At the Tribunal | |
Before
THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)
MR J HOUGHAM CBE
MRS L TINSLEY
APPELLANT | |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
For the Appellant | MR RICHARD THORPE (Appellant in Person) |
For the Respondent | MISS JANE McCAFFERTY (of Counsel) Instructed by: EER Legal Services Broadway House Tothill Street London SW1H 9NQ |
SUMMARY
Unfair Dismissal
No basis in law to challenge Employment Tribunal's finding that the Respondent did not repudiate the contract and was only offering variation, without denying the Appellant's bonus entitlement.
THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)
"The crux of the Applicant's case (as set out in his application) was that he was contractually entitled to a review of the structure of his bonus after he had been in the job for 3 months and a salary review after 6 months. His case was that he had never had a "bonus structure" review, or salary review, and the failure to conduct these reviews was a fundamental breach which entitled him to terminate the contract without notice by reason of his employer's conduct"
The Tribunal continues:
"The obvious difficulty in this case was that he was engaged in March 2002, and if he was right about the contract terms, the bonus review was due in about June 2002, and the salary review in about September 2002. If those reviews had not taken place in accordance with the contract, and the Applicant had remained in post until November 2003 the following year when he gave notice to leave, how could he show that he had resigned in response to the breach and not delayed too long in doing so?"
"In order to cure this deficiency (or at least, weakness) in his case, and for the first time, in his witness statement served at or shortly before the Tribunal hearing, the Applicant advanced a new case."
In fact the new case was recorded in a separate document which was served on the Respondent in March 2004, recording the content, on the Applicant's case, of the conversation of 29 October 2003, to which we will return. The Tribunal continued as follows:
"At the end of a very long witness statement the Applicant explained that he had resigned because his manager Ken Guy had told him that a new salary package was offered only on the basis that he did not have a bonus scheme. The allegation was that Mr Guy had bluntly denied the Applicant's contractual right to a bonus. If correct this allegation was a basis for justifying the resignation in terms of the Respondent's repudiatory breach of contract. The Applicant gave notice to leave very shortly after the alleged conversation with Mr Guy."
"Your salary will be at a rate of £21,000 pa + £5,000 pa London Weighting Allowance + bonus (see attached bonus plan)… This salary will be reviewed based upon performance after completion of 6 months."
"The bonus scheme will operate over the period 1st January to 31st December.
The Bonus scheme is an annual scheme with payment being made on a quarterly basis."
Provided in the outline of the scheme are the following words:
"The General Manager reserves the right to modify or discontinue this plan at any time.
This bonus scheme will be reviewed in 3 months to ensure it is running effectively."
"There is less certainty that there was a bonus review at this meeting although… we have found as a fact that Mr Guest decided not to alter the scheme that applied to Mr Thorpe."
In the Tribunal's judgment, in paragraph 17:
"…the bonus scheme applicable to Mr Thorpe may not have been reviewed at this meeting."
The Tribunal continued:
"18. however, it is clear (and we find as a fact) that the conclusion of the meeting was passed on to Mr Thorpe by Sally Derrington. The manuscript note records that she was to action the salary review and Mr Guest explained (and Mr Hayes and Ms Derrington confirmed) that the decision not to increase the salary was to be communicated to Mr Thorpe….
19. Thus, by the end of September 2002 there had been a salary review in accordance with the contract which had not resulted in any increase, and whether or not the consideration of the bonus scheme amounted to a "review" it was abundantly clear to the Applicant by the end of September 2002 that the bonus scheme applicable to him had not been altered within 3 months of his joining the Respondent. The Applicant received no bonus for the year 2002 because the existing bonus scheme did not result in payment of any bonus."
"Thus, there is no basis (in our [judgment]) for the Applicant's original case to have resigned in November 2003 in the light of the Respondent's contractual failures to review his salary and the structure of his bonus scheme. The delay between knowledge of breach (ie no salary and or no bonus scheme review if the meeting of September 2002 was not a review) and his decision to leave the company was far too long to support a complaint of constructive dismissal."
There is no appeal against that finding.
"Ken stated that he was offering me a Salary Increase of £3,500 per annum. [This was, it is common ground, a substantial increase, approximating to some 12.5%] I was keen however to know what he had done about the bonus scheme. He said there was no bonus scheme at all attached to this offer; neither was he willing to entertain the idea of backdating the salary review as the review was initially scheduled to take place September 2002. In his words, "either you accept this, or you and I are going our separate ways, boy." "
And then in bold in his statement the Applicant said as follows:
"Therefore my acceptance of the salary rise was conditional to the withdrawal of my right to a bonus scheme, AND any right to a claim for backdated money, either resulting from the lateness of the salary review or the bonus scheme review which although scheduled for June 2002 had still never been completed.
It's impossible for me to described to you after all the hard work; and all I'd gone through the disappointment I felt as a result of this conversation. It was not just the terms of the offer he was making, nut the tone of the conversation. Once again in Ken['s] words, "either you accept this, or you and I are going our separate ways, boy.""
"The following is a brief excerpt from the conversation, and although not perhaps 'word perfect', [t]he Applicant would swear in a court of Law that it is a highly accurate account of what was said:-
Quote from Ken Guy
"What!! I'm sorry Peter I'm not interested in anything else. I've managed to get you a pay rise!"
Quote from The Applicant
"Yes, but with all respect it should have been looked at in September 2002!"
Quote from Ken Guy
"I'm not interested in backdating the pay"
Quote from The Applicant
"Well, have you had any more thoughts on the bonus scheme structure?"
Quote from Ken Guy
"No. There's no bonus scheme attached to this offer, and I'm not interested in backdating the pay. You either accept this or you and I are going to go our separate ways, boy!""
"Dear Peter
I am pleased to confirm in writing the details of your salary increase.
Effective date: 01 November 2003
Revised Salary: £30,000
Please note that all other Terms and Conditions remain the same.
As formal acceptance of this change, would you please sign at the foot of this letter and return it to… Human Resources Department…."
"I do not recall the exact words used. I thought I was giving Peter good news as 12.8% was an exceptional award. I am not aware of any 'loss' Peter has endured as, as explained, a 'review' does not mean a pay rise. I would have confirmed that there would be no backdating to pay and that there would be (at this stage), no offer of involvement in the 2004 bonus structure. To the best of my knowledge I have never used the word 'boy' in the fashion described. I would not say 'either accept or go our separate ways' as has been alleged."
"Q. There is no reference to Ken Guy's ultimatum in your resignation or the originating application"
We shall refer later to the resignation letter. The answer was "No". And then the next question:
"Q. The letter at PA/52 [which is a reference to the letter of 21 October 2003, which we have just read] does not say "no entitlement to bonus", it says "Please note all terms and conditions remain the same.
A. I thought it was important that the reviews hadn't taken place. It was all so delayed. Then Ken Guy came in and said I didn't have a bonus scheme…………
Q. …You've made up Mr Guy's ultimatum.
A. No I have not."
And there was further, similar cross-examination.
"The bonus scheme was intact. We had a telephone conversation. I didn't use the words attributed to me. I think he heard or recorded as heard the words he wanted to hear…[I] never said what would you take to get rid of the bonus plan. [I was] not authorised to remove the bonus by cutting a deal."
And then he referred to e-mail correspondence which occurred subsequent to the resignation, to which we will return, when he said:
"I was referring to the future bonus – the one the Applicant said he knew about before me. The Applicant was entitled to bonuses – the 2004 [scheme] was a new regime…."
"It is with some regret and disappointment that I hereby give notice for termination of my employment with Eaton MEM. After constant reminders, my salary review has just been completed some fourteen months late (originally scheduled for September 2002), and the review of the related bonus scheme originally scheduled for June 2002 has not only never materialised but, as I was recently told, is unlikely to be considered at all; as too the company car, mobile telephone and expense account; these ancillary items, although they were not put in writing, I was reliably assured would be seriously considered, as they are arguably necessary tools for the job."
He then dealt with the fact that his performance had been more than satisfactory, and to "the company's seemingly indifferent attitude to addressing [various] issues", and he concluded:
"The recent offer that was made of an increase to my basic salary, whilst appreciated, is simply too little, too late which, considering the success of the present South East sales/estimating arrangement, is a real pity, and from a personal perspective I was hoping that my resignation was not going to be necessary."
"With regards to our telecom this afternoon, thanks for the opportunity to discuss my present situation/resignation.
I believe we are 95% in agreement with most issues."
And then he referred to various problems, such as the backdated pay, and various allowances; and he continued:
"It was appreciated also that you will 'look into' the other issue that I have made (regarding bonus), although I realise that no promises can be made at this time."
" Thank you for your e-mail, but so as not to be mis-quoted the back-pay will not be revisted.
The bonus was never formally confirmed and at present is not included in the re-statement of your employment, if you still wish to proceed."
"…I was sure you said you would speak to HR after Christmas to see about my request to have the pay rise back dated. It seems I should get my hearing checked.
As for the bonus scheme, well you are wholly incorrect. It was a formal part of my initial agreement (as Sally Derington and Leo Hayes would confirm if asked), and the company has a legal obligation to acknowledge and honour this agreement."
And he recorded that he found the whole situation intimidating and petty.
"In response to your e-mail I have established the following:-
You will now be included in the South East Region bonus scheme for 2004, details of which will be circulated in January 2004."
to which the response by the Applicant was:
"This I presume means that my present bonus scheme would be replaced in favour of the South East Region bonus scheme for 2004. I would of course be interested to see the outline for that scheme, but on the face of it, and bearing in mind that we're all working to the same objectives, this sounds OK to me."
And he then dealt with his anticipated entitlement in respect of the 2003 bonus scheme.
"I would like to make an official complaint and would ask for the opportunity to sit and discuss… the following contractual issues;
- Regarding salary review – 14 months late (originally scheduled for Sept. 2002).
- disputed bonus scheme
- and overdue bonus scheme review (originally scheduled for June 2002).
These issues are in connection with my recent letter of resignation…"
"Participants who resign, or are dismissed, during the course of a bonus year will be ineligible for bonus payment."
A letter of 6 February 2004, which was perhaps infelicitously phrased, was thus sent by the Respondent indicating that he had no entitlement to 2003 bonus. We do not know how much his entitlement would have been but for his resignation; but, as we have indicated, the Tribunal understood and recorded that, at least so far as the operation of that scheme in 2002 is concerned, he received nothing. We have no idea what he would have received under the 2003 bonus scheme, but it would plainly have not have been as much as the Applicant would have liked, properly to reflect what he considered was his contribution to the success of the Respondent, if he was not going to be included in whatever the new 2004 scheme was going to consist of.
"21. As to the revised case documented in the Applicant's witness statement, we prefer the evidence of Mr Ken Guy and Ms Derrington on this issue, for the following reasons. [It does not appear, in fact, that Ms Derrington had any relevant evidence to give on this topic]. A further salary review in the early autumn of 2003 achieved an inflation busting increase of over 12% for Mr Thorpe. Mr Ken Guy the new commercial manager had fought hard to get the sort of salary which he hoped would keep the Applicant at the company. On 21 October 2003 the Human Resources Manager wrote to Mr Thorpe to inform him that his revised salary (effective 1 November 2003) would be £30,000 a year and
"Please note that all other Terms and Conditions remain the same".
ie, there was to be no change to the bonus scheme.
22. In a telephone conversation at or about the same time the Applicant contended that Mr Guy had told him that his new salary was on the basis that he did not have a bonus scheme. There was no reason why Mr Guy should have said that in contradiction of the facts as understood by him, recorded in the written contract, and summarised in the notice of increase of salary sent by Human Resources to Mr Thorpe. We reject the contention that the Applicant resigned because the Respondent threatened to take away his right to a bonus.
23. In conclusion the Applicant has not shown that he resigned as a result of a breach of contract by the Respondent. Accordingly the claim fails."
"4. Paragraph 24 of Mr Guy's witness statement [which we have quoted above] is his response to the Appellant's allegation that he had said "There's no bonus scheme attached to this offer"…. Mr Guy's evidence, read in conjunction with this letter, was that when offering a proposed variation to the Appellant's contract to increase his remuneration, he offered an exceptional 12.8% salary increase but that "at this stage" there was "no offer of involvement in the 2004 bonus structure". All the evidence before the Tribunal was that Mr Guy was not denying that the Applicant had an existing contractual entitlement to a bonus in his current terms and conditions but rather that the terms of the offer that Mr Guy was putting to him would not at that stage include a bonus for the following year, 2004."
(i) It is quite plain that the Tribunal well understood that that was the result of remaining with the old scheme, because it has so recorded in paragraph 19 of the Decision.
(ii) A refusal by the Respondent to do anything other than continue with the old scheme, profitless as it might be for him, would not be sufficient for him to succeed in the way that his case was put before the Tribunal. At best it would be part and parcel of his complaint that the Respondent had repudiatorily failed adequately to deal with the question of a review; a case that was rejected by the Tribunal and has no been appealed before us, and, in any event, which might have been met (although the point was not specifically argued on this basis, as Miss McCafferty has submitted to us) by reference to the managerial discretion to withdraw the bonus scheme, at any rate non-capriciously, at any time.
(i) The letter of resignation made no reference whatever to this "blunt denial"; it is, if anything, inconsistent with such suggestion.
(ii) The evidence of Mt Guy, which the Tribunal, in paragraph 21, said that it preferred, was clear, at any rate in his oral evidence before it, that what he was saying was that, although it was unclear as to whether he would be included in a new 2004 bonus structure, and indeed implicitly that there would be no bespoke 2004 bonus structure particularly geared towards him, he was not saying that the Applicant would cease to have any continuing bonus entitlement by reference to the plan based on achievement of budget, attached to his contract of employment.
(iii) The exchange of e-mails is entirely inconsistent with there having been a "blunt denial" of any continuing contractual entitlement to a bonus. We do not need to repeat the contents of those e-mails; they speak for themselves.
Costs