Appeal No. UKEAT/0186/05/CK

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 22 July 2005

Before
HIS HONOUR JUDGE PETER CLARK
DR B V FITZGERALD MBE LLD
BARONESS M T PROSSER

MS A C OWENS	APPELLANT

WEALDEN DISTRICT COUNCIL	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR T GREENSTEIN
Representative	
For the Respondent	MR IAIN O'DONNELL
(Of Counsel)
Instructed by:
Wealden District Council Legal Services
Pine Grove
Crowborough 
East Sussex
TN6 1DH	

SUMMARY

Constructive dismissal – preliminary issue – affirmation of contract.  Termination by employee on notice – notice period extended by 2 weeks – no affirmation.  Appeal allowed.

HIS HONOUR JUDGE PETER CLARK

1.	This case highlights, yet again, the dangers of taking what appears to be a short-cut by way of determining a preliminary issue resulting in the proceedings being unnecessarily prolonged, thus adding to the expense and stress of the litigation to the parties.

2.	It came before us by way of an appeal by Ms Owens, the Claimant before the Brighton Employment Tribunal, against that Employment Tribunal’s judgment, promulgated with Reasons on 1 February 2005, dismissing her complaint of constructive unfair dismissal brought against her former employer, the Respondent Wealdon District Council.  We shall describe the parties as they appeared below.

3.	The Claimant was employed by the Respondent as a Housing Officer, commencing on 28 March 2001.  By her Originating Application she detailed aspects of her alleged treatment by the Respondent which culminated in her resignation on written notice tendered on 19 January 2004.  She then gave 2 months contractual notice.  In her resignation letter she said that she was resigning because of the intolerable behaviour she had experienced from certain other members of staff and the doubt that had been cast on her professional integrity resulting from what she considered to be the mismanagement by the Respondent of the case of a tenant about whom complaints had been made by his neighbours.  The final straw, on her case, was seeing a letter of complaint by one neighbouring family and the response, which she felt was unsupportive of her, from a manager, Paul Homes.  She then promptly gave notice of resignation the same day.

4.	On 26 January the Respondent wrote to the Claimant, inviting her to withdraw her notice.  She replied on 4 February.  We extract 2 paragraphs from that letter:

“Firstly I would advise you that I will not be withdrawing my notice to end my employment.  Whilst I very much appreciate the time you have taken to listen to my concerns.  I feel that the relationships within the team have deteriorated to such an extent that they cannot be recovered.”

Later she said:

“As discussed on Monday, in view of the delay in initiation of the recruitment and selection process resulting from the time you have kindly taken to investigate my concerns, I am prepared to extend my period of notice to 31 March 2004.”

5.	The Claimant continued to work out her notice until the last 2, extended weeks of notice, when she was off sick.  Her employment duly ended on 31 March 2004.

6.	The Respondent resisted her claim.  By their form ET3 they denied repudiatory breach of the contract of employment and at paragraph 10 said this:

“The Applicant (Claimant) gave two months notice of her intention to terminate her employment with the council.  She subsequently extended her period of “notice” by a further two weeks.  The respondents would contend that in so doing she affirmed her original contract of employment and as a result cannot argue that she resigned in response to a fundamental breach of contract by the Respondents.  Insofar as there was any breach of the Applicant’s contract (which is not admitted), the Applicant failed to resign in a timely fashion.”

7.	The case came on for a case management hearing before a Chairman, Mr S J W Scott, on 30 September 2004.  The Claimant was then represented by a non legally qualified friend, Mr Moore, she not attending the hearing and the Respondent by Counsel Mr Downs, who we see is a member of Mr O’Donnell’s Chambers.  A note prepared by Mr Downs in advance of that hearing refers to the affirmation point which was taken in the form ET3.

8.	There has been some debate in the course of preparation in this appeal as to what precisely was said about the affirmation point at the case management hearing.  Plainly it was raised by Mr Downs.  Witness statements tendered in these appeal proceedings on behalf of the Claimant by 2 people present, Mr Moore and another friend of the Claimant Ms Patricia Smith, give the impression that Mr Scott was less than impressed with the affirmation point.  We do not find it necessary to formally admit that evidence. What is quite clear is that the Chairman gave no ruling on the point nor any direction for the affirmation point to be taken as a preliminary issue either before or at the substantive hearing of the complaint.  Instead, he directed that the case be listed for a full 4 day hearing on the issue of liability.  We note that within the Chairman’s order following the case management hearing dated 30 September 2004 he recorded this, at paragraph 4:

“The parties are agreed that the Claimant submitted a letter of resignation dated 19 January 2004, giving two months notice of resignation and that the period of employment was extended to 31 March 2004.  There is a dispute between the parties as to whether this extension came about at the instigation of the Claimant or the Respondent.  In any event, the Respondent claims that such extension of the notice period amounted to an affirmation of the contract by the Claimant.”

9.	In these circumstances it is clear to us that the affirmation point was live when the case came on for substantive hearing on 19 January 2005 before a full Employment Tribunal chaired by Mrs C M Green.

10.	It seems that at the outset of what had been listed for a 4 day hearing Mr O’Donnell, then appearing for the Respondent, invited that Employment Tribunal to consider, as a preliminary point, whether or not the Claimant had affirmed the contract.  If so, it was contended, the question as to whether or not the Respondent was in repudiatory breach of contract would be academic.  Mr O’Donnell submits before us today that the Employment Tribunal proceeded on the basis not of an assumption that there had been a repudiatory breach by the Claimant but an assumption that the Claimant had assumed that there had been a repudiatory breach; a distinction which we understand logically, but there is no indication that such distinction was drawn in the minds of the Employment Tribunal from their written reasons.

11.	The Employment Tribunal adopted the course proposed.  They heard no evidence, although we see from the Chairman’s reasons for rejecting a subsequent review application made on behalf of the Claimant, that the Employment Tribunal did read the Claimant’s form ET1, running to 10 pages and her 22 page Witness Statement.  As to the specific factual issue, identified by Mr Scott, as to which party requested the 2 weeks extension of the Claimant’s notice period, no finding was made (nor could it be, since no evidence was heard).  At paragraph 2.8 of their reasons the Employment Tribunal said:

“Whether the Respondent asked the Claimant to work an extra 2 weeks at the end of her notice period or the Claimant asked to work an extra 2 weeks is not known.”

12.	Having heard submissions from the representatives Mr Moore again appearing on behalf of the Claimant, the Employment Tribunal concluded that she had affirmed the contract and that accordingly she was not constructively dismissed.  Her claim therefore failed.

13.	They directed themselves to Section 95(1)(c) of the Employment Rights Act 1996 (ERA), the definition of constructive dismissal; to Lord Denning MR’s classic formulation of affirmation of contract in Western Excavation (ECC) Ltd v Sharp [1978] 1 QB 781 and 2 further authorities in the Employment Appeal Tribunal; W E Cox Toner (International) Ltd v Crook [1981] IRLR 443 (Browne-Wilkinson P presiding) and a recent unreported judgment of His Honour Judge McMullen QC in Cow v Surrey and Berkshire Newspapers Ltd (EAT/0716/02/SM, 7 March 2003).

14.	Their reasoning is set out at paragraph 5 of their reasons.  They considered it appropriate to take the affirmation issue as a preliminary point as the facts surrounding it were, they said, not in dispute.  They found that the last straw was the tenants’ letter of complaint and the Respondent’s response, which the Claimant saw on 19 January, the day on which she gave notice of her resignation.  Whilst not criticising the Claimant for giving notice, as Section 95 permitted, the Employment Tribunal found that the delay was considerable, 2 months notice plus a 2 week extension.  That pointed strongly, in the Employment Tribunal’s view to affirmation.  The Claimant did not state at any time that she would be working her notice under protest.

15.	We note that in the Claimant’s application for review, prepared by Mr Greenstein, this proposition appears at paragraph 17:

“The fact that the Claimant worked her notice is therefore irrelevant to the question of affirmation of contract.”

16.	Although a number of issues are raised and responded to in this appeal we think that is the key to understanding why, in our judgment, the Employment Tribunal erred in law in finding that the Claimant had affirmed the contract so that her contention that she was constructively dismissed failed.

17.	We begin our analysis by adopting the sage approach advocated by the Employment Appeal Tribunal’s first President, Phillips J.  We shall drink from the pure waters of the statute.

18.	Section 95(1) ERA provides that an employee is dismissed by his employer if:

(c)	the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct.

19.	The legislation has not always allowed of termination by the employee with or without notice.  In Sharp, 770 B-C, under the heading ‘Previous cases’ the Master of the Roll said this:

“The only previous case in the Court of Appeal on the words is Marriott v Oxford and District Co-operative Society Ltd (No 2) [1971] 1 Q B 186.  It was under the Redundancy Payments Act 1965.  Section 3(1) (c) did not apply because it only applied where the employee terminated his contract without notice, whereas Marriott had terminated it with notice.  So the court put it on section 3(1)(a).  But since the amendment to the wording of paragraph (c), it would have been more properly brought under paragraph (c) it was not really an (a) case: but we had to stretch it a bit.  It was not the employer who terminated the employment.  It was the employee: and he was entitled to do so by reason of the employer’s conduct.

20.	So, under the then Section 3(1)(c) of the Redundancy Payments Act Mr Marriott would have been constructively dismissed had he left his employment without notice.  Today, his case would fall under Section 95(1)(c) ERA because he is permitted to leave with or without notice, which brings us to the meaning of affirmation in the context of a Section 95(1)(c) dismissal.  Although we have been referred to a number of authorities Mr O’Donnell accepts that none of them are cases in which the employee left with notice.  All left without notice.  That was the terminating event by the employee.  The question, in each case, was whether he delayed too long between learning of the employer’s repudiatory breach and leaving the employment, because his act of leaving without notice fixed the date on which he accepted the employer’s repudiation.

21.	In the present case, applying the words of Section 95(1)(c), this Claimant terminated the contract on 19 January, with notice.  There is no suggestion that she delayed before giving notice.  Indeed, the lass straw event on which she relied, seeing the exchange of correspondence, occurred on that very day.  She did not delay by giving and working contractual notice, unlike, e.g. the case of Mrs Cow who, following a grievance procedure which lasted from September 2000, until 13 February 2001, when she received the Respondent’s letter dismissing her grievance, then delayed until 4 March 2001 before terminating her employment without notice.  That final 3 week period led to the Employment Tribunal finding that she had affirmed the contract; the Employment Appeal Tribunal refused to interfere with what was essentially a finding of fact.

22.	The rationale, we think, behind the amendment to the definition of constructive dismissal originally found in Section 3(1)(c) of the Redundancy Payments Act, to which the Master of the Rolls referred in the context of the Marriott case in Sharp, is that contractual notice, once given, cannot be unilaterally withdrawn by the party giving notice.  That proposition is rightly not disputed by Mr O’Donnell – see Riordan v War Office [1959] 1WLR 1046; Harris & Russell Ltd v Slingsby [1973] ICR 454.  Thus, subject to withdrawal of notice by mutual agreement, the Claimant terminated her contract by giving contractual notice on 19 January 2004.  She did so promptly upon learning of the Respondent’s alleged repudiatory breach.  Of course, the question as to whether or not the Respondent was or was not in repudiatory breach of contract has not been decided by the Employment Tribunal, who purported only to rule on the affirmation point raised by the Respondent without hearing any evidence.

23.	It also follows, in our judgment, that the agreement between the parties to extend the notice period by 2 weeks does not affect the question of waiver by affirmation.  We return to the Claimant’s letter of 4 February.  First, she made it absolutely clear that she would not withdraw her notice.  Thus, far from affirming the contract she was instead affirming her earlier acceptance of the Respondent’s alleged repudiation of the contract.

24.	Because the Employment Tribunal decided to determine the preliminary issue without hearing evidence, they had to do so on assumed facts, and the factual issue, identified by Mr Scott at the case management hearing, as to which party instigated the 2 week extension, was never resolved.  However, we are inclined to agree with the Employment Tribunal that that issue is largely irrelevant, although for quite different reasons.  The fact is that the parties agreed to a 2 week extension of the contractual notice given by the Claimant; it is always open to contracting parties to agree to extend or abridge notice provided for under the contract.  Technically, and we do not understand Mr O’Donnell to submit to the contrary, they are varying the term of the contract as to notice.  But that agreement cannot alter the simple fact that, for the purposes of Section 95(1)(c), the Claimant terminated the contract on 19 January 2004 with notice.  Thus any delay for the purposes of a finding of affirmation amounting to waiver of the assumed repudiatory breach did not begin on that date as the Employment Tribunal appeared to think but ended on that day.  In our judgment the proposition taken from the Claimant’s review application, advanced again before us today by Mr Greenstein, is plainly right and the Employment Tribunal’s approach equally plainly wrong in law.

25.	So we see again a misguided attempt by an Employment Tribunal to take a short cut which has resulted in further delay and expense.  We shall allow the appeal, set aside the Employment Tribunal’s adjudication and remit the case to a different Employment Tribunal for a full hearing of the liability issue, which is, was the Claimant constructively dismissed?