United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS J M McNEILL QC (of Counsel) Instructed by: Messrs Kennedys Solicitors Longbow House 14-20 Chiswell Street London EC1Y 4TW
For the Respondent	MR A HOGAN (of Counsel) Instructed by: Messrs Freeth Cartwright Solicitors Willoughby House 20 Low Pavement Nottingham NG1 7EA


 


MR JUSTICE BURTON (PRESIDENT):

1. This has been the hearing of two appeals and two cross appeals in respect of the conclusions of the Employment Tribunal sitting at Ashford in Kent, with regard to the claim by Mr Brealey that he was unfairly constructively dismissed by his then employer Balfour Beatty Rail Renewals Limited. The Tribunal reached a majority decision after a hearing on the first 4 July and a discussion in Chambers on 5 July 2002 that there had been a fundamental breach of the Applicant's contract and, as it was put in the Decision, that "he was therefore unfairly constructively dismissed". The minority, being the Chairman, dissented, concluding that none of the matters raised by the Applicant amounted to a fundamental breach of his contract of employment and that his claim of unfair constructive dismissal should fail and be dismissed.
2. Thereafter a remedies hearing occurred, and that came before the same Tribunal on 8 November 2002 with a discussion in Chambers on 19 December 2002, and by a Decision sent to the parties on 14 January 2003 the Tribunal unanimously awarded compensation to the Applicant of £24,866.52. As we have indicated, there have been both appeals and cross appeals, and we have heard the appeals on liability and remedies separately and consecutively and this is our decision on all appeals.
3. The Applicant, as we shall call him, by virtue of his being both cross Appellant and Respondent, was a senior manager with the Respondent company, who began work on 1 January 1998 as Senior Commercial Manager. He raised a grievance, which were dealt with by way of a grievance procedure, that, in respect of events subsequent to 13 December 1999, the employer had acted inappropriately towards him, in certain respects. There were seven matters, the subject matter of his grievance, which are set out in paragraph 17 of the Employment Tribunal's Decision on Liability.
4. The grievance procedure proceeded, and it was agreed, by a letter from him dated 12 September 2000, that the grievance procedure would be carried out in a way that did not exactly accord with the process incorporated into his contract of employment. He wrote as follows: that he recognised that the procedure should ideally provide two stages: that his grievance involved both Mrs O'Brien, the HR Director, and Mr Eric Prescott, the Managing Director; that they would on behalf of the Respondent carry out with him the first stage, notwithstanding that his grievance involved both of them: but there would be a clearly defined second stage, namely, as it turned out, a second stage involving neither Mr Prescott nor Mrs O'Brien, but a Mr Raby who was senior to both of them.
5. In the meanwhile, as appears from paragraph 20 of the Tribunal's Decision, a different senior manager superior to the Applicant, Mr Smith, was becoming concerned about what he considered to be a lack of detailed financial information from the Applicant, particularly in the matter of accruals, and in that paragraph the Tribunal recorded, in the unanimous part of its Decision, that some frustration was building up about the Applicant's conduct with relation to endeavouring to sort out the position in respect of accruals, and that Mr Smith felt that he could not obtain detailed information from the Applicant.
6. A meeting was arranged in September 2000 between the Applicant and Mr Smith and a further preliminary investigatory meeting was held on 15 September between Mr Smith and the Applicant. There was a second investigatory meeting with Mr Smith on 24 October 2000. The Applicant took the view that he was unhappy with the way in which the investigation was being carried on by Mr Smith, and on 30 October he submitted a grievance about the conduct of Mr Smith. What then happened was that Mr Raby determined the Applicant's existing grievance, and he determined it, as a result of the second stage, to which we have referred, against the Applicant.
7. The Applicant then resigned by letter dated 8 November 2000. His letter, addressed to Mrs O'Brien, reads as follows:

"I have received and considered the letter from Paul Raby setting out his decisions relating to my grievances.

It is with much regret that I now consider that I have no alternative but to resign in response to the Company's treatment of me since December 1999.

I have reached the point where my trust and confidence in the Company has been irreparably damaged. The factors contributing to my Decision include the following:

1. The seven grievances which were investigated by Paul Raby;

2. The fact that the first stage of the grievance process was decided upon by the same two individuals whose conduct I was complaining about;

3. The failure of the Company to properly address/investigate my grievances at either the first or second stages;

4. The conduct of Tony Smith since I raised the grievances, full details of which are set out in my letter to yourself dated 30 October 2000.

Whilst I believe that the Company's conduct is sufficient to justify my leaving immediately, I am giving twenty-six weeks' notice as required under my contract and am willing to work out that notice.

For the avoidance of doubt, I do consider that I have been constructively and unfairly dismissed and am taking advice about that issue.

I have received a letter from yourself fixing a Stage 1 hearing in relation to my grievance regarding the conduct of Tony Smith. I regret that, following my experience in relation to the conduct of my initial grievances, I no longer have any faith in the Company's internal grievance procedure as a means of resolving the Tony Smith related grievances. In these circumstances I no longer wish to pursue those grievances through the internal procedure. This does not mean that I am withdrawing those grievances, which have contributed to my decision to resign, it just means that I believe I need to have them resolved in an independent forum."

8. He did work out his notice, leaving in May 2001, and, after some attempt to find some alternative employment, he set up his own company in February 2002, and the compensation that he was awarded by the Tribunal after the remedies hearing gave him money in respect of the period up to and including the setting up of that new company.
9. The Applicant was represented before the Tribunal by Mr Hogan of Counsel, who has represented him on the Appeal before us today, and the Respondent, similarly, was represented below by Miss Jane McNeill QC, and again so before us. The issues that the Tribunal had to resolve ranged in respect of the period since December 1999, in the light of the letter which we have quoted.
10. The Tribunal reached, unanimously, decisions favourable to the Respondent on the vast bulk of the evidence before it. In paragraph 31 of the Decision the Tribunal addressed each of the seven matters of grievance which had been put before Mr Raby, and upheld Mr Raby's view in relation to each of them in the following terms:

"The Tribunal considered the reasons that the Applicant gave for his resignation and in doing so we reminded ourselves that a breach of contract may occur because of the cumulative effect of individual acts or omissions, and that events should not be scrutinised on an artificially individual basis."

Having said that, it looked at the seven grievances in its seven sub-paragraphs of paragraph 31, and concluded each of them by finding that such matters did not amount to a breach of contract. In relation to one of the incidents, an incident in relation to which the Applicant was accused of being immature, the Tribunal found that that incident could not amount to a breach of contract without aggravating factors, and had already concluded in its findings of fact that there were no such aggravating factors, largely it seems because of the fact that the remarks to which the Applicant originally and understandably took exception had been speedily apologised for direct to him by Mrs O'Brien .

11. There was thus a finding in relation to each of the seven matters that they did not amount to a breach of contract. There was no sub-finding, if I can put it in that way, that the events, albeit not themselves breaches of contract, nevertheless reflected adversely on the Respondent, or were capable of being collected up and seen collectively as any kind of breach, in that the facts were, in fact, found wholly favourably to the Respondent or in that, insofar as there were, for example, in relation to the "immaturity" incident to which we have referred, matters which might otherwise have been considered adverse to the Respondent, they were explained and justified.
12. In paragraph 32 of the Decision the Tribunal turned to the criticism made in the 8 November letter about the fact that the first stage of the grievance procedure was dealt with by Mr Prescott and Mrs O'Brien, and the Tribunal's finding there was, again unanimously, that the Applicant had agreed to this process, and therefore this amounted to a reasonable approach by the Respondent and does not constitute a breach of contract. The findings of fact, which are set out as part of the unanimous decision in paragraphs 7 to 29 of the Decision, give further particulars of that conclusion. Paragraph 33 of the Decision reads as follows:

"The third reason given for resigning is that the Respondent failed to address the Applicant's grievances. The Tribunal found that, although there were some flaws in the consideration of the grievances by Mr Prescott and Mrs O'Brien, as set out above, these were remedied by Mr Raby who adopted a better approach to the Applicant's grievances and we find that he addressed all of the issues. This did not amount to a breach of contract."

The Tribunal thus resolved in relation to the letter of 8 November 2000 (counting the contents of the first paragraph of that letter as seven, by reference to the seven grievances referred to) nine matters out of the ten in the letter favourably to the Respondent.

13. Paragraph 34 of the Decision then reads as follows:

"The fourth reason given by the Applicant for resigning was the conduct of Mr Smith. The majority of the Tribunal find that the timing of Mr Smith's conduct, in the context of the grievance proceedings, amounted to behaviour which was likely to breach the implied term of trust and confidence between the parties. The majority of the Tribunal found that this did amount to a fundamental breach of the Applicant's contract of employment."

The balance of paragraph 34 then sets out the dissenting conclusion of the Chairman as the minority of the Tribunal that there was no such fundamental breach as a result by virtue of Mr Smith's conduct.

14. We have made some reference to the history of the matter in relation to Mr Smith's investigation and the unanimous findings of fact upon which the majority and minority views are formed are set out in paragraphs 20 to 23, 25 and 27 to 28. As can be seen from that short summary in paragraph 34 of the conclusions by the Tribunal there was no finding that there was not ground for the carrying out of the investigatory process by Mr Smith. Indeed, rather the reverse, by reference to what the Tribunal had unanimously found in paragraph 20, part of which we have already recited. There was equally no finding that the Respondent acted in bad faith or acted in any way so as to harass the Applicant. Equally there was no specific finding that this was a disciplinary proceeding, as opposed to one by way of investigating a business-related concern, in relation to matters for which, on any basis, the Applicant as a senior manager was responsible. The most that can be said in relation to questions of discipline appears in paragraph 25 of the Decision, and reads as follows, in relation to what happened at the preliminary investigatory meeting on 15 September

"Mr Smith told the Applicant that it was not a disciplinary meeting, but that he wanted to discuss matters that were concerning him. ... The Tribunal finds that this meeting was not an investigation in the sense that any questions were asked of the Applicant and that there was no drawing out of information as might be expected in an investigation. Mr Smith stated his concerns in a very generalised way and said that he was referring the matter to Mr Marlor, so that he could decide whether there was a performance issue or a disciplinary matter or nothing."

15. The Tribunal therefore concluded unanimously that there was no breach of contract in relation to the substantial bulk of the allegations of which the Applicant made against the Respondent, and by a majority that there was one matter of which the Applicant was entitled to complain, namely the fact that Mr Smith brought and pursued the investigation at the same time as the grievance procedure, and that that amounted to a breach of the implied term of trust and confidence between the parties and consequently to a fundamental breach of the Applicant's contract of employment.
16. The Tribunal then turns to deal with and to summarise the parties' submissions, which as we have indicated had not been, of course, based on the result which in the event occurred, because the Applicant had been asserting that he was entitled to regard himself as constructively dismissed by virtue of a series of acts or failures by the employer between December 1999 and the date of his resignation, whereas the Respondent was denying that there was any conduct which could constitute a breach, never mind a repudiatory breach. The law was correctly set out very briefly in the Tribunal's Decision, and then follow its conclusions. The central paragraph, which has concentrated all our minds for most of this hearing, is paragraph 44 in which the majority's conclusion is set out. The paragraph begins effectively with a repetition, slightly expanded, of what had already been stated in paragraph 34, which we have quoted:

"The Tribunal then turned to the question of whether or not there had been a fundamental breach of the Applicant's contract of employment. We made the findings of facts set out above. The majority of the Tribunal concluded that the actions of Mr Smith in launching an investigation into the Applicant's performance in a rather haphazard manner, at the same time that the Applicant was proceeding through the grievance process, amounted to a fundamental breach of his contract of employment."

17. As we have indicated, that is effectively a repeat of paragraph 34; it adds to the complaint about the timing of the investigation a criticism of its haphazardness but that is all. Nevertheless that amounts to a sufficient finding, and Miss McNeil has not sought to say that it is not compliant with the principles of Meek v City of Birmingham District Council [1987] IRLR 250 at any rate just enough to amount to the necessary finding of repudiatory breach. But in order for there to be a constructive dismissal, such repudiatory breach must be accepted by an employee and, put in constructive dismissal terms, it must be shown that the fundamental breach that has been found was the effective cause of the resignation. If the resignation was not caused by the breach then the fundamental breach remains unaccepted, and there is no constructive dismissal, or put another way the resignation has not become one for which the employer can be liable because it did not result from the employer's breach.
18. It has been helpfully pointed out, in the authorities to which we have been referred, and in particular Jones v F Sirl and Son (Furnishers) Ltd [1997] IRLR 493, that the repudiatory breach that is found does not need to be the sole cause of the resignation, but as is clear in that case and from general principles it must be the effective cause. Judge Colin Smith QC in paragraph 13 of that EAT Decision in Jones put the matter concisely, in relation to a case in which the employee complained about serious breaches of contract, but only resigned three weeks after the last of those breaches to go to another job, and the Respondent was alleging that the cause of the resignation was the existence of the other job, whereas the Employment Appeal Tribunal concluded that, notwithstanding that she went to another job, the breach was still the effective cause of the resignation. He said as follows:

"Whilst the breach must be the effective cause of the resignation, it does not have to be the sole cause, and there can be a combination of causes provided the effective cause for the resignation is the breach."

19. Where the Applicant's 8 November resignation letter, to which we have referred, had set out ten matters, of which the Tribunal had only reached adverse findings to the Respondent in relation to one, it was the more necessary for the Tribunal to proceed to conclude as to whether the one repudiatory breach which it had found was the effective cause of the termination of the contract. The Tribunal majority deals with that central aspect in the second part of paragraph 44 of the Decision as follows:

"Although the Tribunal was unanimous that none of the matters raised by the Applicant in the course of his grievance amounted to a fundamental breach of contract, either individually or cumulatively, the majority of the Tribunal concluded that, with those grievances as a background, the treatment of the Applicant by Mr Smith was sufficient to constitute a final straw to which the Applicant responded by resigning."

20. That was the limit of its conclusion in relation to causation. The Tribunal made a finding, as it was put, that there was both constructive dismissal and unfair constructive dismissal. There was no separate consideration by the Tribunal as to whether the constructive dismissal was unfair, and it further proceeded to make a finding in relation to contribution by the Applicant in paragraph 47 as follows:

"The majority of the Tribunal went on to consider the matter of contribution. They consider that the Applicant's response to requests for information was delivered in such a way that the Respondent became increasingly frustrated with him and that this affected the attitude of Mr Prescott and, subsequently, Mr Smith, towards the Applicant. They put the level of contribution at 30%."

21. The appeal by Miss McNeill QC has been put effectively on three bases. The first is that the finding that the conduct of Mr Smith, as it was put in paragraph 44, of

"launching an investigation into the Applicant's performance in a rather haphazard manner, at the same time that the Applicant was proceeding through the grievance process"

was a fundamental breach of contract, was perverse. We shall call that the "perversity case".

22. The second argument of Miss McNeill was that the Tribunal fell between two stools in relation to its conclusions: namely as to whether this was what might be called a "last or final straw" case, or whether it was a fundamental breach of contract case by reference to one breach alone. Insofar as the Decision cannot be understood, on that basis she submits it is not "Meek compliant", alternatively if it is to be understood then it must be, by reference to paragraphs 34 and 44, that the conclusion of the Tribunal was based on the latter concept, namely one single fundamental breach, and in that regard its finding with regard to effective cause was either not made at all, or alternatively was perverse. We shall return to that submission (the "effective cause" case).
23. The third argument she put forward was by reference to the case of Stephenson & Co (Oxford) Ltd v Austin [1990] ICR 609, namely her submission that it was insufficient for the Tribunal to have made a finding of constructive dismissal which was therefore unfair, but that there was required to be a separate conclusion as to whether the constructive dismissal it had found was an unfair constructive dismissal.
24. The cross appeal by Mr Hogan, who of course resisted Miss McNeill's appeal, was on two bases.

(i) He submitted that the Tribunal was perverse in its conclusion that there had not been a fundamental breach of contract in relation to what can loosely be called the grievance process. That, as we understood it, related to the second and third paragraphs in the Applicant's letter of 8 November 2000, both the complaint that the first stage of the grievance process was decided upon by the same two individuals whose conduct he was complaining about, and as to the alleged failure of the company properly to address or investigate those grievances in either the first or second stages. That he accepted could only be a perversity argument.

(ii) Secondly, he attacked the conclusion of the Tribunal as to 30% contribution in paragraph 47 of the Decision, not upon the basis that 30% was not an arguable figure but on the basis that there should not have been any contribution at all. Although he sought to put this on the basis that there was some failure in relation to the Tribunal to consider questions of causation in effect this also was a perversity argument.

25. We turn to deal first with the cross appeal. We are entirely satisfied that both Mr Hogan's arguments on perversity are not supportable. It has, of course, always been the case that an Employment Appeal Tribunal is unable to interfere, save in relation to points of law, and that to elevate a disagreement on fact into a case that no reasonable Tribunal could have reached the decision on fact that it did, must be a difficult one. That difficulty in relation to perversity has continued to be re-emphasised both by this Tribunal and on occasion by the Court of Appeal most recently in the case of Yeboah v. Crofton [2002] IRLR 634. It makes absolute sense that this Appeal Tribunal should only be able to interfere in the rarest of circumstances, particularly where the Tribunal is encouraged to be what is so often called the industrial jury. That is not to say that the Tribunal will not make mistakes of law and be corrected, and sometimes what look like mistakes of fact can be demonstrated to be mistakes of law, but equally it means that there will be many cases when an Appeal Tribunal would have come, or thinks it would have come, to a different decision to that come to by the Employment Tribunal at first instance but is unable to interfere, and in many cases is relieved not to be able to do so, leaving the difficult task of deciding which piece of evidence to believe or to regard as the more important to the extreme conscientiousness of the members of the Employment Tribunal.
26. The Tribunal dealt with great thoroughness, unanimously, with the issues relating to the grievance process. We do not propose to set out the findings of fact that the Tribunal made. Plainly a good deal of reliance was placed by the Tribunal on the letter from which we have quoted in which the Applicant himself approved the system of having a first and second stage. Mr Hogan has not sought to say that there was not full agreement by the Applicant with the process but has effectively sought to make two points: (1) that there was thus bias injected into the grievance system and (2) that there was thereby a breach of the ACAS Code of Practice on Disciplinary and Grievance Procedures, and that no mention was made of that fact by the Employment Tribunal, notwithstanding that he had referred to that document before them.
27. We have no such concerns ourselves nor do we see that either point either has validity or amounts to an error of law. It was obvious, not least to the Applicant himself, when he agreed to what he called the "ideal" procedure, that the first stage of discussion of his grievances was going to be with those who against whom, at least in substantial part, those grievances were aimed. That is, very often, an extremely sensible system and appears to have been concluded to be so by the Tribunal in this case, namely that there should be an attempt to lance the boil, to render any further steps unnecessary, by seeking to obtain consensus between the managers and the managed.
28. In fact that was not possible in this case, but the Tribunal concluded that, although the managers plainly came to the meeting with a view to supporting their own earlier decisions, they equally kept an open mind. The bias, if there was bias, and it appears to us that it may not be in any event apt to call it bias, where it is a question of trying to resolve grievances in that kind of way, was thus known and accepted, and resoluble by the agreed existence of the separate second stage, which in fact took place.
29. Similarly it is in our judgment immaterial that this procedure, agreed on by the parties, and carried out, on the findings of the Tribunal, in a fair and proper manner, differed from or did not comply with the model system recommended by ACAS. In any event the Tribunal considered all the arguments that were put forward by Mr Hogan to exactly the same effect before it, and, apart from finding that there was in fact no criticism to be made of Stage 1, it concluded, in paragraph 33 which we have already recited, that any problems with the first stage were remedied by the involvement of Mr Raby at the second stage, about whom the Tribunal made no hostile conclusions at all.
30. So far as contribution is concerned, it is apparent that the majority who had found in favour of the Appellant, as we have indicated, on the basis that it felt that Mr Smith acted in fundamental breach of contract by pursuing the investigation when he did, nevertheless, in accordance with the unanimous findings of fact, had already concluded that there was substance behind the investigation, in the sense that there was frustration building up by virtue of the Applicant's failure to sort out the position in response to questions; and, although plainly the majority had remained of the view that the investigation itself should not have been pursued while the grievance procedure was pending, it is equally apparent that the Tribunal concluded that the Applicant was responsible for the frustration of the Respondent, and in particular was responsible by virtue of his failure adequately to co-operate with enquiries.
31. We see no substance whatever in any argument either that this was a perverse conclusion, or, which comes to the same effect, that there was no sufficient causative relationship between the constructive dismissal that was found and such lack of co-operation. It was, and was alone, the carrying out of the investigation into the affairs for which the Tribunal found that the Applicant was to be blamed for his lack of co-operation which led to the repudiatory breach, and consequently, on the majority's conclusion, to the constructive dismissal.
32. We turn therefore to the three grounds of appeal which Miss McNeill QC has relied upon. We can deal very shortly, as indeed she did herself, with the third, what one might call the Stephenson point. It is quite apparent that the Tribunal erred in not making a short separate consideration, having found constructive dismissal, as to whether the dismissal was fair. It does not follow that because there is a constructive dismissal it must be fair. However, the onus is upon the employer Respondent to put forward a reason which can justify the dismissal, and it does not appear that any such reason, was, at any rate with any force, put forward.
33. Miss McNeill has suggested that a substantial other reason could perhaps have featured in the Tribunal's thinking. It is unclear to us, because the written submissions refer to the fact that this point was going to be developed briefly orally, as to precisely what, if anything, was said before the Tribunal, but doing the best we can to attempt to reconstruct the position, we cannot see any circumstance in which the Tribunal, had it formalistically asked itself the question, having found constructive dismissal by a majority on the basis it did, as to whether the dismissal was fair, could come to any conclusion that it was. Limited though its findings were in relation to the failure by the conduct of Mr Smith in proceeding with the investigation while the grievance procedures were pending, once the Tribunal, by a majority, had found that such conduct was in breach of the implied term of trust and confidence it is impossible to see how it could be held that there was a fair constructive dismissal.
34. We turn then to the remaining two grounds. We can see the force of the perversity case put forward by Miss McNeill. The conclusion of the majority is difficult to support. The majority went along with, and were fully part of, the unanimous decision, rejecting nine out of the ten complaints against the Respondent. As we have indicated, there was no finding that the investigation was unreasonable in the sense of having no basis. The only finding, apart from its being haphazard, was that its timing while the grievance procedure was still in existence was in breach of the implied term of trust and confidence between the parties: the implication being no doubt that the investigation into the question of accruals, which were on any basis the responsibility of the Applicant, should have waited until after the outcome of the grievance procedures.
35. It is a hard decision for an Employment Tribunal to make against a Respondent, and the facts of this particular case do not suggest any reason why anything exceptional in this case should have arisen, and it certainly cannot be laid down even that disciplinary procedures must not be carried on whilst grievance procedures are still continuing, and there was, as we have indicated, no finding in this case that this was a disciplinary process, as opposed to investigation into matters of business. However we have already emphasised the respect which must be paid to the decision of the industrial jury, even one by a majority, and the rareness in which it would be appropriate for an appellate tribunal to interfere in the decision as to fact by that industrial jury, and though it may well come very close indeed to the borderline, we are not prepared to say that this is a decision to which no reasonable Tribunal could come.
36. We turn then to the second ground which Miss McNeill has relied upon. There is no doubt at all that, in paragraph 34 and in the first part of paragraph 44 of the Decision, there is the firm conclusion by the majority that Mr Smith's conduct amounted to a fundamental breach. This was not on the basis, it would there appear, of what might be called "the last straw" concept. As we have indicated, in relation to each of the other nine matters, the subject of the letter, there were findings that they did not amount to a breach, and in all material respects no finding adverse to the employer such as, for example, that the events almost amounted to breaches, or that when taken together with others of them, they would amount to a breach or breaches. And the basis of the finding and conclusion in relation to Mr Smith's conduct is, as we have indicated, not on the basis of its being taken in concert with any other conduct, but as falling to be criticised of itself.
37. We have been referred by Miss Hogan to Lewis v Motorworld Garages Ltd [1985] IRLR 465, particularly at paragraphs 36 and 37, in which "the last straw" situation is illustrated by Glidewell, LJ, but when the finding is made by the majority as to fundamental breach, namely in paragraph 34 and the first part of paragraph 44 of the Decision, it does not feature. It only features, and in circumstances which are unclear, when, on the face of it, the majority of the Tribunal is moving on to consider the question of effective cause.
38. We have already recited the last sentence of paragraph 44, and do not propose to do so again. In that sentence one would have expected the majority to address the breach which it had found to be a fundamental breach, and to ask itself the question as to whether that breach was the effective cause of the resignation. Had it done so, it might have had difficulties and certainly would not have been able to do so without a specific reference either to oral evidence, if relevant, or certainly to the terms of the letter which we have quoted. But it did not so. It addressed itself, on its face, by reference to bringing into the balance questions of "final straw". In Lewis v Motorworld, at paragraph 36(c), Glidewell LJ gives the example of a situation where the last action of the employer, which leads to the employee leaving, need not itself be a breach of contract,

"... [but] 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."

As we have indicated, on the unanimous findings earlier made by the Tribunal, this was not a "last straw" situation, and the action of the Respondent which alone had been found to be a fundamental breach, and was on the face of it going to be considered in paragraph 44, was the breach of contract, namely the action of Mr Smith, and whether that was the effective cause of termination.

39. Miss McNeill submitted either that there was no finding in paragraph 44 that that fundamental breach, so found, was the effective cause of termination, or alternatively that the finding in paragraph 44 was inconsistent with the balance of the judgment. A finding that a series of acts amounting to a final straw had led to the dismissal she submitted to be inconsistent with the conclusion that the fundamental breach itself had led to the resignation, and of course she relied on the terms of the 8 November letter, which, at any rate on its face, would appear to suggest that it was the receipt of Mr Raby's conclusion in dismissing the grievances which had led to the resignation, rather than the conduct of Mr Smith. Indeed the letter itself, which we have quoted, does refer to the conduct of Mr Smith, but insofar as it led to the new grievance procedure of 30 October, though it ends with a reference to the new grievances as having contributed to his decision to resign.
40. The question for the Tribunal, as we have indicated, was whether the conduct of Mr Smith was the effective cause of the resignation, not necessarily the sole cause. We are entirely satisfied that the Tribunal did not ask itself that simple question, either because it was having difficulty with the question, or simply in error. The majority injected into that simple question a reference to findings of last straws, which it had not in the event made.
41. We conclude that that is an error of law, because an important and necessary finding of fact has not been made by the Tribunal. We accordingly conclude that the Decision is flawed in that regard. We ask ourselves what should be done.
42. Miss McNeill submits that we should answer the question ourselves. We should look at the letter, we should conclude that it was in response to the Decision of Mr Raby and we should conclude that it is plain that the resignation did not result from Mr Smith's conduct but from Mr Raby's rejection of the grievances, which has been found by the Tribunal to be reasonable and justified.
43. Mr Hogan submits that in the event that we should so find, we should return the matter to the Employment Tribunal and implicitly a fresh Employment Tribunal, for the facts to be further considered. He submits that, although it may not be the appropriate test to ask whether Mr Smith's conduct was a concurrent cause nevertheless, particularly given the phraseology of the last sentence of paragraph 44, a Tribunal should be entitled to look again at the whole position, no doubt including some of the matters which formed the basis of his cross appeal, in order to reconsider the question.
44. We do not consider that it is appropriate for us to substitute our own judgment. If one looked at the letter alone, then it would appear that the receipt of Mr Raby's decision was indeed the effective cause, but that is not the question. The question is whether the conduct of Mr Smith which was found to be a fundamental breach was the effective cause in all the circumstances, and we are satisfied that we cannot be sure what answer would be given by the Tribunal and conclude therefore that the matter should be remitted. However we are equally clear that this should not be remitted in blank, and that the matter should be returned to the same Employment Tribunal simply to answer the one question, leaving aside all added complications such as final straws, and ask itself simply the question, by reference of course to the evidence that was given before it, as to whether the fundamental breach of contract, which it found, was the effective cause of the resignation.
45. We turn to the appeal on remedy. Of course this may not arise, because the result of the re-hearing on liability may yet be that the Respondent will succeed in having the claim for unfair dismissal dismissed in its entirety. But we must deal with the questions of remedy, as they have been brought before us. Miss McNeill concentrates her fire on two paragraphs of the Tribunal's Decision - paragraphs 9 and 10. Paragraph 9 reads as follows:

"We know that the Applicant resigned on 8 November 2000 and worked six months' notice until 9 May 2001. We accepted that during that time he looked for other work. We were satisfied that he had attempted to mitigate his loss by applying for other jobs. We concluded that he had underestimated the difficulties that he would have in obtaining other employment. We noted his previous job history and we considered whether or not the Applicant would have left his employment with the Respondent, in the absence of a fundamental breach of his contract of employment, without having obtained other work. We concluded that although the Applicant appeared to have a cautious approach to employment, he had in fact resigned from his post without having explored the job market and without other employment to go to in November 2000. We concluded that this indicated that the Applicant was at that time reasonably confident that he would obtain other employment during his notice period. We further concluded that Mr Smith would have continued to ask questions about the financial position which would have irritated the Applicant and that fairly shortly after he had in fact resigned he would have resigned in any event."

46. So far as paragraph 9 is concerned there is no challenge by Mr Hogan to the conclusion by the Tribunal, which is one of course of fact, set out in the last sentence. But, he seeks to justify both it and the consequences which flowed from it in the Decision. Miss McNeill attacks both it and the basis upon which it is arrived. Her submissions are two-fold.

(1) She refers to Section 123 of the Employment Rights Act 1996, whereby the amount of the compensatory award will be "such amount as the Tribunal considers just and equitable in all the circumstances, having regard to the loss sustained by the complainant in consequence of the dismissal insofar as that loss is attributable to action taken by the employer". She submits that, in the light of the letter of 8 November 2000, notwithstanding her having lost on liability, on the basis that there was a fundamental breach of contract entitling the Applicant to claim constructive dismissal, she can say that the Applicant would have then resigned in any event by virtue of the matters in the letter which did not amount to repudiatory breaches. That amounts effectively to a challenge on perversity grounds to the conclusion of the Tribunal to which we have referred. We are no more persuaded by this perversity argument than by the arguments which she and Mr Hogan put forward on perversity in the liability appeal. We do not necessarily agree with Mr Hogan that this amounts to a re-run of the findings on liability, because it is essential for the Tribunal, where the issue is raised for the Tribunal, to reach a conclusion as to when the employment would have come to an end in any event, in order to see whether the loss period is limited for some reason. But the Tribunal did exactly that, and made a finding of fact, not that the Applicant would have left when he did, but that he would have resigned in any event fairly shortly after.

(2) However the second submission which Miss McNeill makes is a much more powerful one. She submits that the Tribunal ought not to have left it as it did, but that it was vital, in order for there to be a proper award of compensation under Section 123, for the period to be known in respect of which loss was to be limited as a result of that conclusion of the Tribunal. We have seen her written submissions in which, inter alia, she had raised as an issue before the Tribunal as to when, if the Applicant had not resigned on 8 November 2000, his employment with the Respondent would otherwise have terminated.

47. Mr Hogan submits that "fairly shortly after" does not need to be specifically analysed. We disagree. It is plain that the Tribunal ought to have arrived at and announced to the parties the date when it concluded, if it did, that the employment would in any event otherwise have terminated. It did not reach that conclusion and did not indicate it. Mr Hogan has pointed out that, in practice, because it calculated the loss up to 8 February 2002 when the Applicant set up his new company, they have allowed for a period starting six months before 8 February 2002, which is 8 August 2001 and that, in some way, he submits the Tribunal has done what is just and equitable.
48. We see no basis on which the Tribunal has reached, or indeed perhaps could have reached, a conclusion, when it said "fairly shortly after", that it meant 8 August 2001. It is quite apparent to us that the August date, to which Mr Hogan has referred, is one of no relevance, and simply happens to be six months before the new company was set up, and that the entirety of the consideration by the Tribunal has been dedicated towards looking, quite irrespective of its conclusion at the end of paragraph 9, towards the loss resulting from the Applicant's leaving employment on 9 May 2001, and trying to find alternative employment, failing to do so and setting up his new company.
49. There was no impact on the Tribunal's conclusions at all of its finding that he would have resigned fairly shortly after in any event. There will now need to be such consideration because we remit the matter to this Tribunal for such a decision. That will have certain consequences. First of all, of course, it will have to announce its decision, no doubt after hearing further argument in the light of its findings in that sentence in paragraph 9, as to when it would have been that the Applicant would in any event have resigned. It may be that that would have been at such a date as to mean that he would not have left the employment any later than he did leave, namely 9 May 2001, the result of which would mean materially no continuing loss. It might however be a date which does allow for some continuing loss or possibly even the same continuing loss as it has found. But, dependent on the period that has been found, will be the following, among other things:

(1) Whether the Applicant would be entitled to loss of "statutory industrial rights" in the amount of £250 as per paragraph 21, because of course if in fact there was no loss, or only a very short period, that conventional sum, relating normally to a period where someone has lost rights and is likely to be out of work for some time, would hardly necessarily appear appropriate.

(2) He might well have incurred the start-up costs referred to in paragraph 22 in any event.

(3) The periods of losses otherwise recoverable, of course, may well reduce or at any rate alter.

50. That disposes of Miss McNeill's appeal on remedy, by virtue of remission to the same Tribunal for further consideration of the consequence of its own finding at the end of paragraph 9.
51. There was however further before us today a cross appeal by Mr Hogan. That cross appeal related to five matters. Three of them were intertwined. In paragraph 16, the Tribunal dealt with a claim in respect of loss of fuel for private use. It appears that a sum of £40 per week was sought by the Applicant in his Schedule of Loss, as being the loss of the benefit of private use of a motor vehicle, that being a sum which he had claimed in his P11D, or had been claimed on his behalf, in respect of the benefit to him while employed of private use of the motor vehicle.
52. The Tribunal concluded in page 16 as follows:

"With regard to the loss of fuel for private use, we considered the arguments whether this was a net or gross figure. We decided that a figure of £20 per week was just and equitable, which multiplied by 40 weeks gave us a figure of £800."

Leaving aside, of course, the period of 40 weeks, which may change in the light of the further consideration by the Tribunal to which we have referred, Mr Hogan complains that the figure of more than £40 per week has been reduced to £20 per week. We do not conclude that this is a matter for which we can or should interfere with either on perversity grounds or otherwise. The Tribunal plainly considered at least two matters.

(1) Whether tax should fall to be deducted from the sum claimed in the P11D

(2) Whether, in the absence of evidence, it could be shown that, whereas while employed the Applicant might have been getting the benefit of use of the vehicle to and from work, once unemployed he would no longer be needing the car to travel to and from work, and might therefore no longer be either spending on the one hand, or obtaining by way of benefit on the other, such similar amount of money per week on fuel. It appears to us that within the proper jurisdiction of the Employment Tribunal under Section 123(1) it was perfectly entitled to reach the conclusion it did that £20 per week was the appropriate sum.

53. In paragraphs 17 and 18, the Tribunal dealt with the fact that, while employed, the Applicant had the benefit of life insurance, including a benefit, and that he further had the benefit of health insurance. A claim was made by the Applicant, by reference to Section 123 (2) of the Employment Rights Act 1996 which reads as follows:

"(2) The loss referred to in subsection (1) shall be taken to include -

(a) any expenses reasonably incurred by the complainant in consequence of the dismissal, and

(b) subject to subsection (3), loss of any benefit which he might reasonably be expected to have had but for the dismissal."

54. The Applicant did not suggest, and indeed it was not it seems the case, that he took out any alternative such insurance, and thus did not expend any monies on any replacement premiums, but he complained that he had lost the benefit of those insurances. As it happens, very fortunately, no death occurred during the course of the period of 40 weeks for which he was to be compensated, nor did he have any health problems for which he had to pay any out of pocket expenses. The Tribunal pointed out that there were quotes before them on the basis of which the sums were sought, but that there was no evidence that the Applicant had in fact taken out health insurance for himself or his family or indeed expended anything in respect of death benefit. The Tribunal concluded:

"... on balance we decided that it would not be just and equitable to make any award under this heading".

It appears plain to us that the Tribunal considered the question that there had been no out of pocket expenditure by the Applicant, and that he had suffered no loss by virtue of the absence of the benefits in question, and that in the circumstances it would not be just and equitable to compensate him in respect of loss of a benefit for which in the event he had neither paid any monies nor whose absence had caused him any loss. We do not conclude that it is possible or appropriate to interfere, in the exercise of our jurisdiction by this Tribunal.

55. The next matter related to start-up costs, always subject of course to Miss McNeill's case that none should be recoverable, in the light of her appeal. Mr Hogan complained at the conclusion by the Tribunal, set out as follows in paragraph 22.

"The Applicant also claimed for the start-up costs in respect of his new business. We had no evidence as to the actual expenditure incurred, simply a lump sum put forward by the Applicant. We considered that it was not unreasonable for the Applicant to decide to mitigate his loss by setting up his own consultancy company. On balance, we decided to make an award of £2,500 as a contribution towards the setting up and initial running of the new company."

It is plainly unfortunate that the Applicant did not seek to produce evidence as to the actual expenditure incurred, and, given that he did produce apparently a lump sum claim, it is perhaps not surprising that the Tribunal responded with a lump sum award. But, within the confines of Section 123, what is necessary is recovery of a sum which is just and equitable in all the circumstances, having regard to the loss sustained by the complainant in consequence of the dismissal. Leaving aside the question as to whether he would have started up a company in any event, inevitably there are some start-up costs which relate to laying out sums of money which have an on-going implication, where it would not be appropriate for all of them to be recovered as against an employer. In particular, where no invoices are produced, so that any kind of understanding of how the sum is arrived at, it appears to us to be wholly impossible to challenge the just and equitable solution which this Tribunal adopted. It is not appropriate to assert that the Tribunal should have awarded the whole of the sum which was sought by the Applicant, without adequate justification.

56. This leaves finally the question of pension loss which was dealt with in paragraph 23 as follows:

"With regard to pension loss, the parties had suggested to the Tribunal that they might be able to agree a figure, depending on our decision. The Tribunal thought it might be helpful to put forward a figure, but the parties may of course agree to have the matter assessed on an actuarial basis if they think this would be more appropriate. Our calculation was based on a 5% employer's contribution on the Applicant's gross salary of £47,048 which we worked out over a period of 40 weeks at £1,809. We considered whether to discount the figure for accelerated receipt, and used the tables set out in the pension loss guidelines (recently criticised in the Clancy case) and on balance we decided that a simple lump sum was appropriate in these circumstances."

57. The reference to Clancy is to an unreported decision of Lindsay P, delivered on 2 March 2001, in Clancy v. Cannock Chase Technical College & Another, that it was not ordinarily appropriate to measure pension loss by reference to the employer's contribution. One can entirely well see that, in cases where substantial future loss is sought to be recovered, the right approach to establishing loss is to have actuarial evidence as to what in fact is the effect on the employee's ultimate pension. This was however a case in which:

(i) There had been some discussion of trying to agree a figure.

(ii) A very small period, that is 40 weeks and possibly, subject to the outcome of the further hearing which we have ordered as a result of this appeal, an even lesser period was relevant in respect of pension loss, and one for which therefore the full blooded actuarial assessment, which would ordinarily be the right course may not be appropriate, and we are certainly far from saying that Clancy is to be regarded as of universal applicability.

(iii) Really very closely associated with the last point about the shortness of the period, questions of proportionality must always arise where the awards in question are not large; and this is not a question of making no award but of the Tribunal doing its best in the just and equitable sense to approximate towards a loss which it is satisfied has occurred. Mr Hogan has told us that an application for review has been made to the Employment Tribunal on the basis that up to date tables, even if tables are relevant at all, were not used by the Employment Tribunal and may now be available. It may be appropriate for any such review to take place at the same time as the further hearing which we direct, particularly as the period in respect of which the pension loss is to be assessed may change as a result of any further hearing.

58. In all those circumstances, to the extent we have indicated, we allow the appeal on liability and remedy, and we dismiss the cross appeals.