United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR JACK MITCHELL (of Counsel) Instructed by: Messrs Hodsons Solicitors The Greenhouse Stratton Way Abingdon Oxon OX14 3QP
For the Respondent	MR C BAYLIS (of Counsel) Instructed by: MILS Solicitors 27b The Mansions 252 Old Brompton Road London SW5 9HW


 


SUMMARY

Unfair dismissal – Constructive dismissal

Constructive dismissal. Conduct likely to destroy trust and confidence. Appeal allowed; finding of unfair constructive dismissal substituted for ET judgment dismissing claim.


 


HIS HONOUR JUDGE PETER CLARK

1. This is an appeal by Mr Terence Parsons the Claimant before the Reading Employment Tribunal against the judgment of a Tribunal chaired by Employment Judge Lewis, promulgated with reasons on 21 June 2007, dismissing his complaint of constructive unfair dismissal brought against his former employer, the Respondent, Bristol Street Motors.

Background

2. The Claimant, born on 24 August 1947, spent his working life in the motor industry as a sales executive. On 26 February 1999 he commenced employment in the Peugeot dealership at Oxford which, in 2003, was acquired by the Respondent.
3. In the Respondents assessment the Oxford dealership was underperforming. On 18 March 2005 a new manager was recruited for the Oxford operation, Mr Lawrence. The Claimant knew Mr Lawrence from a previous employment; he did not welcome his arrival. The Tribunal described Mr Lawrence as having a reputation as a tough and uncompromising manager with an uncompromising style.
4. Prior to his arrival the Oxford site had been co-managed by the Claimant and his colleague Mr Lovelock who in due course was to be dismissed and to join the Claimant as a second Claimant in these proceedings, the outcome of which was that the Claimant lost his claim and Mr Lovelock succeeded in his.
5. The Claimant resigned from his employment on 14 July 2005. The question for the Tribunal was whether he did so in circumstances amounting to constructive dismissal and that question depended on the behaviour of Mr Lawrence towards the Claimant during the four months that they worked together.
6. The complaints made by the Claimant about Mr Lawrence's behaviour and management style are carefully considered by the Tribunal. They made the following material findings of fact.

Physical contact

7. The Claimant complained that Mr Lawrence repeatedly and gratuitously physically assaulted him. Mr Lovelock corroborated this complaint, saying that he had seen the Claimant beaten quite black and blue. He also spoke of Mr Lawrence habitually grabbing colleagues or striking them in the testicles. For his part, whilst agreeing that he was tactile at work Mr Lawrence denied assaulting anyone. Faced with this factual issue the Tribunal concluded that Mr Lawrence was indiscriminately tactile with staff whom he slapped on the back, punched in the arm or otherwise touched. Whilst they accepted that the Claimant found this behaviour stressful he could see that it was applied to everyone. He was not singled out. They rejected Mr Lovelock's evidence that the Claimant was beaten black and blue although they accepted that on one occasion he saw bruising on the Claimant, they also rejected his evidence about Mr Lawrence grabbing staff by the testicles (there running together the allegation by Mr Lovelock that Mr Lawrence grabbed members of staff and struck them in that region).

Language

8. The complaint here is that Mr Lawrence used foul language and in carrying out his wont to give staff nicknames focused in the Claimant's case on his age; he was the oldest member of staff; referring to him as the old parsonage, old buzzard and old git. Mr Lawrence accepted that he regularly used what is sometimes referred to as industrial language; something which applied to all staff, (the workforce was exclusively male). Reference to a bus pass, the Tribunal found, was not a reference to the Claimant's age but to two executives recruited by Mr Lawrence who had been disqualified from driving and thus were more likely to use public transport then their colleagues.

Work duties

9. The Tribunal rejected the Claimant's suggestion that he was singled out by Mr Lawrence and overloaded with ancillary duties which took him away from sales opportunities.

Location

10. Further, the Tribunal did not accept that Mr Lawrence threatened the Claimant with a transfer to Banbury which would have materially added to his journey to work time. Rather he raised that possibility because he may prefer to work elsewhere and lend his considerable experience to the relatively inexperienced team at Banbury.

Health and safety

11. The Claimant complained of instances of dangerous behaviour in the work place either instigated or condoned by Mr Lawrence including the use of an air gun, a mini motorbike and a go cart.

Support by Mr Lawrence

12. The Tribunal weighed in the balance attempts by Mr Lawrence to support the Claimant by one to one meetings and arranging for the Claimant to take a share of general commission to make up for his decline in individual commission. It is axiomatic that as sales people the Claimant and his colleagues and indeed their manager, Mr Lawrence were largely dependant on commission for their earnings.

Trevor May

13. Trevor May was the managing director of the group of dealerships owned and operated by the Respondent in Oxford, Banbury and Northampton. On 19 May 2005 Mr Lovelock in whom the Claimant had confided his unhappiness with Mr Lawrence, told Trevor May that he was concerned as to the Claimant's mental and physical wellbeing. The Tribunal found that his response was that the Claimant was suffering a reaction to being managed by Mr Lawrence. Mr May followed that up with the Claimant directly on 25 May. There was a conflict of evidence as to what was said between them but the Tribunal accepted Mr May's account, the Claimant did not wish him to take the matter up with Mr Lawrence. Accordingly he did not do so but told Ms Eeles, the Respondent's Human Resources Manager, to keep an eye on things.

The last straw

14. It was the Claimant's case that the last straw which prompted his resignation on 14 July was an incident on 23 June when Mr Lawrence arranged a mock inspection of the Oxford site by a trading standards inspector. That inspection gave rise to a concern that a real inspection would find the operation to be wanting. That led to Mr Lawrence calling together his sales team and addressing them in terms which, were he a football manager, might be described as the hairdryer treatment. The Claimant gave evidence that he was singled out for this treatment. The Tribunal found that he was not.

The resignation

15. In his resignation letter of 14 July the Claimant contended that he had been forced to resign as a result of Mr Lawrence's managerial style leading to his suffering physical and mental abuse and harassment. In response Mr Lawrence refuted those charges and said "I make no apology for the change in regime". The Claimant promptly found fresh employment with a rival dealership and then invoked the Respondent's grievance procedure. His grievance was eventually rejected by Trevor May on 15 November. It was as a result of his contribution to that process that Mr Lovelock was eventually dismissed, unfairly as the Tribunal found.

The Tribunal decision

16. The Tribunal's conclusions on the issue of whether the Claimant was constructively dismissed are encapsulated at paragraph 9 of their reasons. We should set out those findings in full.

"Mr Parsons' sole claim was for constructive dismissal. We applied the well known test of the Court of Appeal in Western Excavating (ECC) Ltd v Sharp [1978] IRLR 27 and the remarks of Lord Stein in Malik v BCCI [1997] IRLR 462. We remind ourselves of the question as whether the conduct of the Respondent was such to go to root of the employment relationship. This is a case where it is important to look at the full context of all the events in question. In doing so we bear well in mind that the test of constructive dismissal is objective not subjective and that Mr Parsons' feelings deep and sincere though they were, are not in point. Considering the matter objectively and the round we find that though Mr Lawrence's conduct towards Mr Parsons was not in full context calculated or likely to destroy the employment relationship or such as to indicate by course of conduct a wish to bring the employment relationship to an end. We repeat that while we do not underestimate the sincerity of Mr Parsons' feelings or the depth of the unhappiness which he experienced after Mr Lawrence joined the Respondent neither of those is determinative. We find that he resigned from his employment and therefore that his claim of constructive dismissal fails in its entirety."

The appeal

17. The amended grounds of appeal drafted by Mr Mitchell, who appeared below, fully set out the ways in which this appeal is put. It may be characterised as raising these principal issues

1) Did the Tribunal apply the correct legal test to the constructive dismissal question?

2) Was their conclusion that the Claimant was not constructively dismissed legally perverse?

The correct legal test

18. The Tribunal, as appears from paragraph 9 of their reasons, purported to direct themselves in accordance with the guidance provided by the Court of Appeal in Sharp and the House of Lords in Malik. It is common ground that Sharp explains the proper approach to questions of constructive dismissal under section 95(1)(c) of the Employment Rights Act 1996 and that Malik is high authority for the proper formulation of the term of mutual trust and confidence to be implied into every contract of employment. It is a breach of that term which the Claimant alleges in this case. Such a breach is by definition repudiatory and entitles the employee to treat himself as discharged from further performance under the contract. Provided he does not delay too long in accepting the breach and that breach is an effective cause of his leaving the employment then constructive dismissal is established. The onus of proving that state of affairs lie with the Claimant.
19. As to the trust and confidence implied term, in Baldwin v Brighton & Hove City Council [2007] IRLR 232 I reviewed the line of cases and academic commentary in order to determine the correct formulation of that term; see paragraphs 19-40. I remain of the view that the term is as formulated by Browne-Wilkinson P in Woods v W M Car Services [1981] IRLR 347, 350 that the employers were not without reasonable and proper cause conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. For the reasons given in Baldwin I do not believe that Lord Steyn departed from that test in Malik. I also respectfully adopted that formulation in GAB Robins (UK) Limited v Gillian Triggs [2007] IRLR 857 by reference to the judgment of Lady Smith in Abbey National v Fairbrother [2007] IRLR 462; see Triggs paragraphs 23-25. For completeness I should point out that no issue arose on the formulation of the implied term when Triggs went to the Court of Appeal see [2008] ALL ER (D)266. Mr Mitchell submits that the Tribunal fell into error in focusing on whether the Respondent, through Mr Lawrence, intended to undermine the employment relationship between the Claimant and his employer; whether the conduct was calculated to destroy the relationship, to the exclusion of the second question, was that conduct, viewed objectively, likely to have that effect. That the second question is important and one which must be addressed by the Employment Tribunal is illustrated by reference to the speech of Lord Steyn in Malik at paragraph 59 where he said:

"Secondly, given the existence of an obligation of trust and confidence, it is important to approach the question that breach of that obligation correctly. Mr Douglas Brody of Edinburgh University, in this hopeful article to which I have already referred, put the matters succinctly, pages 121-122:

'In assessing whether there has been a breach it seems clear that what is significant is the impact of the employer's behaviour on the employee rather than what the employer intended, moreover the impact will be assessed objectively.'

Both limbs of Brody's reservation seem to me to reflect classic contract law principles and I would gratefully adopt his statement."

In support of that submission Mr Mitchell has taken us to passages in the Tribunal's fact finding section, paragraph 7, particularly paragraphs 7.1, 7.5, 7.9, 7.13, 7.16 and 7.21 where the Tribunal make findings as to Mr Lawrence's intentions in acting as they found that he did. He also referred us to the Tribunal's findings that the Claimant was not singled out for ill treatment by Mr Lawrence. Further, the Tribunal's observations that they do not necessarily condone his actions.

20. We must of course look at the Tribunal's reasons as a whole. Those findings are perfectly appropriate in dealing with whether Mr Lawrence's behaviour was calculated (intended) to destroy the employment relationship. However, nowhere do we detect and Mr Baylis has not shown us, any findings at paragraphs 7 and 8 of the reasons which indicate that the second question is there being addressed. We are therefore thrown back on paragraph 9. True it is, as Mr Baylis points out, that on the face of it the Tribunal appears to have directed itself correctly as to the law; they refer to Malik to the objective test and to the question as to whether the conduct complained of was calculated or likely to destroy the employment relationship. However, simply looking at the language used by the Tribunal there are two matters which lead us to conclude that they did not have in mind what we have called the second question. First, they add to the test of conduct calculated or likely to destroy the relationship, this phrase:

"or such as to indicate, by course of conduct, a wish to bring the employment relationship to an end."

That, it seems to us, is the Tribunal's view of another way of saying the same thing. But it is not. That alternative formulation looks only at the employer's wish or intention; it overlooks the second question. Secondly, they direct themselves that the Claimant's feelings, the sincerity of which they do not doubt, are not in point. We cannot agree. Whilst the employee's subjective reaction to his employer's conduct is not determinative of the breach question it is a factor which the Tribunal are entitled to take into account in deciding objectively whether the conduct is likely to destroy trust and confidence. Somewhat inconsistently the Tribunal later says that Mr Parson's feelings and his unhappiness are not determinative. Nowhere does their reasoning make clear what factors they have taken into account in answering the second question suggesting to all three members of this appeal Tribunal that the question was not properly asked and answered. In these circumstances we accept Mr Mitchell's submission that the Tribunal misunderstood or misapplied the law in asking only the first and not second question contained in the constructive dismissal test. That is an error of law. The alternative perversity argument Mr Mitchell's fallback position, therefore need not be considered.

Disposal

21. Mr Baylis urges to remit the matter to the same Employment Tribunal for further findings on the second question. Mr Mitchell invites us to reverse the Tribunal's finding and make a declaration of unfair constructive dismissal, no potentially fair reason for dismissal having been advanced by the Respondent or alternatively to remit the case to a fresh Tribunal. We have carefully considered the Tribunal's primary findings of fact summarised earlier in this judgment; they require no further elaboration. On those facts we have no hesitation in saying in our collective judgment that the Tribunal's decision was plainly and unarguably wrong if the second question is asked and answered. It is, we think, plain that the treatment of the Claimant by Mr Lawrence as found, regardless of whether that treatment was in part applied to other members of staff, is such as to be likely objectively viewed to destroy the employment relationship.
22. In these circumstances we shall allow the appeal and substitute a finding of constructive unfair dismissal. The question of remedy must be remitted to a fresh Employment Tribunal for determination absent agreement between the parties.