Appeal No.	EAT/1207/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 9 February 2000
Judgment delivered on 7 March 2000

Before
THE HONOURABLE MR JUSTICE CHARLES
MR D A C LAMBERT
MRS D M PALMER

(1) AGORA PROMOTIONS LTD

(2) FRANKICE (GOLDERS GREEN) LTD	APPELLANTS

MR K FARROW	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellants	MR J MILLER
(of Counsel)
Messrs Ray Nixon Brown
Solicitors
102 Queensway
Bletchley
Milton Keynes
MK2 2RX	

MR JUSTICE CHARLES:	This appeal comes before us by way of Preliminary Hearing.  Our function is therefore to consider whether or not the Notice of Appeal raises points of law that are reasonably arguable.  At the end of the oral hearing we indicated that in our judgment the Notice of Appeal did not raise such points and therefore that we would dismiss the appeal.  We indicated that we would give our reasons in writing.

1	The parties to the proceedings before the Employment Tribunal were a Mr Farrow (the Applicant before the Employment Tribunal and the Respondent before us) Agora Promotions Ltd and Frankice (Golders Green) Ltd, the Respondents before the Employment Tribunal and the Appellants before us.  

2	The appeal is against a decision of an Employment Tribunal sitting at Birmingham, the Extended Reasons for which were sent to the parties on 16 August 1999.  The decision of the Employment Tribunal was that the Applicant (Mr Farrow) was unfairly dismissed and was dismissed in breach of contract.  Paragraph 1 of the Extended Reasons gives the background and the overall nature of the dispute.  It is in the following terms:

“1.  The applicant was employed as the manager at a shop known as the ‘Amusement Centre’ in Central Birmingham.  In October 1998 the shares in the company which owned the shop, Frankice Ltd, were purchased by Ablethird Ltd, one of a group of companies owned principally by Mr A.S. Mann.  Following the purchase various changes were introduced at the shop which affected the manner in which the shop was run, including the hours which Mr Farrow was required to work and his status at the shop.  Mr Farrow resigned by letter of 26 February 1999 claiming that the changes amounted to a constructive dismissal.  He also claims he was entitled to receive payment in lieu of five weeks’ holiday which had not been taken.”

3	Although the shares in Frankice (Golders Green) Ltd had been purchased by Ablethird Ltd, the day to day running of the amusement centre in Birmingham was dealt with through another company owned by Mr Mann, namely Agora Promotions Ltd (see paragraph 3.5 of the Extended Reasons).

4	The Applicant, Mr Farrow, called as a witness a Mr Frankel who was the former Managing Director of Frankice (Golders Green) Ltd.  It was found by the Employment Tribunal that the Applicant, Mr Farrow, had not been given a written contract of employment by Frankice (Golders Green) Ltd before or after the share acquisition in October 1998 (see paragraph 3.3 of the Extended Reasons).

5	The Appellants asserted before the Employment Tribunal that the changes that were introduced at the shop and affected the manner in which the shop was run were introduced for sound business reasons.  Mr Farrow, the Applicant, claimed that the changes which the Appellants imposed, or sought to impose, upon him brought about fundamental changes in his status and terms of employment which entitled him to put an end to the contract and maintain that he had been constructively dismissed.

6	It follows that the first and an essential issue between the parties before the Employment Tribunal was whether the Appellants, as they maintained, could impose the changes on Mr Farrow.  It was the position of the Appellants that Mr Farrow was not a Manager (see paragraph 3.7 of the Extended Reasons) and that the flexibility in Mr Farrow’s contract of employment meant that the Appellants could impose the changes that were resisted by Mr Farrow and that they had not really affected his contract of employment (see paragraph 5.2 of the Extended Reasons).  

7	A reading of the Extended Reasons as a whole shows that the Employment Tribunal roundly rejected these contentions of the Appellants as to the terms of Mr Farrow’s oral contract and the status that it gave him.  

8	Further, as appears from paragraph 3.11 of the Extended Reasons the Employment Tribunal rejected the evidence of a number of witnesses called by the Appellants which sought to discredit Mr Farrow’s performance of his duties and suggest that he had been intent, from an early stage following the share acquisition, to leave the business, provided that he received an adequate financial pay-out.  It is clear from paragraph 3.11 (and the Extended Reasons read as a whole) that there was some hostility between the witnesses on both sides and notwithstanding some criticism of the Applicant (see paragraph 3.9 of the Extended Reasons) the Employment Tribunal, for the reasons they give, preferred the evidence of Mr Farrow and his witnesses.

9	The Employment Tribunal found that the Applicant, Mr Farrow, was a Manager and that the changes which the Appellants imposed (or sought to impose) upon him constituted significant and fundamental changes in his status and terms of employment.  Accordingly the Employment Tribunal found that the Applicant had been constructively dismissed (see in particular paragraphs 5.1, 5.3 and 5.5 of the Extended Reasons).

10	Paragraphs 6 and 7 of the Notice of Appeal are allegations that findings made by the Employment Tribunal as to the terms of Mr Farrow’s contract of employment, the status it gave him and the duties he had carried out were perverse. 

11	These grounds of appeal are therefore an attack upon the findings and conclusion of the Employment Tribunal as to the terms of Mr Farrow’s employment, his status and duties, and thus on the decision of the Tribunal that the changes which the Appellants imposed (or sought to impose) on Mr Farrow were ones that they were entitled to make and did not bring about any fundamental changes.

12	In our judgment the individual findings and points referred to in paragraphs 6 and 7 of the Notice of Appeal are not fundamental to the overall conclusions of the Employment Tribunal relating to Mr Farrow’s terms of employment, status and duties and that the Appellants imposed (or sought to impose) fundamental changes to his status, the work he had carried out and his terms of employment.

13	In our judgment it follows that grounds 6 and 7 of the Notice of Appeal do not raise points of law that are reasonably arguable and are an attempt by the Appellants to re-argue the facts.

14	As we have already mentioned it was found (and we understand was common ground) that there was no written contract of employment.  The Employment Tribunal heard evidence from Mr Frankel who had been the Managing Director of Frankice (Golders Green) Ltd before the share acquisition and it is apparent that, having regard to his evidence and the evidence of Mr Farrow that the Employment Tribunal had evidence before it upon which it could reach its conclusions.  

15	Paragraphs 1 to 5 of the Notice of Appeal proceed on the basis of the Employment Tribunal’s finding that there was a constructive dismissal and the overall effect of the grounds set out in those paragraphs of the Notice of Appeal is that the Employment Tribunal either erred in law in the approach they took to their finding of unfair dismissal, or, alternatively, that they did not adequately explain their reasons for that finding.

16	As to these grounds we accept (a) that there is no mutual incompatibility between a constructive dismissal and reasonable conduct and therefore the satisfaction and the requirements of Section 98 of the Employment Rights Act 1996, and thus (b) that the finding of a constructive dismissal by the Employment Tribunal does not of itself found a finding that the dismissal was unfair.  It follows that we accept that the Employment Tribunal had a duty to adequately explain the reasons for its finding that the dismissal was unfair.

17	In this context we also accept that the Extended Reasons could have been drafted more clearly and, in particular, that they would have been improved if a separate paragraph or paragraphs had been included which dealt expressly with the issue whether the dismissal was fair or unfair, having regard to the terms of Section 98 of the Employment Rights Act and, in particular, to Section 98(4) thereof.

18	However in our judgment when the Extended Reasons are read as a whole they do show that the Employment Tribunal considered the question of unfair dismissal separately from that of constructive dismissal and that the Extended Reasons adequately explain why the Applicant won and the Respondents lost.  

19	We set out below examples of cases which have given guidance on the approach of this Tribunal to Extended Reasons:

(a)  Hollister v National Farmers’ Union [1979] ICR 542 in particular at 552 H to 553 D which is in the following terms:

“There is only one other matter to which I would refer.  In these cases Parliament has expressly left the determination of all questions of fact to the industrial tribunals themselves.  An appeal to the appeal tribunal lies only on a point of law:  and from that tribunal to this court only on a point of law.  It is not right that points of fact should be dressed up as points of law so as to encourage appeals.  It is not right to go through the reasoning of these tribunals with a toothcomb to see if some error can be found here or there – to see if one can find some little cryptic sentence.  I would only repeat what Lord Russell of Killowen said in Retarded Children’s Aid Society Ltd v Day [1978] ICR 437, 444:
‘I think care must be taken to avoid concluding that an experienced industrial tribunal by not expressly mentioning some point or breach has overlooked it, and care must also be taken to avoid, in a case where the Employment Appeal Tribunal members would on the basis of the merits and the oral evidence have taken a different view from that of the industrial tribunal, searching around with a fine toothcomb for some point of law.’
It does seem to me that in this particular case, if one does not use a toothcomb, if one looks at the findings of this tribunal broadly in accordance with what they have said, it is found that there was a substantial reason for this dismissal.  Not only was there a substantial reason, but in the circumstances of the case the employers acted reasonably in treating it as a substantial reason having regard to equity and the substantial merits of the case.  Therefore the dismissal was fair.  

(b)  Jones v Mid Glamorgan County Council [1997] ICR 815 in particular at 826D where Lord Justice Waite says this:

“The guiding principle, when it comes to construing the reasons of an industrial tribunal at an appellate level, must be that, if the tribunal has directed itself correctly in law and reached a conclusion which is open to it on the evidence, the use in other passages of its reasons of language inappropriate to the direction it has properly given itself should not be allowed to vitiate the conclusion unless the relevant words admit of no explanation save error of law.
In the present case the industrial tribunal had correctly directed itself in law by citing the limitations of issue estoppel.  It had demonstrated an awareness of the issues raised in the pension dispute on the one hand and the unfair dismissal claim on the other, and had noted the differences between them.  …
This is, in short, a case of sound reasoning poorly expressed.  The decision of the industrial tribunal should on that basis be upheld.  I would accordingly allow the appeal and restore the order of the industrial tribunal.”

(c)  Meek v City of Birmingham District Council [1987] IRLR 250, in particular at 251 where Bingham LJ says this:

“It has on a number of occasions been made plain that the decision of an industrial tribunal is not required to be an elaborate formalistic product of refined legal draftsmanship, but it must contain an outline of the story which has given rise to the complaint and a summary of the tribunal’s basic factual conclusions and a statement of the reasons which have led them to reach the conclusion which they do on those basic facts.  The parties are entitled to be told why they have won or lost.  There should be sufficient account of the facts and of the reasoning to enable the Employment Appeal Tribunal or, on further appeal, this court to see whether any question of law arises. …”

(d) High Table v Horst [1998] ICR 409 in particular at page 420 E to F, where after citing from the Meek case, Peter Gibson LJ says this:

“However, in considering whether the reasons given by an industrial tribunal comply with its statutory obligation, it is very important to keep in mind the issues which the industrial tribunal was dealing with.  It has, of course, to reach conclusions on the issues which the statute raises, viz. in the present case, have the employers established that the reason for the dismissals was redundancy and, if so, did they act reasonably in treating the redundancy as a sufficient reason for dismissing the employees?  But, whilst it must consider all that is relevant, it need only deal with the points which were seen to be in controversy relating to those issues, and then only with the principal important controversial points … .”

20	These passages show that when considering and construing Extended Reasons this Tribunal should read them as a whole, not use a toothcomb, not isolate particular phrases or passages, and should read them benevolently and thus not as a statute.

21	In paragraph 4.1 to 4.3 of the Extended Reasons the Employment Tribunal set out the relevant sections of the Employment Rights Act 1996. Firstly they refer to Section 95(c) relating to the dismissal.  They then go on and refer separately in paragraphs 4.2 and 4.3 to the issue of fairness and the fact that it is dealt with by Section 98.  In particular, they cite Section 98(4).

22	In our judgment this citation of the law demonstrates clearly that the Employment Tribunal were aware that, having determined the issue of constructive dismissal they also had to consider whether the dismissal was fair or unfair.

23	The relevant reasoning of the Tribunal is contained in paragraphs 5.2 to 5.6 of the Extended Reasons under the bold heading “Unfair Dismissal”.  In our judgment those paragraphs have to be read with the findings of fact contained in paragraphs 3.1 to 3.11 of the Extended Reasons.

24	In our judgment paragraphs 5.2 and 5.5 of the Extended Reasons are focused on the issue of constructive dismissal.  However, in our judgment, paragraphs 5.3 and 5.4 relate both to that issue and the question whether the dismissal was fair or unfair.

25	In particular, in our judgment, when paragraph 5.4 is read against the findings of fact contained in paragraph 3 of the Extended Reasons, the express reference to Section 98(4) of the Employment Rights Act 1996 in paragraph 4.3 of the Extended Reasons and the bold heading “Unfair Dismissal” to paragraphs 5.2 to 5.6, it shows why the Employment Tribunal concluded that the dismissal was unfair in the light of the matters set out in Section 98(4)(a) and (b) of the Employment Rights Act 1996. 

26	We add that in our judgment this is the case if one takes the approach that as the Employment Tribunal refer to (see for example paragraph 5.1 of the Extended Reasons) and do not reject the evidence advanced on behalf of the Appellants that the changes they imposed (or sought to impose) had a sound business basis, having regard to the way in which they wished to run the shop (and the remainder of their businesses), the Employment Tribunal should be taken to have accepted that evidence.  In our judgment that is the appropriate approach for us to take.

27	In our judgment paragraph 5.4 of the Extended Reasons read with the findings of fact in paragraph 3 thereof and the remainder of the reasoning in paragraph 5 thereof show clearly that the Employment Tribunal reached the conclusion that the Appellants did not act reasonably and that the equity and substantial merits of the case led to a finding that the dismissal was unfair.  It seems to us that this flows inexorably from the findings made by the Employment Tribunal that the Appellants were seeking to impose fundamental changes to Mr Farrow’s status, the work he was to carry out and the terms of his contract by dictat and without addressing his grievance letter.

28	In our judgment, notwithstanding the point made earlier that the Extended Reasons could have been expressed and set out better, we have concluded that they make it clear why the Appellants lost.  

Overall Conclusion 

29	For the above reasons we have concluded that this appeal raises no reasonably arguable points of law and that it should be dismissed.