Appeal No.  UKEAT/0290/05/DM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 31 October 2005

Before
THE HONOURABLE MR JUSTICE BURTON (President)
MR J MALLENDER
MRS L TINSLEY

MRS M KELLY	APPELLANT

RIVEROAK ASSOCIATES LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR A SHORT
(Of Counsel)
Instructed by:
Messrs Reid Minty LLP Solicitors
Moss House
15-16 Brooks Mews
London W1K 4DS	
For the Respondent	MR L QUINN
(Of Counsel)
Instructed by: 
Messrs Glovers Solicitors
115 Park Street
London W1K 7DY	

SUMMARY

Unfair Dismissal

Appellant alleged dismissal by service of P45 on 3 April: Respondent alleged resignation by Appellant on 7 February. ET concluded that employment continued until 4 June, and thus claim fell as premature. ET erred in failing to find that contract was terminated on 3 April, and should then have considered whether on the balance of probabilities there was a dismissal and if so whether it was (for a substantial other reason or otherwise) fair.

THE HONOURABLE MR JUSTICE BURTON (President)

1.	This has been the full hearing of an appeal by the Claimant, Mrs Kelly, against the decision of the Employment Tribunal at Watford after a hearing on 9 and 10 March 2005, by a judgment sent to the parties on 30 March 2005, in favour of the Claimant’s former employer, Riveroak Associates Ltd, the Respondent. 

2.	The claims by the Claimant, who was employed by the Respondent as property manager from 4 April 2002, were of unfair dismissal, wrongful dismissal and failure to provide a written statement of reasons for dismissal, in respect of which this was a pre-hearing review to consider whether they were in time. There were also complaints of unlawful sex discrimination and detriment on the grounds of requesting flexible working, part of which were ruled out of time and part of which were concluded to be in time and sent off to a further hearing. 

3.	There has been no appeal against the findings that some of the sex discrimination and detriment claims were out of time. The only appeal relates to the decision with regard to the dismissal, if we can use that word collectively to apply to all the three such claims to which we have referred. 

4.	The facts as found by the Tribunal included reference to events in February 2004, in particular on or about 6,7, 8 and 9 February. The Tribunal found, in the light of the facts as recorded by it, that there was no resignation by the Claimant at that time. The significance of whether the February date is twofold. 

5.	First, when, in due course, and in circumstances which we will describe, a P45 was sent by the Respondent to the Appellant (received on 3 April), that recorded her date of departure from the employment of the Respondent 7 March 2004, and the Claimant, it seems, requested (and duly received) a fresh P45, recording 7 February 2004, instead of 7 March 2004, as the date of leaving. The reason for this being done, according to the evidence put forward by the Claimant at the Tribunal, was because she was, or no doubt is, a member of the Royal Institution of Chartered Surveyors, and if there was any suggestion that she had received any remuneration after 7 February, it would prejudice her chance of recovery of some proportion of her RICS subscription subsequent to that date. It was common ground that she had not received any payment for any employment after that date.

6.	The other reason that it became significant was because, when she issued, as she subsequently did, her Originating Application, claiming, among other things, unfair dismissal by the Respondent, the Respondent relied in its defence on her having resigned on 7 February, as recorded in such replacement P45, and, if that indeed was the termination of the Claimant’s employment, then her Originating Application was out of time; indeed on the face of it that was the main purpose of the Pre-Hearing Review, to deal with the allegation by the Respondent that the Claimant was out of time in having brought her Originating Application more than three months subsequent to 7 February 2004.

7.	At the Pre-Hearing Review before the Employment Tribunal, therefore, the position of the Respondent was that the Claimant had resigned on 7 February, and, consequently her claim was out of time. The position taken by the Claimant, however, was based upon her receipt of the P45 on 3 April 2004, that is the original P45 in which the date of 7 March 2004 had been recorded, and in paragraph 4 of her Originating Application she said this:

“On 3 April I received in the post my P45 which was dated 7th March.  I took the issue of my P45 to be a dismissal.”

8.	Both parties, therefore, were arguing the case before the Employment Tribunal upon the basis that the contract of employment had terminated at the latest on 3 April: the case for the Claimant being the latter date and, the case for the Respondent being 7 February. The Tribunal, perhaps to the surprise of both parties in those circumstances, concluded that the employment relationship had not terminated at all, but, in paragraph 7.8 of its Judgment, that the position continued until 4 June 2004, when Mrs Kelly asserted through her solicitors that she had been dismissed, and that the employment relationship was continuing at 4 June 2004, and had not been brought to an end by either party. On the basis, consequently, that the employment relationship, on that finding by the Tribunal, was still in existence when the Originating Application was issued by the Appellant, it was premature and consequently her claim failed on that basis. We have not been told whether any protective application was issued in time. We take it not, and that the absence of any such application would mean that the Claimant could no longer pursue her claim for unfair dismissal, in the light of the Tribunal’s findings.
9.	The appeal by the Claimant is put forward by Mr Short, of Counsel, who did not appear below, the Claimant having been represented below by her husband. It is resisted by Mr Quinn, of Counsel, who did appear below. 

10.	The relevant facts are in very short compass, so far as this issue is concerned. They are founded upon the fact that it is clear that at least subsequent to the dates in February, to which we have referred, the Appellant was unhappy in the employment of the Respondent, at least unless she was going to be allowed to work part-time.

11.	There were two discussions between Mrs Kelly and a Mr Mangalase, of the Respondent, on 12 and 19 March, and the material events are recorded in paragraphs 5.19 to 5.23 of the Judgment. The outcome of the discussions was the sending of the P45, to which we have referred, received on 3 April. It is clear that the Claimant was pressing for a response, as to whether she could work part-time, and the issue between the parties was then, and remained at the eventual hearing, what the consequence would be of her not being allowed to work part-time.

12.	The Judgment then continues:

“5.24  The following day [that is 26 March] Mrs Kelly rang the office and spoke to Ms Glacklin who told her that Mr [Mangalase] had left an envelope for Mr Keeney. Ms Glacklin opened the envelope and it contained a P45 and a cheque.  Mrs Kelly spoke to Mr Mangalase.  According to her evidence, he described how he had spoken to Mr Keeney regarding the part time work possibilities. Mr Keeney had given no reaction. Mr Mangalase said it was not his decision to make about the job but he had drawn up the P45 to force Mr Keeney into a decision.
5.25 According to Mr [Mangalase], Mrs Kelly wanted to know the outcome of the discussion on the 12 March and she was chasing for her P45. The Tribunal did not accept that Mr Mangalase had prepared the P45 in advance of his discussion with Mr Keeney nor that he had indicated any intention to force Mr Keeney into a decision.  It is implicit in Mr Mangalase's evidence … about the 19 March that he had not drawn up the P.45 before meeting Mr Keeney, and the Tribunal found he had not.”
5.26 The P.45 was received by Mrs Kelly on the 3 April. She spoke to Mr [Mangalase] on the 15 April, and according to her evidence she told him that [she] was upset and confused by the dismissal. Mr Mangalase said he was sorry she had been sent a P45 and could not understand why Mr Keeney had not accepted the part time situation. [Mr Mangalase] could not explain why the P45 had the date of the 7 March and said it was just a date.  Mr Mangalase confirmed that Mrs Kelly was not being paid to the 7 March and she was on unpaid leave. Mrs Kelly said that the P.45 suggested that she had been paid up to the 7 March and that was not true. She asked if it would affect her tax position. She told Mr Mangalase about the concession from the RICS and that she had told them she had not had an income since the 6 February. After a delay Mr Mangalase said he would reissue the P45 dated 7 February and she would destroy the first one.
5.27 Mr Mangalase's evidence is that Mrs Kelly had complained that the P45 showed the 7 March as her last day of work whereas the real date of her resignation was 7 February. She requested a replacement P45.  He explained the purpose of her P45 was to compute proper tax liability and he was reluctant to re-open the February/March payrolls.  She insisted she should have a re-issued P45 dated 7 February. She explained it was critical that she should be able to have her subscriptions halved if she could prove to the RICS that she was unemployed from the 7 February. He agreed to issue a new P45.
5.28 The Tribunal did not accept that Mrs Kelly had told Mr Mangalase that she had resigned on the 7 February. The Tribunal found rather that Mrs Kelly wanted to ensure that the P45 reflected the last day for which she had been paid. This is not inconsistent with her dealings with the RICS.  The Tribunal found also that Mrs Kelly believed that she had been dismissed by virtue of the refusal of Mr Keeney to arrange for part time working.”

13.	We turn then to the conclusory paragraphs of the Tribunal:

“7.4  On 12 March, there was the conversation with Mr [Mangalase]. He had no authority to dismiss Mrs Kelly. Although there are differences on the accounts of this meeting it is clear that the outcome was that there was no termination at that point, Mrs Kelly was asking what her future was - would she be dismissed or would she be working part-time. Clearly she was not resigning, but, rather, she was expressing a belief that her future employment relationship was in the hands of Mr Keeney, who would either employ her part time or dismiss her - in which case she would like her P45. The outcome was that it was left to Mr Mangalase to approach Mr Keeney and determine the prospects regarding a possible return to part-time work.
7.5	The next event was the meeting between Mr MangaIase and Mr Keeney. At that point Mr Mangalase had not prepared the P45 and Mr Keeney was being asked whether a part-time return to work was appropriate. He decided it was not and he instructed Mrs Kelly to be paid and for her P45 to be issued.”

And then the central passage:

“This was on the assumption that that is she wanted. The Tribunal therefore found that at this stage there was a total misunderstanding of the position between the parties. Mrs Kelly thought that there would be decision to dismiss her or employ her part-time and Mr Keeney thought that Mrs Kelly wanted to resign if she could not work part-time.
7.6 When Mrs Kelly received her P45 on the 3 April, she assumed that she had been dismissed, whereas when the P45 was issued by the Respondents it was [in] the belief that Mrs Kelly was resigning if it was not appropriate for her to work part time. The context in which the P45 was issued therefore was of Mrs Kelly requesting the Respondents to consider whether she could work part time, not in the context of an intention to resign.”
14.	That is the context in which the Tribunal had to resolve the issue as to whether, on the balance of probabilities, it was satisfied that there was a dismissal by the Respondent and, if so when. It is plain that for the reasons there set out the Tribunal concluded that there was no dismissal by the Respondent of the Appellant by virtue of the issue of the P45. But the Tribunal continued as follows:

“7.7  The Tribunal could detect no further act which terminated the contract of employment.  Mrs Kelly asked, on the 26April, why she had been dismissed and Mr Keeney indicated that he understood she had requested her P45.  The misunderstanding therefore continued and the position was that neither had Mrs Kelly resigned nor had Mr Keeney dismissed her.
7.8	That position continued until the 4 June 2004 when Mrs Kelly asserted through her solicitors that she had been dismissed.  The Tribunal found that she had not been dismissed at that point. The Respondents asserted through their Solicitors that her job was still there, that she had not resigned nor had she been dismissed.”

The Tribunal then reached the conclusion, to which we referred earlier, that the employment relationship was continuing at the 4 June 2004 and had not been brought to an end by either party.
 
15.	The basis upon which the Tribunal appears to have concluded that the P45 did not terminate the contract is because of what it calls the total misunderstanding of the position between the parties. Mr Short submits that, on the finding of the Tribunal, the position was a clear one; namely that Mrs Kelly had left it with Mr Mangalase, on the meeting on 12 March, that she would either be allowed to work part-time or would be dismissed and that, in the circumstances of the subsequent meeting between Mr Mangalase and Mr Keeney, once Mr Keeney declined to allow the Claimant to work part-time, option 2, as put forward by Mrs Kelly at the meeting of 12 March, naturally followed; namely that there would be a dismissal. This however, was not the finding or the interpretation by the Tribunal and, it is quite clear that they were of the view that the Respondent was not dismissing and, although the Claimant believed that she was being dismissed, on their findings in fact there was a total misunderstanding of the position between the parties.

16.	There has been considerable argument before us relating to those cases where the issue of ambiguity either of resignation or of dismissal is before a tribunal. The earliest such case is Futty v Brekkes [1974] IRLR 130 and, the next is Tanner v Kean [1978] IRLR 110, a well-known decision of Phillips P. Futty v Brekkes was a dismissal case, as was Tanner v Kean. There then follows a Court of Appeal decision in Sothern v Franks Charlesly [1981] IRLR 278 which is a resignation case, which disapproved an earlier decision of the EAT, B G Gale Ltd v Gilbert [1978] IRLR 453, which was again a resignation case. Then, in 1983, there are two decisions, J & J Stern v Simpson, (a dismissal case) [1983] IRLR 52 and Barclay v City of Glasgow District Council [1983] IRLR 313, which was a resignation case: then finally a further Court of Appeal authority, Sovereign House Security Services Ltd v Savage [1989] IRLR 115, which again was a resignation case.

17.	Mr Short submits that there is no real distinction between the cases dealing with ambiguous resignations and those dealing with ambiguous dismissals. But there is some difference in the way that the courts and tribunals dealt with the question in the six cases to which we have been referred. In two of the decisions, both of them by the Court of Appeal, and both of them being resignation cases, it is stated that a non-disclosed intention of a person making a statement, as to his or her intended meaning, should not be taken into account. In the dismissal cases however, it appears that the approach of the tribunal, not disapproved in either of the two Court of Appeals cases to which we have referred, does permit an analysis of the intention of the employer including, for example, in J & J Stern, why it is that the locks to the doors were changed. 

18.	Much depends upon the context, and much is left to the good sense of the employment tribunal as the judge of facts. All those cases were cases which analysed, with the one exception of the injection into one of the cases of the issue of the changing of locks, the impact and meaning of oral statements, made either by an employer or by an employee, sometimes in the heat of the moment.  This is, however, a case where, as described, the issue is the effect of the sending of a P45.

19.	Mr Short submits that the sending of a P45 of itself, in the context of this case, amounted to a termination and a dismissal, and particularly so in the light of the fact that it was sent subsequent to the meeting of 12 March and the setting out of two options.  Mr Quinn submits both that the Tribunal did not make the finding that the sending of the P45 was the result of the meeting of 12 March and the setting out of the two options, but also that, in his submission, the sending of a P45 of itself means, or may mean, nothing. It is a document relevant for tax purpose and it is extremely rare that a dismissal is executed simply by the sending of a P45. In almost every case - certainly no reported case to the contrary is produced - the dismissal is independent of the confirmatory nature of a P45, and, indeed in this case the P45 purported to confirm the antecedent termination of the Claimant’s employment, as the Respondent believed, by her resignation.  

20.	Further, Mr Quinn submits that there was what he calls here a ‘trafficking’ in P45s which showed the lack of substance, or intrinsic meaning, to be derived from them. The first one that was sent, at the request of the Claimant, with a date which no-one could seemingly explain was substituted, also at the Claimant’s request; and that, he submits, makes even less significant the sending of the P45 than it would have been in an ordinary case. 

21.	However, there is no finding by the Tribunal either that the first P45 or, indeed, even the second P45, was a sham, or that the sending of the P45 was in some way conditional, in the sense of being hanging over the parties until such time as they should reach some agreement: and it is certainly not suggested that there was any consensual arrangement between the parties.

22.	The basis upon which this Tribunal concluded that the P45 was of no effect, and that the employment relationship continued, is contained, and contained entirely, in paragraph 7.5, which we have read: namely that there was a total misunderstanding of the position between the parties, the Claimant believing that she had been dismissed and the Respondent believing that the Claimant was resigning. 

23.	We do not seek, nor would wish in any way, in the light of and notwithstanding the submissions before us, to go behind the finding by the Tribunal in that regard; but we are wholly unpersuaded that that finding by the Tribunal justifies any conclusion that the P45 was of no effect. The cases on ambiguity may be very helpful on the issue as to whether in a particular case there was a dismissal or there was a resignation. But the first question here is whether there was a termination of the contract. There will be cases in which there is ambiguity as to whether there was termination of a contract, whoever terminated it. But it appears to us clear that this is a case in which what is ambiguous is not whether there was a termination, but as to why there was a termination. 

24.	In our judgment it is not common sense to suggest that the employment relationship continued after the sending of the P45 and its receipt on 3 April. The employment relationship concluded on the receipt of the P45, from both sides’ point of view. Of course it is always open to a Tribunal to reach a conclusion looking at the facts objectively which neither of the parties, neither employer nor employee, understood or believed at the time. But there are no indicia whatever of the continuation of the employment relationship after 3 April, which could contra-indicate the effect of the P45 which stated, unequivocally, that the employment contract was at an end. Both parties believed that the contract was at an end, albeit for their different reasons. Both parties acted on the basis that the contract of employment was at an end, and no work was done or proffered on the one side, or payment made or tendered on the other. A letter of 26 April was sent by the Claimant requiring an “official explanation”, as she put it, for her employment having been terminated, to which there was no response by the Respondent. A letter from solicitors to the same effect dated 18 May met, first, a holding response and then, and then only, a letter of 4 June 2004 stating that the Claimant had not been dismissed and:

“For the avoidance of all doubt the position is that, if she wants to resume her existing job, our client is content that she should do so with immediate effect.”

25.	In our judgment, however, the contract of employment had by then terminated, and that that was the only conceivable conclusion in law to which this Tribunal could have come. In those circumstances the letter would amount to an offer to reinstate, or re-engage, which will or may no doubt be relevant in the context of mitigation or quantification of loss if that were to arise. 

26.	What remains unclear is whether there was a dismissal. The Tribunal concluded that there was, on the balance of probabilities, no dismissal. That may well be the correct answer in the case, but the Tribunal reached it by first arriving at a conclusion which, in our judgment, it was not entitled to arrive at in law, namely that the employment relationship continued on 3 April. Mr Quinn has sought to submit that even if that conclusion were wrong or, as he put in the course of argument, “odd”, nevertheless the conclusion by the Tribunal could be upheld.

27.	We are satisfied that, as we have indicated, the conclusion may be right but, as it was reached in so flawed a way, it cannot stand as it is at present. If the Tribunal had concluded that the contract was terminated as of 3 April but that, given that the onus of proof was upon the Claimant they were not satisfied that there had been a dismissal, or that, even though there was a dismissal, it was for a substantial other reason, namely the misunderstanding by the employer and its reasonable belief that the Claimant had resigned or wished to resign, then that might be a different matter; and all those options will be open on a remission. But both because it appears to us that this legal conclusion, wrong as it was, underpinned the judgment of the Tribunal and because, as has pointed out to us by Mr Short, the first question for this Tribunal to determine, as laid down in the earlier case management order of 30 September 2004, was “the effective date of termination of the Applicant’s employment with the Respondent” we do not see how this judgement can stand, we substitute a conclusion that the contract of employment of the Claimant by the Respondent terminated on 3 April 2004, upon the Claimant’s receipt of the P45. 
28.	We leave it entirely open however, as to whether that termination was by way of a dismissal, or whether it resulted from the resignation of the Claimant and if it was in fact a dismissal what the reason for that dismissal was. It has been pointed out by Mr Short that there is presently no defence put forward in the alternative by the Respondent that any dismissal, which is denied, was for a substantial other reason, and no doubt that matter will have to be approached by way of an application for permission to amend, on which we express no view at this stage.

29.	The question remains as to remission of the case to a tribunal. It is always unfortunate for any case to be remitted rather than decided by this Tribunal. We considered the question as to, whether we should, as invited by Mr Quinn, if we were going to see some force in the argument by Mr Short, substitute a conclusion, but, as he himself pointed out, this was only a pre-hearing review, and in any event it is clear to us that the option of substantial other reason, if available, would need to be considered before a proper decision can be reached in this regard. But if the matter is to be remitted, it is somewhat less concerning to do so in this case, by virtue of the fact that in any event there are certain outstanding claims, to which we have referred, which would have to be adjudicated upon in any event. Both sides are agreed that remission should not be to a tribunal which considers any more preliminary points, but that the tribunal hearing this remitted matter should also hear and resolve the outstanding issues of those remaining claims of unlawful sex discrimination and, detriment which were not found on appeal, and not found to be out of time and not appealed.

30.	The issue between the parties before us has been as to whether the remission should be to a different tribunal. We are conscious of the guidelines of this Appeal Tribunal in Sinclair Roche & Temperley v Heard [2004] IRLR 763. We are clear that there is no question here, nor is it suggested before us, of any prejudice on the part of this Tribunal or any pre-cast set of mind; nor, we are satisfied, are there any findings of fact by which this Tribunal would be embarrassed or which it would need to reconsider. The only criticism that we have made of the Tribunal is one as to its conclusion of law, relating to the impact of the sending and receipt of the P45 on the contract.

31.	We make no criticism of any findings of fact which the Tribunal has made, which will assist them to resolve the issue as to whether they can be satisfied, on the balance of probabilities, that there was a dismissal or, if there was a dismissal, as to the reasons for it. Mr Short points out, rightly, that if there is to be an amendment to add substantial other reason in the alternative there may need to be further evidence called, and we leave to the Tribunal hearing the matter how much such evidence there should be and what it should consist of. But we see no difficulty in this Tribunal picking up the reins in relation to a case which, just as in Sinclair Roche it can be said that they have only half completed, by virtue of being de-railed by a legal conclusion from which we now direct them to retract; and we are satisfied that that this two day hearing would be wasted, to no purpose, if this Tribunal were not to pick up those reins and adopt the evidence that has already been given before it. Plainly, it will now need to move on to make decisions which it has not yet made on the question of dismissal. 

32.	We are satisfied that the proper course is for the matter to be remitted to the same Tribunal to reach conclusions as to, whether there was a dismissal and, if so what the reason for dismissal was and, whether the dismissal was fair at the same time as deciding the residue of the unlawful discrimination claims.

33.	In those circumstances and to that limited extent this appeal is allowed.