United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR J E PETTS Free Representation Unit 6th Floor 289-293 High Holborn London WC1 7HZ
For the Respondent	MR J WYNNE (of Counsel) Messrs Hewitsons Solicitors Shakespeare House 42 Newmarket Road Cambridge CB5 8EP

SUMMARY

Constructive Dismissal

The Tribunal erred in law in holding that the Appellant did not resign in response to the Respondent's repudiatory breach. Nottinghamshire County Council v Meikle applied.

The Tribunal erred in law in holding that the Appellant waived the Respondent's repudiatory breach. W E Cox Toner International Ltd v Cook applied.


 


HIS HONOUR JUDGE RICHARDSON

1. This is an appeal by Mr Louis Bass against part of a Judgment of the Employment Tribunal held at Stratford dated 14 April 2005. By its Judgment the Tribunal upheld in part a claim that Mr Bass's former employers, Travis Perkins Trading Ltd, (TPT) discriminated against him unlawfully on the grounds of his race. The Tribunal rejected other claims of race discrimination and victimisation that he made, and his appeal against that aspect of the Tribunal's decision was reject by Langstaff J in a Judgment given at a Preliminary Hearing of the appeal on 26 October 2005. The Tribunal also rejected a claim of constructive unfair dismissal by Mr Bass. Langstaff J gave permission for an Amended Notice of Appeal and directed a Full Hearing of the appeal in respect of the constructive unfair dismissal claim.

The Facts

2. Mr Bass, who is black African, was employed by TPT as a security officer from 17 September 2002 until his resignation on 19 May 2004. TPT operated 130 branches and had 36 security officers. It was a term of Mr Bass's employment that he might be located at TPT's South Eastern Regional Security premises or "elsewhere as may reasonably be required".
3. Mr Bass was first employed at Bethnal Green. On 5 July 2003 he was moved from Bethnal Green to Walthamstow. Although he made claims of victimisation and race discrimination in respect of certain aspects of his treatment at Bethnal Green, these claims were held by the Tribunal to be out of time. He was initially unhappy to be moved to Walthamstow, but he accepted the move and settled down there.
4. At Walthamstow Mr Bass's immediate manager was a Mr Beresford. Mr Bass alleged that Mr Beresford made abusive and potentially racist remarks against him, but the Tribunal rejected that allegation. Above Mr Beresford was TPT's Regional Security Manager, Mr Saunders.
5. In November 2003 Mr Bass was the subject of a disciplinary hearing by reason of complaint that he spat customers' vehicles. He was given a first written warning for this conduct.
6. On 11 December 2003 an altercation took place between Mr Bass and Mr Joel, a white employee at the Walthamstow premises. Mr Beresford suspended Mr Bass, but not Mr Joel. He did not speak to Mr Bass before suspending him, whereas he did speak to Mr Joel.
7. On 23 December Mr Beresford gave Mr Bass a final written warning arising out of the altercation.
8. Mr Saunders told Mr Bass that he would be transferred to the Dalston branch. He did not consult him before telling him this. As the Tribunal found, the reason for the transfer was mixed. In part it was because Mr Bass had expressed concerns about the travelling expenses to Walthamstow; the Dalston premises were close to his home. In part, it was because Mr Saunders and Mr Beresford thought that removal to a different environment would prevent conflict with other employees of the kind which had given rise to the disciplinary hearings and other issues.
9. Mr Bass did not report to work at Dalston. He had decided not to do so, but also became unwell with pneumonia. As the Tribunal found he was not paid, at any rate, initially. He did not submit sickness certificates.
10. On 14 January 2004 Mr Bass wrote a letter which was treated by TPT as a grievance. The grievance was investigated by a Mr Watson and determined by his letter dated 12 March 2004. The grievance was wide-ranging and included a complaint about the transfer which had been ordered from Walthamstow to Dalston. The grievance was not upheld. It was dealt with comprehensively except for one aspect - relating to the suspension in December 2003.
11. Solicitors wrote to TPT on Mr Bass's behalf, complaining in particular of the transfer. Mr Bass did not take up an offer of a meeting. He did not return to work. Rather, on 19 May 2004 he wrote his letter of resignation. The letter runs to four quite closely typed pages. It complains of ill-treatment and discrimination in wide terms. For example, it complains of the first written warning, the subsequent disciplinary process, and the transfer to Dalston.

The Tribunal's Reasons

12. The Tribunal upheld Mr Bass's complaint of unlawful race discrimination in one respect. The Tribunal found that Mr Beresford discriminated against Mr Bass on grounds of race when, on 11 December 2003, he suspended Mr Bass without first speaking to him in sharp contrast to the way in which he dealt with Mr Joel.
13. The Tribunal then turned to the question of constructive dismissal. They recorded that Mr Bass's case was that there had been a breach of the implied term of trust and confidence which they took from Malik v BCCI [1997] IRLR 462:

"the employer will not, without reasonable and proper cause conduct himself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee."

14. The Tribunal identified three possible breaches. First, the act of race discrimination. The Tribunal readily concluded that this was a breach of the implied term. Second, failing to consult Mr Bass before moving his post, contrary to what the Tribunal found to be custom and practice in that business. The Tribunal did not regard this as sufficiently fundamental to constitute a breach of the implied term. Third, failing during the grievance to address Mr Bass's complaint about suspension. The Tribunal, while identifying this as a potential breach, did not specifically state a conclusion about it.
15. The Tribunal then turned to the questions whether Mr Bass resigned in response to the breach and whether, as the Tribunal put it, "he delayed too long so as to be deemed to have waived the breach".
16. In a paragraph upon which essentially this appeal turns the Tribunal reasoned as follows:

"28. However, the major issues which the Tribunal has to decide is, firstly, whether the Claimant resigned in response to these matters and, secondly, whether he delayed too long as to be deemed to have waived the breach. His letter of resignation sets out in some details his reasons for going. He refers to the past history of discrimination which we have not found entirely to have been proved. He was concerned about the outcome of the grievance. We would state that we find that he was rightly found at fault in his conduct on 11 December. We find that he made aggressive comments. The issue of discrimination was whether he was treated differently from Mr Joel who was similarly at fault. It does not exonerate him from his own behaviour which was inappropriate. The penalty imposed upon him as a final written warning was proper and probably a lenient one. He does not accept this to be the case. Neither does he accept that he could be moved and complains that he was told to do by Mr Beresford. Mr Beresford was an appropriate person to tell him in the circumstances of Mr Saunders' absence. The Tribunal finds that the Claimant left because of a general feeling of dissatisfaction with the respondent, which the Tribunal has not found to be entirely justified. The last matter about which he complained was the result of his grievance which he received in the middle of March. After that there were some correspondence about his returning to Dalston. He refused to return and he was wrong to do so. However, it was not until 19 May that he sent his letter of resignation. He gave no explanation as to why he had delayed so long. We note that he was claiming Job Seekers' Allowance during this time and that he was not submitting any medical certificates. It is difficult to understand exactly what was in his mind. A delay of this length needs an explanation which the Claimant has not provided. We know that he had legal advice, because his solicitors wrote to the Tribunal. They tried to secure his return to Walthamstow. Such conduct leaves the Tribunal to find that he did not initially find the breaches of so much concern that he needed to resign. By seeking to return he shows that he wished his employment to continue. By that delay in those circumstances he must be considered to have affirmed any breach. The Tribunal accordingly find that the Claimant has not been constructively dismissed. Firstly, the breaches in respect of which he resigned has only partially been found to be justified and secondly, he has delayed so long in resigning that he must be deemed to have waived the breach. He was not constructively dismissed and it follows, because he resigned, that his complaint of unfair dismissal must be dismissed."

Submissions

17. On behalf of Mr Bass, Mr Petts submits that the Tribunal erred in law both as regards the question whether Mr Bass resigned by reason of the repudiatory breach of contract and as regards the question whether he affirmed the contract and waived any such breach.
18. On the question of causation, he submits that the employer's repudiatory breach need not be the only reason for resignation. He relies on Nottinghamshire County Council v Meikle [2004] IRLR 703. He submits that on a true analysis of paragraph 28 of the Reasons, the Tribunal did find that the repudiatory breach was one cause of the resignation. That, he submits, was sufficient. It was therefore an error of law for the Tribunal to conclude that he had not been constructively dismissed because the breaches in respect of which he resigned had partly been justified.
19. On the question of affirmation, Mr Petts submits that the Tribunal was wrong to concentrate upon the question of delay. He relies on W E Cox Toner (International) Ltd v Crook [1981] IRLR 443. He submits that the Tribunal erred in law in saying that the delay "needs an explanation". Delay of itself, he submits, cannot of itself constitute affirmation. He further submits that the Tribunal was wrong to place reliance on the fact that Mr Bass would have been prepared to work at Dalston. Merely because a person who would otherwise be treated as having been constructively dismissed would be prepared to return to work for the same employer on different terms, does not amount to a waiver.
20. On behalf of TPT, Mr Wynne submits that the Tribunal did not err in law.
21. On the question of causation, he submits that the Tribunal in paragraph 24 of its Reasons, had correctly stated that law; the employee must resign in response to the breach. The Tribunal's findings in paragraph 28, he submits, are properly addressed to this question. He points to the length of time between the repudiatory breach in December 2003 and the resignation in May 2004. He points to the fact that Mr Bass's resignation letter relied upon a whole range of matters other than that found by the Tribunal to constitute the repudiatory breach. He submits that Keene LJ did not necessarily rule out a test of effective cause in his Judgment in Meikle.
22. On the question of affirmation, Mr Wynne submits that the Tribunal did not rely on delay alone. The Tribunal took into account a number of factors: the repeated requests to return to work at Walthamstow; the solicitors letters, none of which expressed any reservation of his right to accept a repudiation; the fact that he wished his employment to continue. Mr Wynne submits that the Tribunal did not fall into the error of assuming that delay on its own would amount to waiver. The Tribunal merely said that if an employee delayed too long he may be deemed to have waived the breach. This, he submits, is consistent with W E Toner (International) Ltd v Crook [1981] IRLR 443. There is, he submits, no error of law in the reasoning. Whether to find an implied waiver was a matter of fact for the Tribunal. He submits that if there is any lack of clarity in the findings of the Tribunal at paragraph 28 the matter should be remitted to the Tribunal.

Conclusions

Resignation and Causation

23. In Nottinghamshire County Council v Meikle [2004] IRLR 703, Keene LJ in a Judgment in which the other members of the Court concurred, considered the law applicable to this issue. He referred to the decision of the EAT in Jones v Sirl & Son (Furnishers) Ltd [1997] IRLR 493, in which an "effective cause" test had been propounded. He continued:

"I see the attractions of that approach, but there are dangers in getting drawn too far into questions about the employee's motives. It must be remembered that we are dealing here with a contractual relationship, and constructive dismissal is a form of termination of contract by repudiation by one party which is accepted by the other: see the Western Excavating case. The proper approach, therefore, once a repudiation of the contract by the employer has been established, it to ask whether the employee has accepted that repudiation by treating the contract of employment as at an end. It must be in response to the repudiation, but the fact that the employee also objected to the other actions or inactions of the employer, not amounting to a breach of contract, would not vitiate the acceptance of the repudiation. It follows that, in the present case, it was enough that the employee resigned in response, at least in part, to fundamental breaches of contract by NCC."

24. We do not think the Tribunal can have had this authority readily to mind in reaching the conclusions set out in paragraph 28 of its Reasons. The Tribunal says that the breaches in respect of which Mr Bass resigned have only partially been justified, and gives that as a reason for finding that Mr Bass was not constructively dismissed. But it is sufficient if the employee resigns in part by reason of the proven repudiatory breaches. As Keene LJ held in Meikle, it is not necessary to establish that the repudiatory breach was the effective cause of the resignation.
25. As we read paragraph 28 of the Tribunal's Reasons, it is implicit in the Tribunal's findings that Mr Bass resigned in part by reason of the repudiatory breach. Two findings lead us to this conclusion. First, the Tribunal referred to his letter of resignation as referring to the past history of discrimination "which we have not found entirely to have been proved". The letter of resignation does complain of the unlawful and discriminatory suspension which the Tribunal found to have amounted to a repudiatory breach, albeit in a much longer catalogue of complaints. Secondly, and more fundamentally as we have said, the Tribunal say that the breaches "in respect of which he resigned" have been partially justified.
26. We strongly suspect that the Tribunal had in mind an "effective cause" test, of the kind propounded in Jones v Sirl & Son (Furnishers) Ltd [1997] IRLR493. If that had been the correct test to apply, we think the Tribunal's conclusion would have been permissible in law. But the test in Meikle is significantly different, and will from time to time produce different results. It might be said to be harsh that an employee should be entitled to resign when his resignation is to a significant extent the product of complaints not found to be justified. But this is inherent in the test propounded by Meikle. The test may be said to be just, because an employer who is in repudiatory breach can have no legitimate complaint if his employee resigns in part in response to that breach. If, on the other hand, the employee had to prove that the repudiatory breach was the effective cause of the resignation, there would need to be detailed enquiry into the employee's motives. This is not necessary in other branches of the law. In the context of commercial law, an innocent party may accept a repudiatory breach of contract even if his underlying motive is to get out of a bad bargain. The risk that the victim of the breach will be able to do so is taken by the contract breaker.
27. For these reasons we consider that the Tribunal's conclusion on the first question cannot be upheld and we conclude that Mr Bass did resign in part because of the repudiatory breach of contract.

Affirmation

28. The classic discussion of this question is set out in the Judgment of the Appeal Tribunal delivered by Browne-Wilkinson P in W E Cox Toner International Ltd v Crook [1981] IRLR 443 at paragraphs 13-15.
29. In paragraph 13 Browne-Wilkinson P said the following:

"It is accepted by both sides (as we think rightly) that the general principles of the law of contract apply to this case, subject to such modifications as are appropriate to take account of the factors which distinguish contracts of employment from other contracts. Although we were not referred to cases outside the field of employment law, our own researches have led us to the view that the general principles applicable to a repudiation of contract are as follows. If one party ('the guilty party') commits a repudiatory breach of the contract, the other party ('the innocent party) can choose one of two courses: he can affirm the contract and insist on its further performance or he can accept the repudiation, in which case the contract is at an end. The innocent party must at some stage elect between these two possible courses: if he once affirms the contract, his right to accept the repudiation is at an end. But he is not bound to elect within a reasonable or any other time. Mere delay by itself (unaccompanied by any express or implied affirmation of the contract) does not constitute affirmation of the contract; but if it is prolonged it may be evidence of am implied affirmation: Allen v Robles [1969] 1 WLR 1193. Affirmation of the contract can be implied. Thus, if the innocent party calls on the guilty party for further performance of the contract, he will normally be taken to have affirmed the contract since his conduct is only consistent with the continued existence of the contractual obligation. Moreover, if the innocent party himself does acts which are only consistent with the continued existence of the contract, such acts will normally show affirmation of the contract. However, if the innocent party further performs the contract to a limited extent but at the same time makes it clear that he is reserving his rights to accept the repudiation or is only continuing so as to allow the guilty party to remedy the breach, such further performance does not prejudice his right subsequently to accept the repudiation: Farnworth Finance Facilities Ltd v Attryde [1970] 1 WLR 1053.

30. Browne-Wilkinson P went on to say in paragraph 14:

"…Therefore, if the ordinary principles of contract law were to apply to a contract of employment, delay might be very serious, not in its own right but because any delay normally involves further performance of the contract by both parties. It is not the delay which may be fatal but what happens during the period of the delay."

31. Further in paragraph 15 after discussing Western Excavating [1978] IRLR 27 and Marriott v Oxford Co-operative Society [1971] QB 196, Browne-Wilkinson P said:

"…This decision to our mind establishes that, provided the employee makes clear his objection to what is being done, he is not to be taken to have affirmed the contract by continuing to work and draw pay for a limited period of time, even if his purpose is merely to enable him to find another job."

32. In this case it is of importance to appreciate that Mr Bass stopped work soon after the repudiatory breach. He did not actually work between January and May. He did not receive pay except, we are told, perhaps a small amount of Statutory Sick Pay. So, the features of an employee's behaviour from which affirmation can most readily be inferred or implied are not present.
33. The Tribunal principally relied as indicative of affirmation on the question of delay. The Tribunal referred to Mr Bass "delaying so long in resigning". The Tribunal say that the period of delay required an explanation by him. In our judgment, in concentrating on the question of delay in this way the Tribunal erred in law. Delay by itself, unaccompanied by any express or implied affirmation of the contract, does not in itself affirmation: see W E Cox Toner International Ltd v Crook at paragraph 13. So, this factor on its own would not justify the finding of affirmation. Yet in the end, in the penultimate sentence of paragraph 28, it is on this factor that the Tribunal has founded its decision.
34. There is one other factor relied on in the Tribunal's decision to some extent, and it is the willingness of Mr Bass to return to work at Walthamstow. In our judgment, however, by seeking to return to work at Walthamstow, Mr Bass was not affirming the contract. The contract, with its mobility clause as applied by TPT, now required him to work at Dalston. That he was not prepared to do, evidently seeing it as an injustice in the light of what had happened to him. He was therefore not affirming the contract. He was seeking to impose his own terms as to his return. Whether he was justified in doing so or not is beside the point. He was not affirming the contract.
35. We have carefully considered whether there is anything which requires a remission to the Tribunal. But it seems to us that once the question of delay has been properly addressed, it is clear in this case that Mr Bass did not affirm the contract. In our judgment, there is nothing that needs to be remitted to the Tribunal for further findings to be made or for further argument to be heard or Reasons given.
36. We mention one final point relied on by Mr Wynne, which is the fact that Mr Bass's solicitors wrote letters to TPT in the period prior to resignation without reserving in any way Mr Bass's position and indicating his willingness to return to work at Walthamstow. We have already dealt with the question of return to work at Walthamstow.
37. In certain circumstances, if a solicitor writes on behalf of an employee claiming constructive dismissal, it will be very important for the letters to reserve his rights. But that depends on whether Mr Bass is continuing to perform the contract: see paragraph 13 of W E Cox Toner International Ltd v Crook. In this case Mr Bass was not, to any significant extent, continuing to perform the contract.
38. For these reasons therefore the appeal will be allowed. A finding of unfair dismissal will be substituted and the matter will be remitted to the Tribunal for a Remedies Hearing.

Postscript.

39. Mr Wynne, having heard the Judgment thus far, takes a further point. His point is that the Tribunal only found that there was no constructive dismissal. We have dealt with that point by finding not only that there was a repudiatory breach, but that Mr Bass resigned partly in response to it and had not affirmed the contract. Mr Wynne, however, says that it is for the Tribunal, not the Appeal Tribunal, to reach the further conclusion pursuant to s.98(4) that the dismissal was unfair; that is to say, outside the range of reasonable responses available to an employer.
40. There will be cases where that submission is correct. However, in this case the repudiatory breach was an act of race discrimination. In our judgment, the answer to the s.98(4) issue is open and shut in such a case as this. The dismissal will be held to be unfair. Where there is only one answer to a point it is open to the Appeal Tribunal to substitute a finding of unfair dismissal in a case such as this.
41. Having listened carefully to Mr Wynne's further submission, we therefore adhere to our conclusion that it is right for us in this case to substitute a finding of unfair dismissal and to remit the matter for compensation.