United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR IAN QUIRK (of Counsel) Instructed by: Messrs Speechly Bircham LLP Solicitors 6 St Andrew Street London EC4A 3LX
For the Respondent	No appearance or representation by or on behalf of the Respondent


 


SUMMARY

CONTRACT OF EMPLOYMENT

Wrongful dismissal

The Chairman in error in finding employee had been dismissed. Employer accepted employee's repudiatory conduct clearly showed an intention not to be bound by contract. Employer's contract conditional upon references. These were not satisfactory. Contract discharged.


 


HIS HONOUR MR JUSTICE ANSELL

1. This is an appeal brought by Speechly Bircham against a decision of a Chairman alone, Miss Lewzey at London (Central). The case was heard on 15 January 2007, reasons sent out on 30 January 2007, determining that the Respondent was entitled to one month's pay as damages for breach of contract for failure to pay notice money. This appeal lies pursuant to leave given on 3 April by Mr Justice Underhill. He felt there was an arguable point about whether the employee resigned or was dismissed, together with a further issue in relation to whether there was in fact no right to notice because of a breach of condition that the employee failed to provide satisfactory references.
2. Miss Nsaba has not appeared today. She has taken part earlier on in the appeal proceedings to the extent of filing a response and submissions. They were sent from an address in the Grand Cayman Islands using an email address which she has used for some time. She did request in one of the emails that this hearing was fixed after 15 August 2007, and that of course has taken place. The notification of this hearing was sent by email to her email address, and also sent by post to an address in London. It is right to say that she has not formally acknowledged receipt of that hearing date, nor completed the form which indicates whether or not she intends to attend this hearing.
3. The solicitors have certainly sent one or two emails since the hearing date was fixed in connection with documentation for this appeal. I am satisfied that she has had proper notice of the hearing, and in considering this matter I do take into account the submissions that she has put in.
4. The Chairman's decision dealt with the facts of this matter. Miss Nsaba was employed on a fixed term contract in the IT Department of Speechly Bircham pursuant to a letter of offer of 2 November 2006. The term commenced on 6 November and was to expire on 2 February 2007. It provided for a notice period of one month and required as a condition of employment two satisfactory written references from her two most recent employers.
5. She started on 6 November and certainly worked the 6th and the 7th. There appears to be an issue about whether she worked on the 8th which was not actually resolved by the Chairman but nothing turns on that. She was certainly not at work on the 9th as she had an agreed holiday day. By the 9th the employers had taken up references and had received concerning and disturbing information which certainly meant that satisfactory references had not been supplied. Miss Simpson of the solicitors prepared a draft letter inviting her to attend a hearing on the 10th to discuss the circumstances in which the firm was contemplating terminating the employment.
6. It appears that there were various phone conversations with Miss Nsaba on the afternoon of the 9th, and there was a major issue about those conversations. Miss Nsaba claimed that as a result of those conversations she was definitely told that her employment was being terminated due to receipt of unsatisfactory references.
7. On the employer's side they maintained that that termination did not take place finally that afternoon. They expressed their concerns but invited her in to a meeting the following day to discuss matters. There was an exchange of emails that day. Miss Nsaba was the first one, and in her email she alleged that her employment had been terminated, she wanted to see copies of the references, and she noted the request to attend the office to discuss the termination. The fact that she was being asked to the office to discuss termination clearly provided some support in favour of the employer's position. Miss Nsaba said she could not attend because she had arranged interviews for another job. She asked to reschedule the appointment.
8. The response from the employers made it clear that she had not been terminated. The purpose of the phone call was to inform her that the letter was going to be sent to her inviting her to come in for a meeting and they proposed an alternative date on 13 November. There was a further email from Miss Nsaba maintaining that the contract had been terminated. She was going to seek legal advice and would revert to them regarding the rescheduling of the meeting. Miss Pinfield wrote on 10 November responding again that she had been invited to a meeting, that she could be accompanied by a colleague, and the meeting was rescheduled for the 14th.
9. Miss Nsaba responded by email that day saying that, "My employment was terminated by yourself. You called me three times after Miss Simpson had just spoken to me to also inform me that my employment was to be terminated". In fact by this time, 10 November, Miss Nsaba had already issued Tribunal proceedings and they were received a few days later by Speechly Bircham.
10. In a letter of 13 November, Speechly Bircham maintained that she had not been dismissed, but went on to say that if she maintained that it had been terminated on the 9th, this was because she had chosen to treat it as having been terminated on that date, and not by reason of dismissal by the firm. She then responded asking for one month's notice based on the dismissal.
11. Finally, on 16 November Speechly Bircham responded. They had received the Employment Tribunal's proceedings by this time, and said that the firm denied that she was dismissed and I quote, "Your employment came to an end by virtue of your resignation with immediate effect. The firm had no alternative but to accept that your employment came to an end on 9 November".
12. The Chairman accepted that she had not been dismissed on the 9th. It is right to say that she did not rehearse in detail the evidence about the phone conversations that day, but there is a clear finding within paragraph 22 that as at 13 November the Respondents, the employers, had not dismissed her. So, I take that as a finding effectively that the Chairman did not believe the allegations made concerning the phone conversations on the 9th, in relation to the version put forward by the employee.
13. However, the Chairman found that Miss Nsaba had not resigned but had been dismissed on 16 November, and crucially in paragraph 21 the Chairman said this:

"For there to be a resignation there must be clear and unequivocal words of resignation and in this conduct there are no words of resignation at all. The Respondent therefore cannot have understood Miss Nsaba to have resigned."

14. It is those few lines that lie at the very heart of the appeal today. The appeal is based on the contention that the Chairman has taken a far too narrow and restrictive view of what was being alleged in this case; perhaps influenced by the word "resignation" and looking for some form of formal words. The Appellants before me contend that in effect what their case was is that there was effectively from 9 November onwards a clear intention on the part of Miss Nsaba not to be bound by the contract.
15. The employers had rejected her right not to be bound by the contract on the basis that she had herself been dismissed and clearly the Chairman concluded that Miss Nsaba's actions were not an acceptance of the employer's breach on the 9th, because there had not been a breach by the employers. Mr Quirk submits that Miss Nsaba's conduct can only be looked at as a course of conduct evincing an intention not to be bound by the contract which eventually Speechly Bircham was driven to accept on the 16th. They chose to highlight the 9th as the date of resignation. It could have been open to them to say that effectively the 16th was the effective date because that is when they accepted what was Miss Nsaba's continuing breach.
16. He argued that the Chairman erroneously attached significance to the absence of formal words of resignation and concluded that the letter of 16 November from Speechly Bircham has accepted that the employment had terminated and it amounted to a dismissal. It is the first unequivocal piece of correspondence that confirmed that the employment had come to an end.
17. The Appellants argue that that ignores the behaviour of Miss Nsaba from 9th onwards, including her commencing Tribunal proceedings that clearly evinced her view that the contract was at an end. A secondary complaint by the Appellants today is that the Chairman ignored submissions that she records in relation to whether or not the failure to provide references meant that either there was never an effective contract between the parties, or alternatively that once those references were provided the contract came to an end with no rights accruing to the employee, and she would therefore have no rights to notice moneys.
18. The grounds are set out in the helpful submissions from Mr Quirk. Firstly, that the Chairman failed to consider whether Miss Nsaba had resigned by reason of her conduct. Secondly, that the earlier finding that she had been dismissed and failed lastly to consider whether Miss Nsaba was in breach of conduct.
19. On the first ground he argues that the Chairman erred because she failed to consider whether the conduct amounted to resignation by way of a repudiatory breach of conduct, and mistakenly simply looked for words of resignation, and having found that there were none concluded that the contract was not brought to an end by Miss Nsaba.
20. He pointed to the clear insistence that she was making that her employment had come to an end as a result of the events of 9 November, making it perfectly clear that she was no longer going to perform her obligations. She started to look for other jobs, and on 10 November commenced Tribunal proceedings.
21. He argued that clearly from the employer's side she had not been dismissed. She was called to a meeting on the 10th which clearly indicated, as I have said already, that her employers regarded still the contract as existing, and although initially paying lip-service to the thought of coming to a meeting she in fact never did. He criticised the Chairman's view that the first indication that employment had come to an end was the employer's letter of 16th, completely ignoring the course of conduct over the previous few days.
22. It was the employer's letter accepting that breach which the Chairman has mistakenly interpreted as an act of dismissal on the part of the employers, rather than looking at it in its proper contractual context as the acceptance of the employee's breach.
23. He referred me to well known principles from Chitty, in particular at paragraph 24-018:

"A renunciation of contract occurs when one party by words or conduct evinces an intention not to perform or expressly declares that he is or will be unable to perform his obligations under the contract in some essential respect. The renunciation may occur before or at the time fixed for performance. An absolute refusal by one party to perform its side of the contract will entitle the other party to treat himself as discharged."

24. Accordingly, Mr Quirk submitted that there was an absolute refusal by Miss Nsaba to treat herself as performing her part of the contract, thereby entitling the employers to treat the contract as discharged. Whether or not her conduct should have been looked at under the narrow heading of resignation perhaps is where error has come in this case and it would have been better to describe it as a repudiatory breach by words, and conduct.
25. The fact that the employers have chosen to as it were backdate matters to 9 November does not seem to me to be material. They can choose, as it were, a particular date for when they say the contract came to an end, although a commonsense analysis of the facts of this case would tend to suggest the effective date of termination was in fact 16 November because that was the date when acceptance was communicated.
26. These well-known principles were the subject of a case before the EAT in 2003, Potter and Others and RJ Temple, HHJ Richardson presiding. From paragraph 22 onwards, HHJ Richardson set out the well-known principles but repetition is always useful in these areas. He said this:

"In Crank and HMSO the employee and the employer agreed respectfully to treat 2 September as a date of termination of employment even though the employee did not send in his resignation until 14 September. It was held that the effective date of dismissal was 2 September, even though in fact the employment was terminated after that date, the earlier date was the commonsense answer. See also Mowlan Northern and Watson [1990] ICR 751, the date (inaudible), and Lambeth and Croydon College [1999] ICR 409. The earlier date was agreed.

23. In Newman v The Polytechnic of Wales Student Union [1995] IRL 72 page 73, the Appeal Tribunal said the effective date of termination has to be decided in a practical and commonsense manner, having regard particularly (inaudible) the parties understood the date and time of dismissal."

27. Just pausing there as far as 9th is concerned, this was of course the date that the employee had alleged in her claim before the Tribunal as the date when her employment had come to an end, albeit that she was placing that termination on a different basis, mainly on the basis of dismissal. Therefore it does not seem to me that anything turns on whether it was the 9th or the 16th. Effectively by the 9th the employee was making it fairly clear that she was not going to be bound by the contract.
28. Returning to the Potter case HHJ Richardson went on as follows:

"It is well established as a general principle of law contract where the one party has committed a repudiatory or anticipatory breach of contract the aggrieved party has an election to accept the repudiation or to affirm the contract. If the agreed party affirms the contract he remains obliged to perform his part of it. If he accepts repudiation he is relieved of his obligation and to perform his part of it. It is now well established that this general principle of the law of contract applies to contracts of employment. If an employer commits a repudiatory breach of contract the employee is not free from his contractual obligations if he has affirmed the contract. He is only free from his contractual obligations if he has accepted the repudiation. An act of acceptance of repudiation does not have to be in any particular form. It is sufficient that communication or conduct clearly and unequivocally conveys the (inaudible) party, that the aggrieved party is treating the contract as at an end. The aggrieved party need not personally or by an agent identify the repudiating party (inaudible) should come to an end. It is sufficient that (inaudible) comes to the repudiating party's attention even (inaudible) by an unauthorised broker or intermediary (inaudible) sufficient."

29. Later in the judgment HHJ Richardson refers to the earlier authority of Edwards v Surrey Police [1999] IRLR 456 and cites a passage from Mr Justice Morison, President, where he said this:

"It seems to us the employers should know where they stand when an employee leaves. It is not an infrequent occurrence when employees find their working life intolerable to walk out in a huff but do not intend to bring their employment relationship to an end. It seems to us that unless there has been proper communication for the employee of the fact they are regarding themselves as no longer employed by words or conduct the employment relationship has not been terminated."

30. The judge goes on:

"There is clear authority finding on the Appeal Tribunal the effective date of termination will not be until the acceptance of the repudiatory breach is communicated."

31. The second ground in this case is very much tied up with the first, namely the allegation that the Chairman erred in finding that Miss Nsaba had been dismissed by reason of the letter of 16 November, clearly ignoring, as we said, Miss Nsaba's conduct over the previous few days and the factors that Mr Quirk relied on, already set out already. The failure to attend work after the 7th, a failure to attend meetings, the issuing of the ET1 on the 9th asserting that her employment had ended, and numerous emails claiming her employment had come to an end. To which can be added the failure to provide satisfactory references.
32. I agree with the submission. It seems to me unfortunate the Chairman perhaps was distracted by an analysis of words, particularly an analysis of resignation, without going back to basics and looking at the contractual analysis of what was actually going on in this case. Once she had rejected the claimant's main contention that she had been dismissed on the 9th as a result of the various telephone conversations, it seems to me that she would then be driven to look at the employee's effective rejection of her employment as clearly being a breach of contract. Therefore the letter of 16th could only be looked at in my view in terms of a response to the employee's breach of contract.
33. I have said already, perhaps both parties were diverted by concentrating too much on the concept of a resignation whereas what was effectively going on in this case was a decision taken by the employee not to be bound by the contract. I am therefore satisfied that the Chairman has adopted a wrong contractual analysis of what was going on in this case. Having made findings that the dismissal did not take place on the 9th it seems to that on the facts of the case the only conclusion that she could have come to was that the employee was in breach of contract and that breach was accepted by the letter of 16 November.
34. If I am wrong on that analysis, that still leaves open the issue of the failure to provide satisfactory references. In the case of Wishart v National Association of Citizen's Advice Bureaux [1990] ICR 794 the effect of a failure to provide references was considered by the Court of Appeal, although at that stage it was an interlocutory hearing to do with injunctions and no final view could therefore be taken on the evidence.
35. Mustill LJ however in a passage at page 800, starting at (e) makes it clear however that his provisional view has to accept the submissions which were being put forward by the employers, which is that they had made an offer which never became unconditional because of the failure to provide references, and never became capable of acceptance until those references were provided. Alternatively he argued that if there was a concluded bargain it was subject to a suspensive condition which would discharge it if the references were not satisfactory. And he goes on to say:

"On either view since the Defendants were not satisfied with the references and since it is not suggested that they acted otherwise than in good faith the Plaintiff has never had an enforceable contract of employment."

36. There was an issue in the case of construction as to whether it was an objective or subjective view that has to be taken of the references, and that point was not dealt with on the Appeal because of the fact that it was an interlocutory appeal. Although Mustill LJ was of the view that he thought that it was a subjective view in terms of the employer's having the right to decide whether or not the references were satisfactory.
37. That was a case where the employment never started. It seems to me that there is a stronger argument in this case for suggesting that since she had started work there was as Mustill LJ described a concluded bargain, but it was subject to a suspensive condition which could discharge it if the references were not satisfactory.
38. It is right to say that the employers in this case did not seek to invoke that condition immediately in terms of the fact that they asked the employee to come in to discuss the situation. Mr Quirk submits that despite submissions the Chairman failed to consider whether or not there was an enforceable contract of employment in place, which would have allowed the employee to claim her month's notice.
39. He argued that once the unsatisfactory references came in the contract was effectively discharged. I can see great force in those submissions. It seems to me that there was a very strong argument to suggest even accepting the Claimant's dismissal or resignation that by reason of a failure to provide the satisfactory references the contract was automatically discharged and therefore no rights would accrue in terms of notice.
40. In any event I decide the case principally on the contractual point, as I have indicated already. So, I propose to set aside the original finding of the case and substitute a finding that the claim fails.