Appeal No. UKEAT/0181/10/DM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 16 February 2011

Before
HIS HONOUR JUDGE RICHARDSON
MS V BRANNEY
MR I EZEKIEL

MRS L BAILEY	APPELLANT

ALEXANDER HOUSE AGENCIES LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	No appearance or representation by or on behalf of the Appellant	
For the Respondent	No appearance or representation by or on behalf of the Respondent	

SUMMARY
UNFAIR DISMISSAL – Constructive dismissal

Constructive and unfair dismissal.

The Tribunal reached an insupportable finding of fact on the question whether the Respondent had taken prompt action to remove an employee who had threatened the Claimant.  

The Tribunal erred in law in holding that the Claimant did not resign in response to the Respondent’s breach of contract by concentrating on what it described as the “immediate cause”: Jones v Sirl and Son (Furnishers) Ltd [1997] IRLR 493 and Nottinghamshire County Council v Meikle [2004] IRLR 703 applied.

Appeal allowed.  Finding of constructive and unfair dismissal substituted.

HIS HONOUR JUDGE RICHARDSON 

1.	This is an appeal by Mrs Lisa Bailey (“the Claimant”) against a judgment of the Employment Tribunal sitting in Manchester (Employment Judge Ross presiding) dated 19 January 2010.  By its judgment the Tribunal dismissed the Claimant’s complaint of constructive unfair dismissal.

2.	The hearing before the Employment Tribunal was one-sided.  The Claimant attended and gave evidence in accordance with her witness statement.  She was represented by a case worker from Merseyside Employment Law, a charity.  Her employers Alexander House Agencies Limited (“the Respondent”) did not appear and were not represented.

3.	On appeal the Claimant has again been represented by the same charity, which has lodged written submissions on her behalf.  The Respondent has lodged a skeleton argument explaining its business and staffing difficulties and stating that it was “not in a position to question or disrespect the findings of the Appeal Tribunal if the finding was that the Employment Tribunal erred in law in its original decision”.  There has been no attendance today on either side.

The Claimant’s case
4.	The Claimant’s case may be summarised as follows.  This summary is taken for the most part from the Claimant’s claim form and witness statement, both of which were before the Employment Tribunal.

5.	The Claimant worked as a cashier at premises in Birchwood, near Warrington.  There was a branch manager.  On Monday 29 September 2008 there was an incident in which a sales manager, Mr Bowden, became aggressive, lunged towards her with a clenched fist and then threatened her both with words and actions, leaning towards her, thrusting his fingers at her and shouting at her.  She was physically shaking, burst into tears and went to the toilet.  She was nervous and felt physically sick throughout the rest of the day.  The incident was witnessed by the branch manager.

6.	On Tuesday 30 September the sales manager worked elsewhere – at Rainford.  On Wednesday 1 October, however, he returned until lunchtime.  The Claimant worked as normal while feeling “completely stressed out” by the situation.  In the afternoon she informed her area manager, Debbie Griffiths, and became distressed during the telephone call.  Ms Griffiths said she would speak to Mr Bowden to get his side of the story, but that she could not attend until the following Monday.

7.	On Thursday 2 October the sales manager again worked elsewhere – at Rainford.  The Claimant was still upset.  The incident was uppermost in her mind.  She did not hear from Ms Griffiths so she texted her.  Ms Griffiths replied to the text to say that the sales manager was OK and was staying at Birchwood.  The Claimant felt upset and believed the whole situation was being ignored.  She replied by text to say that the sales manager had upset her and she was still feeling the effects of the incident.  Ms Griffiths telephoned her.  The Claimant said she was aware that Ms Griffiths was upset that she had texted her; she explained to Ms Griffiths the enormity of the situation and the effect that it had on her.  She explained her anxiety about working with the Claimant the following day.  Ms Griffiths said she would come to see her as arranged on Monday.  She said she would arrange for another employee, called Peter, to see her on the Friday.

8.	On Friday 3 October the Claimant found it very difficult to go to work.  Indeed she telephoned and texted a colleague to say that she could not manage to do so.  But since she had the keys, and she did not wish to leave a colleague on her own, she went in and worked.  The sales manager came in.  She felt physically sick.  Ms Griffiths telephoned to say that the employee, Peter, whom she said she would send was unable to visit.  The Claimant broke down in tears, saying the pressure was too much for her to handle.  She felt that Ms Griffiths was dismissive of her genuine concerns.

9.	On Monday 6 October the Claimant started a period of absence, signed off with work related stress.  She handed in a grievance she had written so that it could be dealt with.  It was a detailed grievance covering what had taken place the previous week.  She remained off work until 4 November.  The Respondent by this stage had taken no action to contact the Claimant or deal with the grievance.

10.	On 4 November she resigned, writing in her letter of resignation:

“It is with reluctance that I am submitting this letter.  As you have failed to respond to my grievance letter dated 6th October I therefore feel that I have no other alternative but to resign with immediate effect from the company.”

The Tribunal’s reasons
11.	The Tribunal heard evidence from the Claimant.  It made no express finding about her credibility, but it is plain that it accepted her evidence about the incident on 29 September.  The Tribunal’s reasons for dismissing her claim were as follows.

“3. The burden of proof is on the claimant.  It is for her to satisfy us that she was compelled to resign.  The leading case in this area remains Western Excavating v Sharpe.  Was there a fundamental breach of contract so serious that it left the claimant with no alternative but to resign?  She must also show she left as a result of that fundamental breach of contract and left neither too quickly nor delayed too long after the fundamental breach had occurred.
4. Firstly, we considered the actions of Darren towards the claimant.  We find that the way he spoke to the claimant and his actions towards her on 29 September 2008 were completely inappropriate and we entirely accept the claimant’s version of events.  However we are not satisfied that the actions themselves amounted to a fundamental breach of the implied duty of trust and confidence by the employer which entitled the claimant to resign.  We came to this finding because the respondent, acting on the claimant’s concern, took prompt action and moved Darren to the Rainford office on a temporary basis so that he was not working alongside the claimant.
5. We turn then to the other alleged breach of contract, the failure to deal with the claimant’s grievance.  It is important that we consider what had or had not occurred and what was in the claimant’s mind at the time she resigned on 4 November 2008.  It is not relevant to the claimant’s decision to resign what happened subsequently in relation to her grievance.  We find that the respondent did not fundamentally breach the duty of trust and confidence by failing to deal with the claimant’s grievance at the point she resigned on 4 November 2008.  The claimant admitted she handed in her written grievance on Monday 6 October 2008 and thereafter was absent on stress related sick leave until she resigned approximately four weeks later on 4 November.  We find that the failure of the employer to contact the claimant in a four week period in relation to her grievance while she was absent on stress-related sick leave is not unreasonable and indeed many employees do not wish to be contacted by their employer when they are absent on stress-related sick leave and it certainly does not amount to a fundamental breach of contract.
6. Even if we are wrong about that we find that the immediate reason the claimant left was because her pay, which was statutory sick pay only, was insufficient to cover her expenses and in particular her mortgage and so she needed to find another job and once again this does not amount to a fundamental breach of the duty of trust and confidence on the part of the employer.”

The appeal
12.	Two grounds of appeal concern findings made by the Tribunal which are wholly or mainly findings of fact.  The Appeal Tribunal has jurisdiction only to deal with questions of law; but if a finding of fact is perverse in the strict legal sense – that is to say, a finding for which there was no basis at all in the evidence before it – then the legal foundation for any judgment based on it is undermined.  It is only in those very limited circumstances that the Appeal Tribunal will re-consider findings of fact made by the Tribunal.

13.	At a preliminary hearing of the appeal the Employment Tribunal was requested to produce its notes of evidence.  We therefore have before us the key evidence which the Tribunal had.

14.	The first ground of appeal relates to the Tribunal’s finding that “the Respondent, acting on the Claimant’s concern, took prompt action and moved Darren to the Rainford office on a temporary basis so that he was not working alongside the Claimant”.

15.	It is said, on behalf of the Claimant, that this finding is indeed perverse in the true legal sense – that is, a finding which was wholly unsupported by any evidence before it.  We have already summarised the Claimant’s statement, in which she specifically says (1) that she had to work alongside the sales manager both on the Wednesday and on the Friday and (2) she was told by her area manager that the sales manager would not be moved from Birchwood.

16.	We have looked to see whether there is anything in the Employment Judge’s notes of evidence which would justify the finding the Tribunal made.  It records the following question and answer, in relation to the conversation between the Claimant and the sales manager on the Thursday evening.

“Q. What did you expect Debbie to do?
A. 	I wanted her to mediate.  Darren had been sent to Rainford.  I wanted her to take it further.  I felt she had taken his side.
Q. 	Did Lesley arrange for Darren to go to Rainford?
A. 	Yes she did.  Made him go.”

17.	This, to our mind, is the only piece of evidence which could have formed the basis for the Tribunal’s conclusion.  But it does not begin to justify the conclusion which the Tribunal reached.  It is plain from the Claimant’s statement that the sales manager had not been moved to Rainford except on two specific dates – the Tuesday and the Thursday.  The Claimant had to work with him on the Wednesday and the Friday.  If she had returned to work on the Monday she would have had to work with him again, for the area manager specifically stated (without having investigated the incident) that the sales manager would not be moved from Birchwood.   As we have said, there is nothing to suggest that the Tribunal disbelieved the Claimant.  Moreover what she said on this question was specifically recorded in the written grievance which she presented to her employer when she went off work.  We are driven to the conclusion that the Tribunal did not pay attention to the Claimant’s contemporaneous grievance and to her witness statement, and placed upon a single answer in evidence a weight which it could not possibly bear.

18.	In our judgment the Tribunal’s conclusion on this point was indeed perverse in the true legal sense.  Contrary to the Tribunal’s conclusion, the Respondent had not taken action so that the sales manager was not working alongside the Claimant.  He did so on Wednesday 1 October and on Friday 3 October.  He would have continued to do so if she had not left work.

19.	The second ground of appeal relates to the Tribunal’s finding that “the immediate reason” the Claimant left was because her pay, which was statutory sick pay only, was insufficient to cover her expenses and in particular her mortgage, and so she needed to find another job.

20.	It is argued that this finding is again perverse on the evidence, including the Claimant’s witness statement and dismissal letter.  Alternatively, it is argued that the Tribunal must have misunderstood the law on this question.

21.	Again we have looked at the Employment Tribunal’s notes of evidence.  The following is recorded in response to questions from the Employment Judge.

“4.11.08.  I left because I had no wages from them.  Mortgage – wouldn’t pay – insurance.  I had to get another job.  Didn’t want another job.  I hoped they would move me.”

22.	In this instance we consider that the Tribunal has misunderstood or misapplied the law.   The Tribunal was correct to proceed on the basis that the Claimant had to prove that she resigned in response to a fundamental breach by the Respondent.  But it was wrong to determine this question by looking at the immediate cause of the resignation.

23.	It is not necessary for the purposes of this judgment to analyse in detail the law on this topic.  Suffice it to say that it has never been the law that the Tribunal must concentrate upon the “immediate cause” of the resignation.  In Jones v Sirl and Son (Furnishers) Ltd [1997] IRLR 493 it was held that that in constructive dismissal cases the repudiatory breach by the employer need not be the sole cause of the employee's resignation.  The EAT there pointed out that there may well be concurrent causes operating on the mind of an employee whose employer has committed fundamental breaches of contract and that the employee may leave because of both those breaches and another factor, such as the availability of another job. It suggested that the test to be applied was whether the breach or breaches were the 'effective cause' of the resignation.

24.	In Nottinghamshire County Council v Meikle [2004] IRLR 703 Keene LJ, in a judgment with which other members of the Court of Appeal agreed, commented on Jones v Sirl and Sons (Furnishers) as follows:

“I see the attractions of that approach, but there are dangers in getting drawn too far into questions about the employee's motives. It must be remembered that we are dealing here with a contractual relationship, and constructive dismissal is a form of termination of contract by a repudiation by one party which is accepted by the other: see the Western Excavating case. The proper approach, therefore, once a repudiation of the contract by the employer has been established, is to ask whether the employee has accepted that repudiation by treating the contract of employment as at an end. It must be in response to the repudiation, but the fact that the employee also objected to the other actions or inactions of the employer, not amounting to a breach of contract, would not vitiate the acceptance of the repudiation. It follows that, in the present case, it was enough that the employee resigned in response, at least in part, to fundamental breaches of contract by NCC.”

25.	Given that the Tribunal was in error in these ways, it is now necessary to stand back and consider whether the Tribunal’s overall conclusion – that the Claimant had not made out her case of constructive unfair dismissal – can stand.

26.	In our judgment if the Tribunal had not made these errors of law it would have been compelled to the conclusion that the Respondent had indeed committed a fundamental breach of contract and that the Claimant had resigned in response to it.

27.	The Tribunal proceeded on the basis that the implied term relied on by the Claimant was the implied term of trust and confidence whereby an employer must not,
 
". . . without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee."

(Malik v BCCI [1998] AC 20 per Lord Steyn)

28.	We will proceed on this basis.  We have no doubt that it may amount to a breach of this term if an employer takes no effective action upon a complaint by an employee that she has been subjected to threats of violence, and leaves the employee liable to work in the same place as the perpetrator without any prompt or adequate investigation.  Indeed we think the Tribunal took the same view.  The Tribunal found against the Claimant on this part of the case because it erroneously found that the Respondent had taken effective action to move the sales manager to another location so that he was not working alongside the Claimant.  As we have found, this was not the case.

29.	The Tribunal’s conclusion, in paragraph 5 of its reasons, that the failure to deal with the Claimant’s grievance was not unreasonable, is therefore restricted to the period after 6 October.  It leaves out of account the fact that the Claimant had complained to the Respondent, and the Respondent had failed to take action, the previous week.  We would add that the Tribunal’s conclusion that it was “not unreasonable” for the employer not to contact the Claimant while she was on sick leave is insupportable.  It might (after consultation with an employee) be reasonable to investigate the grievance after the employee is fit to return to work, although (if for example the subject matter of the grievance is the cause of her failure to return to work) this is not necessarily the case.  But it is wholly unreasonable for an employer not even to acknowledge a grievance and inform the employee of the manner in which it proposes to deal with it.

30.	Once the correct test is applied to the question whether the Claimant resigned in response to the breach, the answer is in our judgment plain and obvious.  She did resign in response to the breach.  The financial exigencies of her position may have meant that she could wait no longer, but they were not the only or main reason for her resignation.  After all, until the events of which she complained, she had a job; and could have returned to it in order to earn her daily bread.   It was the manner in which the Respondent dealt – or failed to deal – with her complaints about the incident on 29 September which was the cause of her resignation, as she said in the resignation letter.

31.	For these reasons the appeal will be allowed.  Findings will be substituted that the Claimant was constructively dismissed and that the dismissal was unfair.  The matter will be remitted for a freshly constituted Tribunal to deal with the question of remedies.

32.	We will today make an order that the Claimant lodge with the Employment Tribunal and serve on the Respondent a Schedule of Financial Loss within 21 days of the seal date of this order.  The Respondent must lodge with the Employment Tribunal and serve on the Claimant a Counter-Schedule within 21 days thereafter.

33.	We would add that the Respondent would be well advised to engage with the question of remedies and not unnecessarily to put the Claimant to the expense of a hearing if the remedy sought is compensation and compensation can in reality be agreed.