do so.
33. Mr Korn next referred us to William Hill Organisation Ltd v Tucker [1998] IRLR 313. This was an application by an employer for an injunction to restrain an employee, who had given notice of termination from working fir a rival during the notice period. The contract contained no "garden leave" provision but the employer had nevertheless sent the employee home and was providing no work for him during the notice period. The High Court refused an injunction on the basis that on a proper construction of the contract, against the factual matrix in which it had been made, there was a duty on the employer to provide work, whilst such work was available. So to send the employee home was a breach of contract on the part of the employer, which had been accepted by the employee as having brought the contract to an end. The Court of Appeal upheld that judgment, emphasising that the nature of the skills of the employee (as senior dealer in spread betting) required frequent exercise. Mr Korn relied on the sentence at the start of paragraph 16 of the judgment of Morritt LJ, with which the other members of the Court agreed, which reads:-

"Given that the question must be resolved by construing the particular contract of employment in the light of its surrounding circumstances, previous cases decided on their own wording and circumstances are of limited value."

The "question" referred to in that sentence is whether or not the contract either expressly or by implication gives rise to a duty to provide work and the paragraph goes on to identify cases which "…illustrate certain categories and trends which are of assistance." These cases include well known ones dealing with theatrical performers, who have a need to practise their skills regularly, those engaged on specific projects, those in unique posts, those whose remuneration depends on output and so on.

34. Mr Korn relies on this sentence as indicating that the Employment Tribunal have erred in their conclusion that Mr Woodfine's skills would not wither away. At paragraph 18, however, Morritt LJ goes on to quote the passage from Langston (No 2), which the Employment Tribunal plainly had in mind at paragraph 13 of their decision, and at paragraphs 20 and 21 of his judgment, he accepts the contractual obligation in that case to be exactly that stated by the Employment Tribunal in the last sentence of paragraph 13 of the decision. As with the case of Breach, we do not think that the William Hill case assists Mr Korn save for its emphasis on the need to establish the factual matrix against which the contract falls to be construed (and we will return to that later in this judgment).
35. Here it seems to us that the Employment Tribunal has construed the contract of employment between Mr Woodfine and BT as being one in which BT agreed to employ Mr Woodfine, and he agreed to serve, as a senior manager in whatever senior management role BT chose to assign to him and on whatever work BT chose to assign him, with the proviso that if there was no work available for him, BT could retain him until such work did become available. This construction undermines Mr Korn's argument put to the Employment Tribunal, and repeated to us, that Mr Woodfine's skills in Sub Sea systems management were atrophying. The Employment Tribunal's answer to that argument was that his role was no more than that of manager, from whom available work must not be unreasonably withheld, which it had not been. If that is a correct construction of his contract (and as to whether it is a correct construction we shall say more later), then it disposes of Mr Korn's argument that the Employment Tribunal misdirected themselves as to any implied duty on BT to enable Mr Woodfine to exercise his skills. .
36. In Mr Korn's submission, however, scrutiny of the decision of the Employment Tribunal should not stop there. He poses two further questions in relation to paragraph 13. Did the Employment Tribunal fall into error in this context by dismissing Mr Woodfine's claim on a submission of no case to answer and thus hearing no evidence from BT about the contract and the factual background against which it was made, varied and operated? Does that paragraph, when taken with what precedes and succeeds it, constitute an adequately reasoned decision? It seems to us that these two questions are interrelated and that we can and should deal with them together.
37. In Logan v Commissioners of Customs and Excise [2003] EWCA Civ 1068 the Court of Appeal analysed the authorities addressing the question as to when it might be appropriate for an Employment Tribunal to entertain and/or accede to a submission of no case to answer. This analysis included the case of Coral Squash Clubs Ltd v Matthews, referred to by the Employment Tribunal at paragraph 10 of the decision (see paragraph 14 above), and ended with His Honour Judge Peter Clark's summary of the relevant principles in the unreported case of Clarke v Watford Borough Council [4 May 2000], which the Court of Appeal approved as a correct statement of the law (see paragraph 19 of the judgment of Ward LJ). Of particular interest is the observation made in relation to the fourth point of the summary that onus of proof cases comprise constructive dismissal cases as well as those of discrimination. Thus the correct approach to the instant case is that before a submission of no case to answer could succeed, the case would have to be regarded as exceptional or frivolous.
38. In our judgment there is no question of Mr Woodfine's case being frivolous and we reject Mr Thornton's characterisation of it as such in his additional written submissions; the question the Employment Tribunal should have addressed was whether it had an exceptional character. In his additional written submission Mr Korn submits that the Employment Tribunal have failed to direct themselves in these terms. Paragraph 10 of the instant decision (see paragraph 14 above) bears some resemblance to what is, quite coincidentally, paragraph 10 of the decision of the Employment Tribunal in the Logan case. The difference between them, submits Mr Korn, is that whereas the Employment Tribunal in Logan's case acknowledged that only rarely would a submission succeed (thus indicating a recognition of the need for the case to be exceptional before a submission could be allowed), in the instant case the Employment Tribunal administered a self cautionary note and being careful is not the same as recognising that the case needs to be exceptional.
39. It seems to us this ignores the fact that the Employment Tribunal here did recognise such submissions should rarely succeed; paragraph 10 of the decision says so in terms. Moreover, the Employment Tribunal's reference to the need for caution is quite consistent with the second point made by His Honour Judge Clark in the summary approved by the Court of Appeal in Logan. On the other hand, what was said by the Employment Appeal Tribunal in the Coral Squash Clubs case now needs to be seen in the overall context of the summary in Logan and the Employment Tribunal's language suggests that it views the Coral case as giving rise to an "entitlement" to entertain a submission of no case, where there is an onus of proof. Taken literally this would be far too rigid an approach but, when viewed in the context of the rest of paragraph 10 of the decision we think this was an infelicitous use of language by the Employment Tribunal rather than a dogmatic but erroneous statement of principle. So we cannot accept Mr Korn's additional submission based on Logan.
40. Before Logan had come to our attention and before we offered the parties the opportunity to make additional submissions, Mr Korn's submission on this point had focussed, however, on the rest of paragraph 10 of the decision. Within the parameters set by His Honour Judge Clark and adopted by the Court of Appeal, whether or not to entertain a submission of no case to answer is essentially a matter of discretion. The Court of Appeal says as much in Logan (see paragraph 21 of the judgment of Ward LJ). The exercise of a discretion can only be challenged on appeal on the basis that it was perverse (the basis of the successful challenge in Logan) or that during the balancing exercise, which must be undertaken in the exercise of the discretion, something was brought into account, which should have been excluded or left out of account when it should have been included.
41. Mr Korn submits that the Employment Tribunal should not have taken account of the fact that there would be time, expense, disruption and delay involved in the case going part heard to future dates. This was said by the Employment Tribunal to be a factor taken into account and it seems clear from paragraph 10 that it tipped the balance in favour of entertaining the submission. We accept Mr Korn's argument. In our view, important though matters of time and cost are to the administration of justice generally, such factors should never be regarded as critical in terms of the exercise of a discretion to hear or refuse to hear a submission of no case to answer and the Employment Tribunal erred by taking them into account.
42. Mr Thornton submitted that even if the Employment Tribunal fell into error on the exercise of its discretion, as we have found to be the case, we should not allow the appeal if we thought that in the absence of such an error the decision of the Employment Tribunal would inevitably have been the same. In his submission it must follow that the decision would inevitably have been the same because of the construction of the contract in paragraph 13 of the decision. As the Employment Tribunal made clear, this was an issue, which could derive nothing from BT's evidence and Mr Woodfine's case could not be improved by that evidence. Moreover, Mr Thorton submits that the reason why Mr Woodfine lost is quite clearly articulated by the Employment Tribunal at paragraph 13; he lost because he was employed as a manager to whom his employer need only assign work if it was available, and none was available.
43. All that would be correct if that construction of the contract is correct. The construction of a contract is a question of mixed fact and law. The factual aspect involves establishing what is nowadays referred to as the "factual matrix" (we referred to this briefly at paragraph 34 above), against which the contract was entered into and/or subsequently varied. The law as to the need to establish a factual matrix against which to construe what the parties said or wrote or did when entering into the contract or varying its terms is not in doubt (see ICS v West Bromwich Building Society [1998] 1WLR 896 HL per Lord Hoffman at pp 912-3 and BCCI v Ali [2001] IRLR 292 per Lord Hoffman at paragraph 39 page 298). On what factual matrix does that construction of Mr Woodfine's contract rest? Mr Korn submits that it is impossible to tell because paragraph 13 is inadequately reasoned. It tells Mr Woodfine that the Employment Tribunal has construed the contract as being one of employment in a general managerial capacity but not why, in the face of the documentary evidence as to his job title and Mr Woodfine's own evidence as to his position (as we glean it from his statement), it has reached that conclusion and on what factual basis that conclusion rests. Furthermore, Mr Korn submits that because of the need to establish the factual matrix in the round, so to speak, unless the case is exceptional, which this one was not, it ought not to be disposed of without hearing evidence from the other contracting party.
44. We think that Mr Korn is right in these submissions. There is now a very considerable body of authority in the Court of Appeal dealing with the error of law, to which an inadequately reasoned decision gives rise (see Meek v City of Birmingham [1987] IRLR 250, Flannery v Halifax Estate Agencies [2000] 1 WLR 377 (also [2000] 1 AER 373), Anya v University of Oxford [2001] ICR 847 (also [2001] IRLR 377), Tran v Greenwich Vietnam Community Project [2002] ICR 1101 ( also [2002] IRLR 735) and English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409 (also [2003] IRLR 710)) and we were helpfully referred to all of it. For present purposes it can be summarised thus: it must be apparent to the parties why they have won or lost by the issues being identified and the way in which the issues have been resolved being explained.
45. We do not accept that there is a distinction to be drawn between employment cases and other types of civil appeal, as Mr Thornton seemed inclined to submit. Nor do we regard it as an essential for an appellant to have obtained notes of evidence before complaining of inadequacy of reasons; neither Adlington v British Bakeries (Northern) Ltd [1989] IRLR 218 nor Hampson v Department of Education and Science [1988] ICR 278 are supportive of that proposition.
46. In our judgment there is no adequate explanation of the way in which the Employment Tribunal has gone about the task of construing the contract of employment. Mr Woodfine does not know what it regarded as significant or what it felt able to discard as insignificant. There is no finding at all as to what constitutes the factual matrix. This is an inadequately reasoned decision. We also accept Mr Korn's point that where a question of construction arises the factual matrix ought to include evidence from the employer. Obviously the employer will be likely to lead evidence, which it thinks is unfavourable to the employee, but whether it truly is inimical to the employee's interests is often not as clear cut as the employer imagines.
47. Accordingly we think there is a fundamental and material error of law at the heart of this decision and the appeal will be allowed. Both parties accepted that if this appeal were to be allowed, the right course was for it to be remitted to a differently constituted Employment Tribunal for a complete re-hearing and we so direct. Mr Korn raised a number of other points. He argued that this was a "last straw" case (see Lewis v Motorworld Garages Ltd [1986] ICR 157) and the Employment Tribunal erred in not treating it as such; he also argued that the VR 2000 scheme should have been viewed as a discretionary benefit, which should not be unreasonably withheld (see Clark v Nomura International Plc [2001] IRLR 766). We think it is neither necessary nor desirable to say anything about these matters, which, it seems to us, are to some extent dependent on the resolution of the central question of construction of the contract of employment and all of which will need to be considered again on the remission.