Appeal No.	 EAT/372/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 17 June 1999

Before
HIS HONOUR JUDGE PETER CLARK
MR D CHADWICK
MR P DAWSON OBE

MR R D JAMES	APPELLANT

NORTHERN LEISURE INC PLC	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	NO APPEARANCE OR
REPRESENTATION  BY 
OR ON BEHALF OF
THE APPELLANT	

	JUDGE PETER CLARK:	This is an Appeal by the Applicant before the Shrewsbury Employment Tribunal, Mr James, against that Tribunal’s decision promulgated with extended reasons on 27th January 1999, following a Hearing on 14th January dismissing his claims of unfair dismissal and damages for breach of contract, brought against his former employer, the Respondent, Northern Leisure Inc PLC.  He was represented before the Employment Tribunal by Mr Naylor, an Employment Rights Adviser, who entered this Appeal on his behalf by letter dated 3rd March 1999.  By a further letter dated 19th March, Mr Naylor asks us to consider his written submission there set out in the absence of the Appellant or his representative at this Preliminary Hearing.  That we have done.

The Facts

1	The Appellant commenced employment with the Respondent in 1996.  He puts the start date as April 1996 in his form IT.1.  The Respondent say it was 7th May 1996 in their Notice of Appearance.  The Tribunal made no finding on the precise start date.  Nothing turns on the point in this Appeal.

2	It appears that the Appellant started as General Manager of the Respondent’s Gregory’s Night Club in Nantwich and that on 1st June 1998 he was transferred to become general manager of their club XS in Wrexham.

3	On 7th September the Appellant was suspended on full pay by Mr Davidson, the Regional Manager, pending investigation of certain allegations made against him, most significantly that he did not attend his place of work sufficiently frequently during its night opening hours.  

4	The Employment Tribunal made the following findings.  On 1st September the local Superintendent of Police called a meeting of the Respondent’s senior management at Wrexham to express disquiet at the way in which the Respondent’s club was being run.  There was talk of possible action to close the club.  On numerous earlier occasions Mr Davidson had warned the Appellant informally that his level of attendance was unsatisfactory and he was told in no uncertain terms that henceforth, his attendance was required on Tuesdays, Thursdays, Fridays and Saturdays, when the club was open at night until 3.00, in addition to his daytime hours.  Contrary to those clear instructions, the Appellant failed to attend on Tuesday 1st and Thursday 3rd September, absences for which he had no real excuse.  He preferred to leave the club managed by his deputy on the Tuesday and on the Thursday he kept a social engagement which conflicted with his working hours.  On Friday, his sister-in-law telephoned the Respondent to say that the Appellant would not be at work because he had suffered concussion playing indoor football on Friday afternoon.  On the Saturday, the Appellant did not attend work because, he claimed, he was still suffering the after-effects of concussion.  He had not contacted the Respondent on that day.

5	On 17th September, a Disciplinary Hearing was convened by Mr McIvor, then Operations Manager and later, Managing Director of the Respondent.  The meeting was inconclusive because Mr McIver decided that he needed to investigate further allegations concerning the Appellant’s absence from work during the 10 weeks prior to his suspension.  At the end of that meeting the Appellant’s suspension was lifted and he was required to return to work.  The Appellant said that he felt unable to return to work at Wrexham because his position had been undermined so far as his subordinates were concerned and he declined to return to any club within Mr Davidson’s region because he had lost confidence in him.  He said he would consider transferring to Birmingham but there were no vacancies there.

6	By letter dated 17th September, Mr McIvor required the Appellant to return to work at Wrexham.  In response, on 21st September, first in a telephone call to Mr McIvor and then by letter of that date, the Appellant tendered his resignation, purporting to give one month’s notice of termination, although his contract, the Tribunal found, only required him to give 2 weeks’ notice.  He indicated on the telephone that he was not prepared to work out his notice.  He nevertheless, gained the impression that he would be paid money in lieu of notice.  That allegation was denied by the Respondent, certainly in their Notice of Appearance.

7	The Employment Tribunal made no finding as to whether or not he was told that he would receive pay in lieu of notice.  For our reasons which follow it was unnecessary for the Employment Tribunal to determine that issue.

The Tribunal Decision

8	The Employment Tribunal was required to resolve three issues, which may be formulated thus:

A.	Was the Appellant constructively dismissed?
B.	If so, was that dismissal unfair and if so was he entitled to any remedy?
C.	If he was dismissed, was he entitled to damages for wrongful dismissal at common law, that is, the equivalent of pay in lieu of contractual notice?

9	The Employment Tribunal answered those questions in the following way:

a)	
Dismissal

	By a majority, the Employment Tribunal found that he was constructively dismissed by the Respondent.  The majority found that the Respondent fundamentally breached the implied term of mutual trust and confidence by requiring the Appellant to return to work at Wrexham whilst he was still under disciplinary investigation, a fact known to his subordinates, who had been asked by management to provided evidence of his absences over the 10 week period prior to his suspension.  The Appellant promptly resigned in response to that repudiatory breach of contract by the Respondent.  He was constructively dismissed for the purposes of Section 95(1)(c) of the Employment Rights Act 1996 and, we would add, for the purposes of establishing a dismissal at common law.  The tests here are identical.  The Respondent has not intimated any prospective cross-appeal against that finding in their PHD form.
b)	Unfair Dismissal

(i)	What was the reason for dismissal?  The majority found that the reason related to the Appellant’s conduct, namely his failure to attend regularly for work; failing to obey the lawful instructions of Mr Davidson that he should attend on and after 1st September every night when the club was open.
(ii)	The majority held that the Respondent acted reasonably in treating that reason as a sufficient reason for dismissal.  His disobedience was deliberate and at least on Tuesday and Thursday of the first week in September he had no excuse.  He also failed to attend on Saturday evening without explanation.  Any reasonable employer would have been entitled to treat those circumstances as amounting to gross misconduct and to dismiss summarily.  Indeed, the Employment Tribunal were surprised the Respondent did not dismiss the Appellant earlier.
(iii)	Alternatively, if there had been any unfairness in the dismissal (and although not expressly stated the Employment Tribunal may have had in mind the fact that the disciplinary procedure had not been completed, as well as the Respondent’s repudiatory breach in requiring the Appellant to return to work in the circumstances of the ongoing disciplinary investigation) the Employment Tribunal unanimously found that the Appellant’s own conduct contributed to his dismissal to the extend of 100%.

c)	Wrongful Dismissal

	The Employment Tribunal rejected the Appellant’s claim for pay in lieu of notice by way of damages for breach of contract (wrongful dismissal).  Their reasoning appears from para 8 of their extended reasons to be this.  The Appellant purported to give one month’s notice of resignation but at the same time refused to work that notice.  That amounted, in the view of the Employment Tribunal, to resignation without notice.  The majority took the view that because of the Respondent’s fundamental breach of contract, as they found had taken place, the Appellant was entitled to resign and was relieved of his obligation to give notice of his intention to do so.  If he wished he could have resigned with notice and in those circumstances, he would have been entitled to be paid for such notice period.  In the present circumstances, he was not.  

10	Accordingly, the application was dismissed.

The Appeal

11	As we understand the letters from Mr Naylor dated 3rd and 19th March 1999, the Appellant does not appeal against that part of the Employment Tribunal’s decision refusing to grant him a remedy for unfair dismissal, either because the dismissal was fair or, if not, because he contributed to his own dismissal to the extent of 100%.  However, insofar as there may be a challenge to those findings, we deal with them below.

12	The Appeal is principally directed to the Employment Tribunal’s refusal to award the Appellant damages for breach of contract.  The argument is put in this way.  The Employment Tribunal majority found that the Respondent was in fundamental breach of contract by requiring the Appellant to return to work at Wrexham on 17th September whilst the disciplinary investigation was continuing to the knowledge of his subordinates.  That was a breach of the implied term of mutual trust and confidence.

13	Secondly, the Employment Tribunal erred in placing itself in the shoes of the Employer by finding, at para 7 of their reasons, that if there had been any unfairness, the Employment Tribunal would unanimously have said that the Appellant’s own conduct contributed to his own dismissal to the extent of 100%.  The Respondent did not find that there was an act of gross misconduct.

14	Thirdly, the Employment Tribunal having found that there was a constructive dismissal the Appellant should have received one month’s notice pay.  Because of the Respondent’s fundamental ongoing breach the Appellant could not return to work at Wrexham and could not be expected to return in the circumstances as found by the majority.  Resignation without notice is permissible where the employer is in repudiatory breach of contract.  The employer is still found to pay damages in lieu of notice.

Conclusion

	Unfair Dismissal

15	Mr Naylor’s second submission confuses the test of reasonableness under Section 98(4) and the issues arising in relation to contribution under Sections 122(2) and 123(6) of the 1996 Act.  It is correct to say that when considering the reasonableness of the decision to dismiss under Section 98(4) the Employment Tribunal must not substitute its view for that of the Employer.  (Iceland Frozen Foods Ltd –v- Jones [1982] IRLR 439.)  However, when considering the question of contribution the Employment Tribunal must ask itself whether the employee was in fact, guilty of the misconduct alleged.  It is not a question of the employers’ “reasonable belief” at this stage of the enquiry.  To this extent the issue on contribution raises the same factual question as to whether the employer at common law is entitled to summarily dismiss the employee for actual gross misconduct.  Thus, we uphold the Employment Tribunal’s approach to the question of fairness and contribution.

	Breach of Contract

(a)	We make the preliminary observation that on the Employment Tribunal’s findings it is not clear what was the contractual notice required from the employer.  They find only that the employee was obliged to give 2 weeks notice.  For the reasons that follow, it matters not what was the correct employers’ notice.
(b)	Mr Naylor is correct in submitting that ordinarily if an employee accepts his employers’ repudiatory breach of contract and leaves, he has been dismissed at common law and without more is entitled to recover damages for wrongful dismissal being normally, the equivalent of the pay due for the contractual notice due from the employer, subject to the usual deductions.
(c)	Accordingly, we cannot accept the reasoning in para 8 of the Employment Tribunal’s reasons.  It would not matter, it seems to us, whether the employee left in response to the employers’ repudiatory breach by himself giving notice, or without notice.  As the innocent party, he is entitled to recover pay in lieu of notice by way of damages for breach.
(d)	However, we uphold the Employment Tribunal’s conclusion that the Appellant was not entitled to recover for damages for breach of contract on the ground that notwithstanding that misdirection, the result was plainly and unarguably right.  (See Dobie –v- Burns [1984] IRC 812) for the following reasons.  It is axiomatic that where the obligations of the parties to a contract are dependent then a party in fundamental breach of his obligations cannot enforce the terms of the contract against the other party where that party is also in fundamental breach.  The position here, on the facts as found, either by a majority of the Employment Tribunal or unanimously is:

(i)	That the Appellant was in fundamental breach of the contract by failing to attend work regularly and in disobeying Mr Davidson’s instructions.  Those circumstances amounted to gross misconduct entitling the Respondent to dismiss the Appellant summarily had they chosen to do so on 17th September.  It was a surprise to the Employment Tribunal that the Respondent had not dismissed him earlier.  Further, the finding of 100% contribution also supports the conclusion that the Respondent was entitled to summarily dismiss the Appellant at common law.
(ii)	The Respondent had neither accepted the Appellant’s breach by dismissing him, nor had they affirmed the contract despite his breach, since the disciplinary investigation was ongoing as at 17th September.  The Appellant’s breach remained extant. 
(iii)	On 17th September, the Respondent was guilty of a fundamental breach of the contract by requiring the Appellant to return to work whilst the disciplinary investigation continued, so the majority found.
(iv)	In these circumstances, on a proper analysis, both parties were released from further performance under the contract.  The Appellant was entitled to leave without notice.  The Respondent was not obliged to give him notice of termination.  It follows that the Appellant’s claim based on the Respondent’s obligation to give notice of termination fails, because the Respondent was entitled to dismiss him summarily, applying the principle in Boston Deep Sea Fishing –v- Ansell (1888) 39 Ch D 339, where the Defendant employer succeeded in defeating the Plaintiff employee’s claim for damages for wrongful dismissal on the grounds of gross misconduct on the part of the employee prior to termination of which the Defendant only became aware after termination.  A fortiori where the employee’s misconduct was known to the employer before termination.

16	For these reasons this Appeal is dismissed.