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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Sandhu v Jan De Rijk Transport Ltd [2007] EWCA Civ 430 (10 May 2007) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2007/430.html Cite as: [2007] IRLR 519, [2007] ICR 1137, [2007] EWCA Civ 430 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
EAT045105LA
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE WALL
and
LORD JUSTICE MAURICE KAY
____________________
CHARLES SANDHU |
Appellant |
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- and - |
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JAN DE RIJK TRANSPORT LTD. |
Respondent |
____________________
WordWave International Ltd
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Ghazan Mahmood (instructed by Peninsula Business Services Ltd) for the Respondent
Hearing date : 24th April 2007
____________________
Crown Copyright ©
Lord Justice Wall :
Introduction
(1) that the Tribunal misdirected itself in law as to the proper test to be applied in determining whether the appellant had resigned or been dismissed;
(2) that the Tribunal's finding that the appellant had been dismissed was perverse; and
(3) that the Tribunal had wrongly excluded evidence properly admissible on the resignation / dismissal issue.
The facts
The hearing before the Tribunal
On being questioned by the Chairman as to the specifics of what was said, Mr. Wijngaards said that they had discussed agency drivers and they were not happy with the situation. They specifically discussed the issue of the amount the agency drivers were costing, asked Mr. Sandhu if something was going on such that might compromise the company, a fact which he denied. Mr. Sandhu commented about the difficulties of unmanned trucks. Mr. Wijngaards estimated that about a third of the time they spent together of between 30 minutes to one hour was spent on discussing the company's problems and two thirds of the time was in the discussion regarding the ending of his employment.
11. The respondents proposed that Mr. Sandhu's employment should finish at the end of December 2002. Mr. Sandhu negotiated that he should remain employed until 31 March 2003, he should retain the use of his company car until the end of January 2003 and that he would retain the use of his mobile phone, albeit paying for the calls himself from 9 December 2002.
Dear Mr. Sandhu,
We hereby agree that we terminate your contract as per 01-04-2003. We agree that you will be paid until that same day.
You will be working till 9-12-2002 on which day you will return all property of Jan de Rijk Transport Ltd with exceptance (sic) of your company car. The car has to be returned by the end of January 2003 in good and proper condition.
By signing this letter for acceptance both parties agree that no further obligations will exist after 31-03-2005.
16. Conclusions of the Tribunal
The Tribunal was conscious that where an employee is effectively told you either resign or you will be dismissed that resignation would be deemed to be a dismissal. Equally, where a person chooses to resign rather than to be the subject of disciplinary proceedings as in Staffordshire County Council v Donovan [1981] IRLR 108 that will be held to be a resignation as the outcome of the disciplinary hearing would not be known. However, the Tribunal was faced with a different situation. The facts as concluded by the Tribunal were that Mr Sandhu was invited to a meeting. There he was faced with the bald facts regarding his apparent abuse of arrangements with agency drivers and made aware that the respondents no longer had any trust in him and wished to terminate his contract. At that point had Mr Sandhu walked away it clearly would have been a dismissal and, in the absence of any proper procedure, an unfair dismissal. However, Mr Sandhu spent the majority of the meeting, on both his evidence and Mr Wijngaards' evidence, sorting out a financially beneficial way for his leaving the company.
17. The Tribunal was satisfied that Mr Sandhu was fully aware of what were the concerns of the company. Despite Mr Sandhu saying he was just told that he had compromised his integrity with suppliers the Tribunal was satisfied that in fact Mr Wijngaards and Mr Heeren went into much more detail. It was on the basis of knowing the extent of those allegations that Mr Sandhu chose to negotiate a deal for his departure. If he had not been aware of the detail and merely been told his integrity was being compromised his behaviour would make no sense. Human nature would be to press for further information. It is only on the basis that he must have been aware of the extent of the allegations against him that Mr Sandhu's conduct in spending a considerable length of time in successfully negotiating a three month additional payment on top of his contractual notice period, the retention of the car and the phone for a month longer than his contractual notice period that the situation makes any sense.
18. We therefore conclude that, although the situation started off as a dismissal by Mr Heeren's statement, Mr Sandhu in fact left because of the favourable terms he negotiated. It was similar to where an enforced resignation becomes a voluntary one where an employee negotiates satisfactory financial terms and leaves because of them.
19. In reaching our view the Tribunal noted the circumstances as described in Sheffield v Oxford Controls Ltd [1979] IRLR 133 and Crowley v Ashland (UK) Chemicals Ltd EAT 31/79. We consider that this case to be on all fours with those cases and therefore, on the facts and in law, we concluded that the parting of the ways between the claimant and the respondent company was by mutual agreement and therefore not a dismissal.
20. The claimant's case of unfair dismissal, wrongful dismissal and breach of contract must all therefore fail.
Events post the 6 December meeting
After a meeting in Roosendaal on Friday afternoon (06.12) between Charlie and the JdR board it was mutually agreed that the parting of ways was the best solution for both parties.
We regret it has come up to this point but wish him the best for his future career.
Robert Kleppers
In reply to your letter of 3-2-03 we hereby state that we clearly agreed upon ending your contract as stated in our letter of 06-12-2002.
You also agreed with the decision as well as with the terms by signing the letter mentioned.
Trusting the above is sufficient,
Yours faithfully
Dismissal or resignation? The authorities
In our judgment, if an employee is told that she is not longer required in her employment and is expressly invited to resign, a court of law is entitled to come to the conclusion that, as a matter of common sense, the employee was dismissed. Suppose that the employer says to the employee, "Your job is finished. I will give you the opportunity to resign. If you don't, you will be sacked". How, we would ask, is it possible to reach a conclusion other than that the employment is being terminated by the employer, even though the employee takes the first and more respectable alternative of signing a letter of resignation rather than being the recipient of a letter of dismissal? We feel that in such circumstances there really can be no other conclusion than the employer terminated the contract.
…… It is plain, we think, that there must exist a principle, exemplified by the four cases to which we have referred, that where an employee resigns and that resignation is determined upon by him because he prefers to resign rather than to be dismissed (the alternative having been expressed to him by the employer in the terms of the threat that if he does not resign he will be dismissed), the mechanics of the resignation do not cause that to be other than a dismissal. The cases do not in terms go further than that. We find the principle to be one of causation. In cases such as that which we have just hypothesised, and those reported, the causation is the threat. It is the existence of the threat which causes the employee to be willing to sign, and to sign, a resignation later or to be willing to give, and to give, the oral resignation. But where that willingness is brought about by other considerations and the actual causation of the resignation is no longer the threat which has been made but is the state of mind of the resigning employee, that he is willing and content to resign on the terms which he has negotiated and which are satisfactory to him, then we think there is no room for the principle to be derived from the decided cases. In such a case he resigns because he is willing to resign as the result of being offered terms which are to him satisfactory terms on which to resign. He is no longer impelled or compelled by the threat of dismissal to resign, but a new matter has come into the history, namely that he has been brought into a condition of mind in which the threat is no longer the operative factor of his decision; it has been replaced by the emergence of terms which are satisfactory. Therefore we think that the finding that Mr Sheffield had agreed to terms upon which he was prepared to agree to terminate his employment with the company — terms which were satisfactory to him — means that there is no room for the principle and that it is impossible to upset the conclusion of the Tribunal that he was not dismissed.
C was employed as a personnel manager. His employers were unhappy about his performance though they gave him no warning about it. C was invited to a meeting in London, ostensibly to discuss pay negotiation. On arrival, however, he was told that the purpose of the meeting was to discuss his own shortcomings, which had been listed in a document. This was read out to him. It was suggested that one way of resolving the problem was to part company, on a voluntary basis. It was stated thus: "What we are suggesting is a voluntary arrangement, and it is not a question of us dismissing you tomorrow as an alternative". Later that day, and over the next few days, negotiations took place, after which C was presented with a resignation letter, which he signed, and a cheque for £5,570, which he accepted. He subsequently claimed unfair dismissal.
The cases to which they (the Tribunal) were referred do not decide that an employee cannot resign pursuant to an agreement with his employers. What those cases decide is that if the departure of the employee is caused by the threat of dismissal if the man does not resign, or if the agreement to resign is not a genuine one and arrived at without pressure, then there is a dismissal. But they leave open the possibility that the cause of the departure is not the threat of the dismissal, but is the agreement which is arrived at and possibly the payment of money as a result of that agreement. So we consider here that the tribunal did on this aspect of the case properly and correctly direct themselves in law.
They considered whether there really had been a resignation free from pressure by the time it was arrived at, or whether there was here a dismissal disguised behind a request for resignation. They were satisfied that the gap between what happened on the 14 July and the decision by Mr. Crowley to accept the cheque and to sign the letter on the 18 July was sufficient for this to have been in his case a genuine resignation. They were satisfied that there had been proper negotiation and it is clear that the figures which were discussed rose substantially as we have said from the equivalent of a former salary for four months to something like a year, with a number of extras. It seems to us that there was evidence here upon which the tribunal could conclude that Mr Crowley had deliberately chosen to resign on this occasion; that it was an agreement arrived at free from the unfortunate circumstances in which the first meeting took place and arrived at genuinely.
6. The idea of Mr Sheffield's going for £10,000, paid as and when the company could, was on the table at this stage although plainly not a concluded agreement. Having been determined in that way and to that extent, Mr Raison went off and prepared the next, final document which was in the form of some heads of agreement, or draft heads of agreement as they plainly were at that stage. Those were prepared, according to the evidence, about 1 pm and in the course of the afternoon (shortly after lunch, it was put by one of the witnesses) the two directors, Mr Raison and Mr Sheffield, met again and a further discussion ensued. Ultimately, the heads of agreement were initialed as an indication of what was the fact, that the contents had been agreed; 'whereupon Mrs. Sheffield signed her resignation letter', to use the phrase in the findings of the Tribunal.
7. The question is whether the resignation contained in the heads of agreement of Mr Sheffield brought about in those circumstances is really something which terminated the contract of employment on the initiative of Mr Sheffield, or whether, because it was made as a result of a threat that he would be dismissed if he did not resign, the result is that that was a dismissal by the company notwithstanding the intermediate negotiation.
If an employee resigns upon being told that unless he resigns he will be dismissed, that is a dismissal in law. In the present case, however, the agreement which formed the basis of the employee's resignation was not arrived at under duress and there was no threat of dismissal. The disciplinary proceedings were continuing subject to a right of appeal.
Where the parties are seeking to negotiate in the course of disciplinary proceedings and an agreed form of resignation is worked out, it would be most unfortunate if the fact that that agreement was reached in the course of disciplinary proceedings entitled the employee thereafter to say that there was a dismissal.
Courts and tribunals have been willing, from the earliest days of the unfair dismissal jurisdiction, to look, when presented with an apparent resignation, at the substance of the termination for the purpose of inquiring whether the degree of pressure placed on the employee by the employer to retire amounted in reality to a dismissal. In the instant case, the employee had framed his claim in constructive dismissal, and the industrial tribunal dealt with it upon that footing. There was accordingly some discussion before us as to whether the principle I have just mentioned is to be regarded as deriving from an inference of circumstances giving rise to a constructive dismissal under s.95(1)(c) of the Employment Rights Act 1996, or whether it is more broadly based as a species of direct dismissal. For my own part, while tending to favour the latter view, I do not find it necessary to resolve that question in the present case because the principle itself (whatever its origins) is well settled. It is a principle of the utmost flexibility which is willing in all instances of apparent voluntary retirement to recognise a dismissal when it sees it, but is by no means prepared to assume that every resignation influenced by pressure or inducement on the part of the employer falls to be so treated. At one end of the scale is the blatant instance of a resignation preceded by the employer's ultimatum: 'Retire on my terms or be fired' – where it would not be surprising to find the industrial tribunal drawing the inference that what had occurred was a dismissal. At the other extreme is the instance of the long-serving employee who is attracted to early retirement by benevolent terms of severance offered by grateful employers as a reward for loyalty – where one would expect the industrial tribunal to draw the contrary inference of termination by mutual agreement. Between those two extremes there are bound to lie much more debatable cases to which, according to their particular circumstances, the industrial tribunals are required to apply their expertise in determining whether the borderline has been crossed between a resignation that is truly voluntary and a retirement unwillingly made in response to a threat. I doubt myself whether, given the infinite variety of circumstance, there can be much scope for assistance from authority in discharging that task: indeed, attempts to draw analogies from other cases may provide more confusion than guidance. In cases where precedent is nevertheless thought to be of value, the authority that will no doubt continue to be cited is Sheffield v Oxford Controls Co Ltd [1979] IRLR 133.
Dismissal or resignation? The case for the respondent
Dismissal or resignation? The approach of the EAT
Dismissal or resignation? Discussion and conclusion
Perversity
Other points
Conclusion
Footnotes
Maurice Kay LJ
Pill LJ