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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Swan (Worthing) Ltd v. Panter [1999] UKEAT 41_99_0111 (1 November 1999) URL: http://www.bailii.org/uk/cases/UKEAT/1999/41_99_0111.html Cite as: [1999] UKEAT 41_99_111, [1999] UKEAT 41_99_0111

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APPEARANCES

 

For the Appellant	Mr M West (Representative) Instructed by: Peninsula Business Services Ltd Stamford House 361-365 Chapel Street Manchester M3 5JY
For the Respondents	Mr J Griffith (Representative) Instructed by: Industrial Relations Consultancy Services 5 Jersey Road, Ferring Worthing, W Sussex


 


MR JUSTICE LINDSAY:

1. Mrs J Panter used to work for West Sussex Motors as a Car Saleswoman. She began to work for West Sussex in April 1985. On the 30 January 1998 West Sussex's business was transferred to the Respondent Company, Swan (Worthing) Ltd. On the 26 March 1998, she handed to Swan a letter of resignation giving a month's notice. That was accepted by Swan and her last day of work was the 24 April 1998. On the 2 July 1998 she lodged her form IT1. In late September and in October there was a three day hearing before the Employment Tribunal at Brighton, under the Chairman of Mr Simpson. The Tribunal held that Mrs Panter had been constructively dismissed and they went onto consider quantum. They awarded her, as the grand total of her claims for unfair dismissal, for unlawful deductions from wages and in respect of a breach of contract claim, the total sum of £4,204.13.
2. From that decision both sides appealed. Swans, by way of a Notice of Appeal of the 14 December 1998, urged that the finding as to constructive dismissal was in an error of law and Mrs Panter, by a Notice of Appeal of the 7 December, urged that the Tribunal erred in law in their computation of the award in her favour, in particular in not paying sufficient regard to commission.
3. There were, as is the practice, preliminary hearings at the Employment Appeal Tribunal on the same day of both appeals. That was the 14 April of this year. In each case, the preliminary hearing adjudged that there was an arguable point of law or at least one arguable point of law, in each prospective appeal.
4. The Chairman's notes of evidence have been received in relation to a particular part of the case. It is, of course, logical to deal first with Swan's appeal. The unfair dismissal finding represents some £3,621 of the global present award of £4204, although, of course, that proportion could change if the Employment Tribunal was wrong in the way in which it computed the award. The Swan appeal is also, in fact, listed first and it seems to us appropriate to take that one first. So we therefore turn to the findings as to unfair dismissal.
5. It is important to have in mind the contractual terms on which Mrs Panter was working from time to time throughout the chronology. At first, when working for Swan, she remained on the terms and conditions upon which she had been employed by West Sussex. Leaving aside whether that would have been the effect of the TUPE regulations in any case, Swan specifically said to her that that was to be the case. The Tribunal in their paragraph 2(c) deal with a letter of the 29 January signed by Mr O'Brien of Swan saying:-

"Dear Mrs Panter,

I refer to the acquisition of the business of West Sussex Motors by Swan Garage (Worthing) Ltd with effect from 30 January 1998 and I hereby offer to re-engage you from that date on the same terms as are contained in your existing contract".

6. So that was an offer of terms and conditions which had been applicable while she had been employed under the West Sussex arrangements and the West Sussex arrangements in fact went back to the 12 April 1989. It is convenient to call those "the first terms". But almost immediately there were some changes agreed, on the 30 January 1998. As to that, the Tribunal says this:-

"On 30 January Mr Pratt, the Sales Director of the Respondent, handed to Mrs Panter a document headed "Salary Proposal for Jenny Panter". It sets out some proposals for changes to her function and to payment of salary and sales commission. It also proposed changes to her working hours from four days on Tuesdays to Fridays to five days on Mondays to Fridays. These proposals were mutually accepted and agreed and operated to vary the terms of Mrs Panter's contract of employment. The Tribunal finds as a fact that Mrs Panter and Swan (Worthing) Ltd agreed those changes and that the remuneration element was implemented during the month of February 1998. Further, Mrs Panter also commenced working a five-day week from 2 February 1998".

7. So thus we have a consensual post-transfer change in her terms and conditions on the 30 January 1998 and Mrs Panter then began to work on what one might call "the second terms". And then there is a later proposed change by Swan. As to that the Tribunal says:-

"On Friday 27 February 1998 Mr Pratt handed to Mrs Panter a proposed new contract".

8. And then, as found by the Tribunal, (and this is in paragraph g on page 6):-

The proposed new contract contained several substantial changes to Mrs Panter's terms of employment. They included (i) a month's trial; (ii) that her previous service from April 1985 was to be disregarded as the new contract expressly states that her employment is to begin on 2 March 1998; (iii) it removed her authority to close transactions on her own which she would be unable to do without the express authority of a Director, or the Sales Manager of the Respondent; (iv) it imposed financial responsibility on Mrs Panter in respect of any unauthorised transactions; (v) it made her bonus payments subject to stringent conditions; (vi) it imposed a restrain of trade clause on her preventing her from working for a competitor within fifteen miles for a period of two years after leaving the Respondent's employment; (vii) it reduced her petrol allowance; (viii) it made her financially responsible for any damage to the car provided by the Respondent and for payment of the insurance excess in respect of any repairs carried out; and (ix) it also provided for her dismissal without notice in the event of her not acting "in keeping with the smooth running of the Sales Department". It also imposed an expectation on Mrs Panter to wear a uniform for which she was expected to pay. None of those terms were in the old West Sussex Motors contract and the Tribunal finds that they were proposed changes which were substantially to the disadvantage of Mrs Panter".

9. Those terms were not agreed. As to that, the Tribunal said this, (and this is sub paragraph (h) on page 7):-

"Mrs Panter asked for time to consider her position. There was a meeting on the following Monday, 2 March 1998 when Mrs Panter met Mr O'Brien and Mr Pratt. Mr O'Brien told the Tribunal that at the end of that meeting it was agreed with Mrs Panter that she would revert to her old West Sussex Motors contract with all its implications, including reverting to her old salary and commission terms. Mrs Panter told the Tribunal that she was willing to try the new proposals for up to a month and that Mr O'Brien said to her "I think we can run with that", from which Mrs Panter inferred his consent to a trial period. The Tribunal accepts Mrs Panter's version of these events.

10. So now the position is that for up to one month from the 2 March 1998 Mrs Panter is to be on the new terms which it will be convenient to call "the third terms". She is to be on the third terms for up to a month, namely up to, possibly, the 2 April 1998.
11. A few working days later, not very many, and presumably whilst working the third terms, she went on sick leave, on the 12 March 1998, for 14 days. Thus she was on sick leave until the 26 March 1998. She produced a doctor's certificate in relation to that absence. It was shown to the employer and was shown to the Tribunal and the Tribunal says:-

"It refers to Mrs Panter and says that "You should refrain from work for two weeks". It continues the "diagnosis of your disorder causing absence from work is exhaustion under investigation".

12. On the 26 March 1998, her first day back at the expiry of that certificate, but still within the month on which she had agreed provisionally to work on the third terms, she hands in a letter of resignation, which is important, and should be read in full. It reads as follows:-

"Dear Nick and Terry

Due to another bout of illness and after careful consideration, I have decided to give up working. It has been a difficult decision, but one I feel I must take. In order that you will not be stuck I am happy to give a month's notice as at today.

Yours sincerely

J Panter".

13. She was, in fact, under no obligation to give more than one week's notice. As to this, the Tribunal said at subparagraph (m) on page 8:-

"Mrs Panter gave a month's notice. She was not required to do so as her West Sussex contract required only one week. However, this period of notice was accepted by Mr O'Brien, on behalf of Swan (Worthing) Ltd, and Mrs Panter worked that period of the notice, terminating her employment on 24 April 1998".

14. Her IT1 form of complaint, so far as concerns constructive dismissal, was less than full. It says in its last sentence:-

"I resigned in response to my employers treatment of me such that I believe that I was constructively unfairly dismissed. I will provide further details shortly".

15. No details seem to have been given or, at any rate, if they were they are not in our papers and when this point was touched on at the hearing this morning it was said on behalf of the employer, Swan, that there were no further details given.
16. Mrs Panter gave oral evidence, it seems, based on her evidence in chief being taken by way of a written statement. So, first came the written statement and then she was orally cross examined and re-examined at the hearing. Then one of the Tribunal members, Mr Kelly, asked some questions. Presumably the position was that even by then Mrs Panter had not made clear the reasons for handing in her notice as she had. Her answers to Mr Kelly find their way into the decision of the Tribunal quite directly and, as to that, looking at paragraph (n) on page 8 the Tribunal says this:-

"When asked by Mr Kelly, a member of the Tribunal, why she had left, Mrs Panter replied that her reason was because of a significant breach of her contract going to the root of her employment which she then expanded by citing five specific items. Firstly, the failure by the Respondent to provide clear and concise details of how her pay was calculated. Secondly, her unease at what she described as the ethics of the Respondent placing microphones under the sales desks to enable customers' conversations to be heard by management without the customer knowing. Thirdly, denial to her of the dedicated computer terminal which had been promised. Fourthly, the various proposed changes to her contract of employment which she regarded as being substantially to her detriment and, fifthly, the failure of the Respondent satisfactorily to conclude negotiations with her with regard to the new proposals. The Tribunal finds as a fact that all these reasons were in the mind of Mrs Panter at that time and that they were the reasons causing her to resign".

17. After directing themselves on the law the Tribunal then came to what was only a majority conclusion on what one might call "ordinary" constructive dismissal. That is at our page 10 in paragraph 4(a):-

"The Chairman and Mr Spry-Shute are satisfied that the circumstances leading to the resignation of Mrs Panter were such that she satisfies the test of constructive dismissal as set out in Section 95(1)(c) of the 1996 Act. Mr Kelly, however, is not satisfied that Mrs Panter meet this test and is not satisfied that the Respondent's conduct amounted to a fundamental breach of contract going to the root of the employment relationship entitling Mrs Panter to treat herself as constructively dismissed".

18. The direction which the Tribunal gave itself on the law included a citation summarising the well-known case of Western Excavating v Sharp and it included the following:-

"As Lord Denning MR, put it "If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct – he is constructively dismissed".

19. We find it difficult not to side with Mr Kelly's conclusion on this subject. One might expect to see in the decision an analysis of each of the five alleged shortcomings which it was said Mrs Panter had had in mind and to which she had so lately referred in her evidence. One would expect to see an analysis of whether each represented a breach of contract, whether such as did represent breaches of contract could, jointly or severally, be described as going to the root or as being of an essential term, express or implied, and then to looking to see whether it was truly such shortcomings as had led to Mrs Panter to resign, given that her letter seemed to refer only to ill health. Unhappily no such analysis is to be found.
20. Looking at the five points which Mrs Panter raised, the first was failure to provide clear and concise details of how her pay was calculated. What did the third terms say as to her contractual entitlement to such information. Nothing is said as to that. The only finding in relation to this is at our page 7(i):-

"On the same day, that is on the 2 March 1998, Mrs Panter received notification of her February commission and salary which provided less detail than previously, as a result of which she made an enquiry of the Respondent to seek clarification".

21. There is no indication that the employer refused to clarify, still less that in doing so it was in breach of contract under the third terms.
22. The second matter is her unease at the placing of the microphones. One might expect to find some enquiry as to why it had been done. Was it to ensure that employees did not make unfounded claims in the course of selling motor cars? Or if they did, to ensure that such mistakes could be corrected? Was it to teach better sales techniques? Or was it simply to snoop? There is no answer to those questions. No doubt for an employer to engage in bad trading practices can lead to a breach of the implied provisions as to trust and confidence between employer and employee. But what did the third term say, if anything, on the issue? There is nothing in the findings to give any answer to that question, nor even as to whether it is a familiar practice in this particular trade. Nor is there any evidence as to whether Mrs Panter requested that she could be exempted from it, nor that the employer adamantly insisted that she could not.
23. Then the next head of complaint is about the computer terminal. As to that the Tribunal said at (j) on page 7:-

"A new computer system was being installed by the Respondent and the Tribunal accepts as a fact that Mrs Panter had previously been informed that she would receive her own dedicated terminal. This did not materialise and it transpired that she was required to share a terminal with the Sales Manger".

24. Again, what did the third terms say on such a subject? Was the position made plain that she was never to get her own terminal or was it that it was only for a while that she would be required to share? There are no findings on these points. Moreover, one has to retain a sense of proportion. Constructive dismissal is to do with the essential terms of the contract and it would be difficult, unaided by specific evidence, to regard such a short-coming as relating to an essential term of a contract of employment.
25. Next the complaint, the fourth, is as to changes to her contractual terms. At the time she gave her notice she was on the third terms but only provisionally so. She was apparently, according to Mr O'Brien's evidence, free to revert to her original West Sussex terms at the end of her provisional period of up to a month. That seems to the be the sense of what had been asserted where, in paragraph (h) the Tribunal says:-

"Mr O'Brien told the Tribunal that at the end of that meeting it was agreed with Mrs Panter that she would revert to her old West Sussex Motors contract with all its implications including reverting to her old salary and commission terms".

26. It was thus open to her, it would seem, at the end of the agreed provisional trial period of her working the third terms, that she could decline to accept the third terms and revert to the first terms. Whether she could have negotiated reverting to the second terms was never taken up. It is thus difficult to see how the fact that the third terms were to her detriment could represent a breach by the employer because she had agreed them provisionally and could escape them shortly if she wished.
27. Lastly it was said there was a failure to conclude negotiations. It was she who had proposed the provisional period of up to a month working the third terms. What contractual provision was broken by a failure to agree? Against such thoughts, it is thus easy to follow Mr Kelly's view of the matter. However, we must recognise that it is for the Employment Tribunal to weight up the facts. They have had the benefit of seeing and hearing the witnesses. Had the decision stopped at that point we might, with whatever misgivings, have had to uphold the majority view. I say only we might have to had to uphold the majority view. But the decision did not stop there. The Tribunal then turned to the TUPE. Regulations. They held on paragraph 4(b) on page 10:-

"The new contract of employment imposed changes in the terms of her employment which were both significant and to the detriment of Mrs Panter, and as a result of this, they operated to create a constructive dismissal of Mrs Panter pursuant to the TUPE Regulations".

28. A little later they said:-

"The Tribunal therefore concludes that Mrs Panter was constructively dismissed by the Respondent".

29. To what new contract does the Tribunal there refer? If TUPE had applied and nothing else had applied, Mrs Panter would have remained on the first terms, but it is to be recalled, that she was held to have agreed the second terms. Moreover, provisionally and for up to a month she had agreed to work the third terms. What her terms were for any extended period after the 26 March were never worked out. She gave notice on that day, the 26 March, and she presumably, therefore, worked the third terms during her period of notice. It looks as if, to judge from the citation we gave earlier, that she could have reverted to the first terms had she so expressed a wish to that effect. That had been Mr O'Brien's evidence.
30. Then the Tribunal deals with Mrs Panter's letter of resignation. We would do well to remind ourselves of precisely what that says. We have cited it already but it is short and worth bearing in mind:-

"Dear Nick and Terry

Due to another bout of illness and after careful consideration, I have decided to give up working. It has been a difficult decision, but one I feel I must take. In order that you will not be stuck I am happy to give a month's notice as at today.

Yours sincerely

J Panter".

31. As to that in their paragraph (h) on page 12 the Tribunal said this:-

"What Mr O'Brien [and he of course was a Swan (Worthing) man] contended was that, if one looks at the letter of resignation, it mentions illness and following careful consideration a decision to give up working. It makes no mention of the matters about which Mrs Panter complained to the Tribunal. However, if one looks at the letter of resignation, what Mrs Panter says in her first paragraph is that "due to another bout of illness and after careful consideration, I have decided to give up working". The "careful consideration" cannot refer to her illness, save to the extent that it may be stress-related and brought on by the atmosphere at work. In the Tribunal's view, Mrs Panter was making clear reference through her words "and after careful consideration" to the events about which the Tribunal heard evidence, and whilst Mr O'Brien may criticise Mrs Panter for not having been more explicit, it is, however, clear to the Tribunal that she was referring to these events and perhaps her lack of clarity is indicative of her non-confrontational and reserved disposition".

32. One has to ask why cannot the careful consideration refer to her illness "save to the extent that it may be stress-related and brought on by the atmosphere at work". No reason is given for that in the decision. None appears in the notes of evidence which were specifically directed to this topic. Moreover, the only medical evidence properly so called was the doctor's certificate and that does not mention stress, but only exhaustion, the causes of which were not attributed by her doctor to her work but were said to be under investigation.
33. Where a claimant in alleging constructive dismissal gives a reason at the time of leaving inconsistent with a later assertion of an acceptance of a fundamental breach, it is crucial to examine why that wrong reason, (wrong in the sense of inconsistent with later argument) was given. The Tribunal here seems to have come to a conclusion, crucial to their view as to constructive dismissal, on what appears to be a complete non sequitur as to what subject the "careful consideration" must have referred. In particular, the notes of evidence contain nothing that justifies the holding that Mrs Panter by her words "and after careful consideration" was referring to anything in particular, let alone all or any of the five matters she later alluded to at the end of her evidence when questioned by Mr Kelly.
34. A further confusion arises when the Tribunal turns to consider TUPE. The Tribunal held that in March 1998, Mrs Panter was working what can only be described as the second terms. What they say in their paragraph 14 on page 14:-

"Mrs Panter was therefore working under the terms of her old West Sussex contract, varied by those arrangements as to salary and commission, entered into at the end of January, with the result that she was entitled to be paid salary at the rate of £8,000.00 per annum and commission at £50.00 per unit".

35. But that conflicts with the Tribunal's finding that on the 2 March 1998 she had agreed to try the new proposals, the third terms, for up to a month. That last citation from the decision of the Tribunal suggests that when the Tribunal considered constructive dismissal it decided the question on the footing that Mrs Panter was then on the second terms, and not, as they should have done and as was consistent with their own earlier findings, on the third terms. It is, needless to say, essential for a Tribunal having to consider whether there has been a fundamental breach of contract to be clear what the contract was.
36. Here the Tribunal's paragraph 2(h) supports one contract and paragraph 14 points to another. Moreover, that the reference in her letter to "careful consideration" could not refer to illness save to the degree to which it related to work was an illogical conclusion seeming to us to have no basis in the evidence. At all events it has no basis in the evidence which appears in the Chairman's notes. Yet that was essential point because Mrs Panter was plainly properly to be required to explain why she had, for example, given a four times longer notice than she needed to give and why she addressed the letter in the way that she had. These seem to us to be serious errors of law. They are not matters so peripheral that we could be sure that the matter would have been decided as it was had such errors not formed part of the decision. It has to be remembered also that the constructive dismissal case, so far as concerned "ordinary" constructive dismissal, was a split decision.
37. The TUPE decision is equally vulnerable as at one point the Tribunal is assuming that the third terms were imposed despite the agreement for the provisional period of up to a month which was unexpired at the time when notice was given. Yet, at other points the Tribunal was holding that the second terms were operative. These errors of law cannot be overlooked, nor could we forecast the outcome if a Tribunal had not included these errors within their reasoning. We therefore take the view that we must set aside the holding as to constructive dismissal. We have to set aside the decision as to TUPE as well as in relation to what we have called "ordinary" constructive dismissal. Both of those subjects need to be remitted.
38. We have heard argument from Mr West and Mr Griffiths as to whether it should be to a a fresh Tribunal or to the same Tribunal. Well, it is now over a year since the original Tribunal heard evidence and there is quite often real difficulty in assembling precisely the same Tribunal as has previous had heard a case. We think the better course is to go to a fresh Tribunal.
39. Having remitted the constructive dismissal case, both ordinary constructive dismissal and TUPE, we see it as essential, as there is no logical other course open to us, to set aside the findings as to quantum. So we must set aside the whole of the remedy conclusion. That means that we need not hear Mrs Panter's appeal on quantification; it may, of course, be an entirely hypothetical subject. But we do suggest, when the Tribunal, if it becomes necessary, considers the question of the quantum of any award in Mrs Panter's favour, should pay some regard to the arguable point of law as to quantum that was identified in the Employment Appeal Tribunal preliminary hearing. Mr West says that there is an answer to that arguable point of law. Well, let us make it clear that all that was said at the preliminary hearing was that the point was arguable. It is for the Tribunal to hear the argument on quantification, and, as long as they have that point in mind, that is all that we need to say on that subject at this time.
40. Accordingly, we set aside the holdings of constructive dismissal. We remit those to a fresh Tribunal. We set aside entirely the remedy conclusion, and say nothing further on the remedy appeal save that we invite the Tribunal to have regard to that which was said at the preliminary hearing on the subject.