United Kingdom Employment Appeal Tribunal

APPEARANCES

 

 

For the Appellant	MR NAPIER (One of Her Majesty's Counsel) Instructed by: Messrs A C White Solicitors 23 Wellington Square AYR KA7 1HG
For the Respondent	MR O'CARROLL (Advocate) Instructed by: Messrs Richard Hutchison & Co Solicitors 9 College Street Nottingham NG1 5AQ

SUMMARY

Claimant sought compensation for unfair constructive dismissal and failure to consult prior to a TUPE transfer of a bookmaker's business for which the claimant worked. Her contract of employment described her job as that of clerk. She had, though, on occasion performed deputy manager duties. She resigned, giving as her reason for doing so that she had lost all trust and confidence in the respondents. At the hearing before the tribunal, evidence was led regarding the claimant's grievance surrounding the fact that she had not received confirmation from the respondents that she would be their deputy manager. The tribunal found, on the facts, that that grievance had not been effectively communicated to the respondents until very shortly prior to the claimant's resignation. On appeal, it was argued that the tribunal had applied the wrong test and also that there had been an unexplained and unreasonable delay in dealing with the claimant's grievance. The Employment Appeal Tribunal held that the tribunal had been entitled, on the facts found by them, to reach the conclusion that they did and that they had not applied the wrong test. They were , however , satisfied that the tribunal had erred in their assessment of compensation in respect of the failure to consult .They held that the same approach required to be adopted as in redundancy cases and , applying the guidance set out in Susie Radin Ltd v GMB & ors reassessed the compensation at the maximum available level in respect that the failure had been found by the tribunal to be serious and gross.


 


THE HONOURABLE LADY SMITH

PRELIMINARIES

1.                   This case concerns a claim brought before the Employment Tribunal in respect of alleged unfair constructive dismissal. The claimant also sought compensation for the respondents' failure to comply with the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ('TUPE') in respect of consultation and in respect of their having discriminated against her on grounds of sex.
2.                   This judgment represents the views of all three members.
3.                   We will refer to the parties as claimant and respondents.

Introduction

4.                   This is an appeal by the claimant in those proceedings against a Decision of an Employment Tribunal, sitting at Stranraer, Chairman Mr H J Murphy, registered with Extended Reasons on 6 April 2005. The claimant was represented there by Mr Murphy, solicitor and before us by Mr Napier QC and the respondent was represented there by Mrs J Morish, Human Relations Manager and before us by Mr O' Carroll, Advocate .
5.                   The decision of the Employment Tribunal was that the claimant had not been unfairly dismissed nor had she been discriminated against but the respondents had failed to inform and consult as they were obliged to do under TUPE. They made an award of six weeks pay in respect of that failure.

The Issues

6.                   The issues for the tribunal were whether or not the claimant had been constructively dismissed and discriminated against, whether or not there was a failure to consult and , in the event that there had been such a failure, what was the appropriate amount to award as compensation.

The Judgment

7.                   The tribunal explain that they were not satisfied that the claimant had been discriminated against, that they were not satisfied that she had been constructively dismissed since the respondents were not in breach of contract but that it was clear that there had been a complete failure to inform and consult. That being so, compensation was due and they fixed the sum payable as the equivalent of six weeks pay.

The Appeal

8.                   The claimant appealed against that decision insofar as relating to the finding that she had not been unfairly dismissed and insofar as compensation was fixed at six weeks' pay.

The Legislation

9.                   The relevant legislative provisions are those contained in s.94 of Employment Rights Act 1996 and Regulation 10 of TUPE.

The Facts

10.               The respondents are bookmakers. They are a large organisation. The claimant commenced employment with predecessors of the respondents, at their outlet in Stranraer, in September 1980. In 1995, Toal's became her employers, Toal's being a smaller organisation than the respondents, based in Ireland. As at 28/29 September 2003, the claimant remained in Toal's employment at their Stranraer outlet. Her contract of employment stated that she was employed as a clerk. One other person was employed as a clerk at Stranraer, Kim Dornan. The claimant's husband was employed as the manager there.
11.               Whilst working for Toal's, the claimant had, on occasion, deputised for her husband when he was absent. That involved her opening the shop, checking all was in place for the day's business and attending to banking and security. She did not deputise for him when he was on holiday; they went on holiday together and Toal's sent a relief manager to the shop for any such period, from Ireland.
12.               On 28/29 September 2003, Toal's business in Stranraer was transferred to the respondents. The respondents' district manager, Gordon Slaven, visited the shop that day and spoke to the staff, including the Claimant. She told him that she was the deputy manager. On 21 September, before the transfer took place, the respondents' regional manager, Gordon Littler, had visited the premises and, having noticed that both the claimant's and Kim Dornan's jobs were described in the same way in the contracts had suggested that, after the transfer, Kim Dornan could be deputy manager. He had done so on the basis of an assumption that the claimant and her husband would want to holiday together and against a background of the respondents' policy being that deputy managers require to be available whenever the manager is absent. The claimant was not, however, present that day.
13.               On 3 October 2003, Mr Slaven visited again. The claimant was not present. Her husband indicated that there were likely to be difficulties if Kim Dornan was appointed deputy manager and Mr Slaven indicated that the respondents Human Relations Department would sort it out .
14.               On 8 October 2003, the respondents' regional Human Relations adviser, Mr Pritchard, visited the premises and met the claimant. The deputy manager post was raised and he indicated that in terms of the respondents' policy, a deputy manager would require to deputise. He did not tell the claimant that she could not be deputy manager of the Stranraer branch and he did tell her that she would be able to remain with the respondents on the same terms and conditions as she had enjoyed with Toals. She assumed that she was being told she could not deputy manager of the Stranraer branch, despite the fact that no such statement was made to her.
15.               On 14^th October 2003, Gordon Littler visited the premises again and this time spoke to the claimant. Whilst reference was made to the difficulties that would ensue from the claimant and her husband taking holidays at the same time, nothing final was said . Only provisional discussions took place.
16.               On 20^th October 2003, the claimant met with both Mr Slaven and the respondent's regional manager, Paul Brown and whilst the post of deputy manager was discussed, the claimant was not told that she could be deputy manager although, again, she assumed that that was the case. She did not, at that stage, tell them that she had fulfilled the role of deputy manager for Toal's although she advised them that she had, on occasion, carried out the additional tasks in her husband's absence to which we have referred.
17.               The claimant sought legal advice and wrote to the respondents on 17 November. Tammy O'Lone, the respondent's district manager had just returned from maternity leave and she arranged a meeting with the claimant. She met with her on 19 November 2003 and, for the first time, the claimant made it clear that she considered that she had been the deputy manager when Toals had been running the business. She was asked whether she had any documents that would confirm that that was the position in response to which she became upset and left the meeting.
18.               On 26 November 2003, Gary Toal, of Toals, sent a letter to the respondents confirming that the claimant had been deputy manager. The next day, 27 November 2003, Tammy O'Lone went to the premises to discuss the matter with the claimant but found that she had been certified unfit for work by her GP the previous day. She did not return to work thereafter.
19.               By letter dated 3 December 2003, the claimant tendered her resignation, specifying as her reason for doing so that she had lost all trust and confidence in the respondents' management.

Claimant's Case

20.               Mr Napier submitted that the claimant had communicated a grievance to the respondents throughout the period of contact detailed in the above summary of facts. The respondents had an implied duty to deal with her grievance expeditiously. They had failed to do so. Whilst he accepted that what amounts to expeditious or speedy disposal of a grievance will vary according to the circumstances of the individual case, there was no finding to suggest that their delay was a reasonable one. The claimant's position was that having failed to deal with her grievance expeditiously, the respondents were in breach of the implied duty of trust and confidence and that the claimant had, accordingly, been constructively dismissed. He referred, in support of that submission to Morrow v Safeway Stores plc [2002] IRLR 9. The tribunal had erred in setting too high a test. They had found that the claimant required to establish that she had raised her grievance starkly enough to alert the respondents that she expected it to have early attention but she did not, as a matter of law, require to do so. That submission was made under reference to the last phrase of paragraph 63 of the tribunal's reasons. In these circumstances we ought, it was said, to reverse the tribunal's decision and make a finding that the claimant had been unfairly dismissed, which failing, remit to a fresh tribunal for a rehearing.
21.               Separately, Mr Napier submitted that the tribunal had erred in restricting the award in respect of the failure to consult to six weeks' pay. The tribunal had erred in their approach to the assessment of compensation. This was a case of complete failure to consult regarding the transfer of a business undertaking. They appeared to have approached matters by concluding that the claimant would have had a further six week's pay if there had been consultation. That was incorrect. They required to look at the seriousness of the default and then ask whether there were any mitigating circumstances. If there were not, then the conclusion had to be that the maximum possible sum, namely the equivalent of thirteen weeks' pay ought to be awarded. Reference was made, in support of that submission to the cases of Susie Radin Ltd v GMB & Ors [2004] EWCA Civ 180 and Smith & anr v Cherry Lewis Ltd (in receivership) [2005] IRLR 86.

Respondents' Case

22.               On behalf of the respondents Mr O'Carroll submitted that whilst it was accepted that it was an implied term in a contract of employment that employers would reasonably and promptly afford employees a reasonable opportunity to obtain redress of any grievance (Goold (Pearmak) Ltd v McConnell & Anr [1995] IRLR 516), for a tribunal to find that an employer had failed in that duty, there required to be evidence of a grievance having been properly communicated to them. In this case, the tribunal had found as fact that that had not been done until 17 November following upon which the claimant's resignation quickly ensued. That was a factual finding that was uniquely within the province of the tribunal and one which had been arrived after a careful weighing by them, of the evidence, in the manner expected of them: Spook Erection v Thackray 1983 SLT 630. Further, the application of the tests set out by both the Employment Appeal Tribunal and the Court of Appeal in the case of Woods v W.M. Car Services [1981] ICR 666 and [1982] ICR 693 showed that this was not a case where constructive dismissal on the basis of a breach of the implied duty of trust and confidence was established. He referred in particular to Browne- Wilkinson J, in the Employment Appeal Tribunal, at p.670 – 1:

"To constitute a breach of this implied term it is not necessary to show that the employer intended any repudiation of the contract : the tribunal's function is to look at the employer's conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it.."

and to Lord Denning in the Court of Appeal, at p.699:

"In the result I think that the appeal tribunal in these cases of constructive dismissal should only interfere with the decision of the industrial tribunal if it is shown that (i) the industrial tribunal misdirected itself in law, or (ii) the decision was such that no reasonable industrial tribunal could reach it. The appeal tribunal ought not to interfere merely because it thinks that upon those facts it would not or might not itself have reached the same conclusion , for to do that would be for the appeal tribunal to usurp what is the sole function of the tribunal of fact."

23.               Regarding the claimant's argument that the phrase referred to in paragraph 63 of the tribunal's reasons showed that they had erred in law , he submitted that the paragraph required to be read in context and as a whole and when that was done it was evident that they had not fallen into error .
24.               Regarding the claimant's submissions on the matter of compensation, Mr O'Carroll drew our attention to the fact that the principles discussed in the Susie Radin case, which concerned consultation in respect of redundancy, had not been applied to compensation for failure to consult in respect of a TUPE transfer before. The circumstances of such failure would not, it was submitted, necessarily fall to be regarded in as serious a light as in the case of redundancy. The tribunal had a wide discretion and were entitled to adopt a 'broad axe' approach. They were entitled to take the view that the failure was due to inadvertence rather than deliberate, to take note of the fact that the new employers had visited immediately after the transfer, to account for the fact that there was no question of dismissal of the transferor's employees and for the fact that the claimant was asked to reconsider her decision to resign.

The Legal Principles

25.               The claimant sought compensation for unfair constructive dismissal. She, accordingly, required to show that the respondents were in breach of their contractual obligations in a manner which amounted to a repudiatory breach. In respect that, in any contract of employment there are implied mutual duties of trust and confidence, if the employer breaches that implied duty, it is highly likely that he will be regarded as having also committed a repudiatory breach of contract. That is because the risk of a breach of the implied duty of trust and confidence, objectively viewed, being regarded as likely to destroy or seriously damage the relationship of trust and confidence will , in the case of most sets of facts and circumstances, be high. It has been determined as a matter of law, through, for instance, the series of authorities reviewed in the case of Morrow v Safeway Stores that where such destruction or damage is likely, an employee will be regarded as justified, and therefore constructively dismissed, if he takes the view that he cannot 'put up with it' and resigns.
26.               It is also well established that there is an implied term in a contract of employment that employers will reasonably and promptly afford a reasonable opportunity to their employees to obtain redress of their grievances: W A Goold ( Pearmak) Ltd v McConnell & anr although, despite the reference by Mr Justice Morrison, in that case, to the requirement to do so being 'fundamental' we are not of the view that the failure to provide such an opportunity will, as seemed to be the claimant's argument, automatically give rise to a finding that a breach of the duty of trust of confidence has occurred in the manner discussed above so as to amount to a repudiatory breach. We can see that it could but much would depend on the individual facts and circumstances of the case.
27.               What is, though, fundamental is that an employee cannot complain that an employer has failed to deal properly and appropriately with their grievance if it has not been effectively communicated to him. An employer cannot reasonably be expected to take steps where an employee is nursing an unexplained grievance or has made assumptions of which the employer is ignorant.
28.               Turning to the question of compensation where there has been a failure to consult in a TUPE transfer, the starting point is to consider the terms of regulation 10 which require the employer, in advance of a transfer, to inform and consult with affected employees. Then, reference requires to be made to regulation 11 of TUPE, the provisions of which include:

"(1) Where an employer has failed to comply with a requirement of Regulation 10 or 10A, a complaint may be presented to an employment tribunal………

(4) Where the tribunal finds a complaint under paragraph (1) above well – founded, it shall make a declaration to that effect and may –

order the employer to pay appropriate compensation……

(11) In this Regulation "appropriate compensation" means such sum not exceeding [thirteen weeks' pay] for the employee in question as the tribunal considers just and equitable having regard to the seriousness of the failure of the employer to comply with his duty."

29.               We note that, in the case of redundancies, employers have a duty to consult affected employees by virtue of the provisions of s.188 of the Trade Union and Labour Relations (Consolidation) Act 1992 and that , in the event of their failure to do so, an employee may present a complaint to the Employment Tribunal under s.189 of that Act , subsection (2) of which empowers a tribunal to make a 'protective award' which is a sum to be calculated by reference to a 'protected period' which, in terms of subsection (4) of that section is to be assessed as being such period as:

"is of such length as the tribunal determines to be just and equitable in all the circumstances having regard to the seriousness of the employers' default in complying with section 188."

30.               The wording of the two sets of provisions can, accordingly, be seen to reflect each other. They both underline the importance of compliance with the duty to consult. They both, significantly, instruct the tribunal, when assessing compensation, to focus on the nature and extent of the employers' default. That gives rise to the inevitable inference that Parliament intended the awards in each case to be penal in nature, rather than solely compensatory albeit that, in our view, the use of the words 'just and equitable' would entitle a tribunal also to have regard to any actual loss that a claimant employee showed that he had in fact suffered as a result of the failure to consult. Lord Justice Peter Gibson, in the Susie Radin case, draws attention to such an analysis having been made by Lord McDonald, as long ago as 1978, in the case of Association of Patternmakers & Allied Craftsmen v Kirvin Ltd [1978] IRLR 318:

"A tribunal, however, is specifically enjoined to determine the [protected] period and so the amount of the award by paying regard to the seriousness of the employer's default. This introduces a punitive element into the jurisdiction of an industrial tribunal and in contrast with, e.g., the calculation of a compensatory award which is based upon what is just and equitable having regard to the loss sustained."

He followed that approach in the Susie Radin case and suggested guidelines that should be applied in future cases:

"(1) The purpose of the award is to provide a sanction for breach by the employer of the obligations in s.188: it is not to compensate the employees for loss which they have suffered in consequence of the breach.

The Employment Tribunal have a wide discretion to do what is just and equitable in all the circumstances, but the focus should be on the seriousness of the employer's default.

The default may vary in seriousness from the technical to a complete failure to provide any of the required information and consult.

The deliberateness of the failure may be relevant, as may the availability to the employer of legal advice about his obligations under s.188.

How the Employment Tribunal assesses the length of the protected period is a matter for the Employment Tribunal but a proper approach in a case where there has been no consultation is to start with the maximum period and reduce it only if there are mitigating circumstances justifying a reduction to an extent which the Employment Tribunal consider appropriate."

31.               It will be seen that in one respect it may be thought that our view is at variance with Lord Justice Peter Gibson's in that if in the first of the above guidelines, he means to suggest that actual loss sustained is wholly irrelevant to the proper assessment of the award, we do not agree. As we have already indicated, we consider that a tribunal would be entitled to have regard to any such loss if caused by the employer's failure, so long as it recognised that the focus of the award requires to be the penal nature which governs it and proof of loss is neither necessary nor determinative of the level at which to fix the award. However, in the event , the issue does not arise in the present case since it was not one which was presented on the basis that there was any evidence of actual loss having arisen. We note that the approach taken in the Susie Radin case was followed in the more recent case of Smith & anr v Cherry Lewis Ltd, where the need to recognise that such awards were intended to be punitive and have deterrent effect was stressed by the Employment Appeal Tribunal and do not take issue with what was said in that case.
32.               We have considered whether the fact that the compensation claimed in this case is in respect of a failure to consult under TUPE rather than under the requirements of Trade Union and Labour Relations (Consolidation) Act 1992 regarding consultation prior to redundancy, makes any difference. Certainly, the consequences of redundancy are liable to be more serious. It means no job whereas, in a TUPE transfer, the employee's job is secure. It is not the job and all that that implies for the employee's financial well-being and social and personal status that is immediately at risk. However, the EU have considered the legal, economic and social implications of a business transfer to be so important as to have agreed that proper consultation is a vital element to the safeguarding of employees' rights in the event of such a transfer (Council Directive 2001/23/EC). In these circumstances, we do not see that we can infer that Parliament, when using the same terminology as in the case of payments due for failure to consult in a redundancy situation, intended that the approach to the assessment of compensation payable be any different. We cannot see that there would be any real justification for drawing a distinction between the two.

Conclusions

33.               We have come to the view that the arguments of the Claimant fall to be rejected and that the appeal should, accordingly, be dismissed as regards the attack on the finding that she was not unfairly dismissed.
34.               The problem with the claimant's approach is that it is at variance with what were determined to be the facts in the case. It is clear that the tribunal formed the view that it could not be said, on the evidence, that the respondents knew or ought to have known that the claimant had a grievance, prior to 17 November 2003. That is a view which we are satisfied, on the evidence, that they were entitled to reach. It is plain from their findings that, whatever was in the claimant's mind regarding her job and the assumptions that she made as to the respondents' attitude to it, it was not until 17 November 2003 that she communicated effectively to them that she had in fact fulfilled the role of deputy manager prior to the transfer of the business and that she had a grievance regarding the matter. It was inherent in Mr Napier's approach that the claimant should be regarded as having communicated a grievance to the respondents from 28 September 2003 and repeated it several times thereafter, prior to 17 November but we do not see that the findings on the evidence support that. Contrary to the submission for the claimant, we do not agree that the tribunal imposed a requirement that an employee such as the claimant not only communicate the grievance but do so starkly and in a manner that indicates that they are asking for it to be dealt with speedily. If paragraph 63 of their reasons is read as a whole and in context, it is evident that they have applied the correct test and have not gone beyond looking to see whether the claimant effectively communicated to the respondents that she had a grievance:

"The Tribunal considered whether the respondents ought to have known that the claimant had a grievance prior to 17th November, 2003 and, if so, when they ought to have acquired that knowledge. With some hesitation we are satisfied that there was nothing to put the respondents "on guard" until the receipt of that letter and that notwithstanding the fact that the claimant raised the issue of the deputy manager post with the appropriate employee of the respondents (from her point of view) on several occasions before that date, because, in our view, it is necessary for an employee not only to have a grievance, but also to raise the matter with the employer in terms such as to make it clear that he or she has a grievance that the employee expects the employer to resolve and we are not satisfied that the matter was raised sufficiently starkly to bring home to the respondents that the matter required early or immediate attention".

35.               Turning to the matter of compensation, we are, however, readily satisfied that the tribunal have erred. They have approached the assessment of the appropriate sum to award on the basis that they required to assess the extent of the claimant's loss. At paragraph 71, they state:

" ….the use of the word "compensation" would tend to suggest that we should have regard to the extent to which the category of affected employees has suffered loss; individual members of that category may have suffered little and others (arguably including the claimant) have suffered considerably in that, had there been proper consultation, there is an increased likelihood that the claimant would have remained in employment; on the other hand , the fact that we must have regard to the seriousness of the employer's failure suggests a penal element. Doing the best we can, we think it appropriate to award the category of affected employees six weeks' wages bearing in mind the amount of time actually taken by the respondents to resolve matters relating to the terms and conditions employment of those whose employment was transferred to them , we are of the view that a modest estimate of the amount of time that proper negotiations would have taken would have been about six weeks."

That was against a background of the tribunal categorising the failure to consult in this case as having been "serious" and "gross", having observed that there was no attempt to comply with the obligation to consult and "no urgency in dealing with the matter after the transfer took place" not, we note, that that would have remedied matters, since the obligation is to consult in advance of the transfer. The authorities to which we have referred are not referred to by the tribunal.

36.               It seems clear, in our view, that the tribunal, in assessing compensation, fell into error in that they tried to find a sum which amounted to appropriate compensation. That is not the correct approach for the reasons which we have already explained. There is no indication of them recognising the need to focus on the punitive and deterrent nature of any such award and no attempt is made by them to consider whether there were any mitigating factors, in circumstances where they begin by finding that the employers' failure was serious and gross. Had they done so, on their findings in fact, the answer would have had to be that there were no mitigating factors and they would then have been left with a failure by the respondents which was at the top end of the range of possible severity. In these circumstances, a sum which represents less than half of what it was open to them to award is not defensible. Indeed, we cannot see that, in the circumstances, it was open to the tribunal to award anything less than the equivalent of 13 weeks' pay and will substitute a finding and order to that effect.

Disposal

37.               We will, accordingly, dismiss the appeal insofar as it relates to the finding that the claimant was not unfairly dismissed by the respondents but allow the appeal relating to the amount of the payment due under regulation 11(4) of TUPE and substitute a finding and order that a sum equivalent to thirteen weeks' pay is appropriate compensation and is due and payable by the respondents.