THE INDUSTRIAL TRIBUNALS

CASE REF:  1635/04

CLAIMANT:		Helen Thompson

RESPONDENT:	Dunnes Stores

DECISION

The tribunal unanimously finds that;-

(a)	the claimant was unfairly constructively dismissed and it awards her compensation of £4,647.72, and 

(b)	the breach of contract claim has been resolved by the parties, and

(c)	the respondent acted unreasonably in its defence and conduct of this claim and it awards costs of £1,500 to the claimant. 

Constitution of Tribunal:

Chairman:		Mr B Greene

Panel Members:	Mr P Laughlin
			Mr J Lyttle

Appearances:

Miss M Higgins QC, instructed by Higgins, Hollywood & Deazley, Solicitors for the claimant.

Mr C Hamill, of Counsel, instructed by Tughans Solicitors, for the respondent.

Sources of Evidence

 1.	The tribunal heard evidence from the claimant and Tim O’Mahony for the respondent.  The tribunal also received three bundles of agreed documents amounting to one hundred and eighty-four pages. 

The Claim and Defence

 2.	(a)	The claimant claimed unfair dismissal and breach of contract.  The respondent denied that the claimant had been unfairly dismissed. 

(b)	The breach of contract alleged included claims for holiday pay and sick pay.  The holiday pay due to the claimant was paid before the conclusion of the tribunal hearing and the sick pay was abandoned by the claimant.  Neither of these matters were therefore considered by the tribunal.  

(c)	At the conclusion of the case the claimant sought costs against the respondent because the case was defended and conducted unreasonably, vexatiously and abusively.  It was not defended in a principled way and the defence was characterised by lack of candour, evasion and denial and lack of documentation to verify the decision making process. 

The Issues

 3.	(a)	Was the claimant unfairly dismissed by reason of redundancy?

(b)	Was the claimant unfairly constructively dismissed?

(c)	Did the claimant suffer a breach of contract?

(d)	If the dismissal was unfair or there was a breach of contract what is the appropriate remedy?

(e)	Is the claimant entitled to an order for costs by reason of the respondent’s defence and conduct of this claim.

Findings of Fact

 4.	(a)	The respondent employed the claimant from 11 November 1999 to 1 March 2004 as a supervisor and later manager of its bakery department in The Old Creamery branch in Newry.  The claimant’s original contract of employment contained a mobility clause.

The respondent operates shops throughout Ireland.
	
(b)	The claimant who was born on 18 May 1966, earned per week £260 gross, £218 net.

(c)	Around October 2003 the respondent recruited ten new trainee managers two of whom were for the Old Creamery branch.

(d)	In December 2003 the respondent made four butchers redundant at the Old Creamery when it decided to close its fresh meat department.

(e)	Mr O’Mahony, the respondent’s Human Resources Manager for all Ireland and Mr McLornan, the respondent’s Northern Ireland Regional Manager discussed staffing arrangements at the Old Creamery in December 2003 and January 2004.  They agreed that the position of bakery supervisor/manager at the Old Creamery was no longer required.

(f)	The reason for reducing the management staff at the Old Creamery was because the ratio of staff to profits applied by the respondent required the reduction of management staff by one.  Mr O’Mahony and Mr McLornan then decided to move the surplus manager to the Omagh branch because there was a need at Omagh for a trainee manager.

(g)	The respondent did not advance an explanation as to how or why the claimant was selected as the manager surplus to requirements.

(h)	Mr O’Mahony and Mr McLornan agreed that the latter would speak to Barry Holland, the respondent’s store manager at the Old Creamery, who would speak to the claimant.  It appears that Mr McLornan did not speak to Barry Holland about this until 16 January 2004.

(i)	On 16 January 2004 Barry Holland met with the claimant.  He informed her that;-

(i)	the position of bakery supervisor/manager at the Old Creamery no longer existed, and 

(ii)	she could go to Omagh, as a trainee manager, which he had told Mr McLornan was not an option, or remain in the Old Creamery doing the same job at a reduced salary and status and with no work on Saturdays which arrangement could remain secret as between the claimant and himself, and

(iii)	her position was being made redundant and she was being made redundant, and 

(iv)	the redundancy would be effective from 1 or 2 February 2004, and 

(v)	she should think about it and come back to him about it. 

(j)	The claimant, having taken advice from friends, did not revert to Barry Holland to discuss the matter further.

(k)	The claimant instructed a solicitor who wrote to Mr McLornan on 30 January 2004 by fax and post.  He stated that the two options put to the claimant by Barry Holland on 16 January 2004 were unacceptable.  He sought clarification on whether the claimant had been made redundant; the date of termination; the reasons for her redundancy; and the quantum of redundancy, if applicable.  The claimant’s solicitor wanted a response by 2 February 2004.

He further asserted that if the redundancy were effected that it was unfair and redress may be sought through an industrial tribunal.

(l)	The claimant had heard nothing by 2 February 2004 and a reminder was sent on 2 February by fax and post.  On 6 February 2004 a further reminder was sent by fax and post and it asked whether the claimant had been made redundant or not.  A letter was also sent to the respondent’s headquarters in Dublin.

(m)	On 9 February 2004 the claimant’s solicitor received an undated letter from Mr McLornan the respondent’s regional manager.   The letter stated that;-

(i)	the claimant had not been made redundant, and 

(ii)	Barry Holland had informed the claimant that the Old Creamery did not require a bakery manager and that she was being moved to Omagh in a similar capacity, and 

(iii)	the claimant was offered an alternative position in the Old Creamery, if she preferred, and 

(iv)	the claimant had signed a mobility clause in her job application, which he set out in full.

This was the first time the mobility clause had been mentioned.

(n)	The claimant’s solicitor sent a holding reply on 9 February 2004 in which he indicated he would be taking the claimant’s instructions.

(o)	Having taken the claimant’s instructions the solicitor replied on 16 February 2004.  In the letter he raised the following matters;-

(i)	that the claimant had been told by Barry Holland that she was being made redundant, and 

(ii)	that Barry Holland had told her that only statutory redundancy would be payable and she should not get excited about it, and

(iii)	why was there no longer a requirement for the position of bakery manager, and

(iv)	when the abolition of the bakery manager’s position became effective, and

(v)	who was or will be carrying out the duties of bakery manager.

(p)	The respondent replied by letter of 19 February 2004.  It asserted that;-

(i)	the claimant had not been made redundant, and 

(ii)	Barry Holland had not discussed redundancy moneys with the claimant, and 

(iii)	the claimant was requested to move to Omagh in line with her contract. 
	
(q)	On 23 February 2004 the claimant’s solicitor wrote to the respondent seeking a reply to the queries raised in his letter of 16 February 2004.

(r)	The claimant’s solicitor wrote again to the respondent on 1 March 2004.  In it he;-

(i)	recorded the events of 16 January 2004, and

(ii)	stated that there had not been any prior consultation with or warning to the claimant about the announcement of 16 January 2004, and

(iii)	set out the history of correspondence from 30 January 2004, and

(iv)	asserted that the respondent was trying to avoid making a redundancy payment to the claimant, and 

(v)	asserted that the respondent had failed to openly, honestly and fairly communicate with the claimant leaving her with no trust, confidence or respect in the respondent, and

(vi)	that the claimant was treating herself as having been dismissed from 1 March 2004 and that she had been unfairly dismissed by reason of redundancy or alternatively had been constructively dismissed, and

(vii)	sought her P45 or other documentation.

(s)	The respondent’s solicitor replied by letter of 18 March 2004 in which he reiterated what had been stated in earlier correspondence from the respondent.  It further stated that the meeting of 16 January 2004 was the beginning of a consultation process.

(t)	The claimant obtained other employment from 2 August 2004 and suffered no financial loss thereafter.

(u)	The respondent defended this claim from the outset on the basis of a redundancy situation.  It so conducted the case in the same manner until the third day of hearing when it changed its defence whereby it abandoned the contention that there was a redundancy situation and relied on the mobility clause in the claimant’s contract of employment to justify its attempted movement of the claimant to Omagh.

The Law

 5.	(a)	Where an employer dismisses an employee by reason of redundancy he must warn and consult the affected employees; adopt a fair basis on which to select for redundancy; apply the selection criteria fairly; and take such steps as may be reasonable to avoid or minimise redundancy.

(b)	To establish a constructive dismissal that is unfair an employee must prove;

(i)	that there was a breach of his contract of employment, and

(ii)	that the breach went to the core of the contract, and

(iii)	that he resigned as a result of the breach, and

(iv)	that he resigned fairly soon after the breach occurred, and

(v)	that in all the circumstances the employer acted unreasonably.

(c)	The breach of contract can be the breach of an express term of the contract or a breach of the implied term of trust and confidence or both.

(d)	A breach of the implied term of trust and confidence can be by a single act of the employer or a course of conduct over a period of time.

(e)	Where a course of conduct is relied upon it is not necessary that any single act itself amounts to a breach of the implied term of trust and confidence but the course of conduct cumulatively must amount to the breach of the implied term.

(f)	On the application of a party a tribunal may make an order for costs against a party where it is satisfied that in bringing or conducting the proceedings the party has acted vexatiously, abusively, disruptively or otherwise unreasonably. (The Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005 Schedule 1 Rules 40 and 41) 

Application of the Law and Findings of Fact to the Issues

 6	(a)	The respondent declared a redundancy situation affecting the claimant on 16 January 2004 and declaring her redundant from 1 or 2 February 2004.

(b)	The respondent did not give any warning to the claimant of the redundancy situation or have a period of consultation prior to 16 January 2004.

(c)	The correspondence from the respondent did not exclude a redundancy situation.  Rather it repeated that the claimant had not been made redundant.  This is consistent with a redundancy situation in which the respondent believed it had made offers of two reasonable alternative positions and a redundancy would be avoided. 

(d)	The effect of the respondent’s letter received on 9 February 2004 and the claimant’s solicitor’s response of 16 February 2004 was not to exclude a redundancy situation or that the claimant would be made redundant.

However, in the absence of any of the usual formalities, associated with making redundancies, e.g. a letter to the redundant employee stating that the employee’s redundancy is effective from a certain date and setting out the calculation of a redundancy payment and stating when and how payment will be made; and the letter of 16 February 2004, the tribunal concludes that the redundancy of the claimant had not been effected on 1 or 2 February 2004 and had at least been deferred.

(e)	By 1 March 2004 neither a redundancy situation nor that the claimant would be made redundant had been excluded.  On I March 2004 the claimant resigned and this act interrupted the redundancy process.

(f)	The tribunal is satisfied that the respondent breached the implied term of trust and confidence in the claimant’s contract of employment.  In so concluding the tribunal took into account the following matters;-

(i)	Until 6 December 2006 the respondent defended this claim on the basis that it was a redundancy situation and therefore the respondent's actions must be considered in that context.

(ii)	The respondent did not give the claimant any warning of an impending redundancy situation or that it might affect her.

(iii)	The respondent did not hold any discussions with the claimant about ways of avoiding the redundancy or what the selection criteria were.

(iv)	The claimant was not asked to make proposals about alternatives to redundancy.

(v)	At best the only consultation offered to the claimant was which of the two alternative positions mooted she wished to take.

(g)	This breach of the implied term of trust and confidence is a fundamental breach given that the respondent conducted this matter without any regard for the appropriate procedures for redundancy.

(h)	The principal cause for the claimant’s resignation was the breach by the respondent.  The tribunal is satisfied that there is not any significance to be attached to the fact that the claimant had from time to time sought other employment before these events occurred.

(i)	The tribunal is further satisfied that the claimant did not delay too long before she resigned.

(j)	The claimant has been constructively dismissed.

(k)	In all the circumstances the respondent has acted unreasonably and thereby the constructive dismissal of the claimant has become an unfair dismissal. 

(l)	The claimant seeks compensation by way of remedy.  In assessing the compensation to be paid the tribunal finds that there is not any loss of earnings after 2 August 2004.  The tribunal is further satisfied that the claimant has mitigated her loss.  The tribunal notes that the claimant who resides in Omeath, County Louth, received unemployment assistance in the Republic of Ireland of €134.80 (£88.97) per week.  The parties have agreed that the claimant suffered a pension loss of £450. 

(m)	The claimant’s compensation is as follows;-

Basic Award

£260 x 4					= £1,040.00

Compensatory Award

From 2 March to 2 August 2004
£218 x 22					= £4,796.00

Unemployment assistance received 
5 March to 2 August 2004
£88.97 x 21.28				= £1,893.28

Loss						= £2,902.72

Loss of pension				= £  450.00

Total loss					= £4,392.72

Loss of statutory rights			= £  250.00

Total Award					= £4,642.72
(n)	The respondent acted unreasonably in its defence and conduct of the case.  The case was pleaded by the respondent as a redundancy situation and conducted it as such until the third day of hearing (6 December 2006) when it abandoned redundancy.  The respondent’s clear evidence to the tribunal from its Human Resources Manager was that redundancy was never an issue in the events that gave rise to the claimant’s resignation and that he had approved the respondent’s responses to the claimant’s solicitors correspondence from before 9 February 2004 and the pleadings. 

The respondent’s assertion that a redundancy situation existed which it believed to be untrue and its failure to clarify the position until the third day of hearing unnecessarily prolonged this application.

The tribunal is of the view that costs should be allowed for one day which it assesses at £1,000 for senior counsel and £500 for her instructing solicitor.

This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

Chairman:

Date and place of hearing:	12 - 13 October; 6 - 8 & 19 December 2006 and 16 February 2007

Date decision recorded and issued to parties: