United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ALEX LOCK (Employed Barrister) Instructed by: Messrs Beachcroft Wansboroughs Solicitors 10-22 Victoria Street Bristol BS99 7UD
For the Respondent	MR J W WILSON (Solicitor) Messrs Wilsons Solicitors 6A Rodley Lane Rodley Leeds LS13 1HU


 


MR RECORDER BRENNAN QC

1. This is an appeal by the employer from a decision of an Employment Tribunal sitting at Leeds, which was sent to the parties on 16 July 2002. The Chairman of the Tribunal was Mrs C Lee. The Applicant before that Tribunal complained of unfair constructive dismissal by the employer. As the Employment Tribunal observed, this case turns very much on its own particular facts.
2. The Applicant was a Cook Supervisor in a school kitchen. Originally employed by a Local Authority, she had some 14 years service by the time her employment came to an end by resignation in July 2001. The employer is a large organisation with some 55,000 employees and doubtless the sophisticated personnel expertise necessary to run such an organisation.
3. There were originally two kitchens in the school. In 1999 the undertaking carried on in the other kitchen (that is to say, that in which the Applicant did not work) was transferred to the employer Sodexho Ltd under what appears to have been a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981.
4. In September 2000, under a further relevant transfer, the undertaking carried on in the Applicant's kitchen and the employment of the Applicant and others involved in that undertaking were transferred to Sodexho Ltd. So, with effect from 1 September 2000 the Applicant was a Sodexho employee.
5. A result of that second transfer was, understandably, a reorganisation of the kitchens, which had the consequence that the Applicant, who had been in charge of her own domain under the previous regime, was now subordinated to another employee who was in charge of both kitchens.
6. It is clear that this was a cause of great dissatisfaction to the Applicant. Representations were made by her and by her union on her behalf to her new employer Sodexho, but they came to no satisfactory result. It is unnecessary to go into the history of the correspondence, but it lasted a considerable time.
7. The Applicant went off sick with stress in January 2001. The Employment Tribunal inferred that difficulties with her work were probably a part of the cause for her sickness.
8. On 17 April 2001 (that is to say, while the Applicant was still off sick) there was a meeting between her and representatives of her employer at which possible redeployment was discussed. She was offered support and training. Whether or not she would go back to work in the kitchen where she had previously worked was discussed. Her ultimately expressed preference was for redeployment.
9. The Tribunal findings of fact, to be found at sub-paragraph 20 and following of the main paragraph 2 of their decision, read as follows:

2 (20) "The Applicant was beginning to recover from her ill health but was not signed off by the doctor until 25 June 2001.

(21) By 1 June 2001 she had heard nothing from the Respondents other than a letter dated 30 April 2001 confirming the meeting which had taken place. She therefore looked to find other work.

(22) On 1 June 2001 she received a letter from the Respondents telling her there was a vacancy at Greggs the bakers and that she was to have an interview on 7 June 2001. She attended that interview but was unsuccessful."

It is appropriate to interpose here that a job with Greggs the bakers would have been redeployment within the employer's organisation and would not have involved termination of her employment.

(23) Also at the beginning of June she applied for and attended an interview at a firm called Redcap. They made an offer on 13 June 2001 which she eventually accepted. It was an offer of a job to start at the end of July 2001.

Redcap was not part of Sodexho's organisation. Acceptance of a job with Redcap would necessarily involve termination of the Applicant's employment with Sodexho.

(24) "Having been "signed off" on 25 June 2001 the Applicant went back to visit the school to take the doctor's note as she was supposed to do. She then discovered there was a permanent replacement for her at her old job. She contacted her union who in turn contacted the employers resulting in a meeting on 2 July 2001 at which she was told that her old position was no longer open. It was suggested that endeavours be made to try and find her alternative work and another meeting be arranged for 18 July 2001. In the meantime the Respondent's Human Resources Officer was going to meet her on 6 July 2001 in order to help her complete application forms, prepare a CV and prepare for interviews."

10. Immediately following that meeting the employer wrote a letter of 3 July 2001 which it is appropriate to read in full:

"Dear Gillian

Thank you for taking the time to meet me on Monday 02 July 2001 at the Sheffield Hilton Hotel. It was good to hear that you are feeling much better.

We met to discuss your recent visit to your former place of work, St Wilfreds School, when you informed them that you were ready to return to your position.

At our meeting of 17 April 2001, you categorically informed me, in the presence of Keith Williamson, Unison and Ian Carter, District Manager, that you would never want to return to your position at the school, or indeed, the school itself. At this point I suggest that you have a week to think this through and take the opportunity to discuss this with both Keith and your family.

You subsequently telephoned me on Friday 20 April 2001 to tell me that you had considered your situation and reiterated that you could never return to your position at St Wilfreds School. Following this conversation, you forwarded to me a copy of your CV and requested that I circulate your details both in the Commercial Education Division and other divisions within Sodexho, which I duly did.

I was delighted to hear at the beginning of June that you had been requested to attend an interview for a position within the Business & Industry Division."

That is a reference to the Greggs post.

"Unfortunately, following your interview, the position was offered to another Sodexho employee already working at the site.

In the meantime, on your earlier instruction informing me, that you would never return to St Wilfreds, I have managed to fill the resulting vacancy, and having had discussions with the Client, am not in a position [to] remove this person.

Therefore, the culmination of our meetings is that your position at St Wilfreds has been filled as per your request, and we currently do not have a suitable vacancy for you.

I am happy to continue to attempt to find you work within Sodexho, and we will review this situation on Wednesday 18 July 2001 at 10.00 am, again at the Sheffield Hilton. As a goodwill gesture, you will continue to receive your normal pay.

In the meantime, as agreed, you will meet with me on Friday 06 July 2001, at 2.00pm at Leeds Brighouse Posthouse Hotel (J25, M62), to receive some advice on applying and attending interviews, for positions.

Should you have any queries between now and then, please do not hesitate to contact me."

That letter is signed by Melissa Proles, who is the Human Resources Manager of the Respondent.

11. That letter is a slightly odd document. It emphasises, and indeed does so on several occasions, the Applicant's indication that she did not want to return to the school. It refers, more oddly, to the employer's willingness to continue to pay the Applicant's salary "as a goodwill gesture."
12. In fact, of course, as Ms Proles, the Human Resources Manager, must have well known, the employer was contractually bound to pay the Applicant's salary and indeed would not have been in a position to dismiss her fairly without having a substantial reason for doing so and without taking reasonable steps to accommodate her skills within the employer's organisation or indeed elsewhere.
13. The letter was not written out of the blue. It was written against the background of the treatment of the Applicant over a period of months, since indeed 1 September 2000, when the kitchen in which she worked had been transferred to Sodexho and she became a Sodexho employee by operation of law.
14. Within the week after receiving that letter the Applicant resigned, confirming her resignation by a short, undated letter sent shortly afterwards. She did so in order to take up the post with Redcap which she had had available to her since the offer of that job in June. That job was for a catalogue company. It was at a very significantly lower rate of remuneration than the Applicant had been enjoying while a Sodexho employee and it did not involve use of the skills which she had no doubt acquired throughout her lengthy period of employment in the catering trade.
15. In coming to its conclusion that the employer was guilty of a fundamental breach of contract, which the Applicant had accepted by resignation so as to give rise to a constructive and, in context, unfair dismissal, the Tribunal correctly directed itself that a constructive dismissal requires a fundamental breach of contract by the employer, which is accepted sufficiently promptly by resignation and that the resignation is effectively caused by the fundamental breach of contract.
16. The Tribunal's reasoning proceeded as follows, in main paragraphs 4 and 5 of its decision:

4 "In applying those principles to the facts we have found, we have concluded that there were in fact two fundamental breaches here. The first was in September 2000 when the Applicant's job changed to such a degree that she could no longer cope with the loss of status that she had suffered. However, at that stage the Applicant neither repudiated nor affirmed the contract. What she did was to complain about it and we do not criticise the fact that she complained and continued to complain about it. Her union wrote several letters from December until April trying to get this problem resolved. We are also conscious that in the early part of 2001 the Applicant had serious health problems which would have limited her ability to make a decision or to put pressure on the employers to reach their own decision. However, there was a meeting on 17 [April] as a result of which an agreement was reached by the Applicant's telephone call of 20^th, when she said she would not go back to the school and she would look to the employers to relocate her and find her other work. From that point on it would have been difficult for the Applicant to refer back to the earlier breach and to say that that breach in itself was sufficient for her to resign. We find that at that stage she affirmed the contract.

5 Therefore we have had to look carefully at what happened after that meeting. We note that the Respondents did try to find her other work in the sense that she was offered the interview at Greggs which was unsuccessful. By 25 June the Applicant had been signed off sick [the Tribunal mean here that she was no longer sick]. She then presented herself as ready to work. Generally employers have no duty to provide an employee with work (except in rare circumstances) but they do have a duty to pay their employees, whether they provide them with work or not. The Applicant was told that the job was no longer there and the Respondents were looking for other work for her. They did not find her other work. They left it to her to decide where to apply. When matters were coming to a head in the beginning of July, the Applicant was told that as a "goodwill gesture" she would be paid to the end of the month. The only sensible conclusion she could have come to from that was that she had no entitlement to be paid at that stage, that out of kindness she was being paid to the end of the month and there was no guarantee that she would be paid after the end of the month. The duty to pay wages is an essential term of the contract. It was not at that stage being breached but the implied threat to discontinue payment, given what had gone before, was a breach of the implied term of trust and confidence. As a direct result of that the Applicant accepted the other job which she had been offered. We have accepted that that was the only reason she accepted the other job, as she had been indicating to her employers that she would stay with them if they could come up with something else for her to do."

17. On appeal Mr Lock, on behalf of the Appellant employer, criticised the Employment Tribunal saying. First, that it is not a fundamental breach of contract to for an employer to say that he will review the Applicant's situation later in the month and that he will pay the Applicant's salary as a matter of goodwill. However, the Employment Tribunal's reasoning did not depend on the indication that salary would be paid as a matter of goodwill as being of itself a breach of contract, an anticipatory indication that salary would not be paid later.
18. The Tribunal's reasoning was that it was a breach of the implied term of trust and confidence, that is to say the implied term of a contract of employment that the employer will not without good cause so conduct himself as to destroy or seriously to damage the relationship of trust and confidence between employer and employee.
19. Whether there is a breach of that implied term of trust and confidence depends critically on context. The employer's obligation, properly understood, was to pay the employee's salary until the effective date of termination of employment and, if there was a termination of employment, to terminate fairly or to take the consequences.
20. The Employment Tribunal was, in our judgment, entitled to take the view against the background of all that had gone before, (including a fundamental breach of contract which the Applicant had not in fact accepted) that there was a fundamental breach of the implied term of trust and confidence, when the employer indicated that as the search for new work continued through July the Applicant's salary would be paid as a matter of goodwill.
21. Second, in the employer's attack on appeal against the Tribunal's decision, it is said that the context of the meeting of 2 July 2001, confirmed as it was by the letter of 3 July, was such that there could not be a fundamental breach of contract. The point that is made is that the Applicant had agreed to what was proposed. It is argued that the Applicant agreed to a review of her situation late in July and that it was a consensual matter that she should not be at work while the employer sought to reaccommodate her in its organisation.
22. Such an approach, that the Applicant had agreed to that of which she now complains is, in our judgment, to ignore the true context of the meeting of 2 July. This was not a contractual negotiation between equals, it was a meeting between management and an employee who was displaced from her post. She had been displaced from her original job on the reorganisation. She did not want to work in the school, at any rate under the new regime of the new arrangements. She was not being criticised by the employer for that reluctance and she was not herself seeking to go back to work at St Wilfreds school. There was by now no post for her to work in even if she did.
23. The context of the meeting was an attempt between management and the Applicant to discuss the Applicant's future with the company. That she consented to her position being reviewed later in July, does not prevent what would otherwise amount to a fundamental breach of contract in this context from being such a breach.
24. Had the employer said to her at the meeting on 2 July, or confirmed in the letter of 3 July, words to the effect that it accepted that she was an employee and was entitled to be treated as such, that she was entitled to be paid her salary indefinitely until she was dismissed and that indeed she could not fairly be dismissed until the employer had gone through the appropriate procedural steps to redeploy or ensure her employment elsewhere, then the position after the meeting of 2 July might have looked very different.
25. As it was, against a background of dissatisfaction on the part of the Applicant starting from 1 September 2000 and of a failure on the part of the employer to deal with her complaints up to April 2001, which itself amounted to a fundamental breach of contract, the Employment Tribunal was, in our judgement, entitled to take the view that the Applicant was subjected to a further fundamental breach of contract in July and that when she resigned, as she did promptly in response to it, that amounted to a dismissal and an unfair dismissal for the purposes of the Employment Rights Act 1996.
26. Accordingly we find no ground for interfering with the Employment Tribunal's determination that the Applicant was unfairly dismissed. This appeal is therefore dismissed.
27. At the conclusion of our judgment, Mr Wilson applied for costs on the basis that the employer (the Appellant before us) had acted unreasonably or vexatiously in the conduct of the appeal. We do not agree. This was an appeal which was arguable on the part of the Appellant and not unreasonable or vexatious. Accordingly we decline to order costs in favour of Miss Busfield.