Appeal No. EAT/1025/95

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 6 November 1996

Before
HIS HONOUR JUDGE H J BYRT QC
MR I EZEKIEL
MR E HAMMOND OBE

WOOD AND MOTT LIMITED	APPELLANTS

MR DAVID CARR	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR A BURNS
(of Counsel)
Messrs Ellison & Co
Solicitors
Headgate Court
Head Street
Colchester
Essex
CO1 1NP	
For the Respondent	MR W J ROSS
(Representative)
Citizens Advice Bureau
92 Pier Avenue
Clacton-on-Sea
Essex
CO15 1NJ	

	JUDGE BYRT QC:   This is an appeal against a decision of an Industrial Tribunal sitting at Stratford on 30th June 1995, when they unanimously decided that the applicant now the respondent, had been unfairly dismissed. They also found that he had contributed to this dismissal to the extent of 25%.

	The respondent had been employed by the appellants since 1981. He resigned his position with them on 28th January 1995, and he claims that he was constructively dismissed.

	There were two issues before the tribunal, namely whether the respondent had been constructively dismissed; and second whether that dismissal was unfair.

	The facts as found by the tribunal are as follows: The appellants were a small furniture manufacturing business, employing some 15 people. The directors were John Wood, who primarily had the responsibility of running the factory, and Mr Mott, who is the sales director. There were three workshops involved in this small firm. The one we are concerned with is the polishing shop. In that shop there was the respondent who was the foreman, his position being a polisher, and two others, Mr Frank Kendall and Mr Gene Evers. They had all been working together in that shop for some eight years. Unhappily, by about the middle of 1993, there had built up a degree of antagonism which involved all three men, but principally the respondent and Mr Evers. The directors were aware of this, and they were aware that the aggravation consisted of trivial and petty matters such as the slamming of doors, and disputes about the radio in the workshop and what it should play.  

	In 1993 the directors took some action. They tried to talk some sense into the relationship between these three people, but it had little effect. Since the work from that particular section was not affected, the directors let matters ride. Matters however came to a head on 6th December 1994. There was an exchange of words in the first place between the respondent and Mr Evers. Mr Evers lost his temper and started hitting the respondent. Mr Kendall pulled Mr Evers away, and then took the respondent down to Mr Mott’s office where the latter took a note of what had happened. Thereafter the respondent left the factory premises.

	At that stage Mr Wood had come in, and he together with Mr Mott, saw Mr Evers. Mr Evers admitted hitting the respondent. He said that there had been a build up going on for some time, and on that day he had just snapped and lost control. The directors sent Mr Evers home with a request that he attend again the next day at 10 o’clock.

	Mr Mott and Mr Wood discussed the matter, at the end of which, Mr Mott rang the respondent. The respondent agreed to come in the next day together with his wife to tell him his side of events. That appointment was fixed for 9 o’clock. That was a time before the directors had planned to see Mr Evers at 10 a.m.

	Next day on 7th December 1994, there was a telephone call from the respondent saying that he was too unwell to come in at 9 o’clock, and alternative time was fixed at 5.15 p.m. that evening. 

	Mr Evers saw Mr Mott and Mr Wood at 10 o’clock as arranged. He told them his versions of events. He was told that the directors could not yet let him know what would happen because they had not yet seen the respondent.

	At 5.15 p.m. there was the appointed meeting between the directors, the respondent and his wife. The meeting went on for some hour and a half. There is little information in the Industrial Tribunal’s reasons as to what transpired between the parties at that meeting, but the overall impression the directors gained was that all that the respondent wanted was Mr Evers dismissal.

	On 8th December 1994, the directors again met and spent most of the day discussing what should happen. They took legal advice. They came to the following decisions: that Mr Evers should be given a final written warning, and that the respondent should be given a verbal warning. Mr Wood was assigned to communicate this to the respondent by telephone. He got the respondent’s wife who said the respondent was too ill to come to the telephone to speak. Accordingly the decision of the directors was communicated to him by letter.

	Thereafter the respondent stayed away from work. He was covered by the general practitioner’s sick notes. He drew sick pay. 

	In mid-December 1994, solicitors acting on the respondent’s behalf made certain enquiries about the incident. The appellant directors replied to those enquiries. But not having heard anything further from the respondent, Mr Wood, on 24th January 1995, wrote to the respondent seeking his permission to write to his general practitioner to ascertain when he, the general practitioner, thought that the respondent would be fit enough to return to work.

	The respondent, so the Industrial Tribunal find, had all the way through been concerned as to whether he should resign. He had undoubtedly enjoyed the job he had with the appellants.  He needed the wage. But at the end of the day, and possibly prompted by that letter from Mr Wood, he decided that he had to resign. Accordingly he wrote a letter dated 28th January 1995 to that effect.

	Those are the facts, and the Industrial Tribunal commenced their deliberations by considering the terms of section 55(2)(c) of the Employment Protection (Consolidation) Act 1978. They asked themselves whether the appellants had been guilty of any conduct which could be said to amount to the breach of a fundamental term of the respondent’s contract of employment, so as to entitle him, the respondent, to regard himself thereby released from his contract of employment.

	Next they addressed the appellants’ own disciplinary rules. Rule 6 said that gross misconduct will render employees liable to summary dismissal. Rule 7.3 said that the disciplinary action taken when the facts of the case warranted it, will be determined by the severity of the offence except in the case of gross misconduct where summary dismissal will apply. The Industrial Tribunal found that the appellants had committed a breach of the implied term of mutual confidence and trust, when they failed to apply the disciplinary sanction warranted by the level of misconduct committed by Evers. And they said that breach was fundamental.

	In the result they found the respondent was not assured of his future safety at work. The appellants had a responsibility to provide him with that assurance, and this was reflected in the implied duty that they had to do what they reasonably could to retain their employees mutual confidence and trust. Hence they came to the finding that the appellants were guilty of constructive dismissal. For good measure they threw in at paragraph 5 of the reasons, their view that the way the appellants treated the respondent was contrary to section 57(3).

	They then went on to consider whether the respondent was guilty of contributory conduct. They found that this amounted to 25%. This was due, they said, to the respondent’s failure as a supervisor to control those under him.

	The appellants’ case has been argued by Mr Burns. He says that the tribunal’s approach was flawed from the outset of their considerations in that they seemed to think that the disciplinary rules dictated that the employers were bound to follow gross misconduct with a summary dismissal, and that therefor Mr Evers should have been dismissed.

	He submits that the rules must be the subject to the overall requirements of section 57(3) of the 1978 Act. The tribunal have to consider whether, in the light of all the surrounding circumstances, the disciplinary action taken by the employers was fair. That will depend upon the culpability of the offence committed, in this case the assault. In support of that submission, he referred us to authorities. The first being  Ladbroke Racing v Arnott [1983] IRLR 154 and the second Taylor v Parsons Peebles Nei Bruce Peebles Ltd [1981] IRLR 119. Mr Burns, very fairly and properly, accepted that although he had argued the paramouncy of section 57(3) before the Industrial Tribunal, he had not drawn the attention of the Industrial Tribunal to these two authorities.

	We, as an appellate tribunal, accept this first part of Mr Burn’s case. It would seem that the Industrial Tribunal did not consider the action taken to discipline Mr Evers in the context of section 57(3). If they had considered section 57(3), they never said in what way they did so. I have already alluded to the fact that they referred to that section in one line in paragraph 5 of the reasons. Furthermore, they never seem to have considered the factors which led to the appellants treating Mr Evers offence as mere misconduct. They seemed not to have taken into account such mitigating factors and these were the long and valuable service Mr Evers had given, his contrition, his willingness to apologise to the respondent, and the fact that his assault had to be viewed in the context of 18 months of mutual bickering.

	Mr Burns further submits, and we accept, their error was compounded by the fact that they seem to have substituted their own view of Mr Evers’s conduct for that of the employers. It is an irresistible conclusion that they found that that conduct amounted to gross misconduct. I am referring to a passage in their findings in paragraph 5 where they say:

“We consider that the breach lay in the fact that the Respondents did not apply the disciplinary sanction which one would expect of this level of conduct and which is expressly provided for in the disciplinary procedure, notably paragraph 7.3.”

	They never considered this issue in terms of asking whether the final written warning, given to Mr Evers was within the band of responses of a reasonable employer having regard to the care with which the employer attempted to approach the matter.

	Mr Burns’ third ground related to the Industrial Tribunal’s finding that the implied term relating to confidence and trust had been breached. When relating their findings about the way the employers handled Mr Evers’s offence to the implied term in the respondent’s contract that they, the employers, would conduct themselves in such a way as not to damage employee’s trust and confidence, they, the Industrial Tribunal, failed to take into account the fact that inevitably in the realms of disciplining employees, their relationship with the employee will inevitably be damaged in some degree. Here the way the employers disciplined Mr Evers was always likely to damage their relationship with the respondent, but, says Mr Burns, this does not necessarily mean there has been a breach of the implied term. It is a question whether what they did with Mr Evers, was reasonable and proper. In support of that submission, he refers to the case of Lewis v Motorworld Garages Ltd [1986] ICR 157 and in particular to the judgment of Neill LJ. If, their way of handling the matter was reasonable and proper, well then there would be no breach of the implied term.

	Again, we, as a tribunal, accept that submission. Their application of the Rule 7.3 excluded the Industrial Tribunal from considering whether the employers’ conduct was reasonable and proper so as to obviate there being a breach.

	Mr Burns’ fourth ground was to allege perversity, that the decision the Industrial Tribunal came to was one which no reasonable tribunal could have reached. In arguing that, he raised a number of factors which he says the Industrial Tribunal did or did not take into account. However, we are not prepared to find that the Industrial Tribunal’s decision was perverse. It is not necessary for an Industrial Tribunal to set out all the factors they have taken into account in coming to their conclusion. In this context, it is relevant to say that we do not have the notes of evidence from the Chairman of the Industrial Tribunal. In all the circumstances we are not willing to accept the contentions of perversity.

	Mr Burns has raised a fifth and last ground. He claims that the respondent waived any breach arising from the way in which the employers handled the disciplinary matters at the beginning of December 1994, by delaying his resignation by some seven weeks until the 28th January 1995, during which time he drew sick pay. He relied upon the authority of Western Excavating v Sharp [1978] QB 761, in which Lord Denning MR set out the way in which an employee must accept the employers’ repudiatory breach if he is to rely upon it. The passage to which Mr Burns specifically referred is at page 769. The passage comes under the hearing “the contract test”, and the concluding three sentences are as follows: 

“... 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.”

	Mr Burns further cited the case of Bashir v Brillo Manufacturing Co [1979] IRLR 295, in which it was said that it was only in special circumstances that receipt of sick pay did not amount to a affirmation. The question here is whether all the surrounding circumstances, including the receipt of sick, indicated that the respondent had elected to affirm the contract. 

	We take the view that this is essentially a question of fact. The tribunal’s finding whether or not there has been a waiver is crucial to the whole issue of the repudiatory breach. Unhappily, the Industrial Tribunal made no finding in relation to this matter.

	For all the above reasons, Mr Burns has invited us to allow the appeal and contends we should without sending it back to a differently constituted tribunal, substitute our own finding of a fair dismissal.

	In arguing the case for the respondent, Mr Ross, could not, in our view, deal adequately with the legal issue arising on the authorities of Labroke and the Taylor cases to which we have referred.  He adopted the line that no reasonable tribunal properly directed could on the facts of this case have come to a conclusion other than the one that the tribunal did. He referred us to the general practitioner’s medical reports on the respondent. This showed that, throughout December 1994 and January 1995, the respondent suffered, or was suffering from shock and was in a state of being demoralised as a result of the beating he had received from Mr Evers. This, he said, was severe in its physical and psychological effects. He also drew our attention to the fact that the police had been involved, and they, as a result, had issued a formal caution against Mr Evers. This had serious implications for him were he to misconduct himself in a similar way again.

	Mr Ross also said that the employers’ solution that the respondent should be expected to return again to the old workshop and join his colleagues, Mr Evers and Mr Kendall, as if nothing had happened, was just not realistic. This was a solution of a disciplinary issue which, in his submission, no reasonable employer could have thought satisfactory. If section 57(3) had been considered, the Industrial Tribunal would not have come to any different conclusion. He invited us to dismiss the appeal.

	We indeed were impressed with the factual merits of Mr Ross’s argument. But in our view, they do not tackle the essential legal difficulties that lie in the way of sustaining this particular decision. 

	For the reasons that I have already set out when considering the submissions of Mr Burns, we have decided that this appeal must be allowed. The question thereafter is what we should direct and order.

	The gravamen of our decision is that the factors relevant under section 57(3) have not been properly considered by the Industrial Tribunal. Therefore the facts relating to the requirements of that section have not been properly determined by an Industrial Tribunal, considering the matter from the perspective of the employer concerned. We are not satisfied that the Industrial Tribunal’s finding that the respondent had contributed to his own dismissal to the extent of 25% adequately takes into account all the factors the employer took into account in naming Mr Evers’s conduct a mere act of misconduct.

	We are satisfied that this matter must go back to a differently constituted tribunal for these matters to be determined. Likewise the issue arising on the submission relating to waiver. Sick pay is a powerful determinant but not conclusive in all and every circumstance. These need to be properly evaluated by a tribunal of fact to be determined on the basis of an industrial jury.

	Accordingly, our direction will be that the appeal be allowed, and the case be remitted for a rehearing before a differently constituted tribunal.