Appeal No.  UKEAT/0306/07/DM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 31 August 2007

Before
HIS HONOUR JUDGE McMULLEN QC
DR B V FITZGERALD MBE LLD FRSA
DR K MOHANTY JP

MRS JP DE CLARE JOHNSON	APPELLANT

MYA CONSULTING LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR STEPHEN WOODMAN
(of Counsel)
Instructed by:
Messrs Lyons Davidson Solicitors
Victoria House
51 Victoria Street
Bristol
BS1 6AD	
For the Respondent	MR STEPHEN ROBERTS
(of Counsel)
Instructed by:
Messrs Davies & Partners Solicitors
Rowan House
Barnett Way
Barnwood
Gloucester
GL4 3RT	

SUMMARY

Contract of Employment:  Mutual trust and confidence
Unfair dismissal:  Exclusions including worker/jurisdiction
The Employment Tribunal correctly held that the Respondent company was liable for the acts of the Managing Director’s husband and so for breach of the fundamental term of trust and confidence caused by his acts.  

Judgment of Lindsay J (P) in Moores v Bude Stratton Town Council [2000] IRLR 676 applied.

HIS HONOUR JUDGE MCMULLEN QC

1.	This case is about vicarious liability of a company for the acts of a non-employee in causing the constructive dismissal of an employee.  The judgment represents the view of all three members.  We will refer to the parties as the Claimant and the Respondent.

Introduction
2.	It is an appeal by the Respondent in those proceedings against the judgment of an Employment Tribunal sitting at Bristol, Chairman, Mr C G Toomer, over a day and a day in Chambers, registered with reasons on 20 April 2007.  Parties were represented by Mr Stephen Roberts of Counsel and Mr Stephen Woodman, Solicitor, respectively.

3.	The Claimant claimed unfair dismissal.  The Respondent denied the acts leading to the dismissal and also took a point at the hearing relating to vicarious liability.  The essential issue for the Employment Tribunal was to determine whether the matters alleged by the Claimant, in aggregate, constituted a fundamental breach of contract and if so, whether she accepted that breach promptly in leaving.  The Tribunal upheld her claim.  The Respondent appeals.  Directions sending this appeal to a full hearing were given by Wilkie J.

The legislation
4.	Provisions of the legislation are not in doubt.  It is Section 95(1)(c) of the Employment Rights Act 1996 which deals with constructive dismissal.
95. - (1) For the purposes of this Part an employee is dismissed by his employer if 
(c) the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct.
The facts
5.	For the purposes of the appeal, none of the facts is in dispute.  The Tribunal defined the relationship in the following way:
“2.	The respondent is a consultant in catering and hotel keeping. The Managing Director is Mrs Carla Mckenzie and her parents, a Mr and Mrs Davis, are the Executive Directors.  The business is operated from premises known as Clayfields Mill which is also Mrs McKenzie’s home.
3.	The claimant was engaged as a housekeeper with effect from 27 April 2004.  She worked 3 hours a day, 5 days a week, and the terms and conditions of her employment were covered by a written contract of employment which is in the agreed bundle.  It is clear that she was trusted to run the household, dealing both with the areas used for the purposes of the business and Mrs Mckenzie’s private accommodation.  Her relationship with Mrs Mckenzie seems to have been a good one and there is no evidence that Mrs Mckenzie ever had occasion to complain about the claimant’s performance of her duties.
4.	Mr McKenzie, whom Mrs McKenzie married in June 2006, was first introduced to the claimant in early 2006 and seems to have lived at the premises from about March. It is accepted that there may have been occasions when he was at the house when Mrs Mckenzie was not, and it is clear that in addition to the personal relationship with Mrs McKenzie, he also had a business relationship with the respondent as a Design Consultant, and was working at the premises.  The claimant alleges that both he and Mrs McKenzie became distant towards her and somewhat dismissive but the McKenzies deny that.  On the other hand, Mr Mckenzie did admit that there might have been occasions when .he would say “not now” in response to a question from the claimant, which we thought would not be altogether surprising if he was working at the time. No reason emerged from the evidence to justify or explain why the relationship between Mrs Mckenzie and the claimant should have deteriorated.”

The Tribunal analysed and upheld the Claimant’s case on each of five incidents.  These were that Mr McKenzie confronted the Claimant and screamed at her about some ironing.  He confronted her and shouted, “What the hell is going on here?”  He raised his voice to her regarding a purple bedspread. At a wedding which was a social occasion at the house, he confronted her, screamed at her and jabbed his fingers at her shouting, “You don’t smoke in my house or that husband of yours.  Got that, Joan?”  Finally, on 26 June 2006, he shouted at her the words, “Self‑explanatory; clean it up”.  The Claimant left work immediately and did not return.

6.	The Tribunal held that all of those matters in aggregate constituted a fundamental breach of contract and entitled the Claimant to leave forthwith.  It thus upheld the Claimant’s case of constructive unfair dismissal holding that the actions described above were likely seriously to damage the relationship of trust and confidence which has to exist between the Claimant and her employer.

The Respondent’s case
7.	  While accepting, for the purposes of the appeal, the facts set out by the Employment Tribunal, the sole issue advanced by Mr Woodman was that the company was not responsible for the actions of Mr McKenzie.  He relied on the judgment of the minority, Lindsay J (P) in Moores v Bude Stratton Town Council [2000] IRLR 676, disagreeing in the result with the members, Ms B Switzer and Miss S M Wilson.

8.	It was submitted that the facts of that case restricted its reach since this was to do with the activity of a councillor on a town council.  Reliance was also placed upon Hilton International Hotels v Protopapa [1990] IRLR 316 where a company was held liable for the act of a supervisor who did not have authority to dismiss.  The instructions given by Mr McKenzie to clean it up were not those of the Respondent company and the company was not responsible for him.

9.	Mr Woodman indicated broad acceptance of the approach of Lindsay J to the factors which we will set out and that an analytic approach to those was appropriate, as had been set out in the skeleton argument of Mr Roberts.

The Claimant’s case
10.	On behalf of the Claimant, it is contended that the Tribunal reached the correct conclusion albeit not citing directly the authorities now put before us.  The correct approach was to analyse the factors set out in Moores and in doing so, it came to the straightforward conclusion that, on balance, the action of Mr McKenzie was to be pinned upon the company.
11.	Secondly, there is an implied term to create as far, as is reasonably practicable, a working environment which is reasonably suitable for the performance of contractual duties.  See Waltons & Morse v Dorrington [1997] IRLR 488.  

Discussions and conclusions
12.	The starting point is Moores.  As we read that judgment, the analysis of the law given by Lindsay J is very helpful, albeit it was a minority judgment.  The majority in that case found the case law on vicarious liability of limited assistance because none of the authorities dealt with the position of a councillor.  In our judgment, Lindsay J sets out the law correctly and the disagreement he had at the EAT in that case does not affect the validity of his legal analysis.  The disagreement was as to whether or not a councillor could be fitted into the authorities.  Thus, we hold that the correct approach is to adopt what Lindsay J said, as follows and:
“23.	As for determining whether a wrong-doer is on his own business, just as no single test is nowadays seen to be determinative of whether a person is an employee (as opposed, for example, to being self-employed or an independent contractor), so also no one test is determinative of a person being on his own business for the purposes of vicarious liability, very commonly a closely related question. Similar questions arise in both cases; was remuneration paid for the doing of what was done; was what was done , done for the benefit of the party sought vicariously to be made liable ("the propositus")? Was the act complained of reasonably incidental to the duties of the wrongdoer as cast upon him by the propositus? Was the propositus in a position of control, not only to order what was to be done but how it was to be done? Was the propositus in a position to select who should do the activity in the course of which the wrongful act occurred? Could the propositus suspend or stop that activity? Was what was done expressly or impliedly authorised by the propositus? Was it an unauthorised way of doing something which was authorised? Was it the performance of an act of a class the wrongdoer was not required to do at all or had been forbidden to do? No single question and answer is likely to be determinative but together the answers should provide a composite from which it can be adjudged whether vicarious liability exists.”

13.	Lindsay J mentions other authorities but it seems to us that the correct starting point is to analyse each of the factors which he there set out.  Looking at the last and trigger event in this case, it is plain that the majority of the factors is positively in favour of vicarious liability.  The same exercise could be done of the other four incidents but simply for the purpose of proving the point, it is sufficient for us to say that the events in the fifth incident occurred while the Claimant was at work at her workplace and being paid for what she was doing.  The cleaning up was for the benefit of the company.  The cleaning up was not reasonably incidental to the duties of Mr McKenzie as a consultant designer.  The company was in a position of control through Mrs McKenzie as to what was to be done and how it was done.  She was in a position to select who to do the cleaning up.  She could stop the Claimant doing that or suspend her doing it and put her on to other duties.

14.	There was no evidence of an express authority given by Mrs McKenzie to her husband to issue the instruction to clean it up to the Claimant, but he was implied authorised to do that, we hold.  The way in which the work was instructed to be done may have been unauthorised but the work was something which was authorised.  The instruction was not one which he had been given by Mrs McKenzie to make but he had not been forbidden to do it, either.

15.	Therefore, looking at those factors, as Mr Woodman frankly accepted, a substantial majority of them points in favour of vicarious liability in respect of the last incident and that is sufficient for the finding that the company was vicariously liable for Mr McKenzie’s instruction.  It is not necessary to repeat that analytic approach in respect of the other four incidents but Mr Roberts submits that they are all of the same category.  Broadly speaking, we agree.  The preponderance of factors is met in each of the five incidents.  That means that liability rests with the company.

16.	This may be a rather artificial environment in which to test these principles, since Mr and Mrs McKenzie were married, he worked partly in the business as a consultant and the business was carried on in their joint home, but the rules can be applied in the way we have done.

17.	Having upheld the submissions of Mr Roberts, it is not necessary for us to deal with his second submission, but as we have heard argument upon it and there appears to be little dispute about the application of it, we will express our view.  It is based upon Waltons & Morse.  The proposition set out there concerned a working environment in 1992 which included smokers.  The Claimant, being a non-smoker, was the subject matter of the case.  The EAT, Morrison J (P) and members, said this.
“22.	It seems to us that there is force in the submission which he made to us as to the detail of the suggested implied term. It seems to us that a good starting point for the implication of a term of the sort that the tribunal had in mind is s.2 of the Health and Safety at Work Act 1974.  It is to be stressed that this case was not concerned with health and safety, in the sense that there was no evidence before the industrial tribunal that being exposed to tobacco smoke is in fact injurious to the health of those who have to endure it. On the other hand, s.2(2)(e) of the 1974 Act is concerned with the employer’s duty to provide and maintain a working environment for his employees that is reasonably safe, without risk to health, and is adequate as regards facilities and arrangements for their welfare at work. In one sense, the right of an employee not to be required to sit in a smoke-filled atmosphere affects the welfare of employees at work, even if it is not something which directly is concerned with their health or can be proved to be a risk to health.
 23.	It seems to us that to give effect to the points made by counsel, we ourselves would be inclined to the view that the correct implied term to deal with the complaint in this case is that the employer will provide and monitor for his employees, so far as is reasonably practicable, a working environment which is reasonably suitable for the performance by them of their contractual duties.
 24.	It seems to us that such an implied term is of the general nature of the sort which is referred to in the authorities. We do not need to consider the cases to which Mr Griffiths referred, which identify a number of circumstances in which terms may be implied into a contract. It seems to us that the position is well known in the employment field, and it may involve general considerations beyond those which normally apply in other types of contracts.”

18.	That term is broad enough to be applicable as a matter of contract.  Mr Roberts very fairly, in his argument, addressed the issue for the purposes of race and sex discrimination raised by Burton and Rhule v De Vere Hotels [1996] LRLR 596 which had been held to be wrongly decided by the House of Lords in Macdonald v Advocate General for Scotland [2003] IRLR 512.  He submitted correctly, we hold, that the position in relation to the statutory torts of discrimination is different from that at common law relating to the implied contractual term to create a reasonably suitable working environment.  The judgment in Waltons & Morse is unaffected by Macdonald and was not cited in the House of Lords from which we take it that the principle it embodies was not felt to be relevant to the discrimination issues determined in Macdonald.

19.	If it had been necessary for us to decide this matter, we would have followed Mr Roberts’ argument stemming from Waltons & Morse and have held that the Respondent company was responsible for ensuring that the working environment enabled the Claimant to carry out the performance of her duties satisfactorily and not, as the Tribunal here found, to be exposed to jabbing and shouting by someone within the building closely connected to the leading light.

20.	In any event, some of the five incidents are very closely related to the rules to be enforced by the company and it is necessary for us to say just a word about the wedding incident.  On this occasion, the Claimant was attending as a guest and she was smoking in the woodshed.  This is a home where there is to be no smoking.  It is also a workplace where there is to be no smoking and we have no doubt that the no smoking rule applies at all times and not simply during the time when the premises are being used for the purposes of the business.  It was for the benefit of the company and its workers that the rule was created and was, we hold, enforced on behalf of the company by Mr McKenzie.  Seeing an obvious breach of the rule, he took it upon himself and with the implied authority of Mrs McKenzie, to draw the Claimant’s attention to the rule even though it was a Saturday and no one was working.

22.	For those two reasons, we will dismiss the appeal.  We would like to thank Mr Woodman and Mr Roberts for the very succinct way in which they presented the arguments.