Appeal No. UKEAT/0359/12/KN

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

		At the Tribunal
		On 18 December 2012

Before
HIS HONOUR JUDGE PETER CLARK
MS G MILLS CBE

REVEREND STUART PIPER	APPELLANT

MAIDSTONE & TUNBRIDGE WELLS NHS TRUST	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR GORDON MENZIES
(of Counsel)
Instructed by:
Baileyfields
Thorne Estate Business Park
Forge Hill
Bethersden
Ashford
TN26 3AF
	
For the Respondent	MR JAMES PURNELL
(of Counsel)
Instructed by:
Brachers LLP
Somerfield House
59 London Road
Maidstone
ME16 8JH

SUMMARY
UNFAIR DISMISSAL – Dismissal/ambiguous resignation

Whether sanction short of dismissal on internal appeal expunged earlier dismissal.  Employment Tribunal held: yes.  On analysis, the contractual provision required the Claimant’s agreement to the lower sanction.  Absent that agreement his dismissal stood – Roberts v West Coast Trains considered.  Claimant’s appeal allowed.

HIS HONOUR JUDGE PETER CLARK
Introduction
1.	The question in this appeal is whether the Ashford Employment Tribunal fell into error of law in finding, on the hearing of a preliminary issue, that the Claimant, Reverend Stuart Piper, was not dismissed by his employer, the Respondent, Maidstone & Tunbridge Wells NHS Trust, so that the Tribunal had no jurisdiction to consider his complaint of unfair dismissal.  That decision is contained in a Judgment with reasons promulgated on 29 March 2012.  We sit to hear the appeal as a two‑member panel with the informed consent of the parties.

The facts
2.	The material facts relating to this issue are not controversial.  The Claimant commenced his employment with the Respondent as lead chaplain on pay band 7 on 7 January 2008.  By a written contract of employment dated 23 January 2008 it is common ground that the Respondent’s disciplinary rules and procedures referred to at clause 10 of the contract form part of the contractual terms and conditions of employment.  Paragraph 5.8 of the disciplinary policy is headed “Possible Outcomes of a Disciplinary Hearing”.  The sanctions where a disciplinary offence is found proven range from informal action to summary dismissal for gross misconduct, and then this:

“Action Short of Dismissal
There may occasionally be exceptional circumstances where management take the view that whilst dismissal may be warranted, organisational and employee circumstance may best be served by action short of dismissal itself.  In these circumstances, one of the following sanctions may be considered as an alternative to dismissal only.  These sanctions will normally be applied on a substantive basis.  If the employee does not agree with this course of action, dismissal is the only alternative.
o	Demotion without pay protection
o	Disciplinary transfer to another post within the organisation – without pay protection or excess mileage payments
The Trust cannot create posts to accommodate demotions or transfers and consideration of such a course of action will only be possible where a vacancy exists.  Any of the above sanctions will be accompanied by a final written warning.”

3.	The policy provides for a right of appeal against dismissal.

4.	On 11 April 2011 an incident took place involving the Claimant and his manager, Mrs Steele.  Thereafter disciplinary proceedings were taken against him.  A disciplinary hearing took place on 28 June and 20 July 2011 before Mr Shaw.  By a letter sent on 4 August Mr Shaw notified the Claimant that he was dismissed for gross misconduct with three months’ pay in lieu of notice.  He was informed of his right of appeal.

5.	Against that decision the Claimant appealed by letter dated 16 August.  An appeal hearing took place on 23 September 2011.  The outcome was that the appeal was allowed to the extent that the Respondent decided to substitute for the sanction of dismissal what is described in the appeal letter from Mr Bentley dated 11 October as action short of dismissal, namely a final formal warning, which was to remain on the Claimant’s file for 18 months, downgrading from the role of band 7, lead chaplain, to band 6, chaplain, involving a reduction in pay, and a transfer from his previous base of Maidstone Hospital to the Respondent’s hospital at Tunbridge Wells.

6.	On 18 October 2011 the Claimant lodged his form ET1 at the Tribunal.  He there contended that his employment had terminated on 20 July.  He complained of unfair dismissal, and the remedy that he sought was, “Full reinstatement to my role as Trust lead chaplain”.  He then emailed the Respondent on 20 October referring to the appeal outcome and saying:

“I write to inform you that I consider the offer of re‑engagement at the lower level to be an unreasonable one.
It is not an offer that I can reasonably accept given the severe financial and psychological penalties that it would impose on me.”

7.	By letter dated 28 October the Respondent treated that email as a resignation, which was accepted.  By their form ET3, in addition to taking issue with the unfair dismissal claim on its merits, the Respondent contended that the effect of the appeal outcome was to remove the earlier dismissal on 20 July; the Claimant was not dismissed; hence the preliminary issue that the Tribunal determined.

The Tribunal Decision
8.	The Tribunal were referred to the leading Court of Appeal authority, Roberts v West Coast Trains Ltd [2005] ICR 254, and the later EAT decision in Saminaden v Barnet Enfield & Haringey NHS Trust UKEAT/0018/08, 7 July 2008, HHJ Jeffrey Burke QC and members.  A reference was also made by the Tribunal (paragraph 10) to the case of “O’Riordan”, presumably a reference to Riordan v The War Office [1959] 3 All ER 552.  That case is authority for the proposition that notice once given cannot be unilaterally withdrawn (see also Harris & Russell Ltd v Slingsby [1973] ICR 454 NIRC).

9.	The Tribunal concluded that the contractual provision in Saminaden that disciplinary downgrading required the written agreement of the employee could be distinguished from the relevant provision in the instant case, namely if the employee does not agree to a sanction as an alternative to dismissal, then dismissal is the only alternative.  Their principal reasoning is set out at paragraph 30 thus:

“Having considered that wording carefully [the passage of paragraph 5.8 in the disciplinary procedure], the Tribunal concluded that the plain meaning of the Respondent’s disciplinary procedure was that the Respondent could take action short of dismissal upon appeal and that if the employee did not agree with that action, then the only action left was dismissal.  In other words, the dismissal would be confirmed if the employee did not want to return upon demotion (or such other actions short of dismissal that the Respondent had decided).  The Tribunal was satisfied that the employee could not be forced to return to work in a demoted role, but that did not mean that he had to consent to the Respondent making that decision to demote in the first place.  That is quite different in the case of Saminaden, where the employer clearly had to obtain the agreement of the employee in order to downgrade that employee.  The Tribunal concluded that the Respondent here was entitled under the contractual disciplinary procedure to say, on appeal, that the employee could return to work on the new terms set out by the appeal panel, or could remain dismissed.”

10.	Their conclusion, expressed at paragraph 32, was that at the date when the Claimant presented his claim form on 18 October he was an employee of the Respondent, as his dismissal had been overturned by the appeal.  Consequently, the Tribunal had no jurisdiction to consider his complaint of unfair dismissal.

The law
11.	Dismissal for the purposes of Part X of the Employment Rights Act 1996 (ERA), unfair dismissal protection, may take one of three forms under section 95(1).  Potentially relevant here are (a), actual dismissal and (c), constructive dismissal.  At paragraph 28 this Tribunal directed themselves as follows:

“The Tribunal considered firstly the argument that a contract could not be revived unilaterally.  The Tribunal concluded that in general terms in the case of a dismissal followed by an appeal which reinstated an employee, clearly the contract could be revived unilaterally.  The employee does not have to consent to be reinstated and may choose to leave the employment of his employer.  He cannot be forced to continue to work for the employer.  However, all of the case law points to the inescapable conclusion that overturning a dismissal on appeal does in fact revive the contract of employment.”

12.	We consider that that statement of the law requires close analysis.  We begin with the general proposition to be found in Riordan and in Slingsby that notice, once given by either party, cannot be unilaterally withdrawn; we emphasise the word “unilaterally”.  At paragraph 29 of Roberts Mummery LJ, giving the leading Judgment of the court, cited two passages from the speech of Lord Bridge in West Midlands Co-operative Society Ltd v Tipton [1986] ICR 192 to the effect that where an employee is dismissed and there then follows the contractual appeal procedure, his dismissal is suspended without pay pending the outcome of the appeal in the sense that if his appeal is successful, he is reinstated and will receive back-pay for the period of suspension.  If the appeal is unsuccessful and the dismissal is affirmed, then dismissal takes effect on the original date of dismissal.  Those remarks were made in the context of determining an issue as to whether in deciding the fairness of a dismissal under what is now section 98(4) ERA it was relevant to take into account what happened at the internal appeal stage.  The House of Lords decided that it was.

13.	Mummery LJ, whilst accepting that the observations of Lord Bridge were made in a different context, went on to hold in Roberts (paragraphs 30‑31) that their Lordships in Tipton approved the essential reasoning of the Court of Appeal in J Sainsbury Ltd v Savage [1981] ICR 1.  The issue in that case, it will be recalled, was: what was the effective date of termination of the contract?  On that finding depended the question as to whether the claim was justiciable.  Mr Savage was summarily dismissed.  If time ran from that date, he had not completed sufficient qualifying service, then 26 weeks, to bring a claim of unfair dismissal.  However, the disciplinary procedure applicable to his case provided that pending the decision on appeal the employee was suspended without pay but if reinstated on appeal he would receive back‑pay for the period of suspension.  He lost his internal appeal but was able to bring a claim of unfair dismissal because, as the Court of Appeal held, during that period of suspension pending appeal the contract of employment remained in existence; he had thus completed the necessary qualifying period of service entitling him to bring a claim of unfair dismissal.  What Savage, as approved in Tipton, establishes in our view is that the contractual provisions for internal appeals and their effect on statutory questions is important.  In Savage the contract expressly provided for suspension without pay pending appeal as opposed to providing for continuity of employment only if the appeal succeeded.

14.	Before turning to the facts in Roberts, essential to a proper understanding of the reasoning in that case, we pause to observe that the term “reinstatement” used by Lord Bridge in Tipton has a precise meaning in employment law.  One of the remedies for unfair dismissal is an order for reinstatement, defined in section 114 ERA as an order that the employer shall treat the complainant in all respects as if he had not been dismissed.  That includes not only full reimbursement of all pay and benefits not received by the employee following his dismissal but also restoring all rights and privileges, including seniority and pension rights.  That is precisely the order that the Claimant seeks in this claim to the Tribunal.

15.	An alternative remedy (section 115 ERA) is re‑engagement.  That may involve different terms and conditions of employment to those in place before dismissal.  Again, we think that the Claimant here was entirely accurate in his email to the Respondent of 20 October in referring to “re‑engagement”, involving a downgrading in pay and status coupled with a transfer to a different location.  The question is whether that was an offer of re‑engagement that he could contractually refuse or was an outcome by which he was contractually bound.  In this appeal the Claimant contends for the former and the Respondent for the latter.

16.	We turn, then, to the facts in Roberts, as set out in the Judgment of Mummery LJ.  Mr Roberts was dismissed on 6 November 2001.  He appealed internally and lodged a claim in the Employment Tribunal before the result of the appeal was known.  On 6 February 2002 an appeal hearing was held.  The outcome was that the sanction of dismissal was replaced by a reduction in grade.  He was also given a final warning.  The period between dismissal and appeal was treated as a period of suspension without pay.  At paragraph 17 Mummery LJ observed that by reference to the contractual disciplinary procedure the sanction short of dismissal imposed by the Respondent on appeal was provided for under the procedure.  That was common ground between the parties; see paragraph 21.

17.	It is in those circumstances that the Court of Appeal, upholding the decisions below, concluded that in exercising his right to appeal internally Mr Roberts had agreed to abide by the outcome permitted by the contractual disciplinary procedure, thus his original dismissal was nullified by the appeal outcome, which revived the contract of employment from that date.  Hence although dismissed at the time he lodged his form ET1, he was no longer dismissed when the case came on for hearing, he having declined to return to work on the basis of the appeal decision.  As Arden LJ observed (paragraph 34) in a short concurring Judgment, continuation of the contract is the normal result of an internal appeal procedure unless the contract otherwise expressly provides (see Lord Bridge in Tipton).

18.	Saminaden is an example of a case where the contract did expressly provide otherwise.  There the contractual disciplinary procedure provided:

“Exceptionally, as an alternative to dismissal, downgrading and/or transfer may be considered.  Downgrading will require the written agreement of the employee concerned.”

19.	Mr Saminaden was dismissed for misconduct on 30 May 2006.  His internal appeal was successful to the extent that his employer proposed substituting a sanction of downgrading from band 6 to a band 5 post coupled with a final written warning for the sanction of dismissal.  He did not agree to that outcome in writing, although he returned to work under the new conditions before going off sick, never to return.  On his complaint of unfair dismissal the Employment Tribunal, having referred to Roberts, concluded that the employer’s action on appeal was clearly permitted by the contractual disciplinary procedure; the Claimant was not dismissed.  On appeal the EAT held that in the absence of the Claimant’s written consent to his downgrading the original dismissal stood; the appeal was allowed.

Discussion
20.	In advancing this appeal Mr Menzies submits that, contrary to the Tribunal’s approach at paragraph 30 of the reasons, there is in truth no material distinction between the contractual position in Saminaden and the present case.  In Saminaden the employee’s written consent to downgrading on appeal as an alternative to dismissal was a prerequisite of the contract of employment being continued and the original dismissal cancelled.  In the present case the Claimant’s agreement to action short of dismissal as an alternative to dismissal was required, otherwise he would be dismissed at the disciplinary stage, or his dismissal would stand at the appeal stage.  On the facts the Claimant never gave his agreement to the appeal sanction; on the contrary, he rejected it and brought proceedings with a view to obtaining an order for reinstatement in the full section 114 sense.  The facts of this case, he submits, differ from those in Roberts, where the employer was contractually entitled to impose the sanction short of dismissal on appeal as an alternative to the original dismissal decision.  The employee’s consent to that course was not required.

21.	In response Mr Purnell focuses on the words of paragraph 5.8 of the Respondent’s disciplinary procedure, which he accepts was contractual.  He argues that the words, “If the employee does not agree with this course of action, dismissal is the only alternative”, do not create an exception to the general rule in Tipton and Roberts that a successful appeal will nullify the original dismissal.  He supports the Tribunal’s distinction between those words and the requirement for the employee’s written agreement to downgrading in Saminaden.  It is his case on behalf of the Respondent that the Tribunal was entitled to conclude (paragraph 32) that the effect of the appeal outcome was to overturn the original decision.  If the Claimant did not wish to continue his employment on the new terms, then it was open to him to resign; that is what, in effect, he did.

Analysis
22.	Ultimately, this case raises a pure question of contractual construction: what do the words, “If the employee does not agree with this course of action, dismissal is the only alternative”, mean in the context of the authorities to which we have referred?  Plainly, in our judgment, the reference to the employee’s agreement can only mean that he is being given the option to agree or disagree with the alternative sanction short of dismissal proposed on appeal.  If he agrees to the alternative sanction, then the employment will continue and the original decision is expunged; however, if he disagrees with that course, then if the question arises at the disciplinary stage, he will be dismissed, and if, as here, it arises at the appeal stage, the original dismissal will stand.  That is what happened here.  The Claimant did not return to work after his dismissal nor indeed after the appeal letter.  He did not agree with the outcome of the appeal.  He believed that he should have been exonerated and continued in his original post as lead chaplain on band 7 at Maidstone.  He made that clear both in his form ET1 lodged on 18 October and in his email of 20 October.  To that extent his case is similar, although not identical, to that of Saminaden.

23.	Absent the reference to the employee’s agreement in paragraph 5.8, the Respondent would have been contractually entitled to impose the alternative sanction that it did, as were the employers in Roberts.  The passages in Tipton do not greatly assist since, leaving aside the issue in that case, Lord Bridge was dealing with reinstatement on appeal.  It is plain that the alternative sanction proposed by the Respondent in this case amounted to re‑engagement on terms which, under the contractual disciplinary procedure, required the Claimant’s agreement.  Absent that agreement, the original dismissal stood.  That appears, for the most part, to have been the Tribunal’s reasoning at paragraph 30 of their reasons.  Their conclusion at paragraph 32 seems to us to be inconsistent with a proper construction of the contractual term at paragraph 5.8.

Disposal
24.	It follows that we shall allow this appeal, substitute a declaration that the Claimant was dismissed on 20 July 2011 and his employment was never revived, and that the Tribunal has jurisdiction to entertain his complaint of unfair dismissal.  The case will now be remitted to a different Tribunal to determine that complaint on its merits, as to which we say nothing.