United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR RUSSELL ROBINSON (The Appellant in Person)
For the Respondent	MR ANDREW ALLEN (of Counsel) Instructed by: Messrs Hammonds Solicitors Rutland House 148 Edmund Street Birmingham West Midlands B3 2JR


 


SUMMARY

Contract of Employment – Damages for breach of contract - Implied term / variation / construction of term

Unfair Dismissal – Constructive dismissal

Unfair dismissal, breach of contract: whether unilaterally imposed new terms and conditions of employment from employer were affirmed by the employee agreeing to work under them, but only under protest, treating the contract as extant, but regarding himself as dismissed and able to sue for breach of contract should he not be able to come to an agreement on the new terms and conditions. Dismissal for failing and refusing to abide by the new terms he had agreed to work to: whether conduct sufficient to justify summary dismissal.


 


THE HONOURABLE MR JUSTICE NELSON

1. This is an appeal against the decision of the Ashford Employment Tribunal of 20 June 2007 dismissing the Claimant's claim for unfair dismissal and breach of contract. The Claimant has been given permission to pursue one ground in his notice of appeal, namely that set out in paragraph 47. The essence of that ground is that the Employment Tribunal erred in finding that the Claimant had affirmed the new terms of his contract of employment which had been unilaterally varied by the Respondent. The Claimant had written a letter of 25 September 2006 agreeing under protest, to work under the terms of the varied job description, but had then continued to work to his original terms and conditions and had not resigned. The Respondent seeks to affirm the Employment Tribunal decision, and contends that the Claimant's refusal to abide by the new terms he had agreed to work under, albeit under protest, was, as the Employment Tribunal found, misconduct to which dismissal was a reasonable response.

The Facts.

2. The Claimant was employed as a territorial manager working in the South East of England from 1 December 1995. The Respondent manufactures pressure regulators and valves for the oil and gas industry, the semi conductor industry and the pharmaceutical industry. The Claimant's task was to sell components made by his employer. In October 1997 he was issued with a new job description calling him Territory Manager UK and on 24 January 2003 he had a further job description describing him as Territory Manager with a requirement to sell systems as well as components in the designated sales region. This region was the South East of England covering an area from Great Yarmouth in the North to Slough in the West. The Claimant also worked, though only rarely, on projects outside this area, and travelled round the country accordingly.
3. The Respondent decided to establish a separate systems operation within the UK and the Claimant was included in the discussions about these proposed changes. It was suggested to the Claimant in February 2006 that he should take over 80% of the systems work and keep 20% of the component work, a new role which would involve travelling nationwide. The Claimant made it clear that he wished to continue his existing role in the South East region, known as Area 6.
4. The restructuring plan was revised by Mr Addy, the Respondent's country manager UK and Ireland, in an effort to accommodate the Claimant's wishes. It was then proposed that the Claimant would be become territory manager for components for Area 6 and Area 3. These included the whole of the South of England from The Wash to mid Wales. The company's view was that in practice the travel requirements would be no more onerous than before, as although the area was greatly increased, in practice there were no accounts in Wales, Devon or Cornwall nor expectation of such accounts, though there remained a possibility that there would be customer requirements to be satisfied in the whole of that region. The new job description which the Claimant was given described him as Territory Manager, Components and there was no dispute that this covered Area 3 and Area 6. The Claimant asked if a relocation package would be available but was informed by the Respondent that it was not, as it was their view that the proposed changes could be achieved from his current location, in Kent.
5. On 18 July 2006 the Claimant raised a grievance relating to the increased time he would have to spend away from home staying in hotels and stating that he wanted to remain in his existing position. At the same time his other three colleagues agreed to change their roles. The grievance meeting took place on 27 July 2006. At the conclusion of this the Respondent wrote to the Claimant stating that he would take on the extended sales territory from 1 September 2006 but that the situation would be monitored over a twelve month period, with review meetings at three monthly intervals. On 25 August 2006 the Claimant wrote stating that he would agree the twelve month trial period with three months reviews once they had agreed an existing key and potential new account list within reasonable driving distances from his current location. Matters were not further resolved however even with further meetings on 20 September and 22 September 2006. A list of accounts for Areas 3 and 6 were sent to the Claimant and on 22 September Mr Addy confirmed that from 2 October 2006 that the Claimant would be responsible for the extended territory.
6. The Claimant replied to Mr Addy by a letter dated 25 September 2006 which stated:-

"Following the account review meeting on 20^th September 2006 with yourself, Craig Davies and Iain Johnston I now write to advise you of my response.

I will work under the terms of the varied job description, Territory Manager – Components but under protest. I do not accept the terms and I am treating the change as a breach of contract and dismissal from the original contract.

I retain the right to seek damages from my employer for a breach of contract and/or a declaration from the courts that my employer must abide by the original terms of my contract.

I look forward to hearing from you shortly."

7. The wording of this letter was taken from the ACAS advice leaflet entitled 'Varying a contract of employment' under the section where such a variation was without the agreement of the employee. This leaflet sets out the options available to an employee in such circumstances, including the option chosen by the Claimant, namely to continue working within the varied contract under protest, making it clear that the employee does not accept the terms and is treating the change as a breach of contract and dismissal from the original contract.
8. On 29 September 2006 the Claimant appealed the grievance decision. The managing director heard the appeal and concluded that coverage of the whole territory in Areas 3 and 6 was necessary, that the impact of the change on the Claimant's role was reasonable and manageable and that it would be implemented with effect from 16 October 2006. This was confirmed and on 16 October Mr Addy asked the Claimant to sign his job description and key objective forms and return them to him. On 25 October 2006 the Claimant wrote to Mr Addy saying 'I write to confirm that I still do not accept the new terms and conditions and will continue to work for the company in the role of Territory Manager covering South East England only, known as Area 6, selling both components and systems.' On 27 October 2006 Mr Addy wrote to the Claimant reminding him that his new role of Territory Manager - Components for Areas 3 and 6 was effective from 16 October.
9. The Claimant did not work to the new terms and was requested to attend a disciplinary meeting to discuss his apparent failure to follow a reasonable management instruction. That meeting took place on 2 November 2006. The Claimant made it clear that he did not accept the changes to his area. Mr Addy concluded that this was a failure to follow a reasonable management instruction, deemed it to be gross misconduct and summarily dismissed the Claimant. The Claimant appealed, that appeal was heard on 24 November 2006 and was dismissed.

The Tribunal's findings.

10. The Tribunal found that the Claimant was contractually employed to work in the South East area. The employer was seeking to impose a unilateral change to the contract and the Claimant would have been entitled to treat that as a breach of contract. He could have resigned and claimed that he had been constructively dismissed. He did not however do that but instead wrote his letter of 25 September 2006. The employer could also have taken steps to bring the existing contract to an end and offer to re-employ the Claimant on new terms. The Claimant had said that he would work under the new terms and the employer did not bring the existing contract to an end.
11. In paragraph 20 of its decision the Employment Tribunal stated:-

"In the employment context in our view it is not practicable for an employee to be able to require an employer to abide by the original terms. By not resigning as a result of the breach of contract, the employee was affirming the continued existence of the contract. In our judgment the Claimant by his letter of 25 September limited any claim that he may have for breach of contract to a claim for damages for that breach. In this situation it is unreasonable to suggest the Claimant can continue in his job but only perform the tasks under his original contract, when the employer requires him to undertake other tasks. The contract that the Claimant was affirming by his letter of 25 September was the contract as amended by the Respondent."

12. The Claimant could have undergone the trial period and periodic reviews offered, and if his fears had been realised, but not addressed, he could have resigned later and referred that resignation back to the original change in contract terms.
13. The Employment Tribunal concluded that as the Claimant had agreed to work under the terms of the varied job description, the letter of 16 October 2006 was a reasonable instruction to him to comply with those terms. He made it clear that he did not accept those terms. The Respondent reasonably believed on reasonable grounds that the conduct complained, namely a failure to follow a management instruction had been made out. There was no dispute that the Claimant was refusing to comply with the management instruction to abide by the new terms of contract.
14. The Employment Tribunal accepted that the doubling of the Claimant's area of work was a significant change of contract. The Claimant did not co-operate with the Respondent, who had assured him that the travel would not in practice be significantly different from that undertaken before, and offered a twelve month trial period with three month reviews when any practicable problems could be addressed. The failure of the Claimant to co-operate in the circumstances was gross insubordination. He had demonstrated that he did not wish to be bound by the terms of the varied contract and in such circumstances dismissal was within the band of reasonable responses. Accordingly the Tribunal concluded that the Claimant had not been unfairly dismissed, that summary dismissal was not inappropriate and dismissed his claims for both breach of contract and unfair dismissal.

The Submissions.

The Claimant/Claimant's submissions.

15. The Claimant submitted that the new terms did not come into force as they had never been accepted by him. The necessary offer and acceptance for a contract was absent. Indeed his letter of 25 August 2006 was a counter offer which was never accepted by his employers. As a consequence the only legally binding employment contract was the original contract signed by the Claimant on 24 January 2003. The instruction to work to the new varied terms was, therefore, an unlawful instruction and there were no grounds for dismissal.
16. The letter of 25 September 2006 was not an affirmation of the new contract or the varied terms, but a rejection of the new terms. The Claimant sought to write this letter in accordance with the advice in the ACAS leaflet. He was seeking to carry on working on a without prejudice basis, that is under protest. Ultimately he would sue for breach of contract if no agreement could be reached as to the proper terms upon which he could work. He made it clear at all times that he did not accept the new terms, albeit he said that he would work under them, under protest. As the only contract in existence was the original contract there was no breach until the date of his dismissal on 2 November 2006.
17. The Claimant submitted that he was working to the old contract, selling both systems and components in the South East of England, and in practice continued to work under the terms of the original contract. Until the new terms came into force he did not have to work under them, and as they never came into effect he was never under any obligation to do so.
18. The Employment Tribunal wrongly found that he had affirmed the varied terms, had failed to clarify when one contract ceased to exist and the other came into force, and wrongly found that the instruction that he was to work under the varied terms was a lawful instruction when it was not.
19. At one point during the course of his submissions it appeared that the Claimant was submitting that the contract required him to be given three months notice of any variation of his terms of contract. On examination of the relevant term of the contract however this was not the case and it transpired that the Claimant was submitting that as there was no proper ground for his dismissal he should have been given the three months notice to which he was entitled under the contract.

The Respondent's submissions.

20. Mr Andrew Allen on behalf of the Respondent submitted that an employee has four choices open to him when an employer has sought to impose a unilateral variation of an employment contract. These are firstly to acquiesce in the variation, secondly to resign and claim constructive dismissal, thirdly to refuse to work under the new terms and put the onus upon the employer to take what steps it thinks appropriate including dismissal, and fourthly to 'stand and sue' namely to work under protest and seek damages as set out in Rigby v Ferodo [1988] ICR 29 or, if the breach of the contract is so serious as to bring the original contract to an end, bring a claim for unfair dismissal in the Employment Tribunal under the principles in Hogg v Dover College [1990] ICR 39.
21. The Claimant's letter of 25 September 2006, Mr Allen submitted, is a 'stand and sue' letter. It would have enabled him to bring a claim for breach of contract in the County Court and possibly a claim for unfair dismissal in the Employment Tribunal though the latter claim could not have been successful as the variations were not so fundamental as to terminate the old contract and substitute a new one, and in any event such a dismissal after a business reorganisation would have been fair for some other substantial reason. A claim for unfair dismissal in relation to events prior to 25 September 2006 would have been out of time as the ET1 was submitted on 26 January 2007. The claim heard by the Employment Tribunal related to his dismissal on 2 November 2006. The Claimant's letter of 25 October 2006, however, stated not merely that he did not accept the new terms and conditions, but that he would continue working in his old job only, which he did. This he was not entitled to do. It was not open to him to agree to work under protest and then by letter of 25 October 2006 go back on this position and refuse to obey a reasonable instruction. That was not working under protest. He could not force his employers to keep him on his old terms and conditions when he had agreed in his letter of 25 September 2006 to work under the new terms. The Employment Tribunal found that he was agreeing to work to his contract as amended, albeit under protest. That was a reasonable analysis.
22. Neither party submitted that the original contract had been terminated either by the actions of the Claimant or the Respondent, and the Employment Tribunal accepted that the contract of employment still existed. This confirmed the fact that no claim could have been made under the principles of Hogg v Dover College. Furthermore, because the Claimant did not resign, as the Employment Tribunal found he could have done, he could not claim for constructive dismissal.
23. The Claimant did not acquiesce in the variation of terms but said that he would work to those new terms, under protest. His employers properly set the date at 16 October 2006 from which he must comply with them, he having said that he would work to them. By then declining to do the very thing that he had agreed to do, the Claimant was disobeying an instruction which had been properly given and the Employment Tribunal was right in its conclusion that dismissal in such circumstances was within the band of reasonable responses by the employer.
24. Mr Allen submitted that the case of Bashir v Brillo Manufacturing Co Ltd [1979] IRLR 295 which was referred to by Mr Justice Keith when granting the Claimant leave to appeal, did not assist the Claimant on the facts of this case as in Mr Bashir's case he claimed constructive dismissal, whereas here the Claimant chose not to do so but continued in work having agreed to work the new terms under protest.

Conclusions.

25. When the Respondent sought unilaterally to change the Claimant's contract, the Claimant did not acquiesce in the new terms, but immediately made his position clear; that he did not wish to take on the additional travel and staying away from home which he considered the new job description would entail.
26. A period of negotiation ensued with offer and counter-offer, during which time other members of staff had accepted varied terms. The Claimant sought to follow the ACAS advice leaflet in his 'stand and sue' letter of 25 September 2006. At that time his contract of employment, was, as the Employment Tribunal's found, still extant. It follows that although the Employment Tribunal found that the change brought about by the new terms was significant, it was not so fundamental as to bring the contract to an end. The Employment Tribunal specifically found in paragraph 19, that the Respondent did not bring the contract to an end. The route under Hogg v Dover College was not therefore available to the Claimant.
27. Indeed no claim for unfair dismissal relating to the introduction or imposition of the new terms was made except in relation to the instruction of 16 October 2006 and the dismissal of 2 November 2006. A claim in respect of any earlier constructive dismissal in September 2006 was out of time in the Employment Tribunal by the time the ET1 was served on 26 January 2007.
28. When the Claimant wrote his letter of 25 September 2006 he could, on the findings of the Employment Tribunal in paragraph 19 of their decision, have claimed constructive dismissal but he chose not to do so. Instead, he agreed to work 'under the terms of the new job description Territorial Manager – Components, under protest' whilst treating his contract as breached, himself as dismissed and retaining the right to claim damages.
29. The Employment Tribunal's finding that the Claimant affirmed the continuing existence of his contract of employment as amended by his letter of 25 September 2006 and by not resigning, does no more than seek to reflect what the Claimant said he would do, namely work to the extant contract as amended, preserving his right to sue for breach later. As the Claimant submitted to us, he was agreeing to work under the varied job description, without prejudice and under protest, even though he rejected the new terms, so that if no agreement could be reached between him and his employers he could then sue them for breach. He could in such circumstances, as the Employment Tribunal found, have undergone the trial period, and if his fears had been realised but not addressed, he could have resigned later and referred that resignation back to the original change in contract terms.
30. The Respondent's letter of 16 October 2006, given the Claimant's letter of 25 September 2006, was a lawful instruction, as the Employment Tribunal found. The Claimant had agreed to work to the new job description, under the still extant contract of employment, and having so agreed, could be compelled by his employer to do so. He did not however keep to his side of the bargain, but insisted on working to the terms of the original contract and ignored the new job description he had agreed to work to.
31. There was not an affirmation of the amended contract as such, as the Claimant made it clear that he rejected the new terms and was only working to them under protest. He was however, albeit under protest, agreeing to work to the contract of employment as amended until such time as he felt a satisfactory agreement had been reached or was incapable of being reached. Whilst that process was going on however he had agreed to work under the terms of the varied job description which he then failed to do.
32. We accept Mr Allen's submissions that the case of Bashir does not assist the Claimant. It was decided upon its own particular facts, and involved a case of constructive dismissal which does not apply here. It was made clear in Bashir that these cases will depend upon their own facts and that there may be circumstances where an employee either by actually doing the job for a period of time without leaving or doing some other act may be said to have affirmed the contract as varied.
33. Whilst the Employment Tribunal in the present case does not spell out its entire reasoning and does not, for example illustrate its reasoning or decision by reference to the cases of Ferodo or Hogg, its essential reasoning can be followed and deduced and we see no error of law in that reasoning or the conclusions which they reach. The contract of employment was extant, the Claimant had agreed to continue working under it, and under the varied job description, but then failed and refused to do. Dismissal in response to the Claimant's refusal was, as the Employment Tribunal found, within the band of reasonable responses.
34. We feel some sympathy for the Claimant who sought to follow the advice in the ACAS leaflet but, unfortunately, failed to do so. That advice requires the employee who takes the 'stand and sue' position as the Claimant did here, to 'work within the varied contract' albeit under protest. Here the Claimant expressly declined to work to the varied job description he said he would work within.
35. We therefore conclude that the Employment Tribunal's decision, on the findings that it properly made, cannot be said to disclose any error of law. Accordingly the appeal must be dismissed.