THE INDUSTRIAL TRIBUNALS

CASE REF:  215/06

CLAIMANT:			Julie Martin

RESPONDENT:		Openwork Services Limited

DECISION

The unanimous decision of the tribunal is that the claimant was not dismissed.

Constitution of Tribunal:

Chairman:			Mr Palmer

Panel Members:		Mrs Foster
Mrs Wright

Appearances:

The claimant was represented by Mr Robinson, Barrister-at-Law, instructed by Rosemary Connolly, Solicitors, Warrenpoint.

The respondent was represented by Mr Dunlop, Barrister-at Law, instructed by TLT, Solicitors, Bristol.

The Claim

1.	The claimant alleged that she was constructively dismissed by the respondent.

Evidence and documentation

2.	Evidence was given by the claimant, and on her behalf by Mr N T Boyle.  Evidence was given on behalf of the respondent by Mr P Mogford and Mr S Reid.  A bundle of documents was provided and was added to during the course of the hearing.  Written submissions were made by both parties.

THE LAW RELATING TO CONSTRUCTIVE DISMISSAL (INSOFAR AS RELEVANT TO THESE PROCEEDINGS)
	
The Statutory Provisions
	
3.
 	Article 126(1) of the Employment Rights (Northern Ireland) Order 1996 (“the Order”) provides that an employee has the right not to be unfairly dismissed by his/her employer.	
		
4.	Article 140 (1) of the Order provides that Article 126 does not apply to the dismissal of an employee unless the employee has been employed for a period of not less than one year, ending with the effective date of termination of the contract of employment.	
	
5.	Constructive dismissal occurs where an employee terminates his or her contract with the employer in the circumstances set out in Article 127 (1) (c) of the Order.   Where the circumstances set out in that provision occur the employee is regarded as dismissed by his/her employer.	
	
6.	Article 127 (1) (c) of the Order provides as follows:	
	
	“127. — 
(1) For the purposes of this Part [which includes the provisions referred to at paragraphs numbered 3. and 4. above] an employee is dismissed by his employer if…….. 
(c)  The employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct.”		
	
The Case Law	
	
7.	The first matter for the tribunal to determine is whether the claimant was constructively dismissed.  The tribunal does not reach consideration of the “fairness” provisions contained in Article 130 of the Order unless constructive dismissal is established.  This was put in the following way by the EAT in Barratt v Accrington & Rossendale UKEAT/ 0099/06/RN, at Paragraph numbered 14:	
	
	“14.  Thus, where an employee resigns, only if he can be treated as having been dismissed under [Article 127(1)(c) of the Order] does consideration then pass to the well known provisions of [Article 130 of the Order] regarding the determination of the question of whether or not the dismissal is fair or unfair.”		
	
Implied Terms In Contracts Of Employment	
	
8.	As will be seen later in this decision, the test in relation to constructive dismissal is whether the employer significantly breached the contract of employment.  Here, under this heading, we refer to an important implied term in contracts of employment.	
	
9.	In deciding the issue of constructive dismissal consideration is given not only to written terms of the contract of employment, but also to its implied terms.  At paragraph 15 of the Barratt case (referred to above) it is stated:	
	
	“……., the question of whether or not an employee is entitled to terminate his contract without notice falls to be determined according to the law of contract, in particular, according to what the law says regarding what terms are implied in a contract of employment”.		
	
10.	There is an implied term in contracts of employment that the employer will not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee (See Malik v Bank of Credit and Commerce International SA [1997] IRLR 462 and the reference to that case immediately hereafter and to Omilaju at paragraph numbered 12 below).  In Malik Lord Steyn stated at paragraph numbered 50:	
	
	“Earlier, I drew attention to the fact that the implied mutual obligation of trust and confidence applies only where there is ‘no reasonable and proper cause’ for the employer’s conduct and then only if the conduct is calculated to destroy or seriously damage the relationship of trust and confidence.  That circumscribes the potential reach and scope of the obligation.”		
	
Constructive Dismissal	
	
11.	It was established in Western Excavating v Sharp [1978] IRLR 27 that the proper test to be applied in establishing whether constructive dismissal occurred is the “contract test”.  In that case Lord Denning stated at paragraph 15:	
	
	“If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment; or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract; then the employee is entitled to treat himself as discharged from any further performance.  If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed.  The employee is entitled in those circumstances to leave at the instant without giving any notice at all or, alternatively, he may give notice and say he is leaving at the end of the notice.  But the conduct must in either case be sufficiently serious to entitle him to leave at once.  Moreover, he must make up his mind soon after the conduct of which he complains: for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged.  He will be regarded as having elected to affirm the contract.”		
	
12.	In London Borough of Waltham Forest v Omilaju [2005] IRLR 35 (a decision of the Court of Appeal for England and Wales) Dyson LJ stated at Paragraph 14, in relation to constructive dismissal:	
	
	“The following basic propositions of law can be derived from the authorities:
1. The test for constructive dismissal is whether the employer's actions or conduct amounted to a repudiatory breach of the contract of employment: Western Excavating (ECC) Ltd v Sharp [1978] IRLR 27.
2. It is an implied term of any contract of employment that the employer shall not without reasonable and proper cause conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee: see, for example, Malik v Bank of Credit and Commerce International SA [1997] IRLR 462, 464 (Lord Nicholls) and 468 (Lord Steyn).  I shall refer to this as 'the implied term of trust and confidence'.
3. Any breach of the implied term of trust and confidence will amount to a repudiation of the contract see, for example, per Browne-Wilkinson J in Woods v WM Car Services (Peterborough) Ltd [1981] IRLR 347, 350.  The very essence of the breach of the implied term is that it is 'calculated or likely to destroy or seriously damage the relationship' (emphasis added).
4. The test of whether there has been a breach of the implied term of trust and confidence is objective.  As Lord Nicholls said in Malik at p.464, the conduct relied on as constituting the breach must 'impinge on the relationship in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer' (emphasis added). 
5. A relatively minor act may be sufficient to entitle the employee to resign and leave his employment if it is the last straw in a series of incidents.  It is well put at para. [480] in Harvey on Industrial Relations and Employment Law:

'[480] Many of the constructive dismissal cases which arise from the undermining of trust and confidence will involve the employee leaving in response to a course of conduct carried on over a period of time.  The particular incident which causes the employee to leave may in itself be insufficient to justify his taking that action, but when viewed against a background of such incidents it may be considered sufficient by the courts to warrant their treating the resignation as a constructive dismissal.  It may be the 'last straw' which causes the employee to terminate a deteriorating relationship.' 		
	
The Tribunal’s Approach	
	
13.	The tribunal approaches this case on the basis of the statutory provisions and the authorities set out above.  Put briefly (but not comprehensively) the authorities are stating:	
	
(a)	constructive dismissal arises where the employee resigns as a result of the repudiatory conduct of the employee;	
(b)	there is an implied term in contracts of employment that the employer will not engage in conduct calculated or likely to destroy or seriously damage the relationship of trust and confidence that should exist between employee and employer;	
(c)	when considering if this implied term has been breached the conduct is looked at objectively;	
(d)	a series of acts conducted by the employer may cumulatively amount to repudiatory conduct.	

Background Facts Found

14.	As stated later, the claimant commenced her employment with Allied Dunbar Assurance PLC (Allied Dunbar) on 1 May 1995.

15.	In 1998 Allied Dunbar had a Franchise Network.  This was a network of individual and self-employed traders and businesses who sold Allied Dunbar products.

16.	In 2001 the Franchise Network became Zurich Advice Network (ZAN).  Both networks could sell products associated with the business: they were “tied”. In 2001 the claimant was employed by ZFN Management Company Limited (ZFN), which was the service company for ZAN.

17.	On 1 June 2005, ZFN was renamed Openwork Services Limited (Openwork).

18.	No issue arises with regard to continuity of employment.

19.	On 1 June 2005, deregulation occurred in the insurance business.  This meant that Openwork (which was launched to take advantage of deregulation) was permitted to sell other providers’ products; it became a “multi-tied” business.

20.	The parties were engaged in a highly competitive market.  It was necessary for the respondent over the years to devise strategies to maintain its competitiveness and these strategies led to changes to employees’ job descriptions.  In the past the claimant accepted these.  

21.	Allied Dunbar and ZAN were, and Openwork is, engaged in the insurance business.  Products were sold by Allied Dunbar and ZAN through franchisees, namely, individual self-employed traders and businesses, as are Openworks’.

Further Facts Found

General

22.	The claimant commenced employment with Allied Dunbar, on 1 May1995, as Regional Operations Manager.

23.	On 1 August 1999 she was appointed Field Manager, by Allied Dunbar.  The purpose of this role was, “To help financial advisers/trainees to develop their skills in the sales process.”

24.	On 1 April 1999 she was appointed, by Allied Dunbar, as a Sales Manager.  In this post, according to the letter of appointment, she was required “to manage an existing team & recruit new advisers.”

25.	On 1 December 1999, she was promoted to Senior Sales Manager, by Allied Dunbar, and was required, in this post, “to manage an existing team of Franchisees and recruit additional Franchisees.”  In order to be promoted to this position Allied Dunbar had to be satisfied as to the claimant’s credentials in the field of recruitment of franchisees.  These were found to be above the norm in this field.

26.	In January 2000 she was appointed as a Band B Senior Manager.  She was required to recruit franchisees in this post.

The Recruitment Issue

27.	On 1 January 2003 the claimant was appointed as an Account Manager.  Prior to the making of the appointment the company decided, for good reasons, namely, that the business was beginning to falter and that quality issues were coming to the fore, to concentrate most resources on the retention of existing franchisees and the quality of their service.  At the time there were three sales managers in Northern Ireland, namely, the claimant, Mr Stephen Reid and Mr Paul Dalzell.  Mr Dalzell was appointed to a recruitment role covering Northern Ireland and the claimant and Mr Reid appointed as account managers after they successfully completed an assessment for a role in development.  The claimant’s primary role as an Account Manager was to focus on the development of existing franchisees.  A job description accompanied her letter of appointment, dated 24 December 2002, as an Account Manager.  In the job description the purpose of her role was, “…to support the growth of sales from your Accounts”.  “Accounts” were the number of franchisees under her management.  One of her objectives was “To maintain the overall number of sellers.”  This, we consider, was the number of franchisees under her management.  Therefore, it seems to us that, notwithstanding that there was a dedicated recruiter in the field (Mr Dalzell), the claimant was required, in the event of the number of franchisees under her management declining, to recruit new franchisees to maintain her numbers.  The job description also provided that she, “Assist with recruitment by presenting the Business Development Proposition.”  Although the claimant was primarily a developer, there was an element in her job description connected to recruitment.

28.	In July 2003 she was promoted to Area Sales Manager.  Her job description for that post provided that she, “maintain the overall number of sellers” and that she, “assist with recruitment by presenting the Business Development Proposition”.

29.	In March 2004 there were changes to her contract, which she accepted.  A new job description was included.  As far as recruitment is concerned, that job description provided that she, “…support the recruitment & induction of any new ZAN Franchisees.”  At March 2004, therefore, she had still some obligations with regard to recruitment.  The March 2004 job description also provided that she, “Recruit Sales Managers determined by capacity and performance.”  This refers to the recruitment of employees and we do not see this provision as relevant to the issue that we have to determine.  We consider that different skills are required in the recruitment of employees as opposed to the recruitment of franchisees.

30.	We are satisfied that the claimant’s role from April 1999, when she was appointed as a Sales Manager, until 1 January 2003, when she was appointed as an Account Manager, was a twin one, namely, the development of the franchisees allocated to her and the recruitment of new franchisees.  The main purpose of the development role was to increase the skills of existing franchisees. The recruitment one was to increase the number of franchisees in the Allied Dunbar fold.  The overall purpose was to increase the sales of the Allied Dunbar products through existing franchisees and new franchisees.  From 1 January 2003 the claimant maintained some duties (set out above) with regard to recruitment of franchisees.

31.	By letter, dated 22 June 2005, Openwork wrote to the claimant formally confirming her appointment as Regional Sales Manager with them.  The letter stated, “A job accountability statement [a job description] for the RSM [Regional Sales Manager] is enclosed with this letter and changes to the terms and conditions of your employment resulting from your appointment are set out below”.  The changes were in relation to bonus arrangements, eligibility to participate in Openwork’s Equity Participation Scheme, Recognition (which was a scheme to determine the top UK Regional Sales Manager), Business Account Budgets (how overspend would be dealt with) and personal sales.  The claimant’s core earnings of £55,000 per annum remained unchanged.  In the job description for Regional Sales Manager it was provided that the claimant could be required to recruit new franchisees.  She raised objection to this recruitment remit and refused to sign up for it.  In the past she had signed up when job descriptions changed, but not this time.

The claimant did not want did to do recruitment.  There was too much legwork involved.  In the past she had proved herself to be a highly competent recruiter.  Openwork assessed that she would only need a refresher course in recruitment and offered her further training.  She resigned her employment on 28 November 2005, shortly after her grievance appeal was rejected.

32.	The claimant’s basic job was to increase the sales of the respondent’s products.  One of the ways of doing so is through the recruitment of franchisees.  In providing for the recruitment of franchisees in her new job description the claimant was not being asked to carry out a task that she was incapable of doing.  In fact she had been a successful recruiter prior to 1 January 2003 and after that she had still some responsibilities in the franchisee recruitment field.  We are satisfied that there was no pressure to recruit for 2005 and she need not have recruited for the remainder of that year.  There was no bonus for recruitment for that year.  The claimant told us that her earning would be reduced from her previous year’s earnings of £120,000 (which sum included a one-off bonus of £10,000 for agreeing to remain with the employer until 31 March 2005), but she did not quantify what the amount might be.  We are not satisfied that a reduction in earnings would have occurred.  She could have concentrated on development until the end of 2005 without penalty and we are satisfied that if recruitment had been required to be carried out thereafter bonus arrangements would have been put in place to encourage this activity.

33.	With regard to that part of the job description requiring recruitment, we do not consider, taking account of all the above, that Openwork were in fundamental breach of the contract of employment in providing for recruitment.

The Information Issue

34.	The claimant was informed officially by letter, dated 21 February 2005, of changes to the sales management structure when Openwork came into operation.  She was informed that a number of Regional Sales Manager positions would be created and that she was at risk of redundancy.  She was also informed that the Regional Sales Managers would be responsible, inter alia, for recruitment.  On 1 April 2005 she was informed, by email that she was no longer at risk of redundancy.

35.	In an email to personnel, dated 7 March 2005, the claimant stated that she was concerned about the change in role (between her current one and that of Regional Sales Manager) and the contract which “had been discussed lately”.  This is clearly in relation to the proposed recruitment duties referred to in the letter of 21 February 2005.  She did not receive a satisfactory reply, nor did she receive a satisfactory reply to further emails.  However, Mr Mogford sent her an email on 13 June 2005 to say that a letter would probably be in the next day’s post and accepting responsibility for the delay.  The letter referred to was not sent until 22 June 2005.  In this letter Mr Mogford apologised for the delay in issuing the letter.  Mr Martin Spencer, the respondent’s Training and Development Director and the person who chaired the appeal from the initial grievance hearing, wrote to the claimant on 24 November 2005 informing her of the outcome of her appeal.  In that letter Mr Spencer apologised in the following terms, “In some of the responses to your emails and your telephone calls an impression may have been created that you were being ignored or avoided.  I would like to apologise for the tardiness of these responses.”  We are satisfied that the claimant received information at the same time as others and that the information sought by the claimant was not available at the time.  We think that the claimant should have been informed that the information sought by her was unavailable at the time: she was not so informed.

36.	We do not consider that the conduct above was calculated to destroy or seriously damage the relationship of trust and confidence between the parties, nor do we consider that the conduct was likely to destroy or seriously damage the relationship of trust and confidence between them.

The Recruitment and the Information Issue Together

37.	We now consider both the recruitment issue and the lack of information issue.  Taking all the facts into account, we do not consider that the claimant was constructively dismissed.

TUPE

38.	There was a period of confusion as to whether the claimant was to be transferred to Openwork by way of the TUPE regulations.  However, the claimant told us that this played no part in her decision to resign.  We have not, therefore, considered that matter in relation to constructive dismissal.

Dismissal and Offer of a New Contract

39.	In the submissions made by Counsel on behalf of the claimant the proposition is put forward that what occurred in this case is that the respondent, by changing the job description to include recruitment, was dismissing her from her employment and offering her a new contract.  Counsel referred to 2 paragraphs in Harvey on Industrial Relations and Employment Law at D1 403.01 and 222, where it is stated:

“403.01 

Very exceptionally, the repudatory breach is such a substantial departure from the terms of the existing contract that a tribunal is entitled to hold that it constitutes a dismissal and the offer of a new contract.  In such cases there is a dismissal, therefore, even though the employee remains in employment (see para (222) above).”

“[222]
It must be emphasised that because the definition is in terms of termination of the contract, there may be a dismissal in law even where the employee remains in the employment of his employer if he does so pursuant to a new contract.  This will arise in a clear case where the employer in terms brings one contract to an end and offers to re-engage the employee under a new one.  This will prevent any claim for wrongful dismissal arising, but the employee can then claim for unfair dismissal even if he accepts the re-engagement.  Of course, the fact that he secures the alternative employment will be significant in mitigating his loss.  Moreover, according to the EAT in Hogg v Dover College [1990] ICR 39 a court might legitimately treat as dismissal and re-engagement a situation where the employer ostensibly is merely seeking to vary the contract without effecting any dismissal as such at all.  In that case a teacher was told that his full-time employment would be replaced by a part-time post.  He objected to this but nevertheless accepted the new job in order to mitigate his loss.  The EAT (Garland J presiding) held that the change was sufficiently fundamental to constitute a termination by the employer.  Quite when a variation will be so fundamental as to constitute a termination of the contract and offer of re-engagement under a new contract, rather than being a variation of the same continuing contract, is not always easy to determine.  In British and Beningtons Ltd v North Western Cachar Tea Co Ltd [1923] AC 48, the House of Lords held that in order for there to be a termination of the original contract in these circumstances, the change must be such that the new agreement is entirely inconsistent with the old, or at least must go to the very root of the old agreement. It will then be inferred that the parties intended to abrogate or supersede the old contract.  (On the distinction between variation and rescission generally, see Chitty on Contracts (1994) paras 22–025 and 22–026.)  An example of a tribunal finding that a variation amounted to a termination and the offer of a new contract is found in Alcan Extrusions Ltd v Yates [1996] IRLR 327.  The employers unilaterally introduced a rolling shift system to replace a fixed shift system.  The industrial tribunal held, following the Dover College case, that this was one of those exceptional cases where the repudiation of the contract constituted a dismissal.  The EAT (Judge C Smith QC presiding) held that the industrial tribunal was entitled to reach this conclusion.  It expressed the position as follows:
'We entirely agree with counsel for the appellants that it is only where, on an objective construction of the relevant letters or other conduct on the part of an employer, it is plain that an employer must be taken to be saying, “Your former contract has, from this moment, gone” or “Your former contract is being wholly withdrawn from you” that there can be a dismissal under [Article 127 (1) (a) of the Order] other than, of course, in simple cases of direct termination of the contract of employment by such words as “You are sacked”.  Otherwise, we agree with him the case must stand or fall within [Article 127 (1) (c) of the Order].
However, in our judgment, it does not follow from that that very substantial departures by an employer from the terms of an existing contract can only qualify as a potential dismissal under [article 127 (1) (c) of the Order)].  In our judgment, the departure may, in a given case, be so substantial as to amount to the withdrawal of the whole contract.  In our judgment, with respect to him, the learned judge in Hogg was quite correct in saying that whether a letter or letters or other conduct of an employer has such an effect is a matter of degree and, we would hold accordingly, a question of fact for the industrial tribunal to decide.' 
40.	We do not consider on the facts found by us, that the change to the job description is inconsistent with the “old” contract of employment, nor do we consider that the change to include recruitment goes to the root of the “old” contract of employment, nor do we consider that the changes were so substantial as to amount to the withdrawal of the “old” contract.

41.	For the reasons given, the claimant’s claim is, therefore, rejected.

Chairman:

Date and place of hearing:	5 and 6 October 2006, 4, 5 and 7 December 2006, 23 March 2007, 23 May 2007 and 24 May 2007, at Belfast.

Date decision recorded in register and issued to parties.