Appeal No.	EAT/1118/97

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 10 July 1998

Before
HIS HONOUR JUDGE J HULL QC
MR L D COWAN
MR P R A JACQUES CBE

MR D DONCASTER	APPELLANT

POWER PRODUCTS INTERNATIONAL LTD	RESPONDENTS

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	MR S BRINDLE
(Representative)
Employment Law Unit
Freepost c 2051
Tonbridge
Kent
TN11 4BX	

	JUDGE J HULL QC:	This is an appeal to us by Mr Donald Melville Doncaster, a gentleman now aged 64, who was employed as sales manager by the Respondents, Power Products International Ltd.   The employers’ premises are at Edenbridge and the managing director is a Mr William Chettle.

	Mr Doncaster’s employment with the Respondents began as long ago as 9 August 1954.   He was at first a product manager and, in due course, after considerable time and a takeover of the company - which is not a large one, something like 20 employees - in which Power Products International, which had been American-owned, became owned by a company in which Mr Chettle had a controlling interest, or was very much a moving spirit, Mr Chettle was managing director and Mr Doncaster became sales manager.   Unhappily, his performance in that role became less satisfactory to Mr Chettle - one can perhaps imagine the situation fairly clearly, in which Mr Chettle had ambitions for the company and his sales manager was not entirely adequate for the duties which he wished him to discharge - and, eventually, in the space of 15 months or so, Mr Chettle gave two final written warnings, which were concerned with his perception that Mr Doncaster was not doing his duty as Mr Chettle hoped he would.

	It can be summed up by saying, apparently (looking at it from the employers’ point of view) that Mr Doncaster was perceived as an absolutely first class technical man, an innovator, a scientist, but as a salesman he was found wanting and he lacked the leadership qualities for his sales force, and powers of organisation;  that sort of complaint was made.   Whether properly or not, of course, is not for us to say.

	After these warnings Mr Doncaster resigned, and he said that he did so because the behaviour of the employers was a breach of contract which went to the root of the contract.   He complained to the Industrial Tribunal on 20 February 1997 that the had been unfairly dismissed, that there had been a breach of contract in dismissing him and he wanted a compensation.   The employers, by their IT3, their answer, said that he had not been dismissed. 

The Industrial Tribunal sat at Ashford, Kent, under the Chairmanship of Mr Davis, to hear the complaint on 4 July 1997.   Their Extended Reasons are with our papers.   They record the allegation that this was a case of constructive dismissal.   They record the two warnings to which I have referred.  The letter of 6 January 1997, which was the immediate cause of the resignation, said the Applicant, went as follows:

“Regretfully I now have yet another occasion to write to you regards your lack of ability to follow through projects which I have asked of you...
We just cannot go in this manner, my patience and tolerance is finally exhausted.   It is now 18 months since I last issued you with a final written warning and this is yet another example of your inability as Sales Manager.   I must now issue what is definitely the last and final written warning that you will receive.”

	Then Mr Doncaster resigned.   He wrote as follows:

“It is with regret that due to your persistent harassment and intimidating attitude which is affecting my health I have reluctantly decided to take early retirement.
I am therefore advising you officially that I shall retire on the 30th May 1997.”

	His case, recorded by the Tribunal, was as follows:

“3(19)  The Applicant agreed in evidence that nothing particular had happened between the end of June 1995 and 6 January 1997, but maintained that it was a general build up over all the years...”
	That was his case.
“...and that the letter of 6 January 1997 was the final straw.”

	So the Tribunal evidently considered the picture going back a considerable way and they went into the general background, some of which I have referred to.   They record what happened after that, in which Mr Chettle and the Applicant endeavoured to reach a friendly accommodation with regard to resignation.   They criticise the Applicant for the way in which he handled that:  that does not seem to us to be directly material to our consideration.   They say this:

“4   Mr Pritchard, on behalf of the Respondent, submitted that the Applicant had referred to a number of incidents over a long period of time and relied on the “last straw doctrine”.”

	Having considered the rest of the submissions for the Respondent they considered the submissions made for the Applicant and the authorities which were cited to them.   They refer to Section 95(1)(c) of the Employment Rights Act 1996.   They were quite right to do that.   Then they went on, again saying that the Applicant’s case was that this was the “last straw”.   They say the mere issuing of two final warnings in the space of one and half years they do not find oppressive, of itself, or in any way to be a breach of contract.

“11   In this case, the Applicant complains of oppressive conduct by Mr Chettle, and in order to succeed in his claim that he lost trust and confidence in his employer, the Applicant has to show that such oppressive conduct as is alleged and the final warnings, were unjustifiable.”

	Mr Brindle, who has appeared before us today, to whom we are grateful, says “there they were applying the wrong test.   It was not a question of whether the warnings were justifiable or unjustifiable.   That was nothing to do with the Tribunal.   What they should have decided was whether those warnings amounted to a breach of contract.”   But it seems to us that is not a maintainable submission.   An employer is perfectly entitled, in good faith, to warn an employee, or give him a final warning, if he considers that there is a serious matter which may lead to a dismissal.   He may or may not be right to do so, looking at it objectively.   The employer may be mistaken.   But he is within his rights, as long as he acts in good faith, to give such a warning.   Therefore the Tribunal were right to look and see whether there was justification for the warning.   If there was not they might have to go on and say, “these warnings were given without any justification and we must now see whether they were in fact given in good faith or whether this was, as the Applicant says, a campaign of harassment.”   

	So they were right to look, first and foremost, to see whether this conduct by the employer - ostensibly, perfectly justifiable and without any possibility of criticism, indeed, recognising the continuing existence of the contract and the hope that it would continue if only the employee would mend his ways - whether in fact it was not being carried on with justice and, if it were not, then was it being conducted in bad faith?   So we reject that criticism of the Tribunal.

	The Tribunal go on to say as follows:

“12   It is recognised in law that unjustifiable discipline can give rise to a breach by the employer.   However, in this case, we are perfectly satisfied on the facts that Mr Chettle was justified in acting as he did towards the Applicant.   On the facts, there are clear reasons for Mr Chettle’s actions, and his concerns are confirmed by the independent consultant’s report, and also to some extent by the evidence of the Applicant’s own witness, Mr Russell.   We are perfectly satisfied that the actions taken by Mr Chettle were designed to motivate and encourage his Sales Manager and were not in any way oppressive or intimidating.   They were certainly not sufficient to justify the Applicant resigning from his employment and claiming a breach of the implied term of trust and confidence.”

	That, as we pointed out in argument, is a shortening of the true position.   The true position is that there is an implied term of a contract that neither party will do anything in breach of contract which is calculated to destroy the relationship of trust and confidence between employer and employee.   But of course such a relationship may break down for all sorts of reasons.   The employee may quite legitimately assert, perhaps with a threat of industrial action, his interests in a pay rise.   The employer may, in what he perceives as his own interest, insist on all sorts of terms with regard to discipline which the employee finds very objectionable.   Those matters do not by themselves, even if there is a breakdown of confidence and trust, enable either party to say that the other has brought the contract to an end.   

	The Tribunal  say:

“14   We find that there was no breach of contract by the Respondent.   The Applicant resigned voluntarily.   There was no constructive dismissal..”

	Mr Brindle makes a number of points, as I say, we are grateful to him.   He says “this so-called independent expert, who gave the independent expert’s report was, in fact, a person who was friendly with Mr Chettle and had no experience of marketing matters.”   That was all ventilated at the hearing.   The Tribunal must have had that in mind, if that was an indication of bad faith, or an indication that Mr Chettle was, so to speak, “stitching-up” his employee, the Tribunal would most certainly have considered that, and they found that it was an independent expert’s report.   They were entitled to say that.   They said it was not of great importance, it was not a major matter, but it was of some help to them in deciding about Mr Chettle’s conduct.

	Having considered all these matters we would say that the case which is made in the skeleton argument, that the Tribunal should have concentrated on this final act is, perhaps, rather hard to square with the case for the Applicant before the Tribunal;  that is was a case of the “last straw”.   However that may be, we are satisfied that this Tribunal did its duty properly, that there is no error of law whatever disclosed either by the criticisms which are made of their decision or by the decision itself.   Therefore, since in our view there is no fairly arguable point of law, we must now dismiss the appeal instead of allowing it to go to a full hearing and we so order.