Appeal No. EAT/787/92

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 1 September 1994

	Before

	THE HONOURABLE MR JUSTICE TUCKER

	MR J H GALBRAITH CB

	MR S M SPRINGER MBE

MR A IRVING	APPELLANT

THWAITE HOLME KITCHENS	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR N GRUNDY
(Of Counsel)
	Messrs Burnetts
	6 Victoria Place
	Carlisle
	CA1 1GS

For the Respondents	APPEARING IN PERSON

	MR JUSTICE TUCKER:  This is an appeal by the employee, Mr A.W. Irving, against the decision of a majority of the members of an Industrial Tribunal held at Carlisle on 14 July 1992, that the Appellant was not dismissed.  

	The appeal has been brought on questions of law.  The Appellant, Mr Irving has been represented before us by counsel, Mr Grundy.  The Respondent, Thwaite Holme Kitchens have not been represented before us by counsel or solicitors, but their partners have attended the hearing and one of them, Mr Stephen Postlethwaite, has addressed us.

	As will be clear, the complaint by the Appellant, as set out in his IT1, the Originating Application, was that he had been dismissed by his employers.  That was coupled with another complaint which had been made by him claiming that wages had been wrongly deducted.  Those complaints were consolidated and were heard together before the Tribunal.  The Tribunal reached a unanimous decision that the Applicant's complaint under Section 5 of the Wages Act 1986 was well founded, but by a majority, they decided that the Applicant had not been dismissed.

	The Respondents manufacture and fit kitchen units.  The Appellant had been employed by them as a joiner.  His employment started in July 1984.  In 1988 he became dissatisfied with the amount of wages being paid to him and he discussed this with Mr Stephen Postlethwaite, the senior partner.  It was agreed, on 17 August 1988, that the Appellant should receive a productivity bonus.  We need not go into the details as to how that was calculated.  In addition, it was agreed that the Appellant should receive an annual increase in his wages on 1 January of each year, commencing on 1 January 1989.  That increase was to be fixed in accordance with the increase paid to employees in the building industry.  For some time the bonuses were duly paid each month in accordance with the agreement and the wages too were increased by the agreed percentage.  But in February 1991, Mr Stephen Postlethwaite informed the Appellant that they were stopping his bonuses.  The Appellant said that he would not accept this.  He pointed out that it was a contractual agreement and that they were obliged to pay it, so Mr Postlethwaite continued to pay the bonus for the time being until 31 October 1991, but in November, the following month, that is, Mr Postlethwaite told the Appellant that he was not going to pay any more bonuses.

	In addressing us, Mr Postlethwaite explained that these restrictions as to bonuses and as will transpire as to wages also, were not directed at the Appellant individually, they applied to everyone in the workforce and to the partners themselves as well.  No doubt it arose as a result of the recessionary situation.  

	On 1 January 1992, the Appellant was entitled to the increase in wages, as had been agreed, but he was not paid that increase.  He was paid the same wage as before.  Again, there was a discussion about it.  The Appellant did not accept the reduction in wages.  Mr Postlethwaite told him the could not afford to pay more.  There was an argument about it and as a result of that non-payment of wages and no doubt non-payment of bonuses as well, the Appellant commenced his first application, that was on 14 February 1992.  As has been observed, that application succeeded when it came before the Industrial Tribunal.

	It is submitted to us, and we accept as being correct, that there was no question of waiver by the Appellant of these breaches of his Contract of Employment.  There was a contractual entitlement to be paid bonuses and to be paid an increase in wage each year.  The failure to pay those sums therefore amounted as we agree, to continuing breaches of the Contract of Employment.

	In dealing with that matter, the Tribunal found, as they set out in paragraph 12 of their reasons this:

"The Respondent was in breach of the Applicant's Contract of Employment when it failed to pay a full bonus in November and did not pay any bonus thereafter.  It was in breach again at the beginning of January when it failed to pay to the Applicant the agreed increase.  The Applicant could have walked out and have regarded himself as having been constructively dismissed on either of these occasions, or indeed, on any subsequent occasion when the Respondent did not pay him the proper amount.  The Applicant did not leave as a result of the failure to pay his proper wages, but he instituted the original proceedings".

	And so, notwithstanding his dissatisfaction and the institution of proceedings for the recovery of monies unpaid, the Appellant continued in employment.  

	There had meanwhile been another development of some significance.  At first, it would have not seemed to have affected the working relationship between the parties at all, but unhappily it did so.  It was this.  Early in 1991, the Respondent decided to extend their premises.  They wished to expand their business.  They erected extractor towers to their premises.  The Appellant and his family lived nearby.  They objected to the extension of the premises on amenity grounds.  Nevertheless, planning permission was obtained and the extension was constructed, but it resulted, unhappily, in hostility between the Appellant and his family on the one hand, and the Postlethwaite family on the other.

	As the Tribunal found, as a result of the Applicant's objections the Irving and Postlethwaite families ceased to be friends.  When the Appellant was at work conversation between him and the Postlethwaites was reduced to a minimum, and therefore it had some effect as can now be seen on the working relationship between the parties.

	Matters came to a head on 11 March 1992.  On the morning of that day Mr Ian Postlethwaite who acts as shop foreman criticised the Appellant for having failed to sharpen a tool used for making pellets or plugs which are used to cover screw holes in the kitchen units.  

	There was a further incident which occurred the same afternoon.  It related to the Appellant's failure to fix a base in a drawer which he had made.  He was told to fix it.  The Appellant became extremely angry.  He shouted at Mr Postlethwaite to stop "bitching" at him and a heated argument ensued in which both parties shouted at each other.  This ended by the Appellant walking out and telling Mr Postlethwaite that he had been constructively dismissed.  
	In paragraph 13 of their Reasons the Tribunal set out, very cogently, if may say so, the matters which they had to consider.  They say this:

"When he [referring to the Appellant] left he did not do so because he had not been paid although this was a contributory factor, but because he considered the Respondent's conduct was intolerable and the criticism of him on that day was the last straw".

	They went on to find that there was an unquestionable hostility towards the Applicant, but if the Appellant, as he now is, they found that if the Respondent had fallen upon hard times it might well have discussed with the Appellant the question of a reduction in his bonus or his increase in salary, but as the Tribunal appear to find the Respondent did not do so.  They found that the refusal to pay a bonus and the refusal to increase the Appellant's salary were influenced by his activities in opposing plans for the expansion.  Similarly, there was some argument about the return of a key to the premises which the Tribunal found showed change in the Respondent's attitude towards the Appellant, and they found that the Appellant was entitled to feel aggrieved.  

	They then went on to say this:

"However the question we have to determine is whether he is entitled to terminate his contract on 11 March 1992 without notice.  It is here that we differ.  We all agree that the Respondent's complaint that the Applicant had failed to sharpen a tool was a proper complaint.  We similarly agree that the Respondent was entitled to instruct the Applicant to fix the bottom of the drawer.  Where we differ is in relation to what happened after the instruction was given.  The majority consider that as the instruction was a proper one the Applicant was not entitled to object in the way he did.  Both the Applicant and Mr Ian Postlethwaite were young men.  It was unfortunate that they should have entered into an argument and shouted at each other, but even having regard to what had gone on before this did not entitle the Applicant to walk out without notice and terminate his contract.  He was therefore not dismissed.  The other member takes a different view.  The Respondent had acted unreasonably for a long time in failing to pay the bonus, in refusing to pay the agreed increase and in its sulky attitude towards the Applicant.  The way in which Mr Postlethwaite reacted by shouting when he refused to obey an instruction even though it was a legitimate one was unreasonable.  This was the last straw.  The Applicant was entitled to walk out and he was dismissed.  In view of the finding of the majority the Applicant's application fails".

	Mr Grundy has made most helpful submissions before us.  He submits that the starting point of course, as is correct, is the Tribunal's finding of the facts.  Where he complains is that he submits that the Tribunal did not apply the correct questions of law to the facts which they found.  He submitted that there were three aspects of the Respondent's conduct which the Tribunal ought to have examined.  First, their failure to pay sufficient wages.  Second, their failure to pay bonuses and third, the unquestionable hostility which made the Appellant entitled to feel aggrieved.  What Mr Grundy submits the Tribunal should have asked, but did not ask themselves was:

"Did those individual acts of conduct amount to a repudiatory breach of contract which entitled the Appellant to leave".

	Moreover, he says that if you look at the individual acts of conduct, there was a clear repudiation of the terms of the Contract of Employment which would have entitled Mr Irving to leave at any time, and indeed with that the Tribunal agree in the express finding to which I have already referred.  

	Moreover, Mr Grundy submits that if you look at the acts cumulatively, the answer must be the same, but he submits the Tribunal's conclusion stems from their consideration of the "last straw" episode which occurred on 11 March.  They were in error submits Mr Grundy in saying that even having regard to what had gone on before this did not entitle the Appellant to walk out without notice and terminate his contract.  

	Mr Grundy has cited to us authority which does not appear to have been placed, so far as we can see, before the Industrial Tribunal and there is certainly no reference to it in the Reasons.  That authority is the case of Lewis  v  Motorworld Garages Ltd [1986] ICR page 157 and it is the decision of the Court of Appeal on appeal from the Employment Appeal Tribunal.  It is a case where the facts were that in November and December 1981, the employer in breach of its contract with the employee, demoted him and adversely altered his pay structure.  The employee elected to affirm the contract and that is an important distinction rightly submits Mr Grundy, between that case and the present, and I return to the facts of Lewis that over a period of eight months the employer persistently criticised the employee and threatened him with dismissal if his performance did not improve.  

	In allowing the appeal against the decision of the Employment Appeal Tribunal, all three members of the Court of Appeal gave judgments.  Mr Grundy has referred us in particular to passages in the judgment of Lord Justice Glidewell starting at page 169 of the report, and in particular to a passage between letters F and G on that page where Lord Justice Glidewell said this:

"The breach of this implied obligation of trust and confidence may consist of a series of actions on the part of the employer which cumulatively amount to a breach of the term, though each individual incident may not do so.  In particular in such a case the last action of the employer which leads to the employee leaving need not itself be a breach of contract;  the question is does the cumulative series of acts taken together amount to a breach of the implied term?  (See Woods  v W. M. Car Services (Peterborough) Ltd [1981] ICR 666).  This is the 'last straw' situation. 

	And again at page 170 between letters A and C, Lord Justice Glidewell continues:

"This case raises another issue of principle which so far as I can ascertain, has not yet been considered by this court.  If the employer is in breach of an express term of a contract of employment, of such seriousness that the employee would be justified in leaving and claiming constructive dismissal, but the employee does not leave and accepts the altered terms of employment; and if subsequently a series of actions by the employer might constitute together a breach of the implied obligation of trust and confidence; is the employee then entitled to treat the original action by the employer which was a breach of the express terms of the contract as a part - the start - of the series of actions which, taken together with the employer's other actions, might cumulatively amount to a breach of the implied terms?  In my judgment the answer to this question is clearly 'yes'.

	We note what Mr Stephen Postlethwaite has told us.  I have referred to some of it already.  He has said that the wages and bonus restrictions were applied throughout, that the hostility did not go one way only and that the question of trust and confidence worked both ways.  He points out that no one else objected to the restrictions which had been made.  Nevertheless, it is clear to us and as the Tribunal found, the Appellant certainly did so.  

	We take the view that had the authority to which we refer been before the Tribunal and had they addressed the proper question to themselves as posed by Mr Grundy, the majority must have answered that question in a different way.  They would have answered it as the single member did.  The question is, did the individual acts of conduct amount to a repudiatory breach of contract which entitled the Appellant to leave?  The answer to that is clearly yes, as the Tribunal themselves found.  Moreover, not only did the individual acts amount to a repudiatory breach of contract but the acts taken cumulatively certainly did so, and to those acts must be added the final matter which although itself not amounting to a breach operated as the "final or last straw".  Had those questions been addressed and answered as they should have been, the Tribunal must, we feel, have come to a different conclusion.

	We find that the Tribunal came to a wrong decision because they posed the wrong question of law and did not pose the right question of law for themselves.  Accordingly, we allow this appeal.

	We find that the Applicant was dismissed and we remit the matter to an Industrial Tribunal on the question of remedies.