Appeal No. UKEAT/0128/12/SM
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX
At
the Tribunal
On
19 July 2012
Before
THE
HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)
MS K BILGAN
MRS M V McARTHUR FCIPD
JEFFERSON (COMMERCIAL) LLP APPELLANT
MR
H WESTGATE RESPONDENT
Transcript of Proceedings
JUDGMENT
SUMMARY
UNFAIR DISMISSAL
Reasonableness of dismissal
Reason for dismissal including substantial other reason
Employment Tribunal found that an employer had dismissed an
employee because he had asserted at a meeting (after a long history of lack of
co-operation) that he would not be back to work, and had irretrievably lost
confidence in his employer. In response, the employer considered it too had
lost confidence in the employee, and dismissed him. The Employment Tribunal
did not criticise the employer for any action prior to dismissal, and accepted
that the reason was SOSR of a kind of justifying dismissal. It held it unfair
because it considered that dismissal without a further meeting or further
discussion was necessarily unfair, and that a meeting was required by the ACAS
code, but never stopped to think what a meeting might achieve given that it
found that the loss of confidence was irretrievable, and that the code had
nothing to say in respect of SOSR dismissals. Held that it was a
mistake not to apply the words of s.98(4) ERA, and that in the circumstances a
further hearing could have achieved nothing.
THE HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)
Introduction
1.
The Employment Tribunal at Bury St Edmunds faced an unusually difficult
task because of a muddled and indecisive approach taken by a Claimant to the
circumstances of the determination of his employment with the Appellant. The
parties were agreed at least on one matter. His employment as a surveyor had
ended. But they did not agree the mode of termination, the date, or the
circumstances and the Claimant was uncertain to the point of being
contradictory about that.
2.
Although in his ET1 he began by stating that he did not admit having
resigned in January 2011, by the time he reached paragraph 13, he appeared to
be alleging that he expressly communicated his resignation on 21 January but
then, if that had not been an express communication to the Respondent of his
resignation, that he had impliedly resigned by conduct, but if he had not done
that then over two months later he wrote unequivocally on 4 April 2011 to
resign. His primary case in the ET1 might have been that he was actually
dismissed rather than resigned, though even here he was indecisive. The
dismissal was said to have occurred on either 12 January or 31 January.
3.
By the time it came to submissions at the conclusion of the Tribunal
hearing however, the Claimant had hitched his wagon solely to that of
resignation though he said the dismissal thereby occasioned under section
95(1)(c) of the Employment Rights Act 1996 was a constructive unfair
dismissal. But even then he declined to specify when the constructive
dismissal had occurred and he offered the Tribunal a smorgasbord of choice. Therefore,
the Tribunal itself had to choose what was the occasion of his dismissal by
resignation and what, indeed, was the breach which the Claimant relied upon to
show (adapting the phraseology approved by the Court of Appeal in Tullett
Prebon & BGC [2007] IRLR 420 at para 21) that the employer had
abandoned and altogether refused to perform its side of the bargain.
4.
The Respondent’s case was much simpler. The submission of Mr Tyndall,
solicitor for the Respondent, was there was no constructive dismissal but that
the Respondent took steps to end the relationship on 21 January 2011. It was
that case which the Tribunal accepted. It gave reasons in its decision of 23
November 2011 for concluding that although there had been a dismissal it was for
some other substantial reason (to which we shall come) but that dismissal was
unfair.
The underlying facts
5.
The Claimant was employed from 2002. He was paid by a mixture of salary
and bonus. Such were the employer’s economic circumstances that from December
2007 there were discussions about whether bonus could continue and, if so, at
what level. By September 2010 the employer had had reason to speak to the
Claimant about what were described as performance issues. A week later on 24
September he began a period of sick leave from which he was never to return,
but three days later issued a grievance complaining about a number of aspects
of the behaviour of the Respondent toward him, which he was later to say were
fundamental breaches of its obligations to him.
6.
In its review of the facts it is striking that the Tribunal never
criticised the employer for any of the actions it had taken toward the
Claimant. On a number of occasions it specifically went out of its way to
acquit the employer of any breach. There was nothing, therefore, to show that
the Tribunal took the view that the employer had acted in any way unreasonably
toward the employee.
7.
Whilst sick, the employer sought information from the Claimant’s medical
practitioner, which the Tribunal found that the Claimant had agreed to provide.
Though later the Claimant was to argue that it was a fundamental breach by the
employer of is contract of employment for the employer to contact his general
practitioner to make enquiries as to his health, on the findings of fact that
was precisely what the Claimant had indicated the employer was at liberty to
do. When the employer found that it could not get the information it wished as
to the continuing state of ill health of the Claimant, it restricted the level
of sick pay which it was paying to the Claimant. Pay was discretionary, it
should be emphasised.
8.
It is not difficult to understand how that passage of events, and it may
well be the nature of the illness, led in due course to a meeting on 12 January
2011. The employer wished at that meeting to discuss the Claimant’s state of
health and the grievance letter with him, to deal with the issues which were
outstanding about the Claimant’s performance and the return of the company car
which he had kept. The Claimant gave evidence, see paragraph 66, that he
requested a compromise agreement at that meeting, that is he indicated to the
employer that he wished to leave its service and wished some form of financial
settlement when he did so. That, as it happens, was contrary to his ET1 in
which he had suggested that the compromise agreement suggestion came from his
employer.
9.
It is apparent that the meeting on 12 January was not a happy one. At
paragraph 67 the Tribunal recorded what the employer’s manager said at that
meeting:
“At the end of the meeting you stated that you considered your
relationship with Jeffersons to be broken. This was not our view but I accept
that you cannot be dissuaded from this and on reflection when we consider the
tone and nature of your recent communications, including the tone you adopted
at our meeting, we reluctantly accept that our trust and confidence in you has
totally broken down.”
10.
The letter went on to state:
“We have always wanted you to return to work as a happy fully
performing employee and have tried our best to facilitate that during your time
off sick, despite the above concerns. During the meeting on 12 January you
made it very clear that your return to work is not an option as you view your
relationship with Jeffersons as broken. We must now concur in this view and
accept that your employment relationship with Jeffersons is at an end by reason
of a total breakdown in trust and confidence between the parties. Therefore in
law there is no entitlement to either party to give or receive notice. I can
confirm that for convenience the last day of your employment will be 31 January
2011 […]”
11.
Although it was at one stage contended that there had been a mutually
accepted breakdown of trust and confidence such that the contract of employment
terminated for that reason and not by dismissal, that argument has not been
pursued before us. It is accepted that that letter was the letter of dismissal.
The reason it gave for dismissal was twofold; first that the Claimant was
maintaining that he would not return to work because his trust and confidence
in the employer was shattered, and secondly, that the employers trust and
confidence was reciprocally broken. Accordingly the reason for the dismissal,
as set out in a letter, was a bilateral loss of confidence. The employer was
saying in the letter that the breakdown was irretrievable and that that had
been the view expressed by the Claimant.
12.
Although those extracts from the letter are set out by the Tribunal as
part of the context, the other aspects of the context, as we mentioned in our
opening remarks, were that the Claimant thought and still submits that the
behaviour of the employer toward him in a number of distinct respects was such
that he was entitled to regard his employment at an end and that he did so. No
suggestion was made by the employee to the Tribunal that there had not been a
breakdown of trust and confidence on his part. He did seek to put the blame
for that on the employer but as to the basic fact that there had been such a
breakdown there was no issue, nor was there from the Respondent. The Tribunal
itself did not at any stage indicate that it took the view that there had been
anything other than a mutual complete breakdown of trust and confidence, which
in the concluding words of paragraph 123 it described as an irreparable
breakdown. In context, we do not see that, in the light of the findings of the
Tribunal, as being an overstatement.
13.
Against that background the parties made their submissions. Because of
the way in which the Claimant argued the case (that there was no actual
dismissal but rather conduct by the employer which entitled the Claimant to
treat himself as the victim of a repudiatory breach and therefore to resign) no
question was put to any witness for the Respondent asking why it was that there
was no further discussion after 12 January.
The Tribunal’s conclusions
14.
The Tribunal having set out of the law, and having noted that it had
been referred to the cases of Perkins v St George’s Healthcare NHS Trust
[2005] IRLR 934 CA and Ezsias v North Glamorgan NHS Trust [2011] IRLR 550, EAT, first accepted (see paragraphs 117 and 118) that dismissal had
taken place on the grounds of some other substantial reason. That is a
reference to the fuller phrase, each word of which deserves to be remembered in
section 98(1)(b) of the Employment Rights Act 1996. It is for the employer
to show that the reason or be:
“That it is either a reason falling within subsection (2) or
some other substantial reason of a kind such as to justify the dismissal of an
employee holding the position which the employee held.”
15.
Here, by use of the shorthand “some other substantial reason” the
Tribunal was saying, as we understand it, that the reason was of a kind which
would justify the dismissal of an employee. That left, however, the question
posed by section 98(4):
“Where the employer has fulfilled the requirements of subsection
(1), the determination of the question whether the dismissal is fair or unfair
(having regard to the reason shown by the employer) -
(a) depends on whether in the circumstances (including the size
and administrative resources of the employers undertaking) the employer acted
reasonably or unreasonably in treating it as a sufficient reason for
dismissing the employee, and
(b) shall be determined in accordance with equity and the
substantial merits of the case.”
16.
The section focuses upon the particular circumstances of a particular
case. It does not apply a “one size fits all” approach to any dismissal for
any particular reason. The Tribunal dealt with section 98(4); at paragraph 122
it said:
“The Tribunal finds that this Respondent did not act reasonably
in treating that [the reason identified] as a reason to dismiss the Claimant at
that moment in time.”
17.
That was not so much amplified as restated in paragraph 123, the critical
paragraph in the reasoning in which the Tribunal said this:
“Following the meeting on 12 January the Respondent wrote to the
Claimant and terminated the relationship. There was no further meeting; no
further discussion and that cannot be a fair dismissal. This case can be
distinguished from that of Ezsias. From that case report it is
clear that the Trust had commissioned an independent HR Professional’s Report
into the situation with the Claimant. Following the delivery of the report (of
which the Claimant had a copy) there were then three meetings between the Trust
and the Claimant at which he was represented. Others were threatening to
resign if the Claimant came back. That is a very different situation to the
case before this Tribunal. There were no further meetings with the Claimant at
which he had an opportunity to put forward his position. The Tribunal also
feels that Ezsias is particularly concerned with the Whitley
Council terms on disciplinary procedures which again did not apply on the facts
of the case before this Tribunal. The EAT also urged the Tribunals not to fall
into the trap of accepting some other substantial reason as a cover for
something else. Although it is accepted that the dismissal was for some other
substantial reason, it is the view of this Tribunal that it would be at fault
if it then found that that dismissal was by virtue of applying Ezsais
a fair dismissal when there was no attempt to follow any procedure, or indeed
the ACAS Code in having a further meeting to discuss the irreparable breakdown
of the relationship with the Claimant.”
18.
Mr Neaman, appearing here for the employer, submits that those conclusions
betray an error of law. The sole focus of attention should be the requirements
of section 98(4). The Tribunal in assessing whether those requirements have
been fulfilled should have asked whether what the employer did fell within the
range of reasonable responses. The only criticism it made was the failure to
hold a further meeting. That was premised on the idea that there was an obligation
to follow a procedure of a particular kind when dismissing an employee. That,
he submitted, was an impermissible gloss on section 98(4) where there is
nothing that says that a failure to follow a specific procedure is necessarily
unfair.
19.
He pointed out that the Tribunal had suggested that the ACAS Code should
have been followed. By the ACAS Code the Tribunal could only have meant the
ACAS Code of 2009 which is headed “Disciplinary and Grievance Procedures”. As
the foreword makes clear, it is designed for disciplinary and grievance
procedures, although, as Mr Shaw pointed out, it might be that it is capable of
extending beyond strict disciplinary and grievance situations because of the
wording of the first bullet point in paragraph 1:
“Disciplinary situations include misconduct and/or poor
performance.”
20.
The word “include” might suggest that misconduct and poor performance is
not a conclusive list. Be that as it may, there is nothing in our view to
suggest that the Code of Practice had anything in particular to say in respect
of the situation which the Tribunal identified here. That situation was one in
which the employee had expressed an unshakeable determination not to return to
work. He had expressed an irretrievable breakdown of the relationship with his
employer. The Tribunal had concluded that the breakdown so far as the employer
was concerned was irreparable.
21.
Accordingly, the Code has nothing to say of relevance to the present
circumstances, but if it did, it should be worth noting, in respect of the
suggestion that should here have been a further meeting or meetings, that the
code itself appears to envisage one meeting to discuss the problem
followed by an appeal if necessary as being a sufficient procedure. The
response by Mr Shaw, appearing as he did below for the Claimant, was that the
arguments of the Appellant demonstrated a confusion between section 98(4) and a
fair procedure. He rightly submitted that it was not sufficient to justify a
dismissal that a reason for it be identified. The employer had to act
reasonably in treating that as a reason which did indeed justify the dismissal
which followed. That he viewed as procedure.
22.
He could not, however, answer here what it was that a further meeting or
further discussion would have had to offer in the particular circumstances of
the case. If, indeed as the Tribunal found, the breakdown was beyond repair
then it might be thought that there was nothing that a meeting could sensibly
add. Nor could he assist with the rather curious interpretation in paragraph
123 of the reference to urging tribunals not to fall into a trap of accepting
some other substantial reason as a cover for something else followed by the
word “although” which suggests that that consideration had some impact upon the
Tribunal’s reasoning though precisely why it should is not made clear.
Discussion & conclusion
23.
The first question for us is to decide what the Tribunal were saying in paragraph
123 was the reason for its conclusion that the employer had not acted
reasonably. We accept that it was saying that it was unreasonable not to have
a further meeting or further discussion. Mr Shaw points out that discussion
falls short of meeting but does involve some constructive communication between
the parties.
24.
The need for a further meeting and why a further meeting should be an
essential aspect of fairness in the present case is, however, not spelt out by
the Tribunal. By using the words: “There was no further meeting, no further
discussion and that cannot be a fair dismissal”, the Tribunal appears to be
stating a proposition of law. If so it was wrong to do so. The law is
contained in section 98(4). Section 98(4) does in terms require a given or any
procedure involving further meetings. That is not to say that in most contexts
a decision would not be unfair if there were no such meetings. It is plain
that what is unreasonable or reasonable may often depend upon such a meeting or
meetings, but as we have already pointed out, all depends upon the particular
circumstances of the case to which section 98 makes explicit reference.
25.
As it was put during the argument the expression of opinion here looks
rather like a knee-jerk reaction by a Tribunal. Here it was requisite that the
Tribunal should have considered what purpose in fairness such a further meeting
would have had. The Tribunal does not explain that. It says that there were
no further meetings with the Claimant:
“At which he had an opportunity to put forward his position.”
But his position had already been to state that he would not
return to work and that he had totally lost confidence in the employer. The
Judgment is to the effect that there had been a mutual and irreparable
breakdown of confidence. To have a further meeting to restate that position,
which on the findings of fact would be all it could achieve, would be to
require the parties to go through a meaningless charade simply for the sake of
it. It is no part of a fair procedure to be conducted for the sake of it if
the procedure is truly pointless.
26.
The Tribunal went on to suggest by what it said about the Ezsias
case that it was taking an absolute approach to the need for a “procedure”
without which there could not, as a proposition of principle, be a fair
dismissal.
“Although it is accepted that the dismissal was for some other
substantial reason, it is the view of this Tribunal that it would be at fault
if it then found that that dismissal was by virtue of applying Ezsais
a fair dismissal when there was no attempt to follow any procedure, or indeed
the ACAS Code[…]”
27.
The reference to procedure there is not as we see it in context a
reference to the approach to the reasonableness of the decision identified for
the dismissal. It is referring to something of a formal nature such as would
be applied in most employments if what was in issue was a disciplinary offence
or an issue of capability. Here, however, as Mr Neaman observes misconduct was
not the reason for the dismissal, although disciplinary proceedings were
anticipated if the Claimant should return to work. They had not even begun and
therefore obviously were not concluded, and there is no suggestion that the
dismissal took place because they were anticipated in the offing.
28.
This was, therefore, simply a case in which there had been a recognised
complete breakdown of trust and confidence between the parties. We cannot for
ourselves see, and the Tribunal does not say anything to enlighten us, what the
purpose of having a further meeting in these particular circumstances would be;
Mr Shaw cannot help. We would simply emphasise that section 98(4) has to be
applied sensibly and with regard to the substance of the case. It should never
result in a Tribunal applying a standard approach to a case, certainly without
considering whether that case fully and properly justifies such an approach.
It invites the Tribunal to consider the circumstances of each case, which
inevitably differ.
29.
There is much force in Mr Neaman’s approach to Ezsias
which is that he submitted it was relevant before the Tribunal for one matter
only, which was that a breakdown in trust and confidence was capable of being
some other substantial reason justifying dismissal, but the Tribunal referred
to it at paragraph 123 in order to distinguish it. Part of Mr Neaman’s
argument, on paper, was that the distinction ignored the main points of difference.
30.
For us it seems that the logic which the Tribunal adopted was probably
this. It recorded the submission made to it by the Respondent as being that Ezsias
not only went to the proposition we have already drawn from it, but also that
there was no requirement as such to go through a disciplinary hearing where a
dismissal was for some other substantial reason which consisted of a loss of
trust and confidence. As a matter of factual history, that is so in the Ezsias
case: much of the debate was about whether proceedings by way of disciplinary
hearings were required by the particular contractual arrangements under which
Mr Ezsias worked. Since the dismissal was for some other substantial reason,
and not by reason of misconduct, there was no requirement for those proceedings
to be held.
31.
It is a matter of fact that in the Ezsias case the
Tribunal did not find the dismissal unfair because there was no such hearing,
but it must be remembered that cases should be cited for the principle they
contain and not merely as factual illustrations of what might be supposed to be
somewhat similar circumstances. Here, as the Tribunal said, the circumstances
are quite different even though there is room for disagreement as to the
precise nature of those differences. However, Ezsias does
reflect, at least to that extent, that there is no absolute rule that a hearing
is required in each and every circumstance where a reason for dismissal is
identified, and as we have indicated, the Tribunal appeared to be approaching
this case as if one were without asking whether any further hearing might have
added anything of value.
32.
It follows that since we consider the Tribunal’s approach to be in error
of law in the respect we have identified, the appeal must be allowed. Mr Shaw
rightly and realistically conceded that if we allowed the appeal that we should
ourselves should substitute a finding that the dismissal was fair in
substitution for the finding of unfairness which the Tribunal reached, and we
do.
33.
It may be that in the outcome it makes little difference to the parties
given a heavy hint which the Tribunal made toward the conclusion of his
Judgment as to the likely low level or lack of compensation when that came to
be assessed. It follows, however, from our decision that compensation will not
be an issue any longer in this case.
34.
We express our gratitude to the parties for the focus and succinctness
of their submissions and their respective sides.
