Appeal No. UKEAT/0025/06/MT

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF

	At the Tribunal
On 19 January 2007

Before
THE HONOURABLE LADY SMITH
MR P PAGLIARI
DR W SPEIRS

MR FRANK YORKE & MR GRANT YORKE 
PARTNERS OF AND TRUSTEES IN 
THE FIRM OF YORKES OF DUNDEE	APPELLANTS (RESPONDENTS)

MRS PATRICIA MOONLIGHT	RESPONDENT (CLAIMANT)

Transcript of Proceedings

JUDGMENT

APPEARANCES

For the Appellants (Respondents)	Mr J Muir, Solicitor
Messes Muir Myles Laverty Solicitors 
Meadowplace Building
Bell Street
Dundee 
DD1 1EJ	
For the Respondent (Claimant)	Ms C P McCrossan, Solicitor–Advocate 
Quantum Claims Solicitors
Employment Division
70 Carden Place
Queen's Cross
Aberdeen
AB10 1UP	

SUMMARY

The claimant was employed as front shop supervisor in a butcher’s shop.  Her employers were a partnership in which the partners were two brothers.  She resigned following and because of an incident in which she was verbally abused by the brothers’ father who was not a partner nor an employee of the business.  The Tribunal found that she had been constructively dismissed and awarded her £4,682.04.  On appeal, the Employment Appeal Tribunal held that the Tribunal had erred in regarding the conduct of someone who was neither her employer nor a fellow employee as justifying her resignation.  

THE HONOURABLE LADY SMITH

Introduction 
1.	The claimant, who was formerly employed by the appellants (to whom we will refer as respondents) as front shop supervisor in one of their two butcher’s shops.  She resigned from that post by letter dated 14 July 2005 following an incident that occurred at the shop on 13 July 2005.  She claimed that she had been constructively dismissed and in a judgment of the Employment Tribunal sitting at Dundee, Chairman Miss FCC Carmichael, registered on 26 January 2006, the Tribunal upheld her claim and awarded her the sum of £4,682.04. 

Background
2.	The respondents were a partnership in which two brothers were partners.  Their father, referred to by the Tribunal as “Mr Yorke”, was no longer a partner nor was he an employee of the firm.  He did, though, call at the shop where the claimant worked about twice a week.  The import of the Tribunal’s findings is that he was a forceful character.  The claimant regarded him as her “overall boss” as, it seemed, did other members of staff. 

3.	On 13 July 2005, Mr Yorke was verbally abusive to the claimant in that when he discovered that she was going to a doctor’s appointment that day he shouted at her and told her: “That is no use to me.  I have a business to run.”  He further shouted at her, when she said that she was not well: “Well, if you are not well then just go and go now.”  This was all in circumstances where the claimant had agreed with Mr Frank Yorke that she should attend a medical appointment during her lunch break that day.  She had arranged cover for her absence.  He was content that she attend the appointment.  The incident took place in the presence of another employee, Mr Angus Burnet. 

4.	The claimant was upset as a result.  Later that day she told one of the two brothers, Mr Frank Yorke, what had happened and of how upset she was.  He told her that he would look into it and call her the next day.  

5.	There was no suggestion or finding that Mr Yorke had conducted himself in such a manner towards the claimant on any prior occasion. 

6.	Mr Frank Yorke did not contact the claimant on 14 July and she, accordingly, wrote resigning in the following terms:
“It is with a great deal of regret that I must tender my resignation from the Company as from 21/7/05.

I did, in the main, enjoy my work however I feel I cannot continue, following the latest incident resulting in my feeling embarrassed in front of shop staff, personally abused by the tone of voice and language used by your father and confused as to exactly who was my immediate manager.

I feel it was totally inappropriate for me to have to endure a barrage of abusive comments and language regarding the smooth operation of the shop whilst I attended a Doctors appointment.

As you are aware, I had informed you of my intentions, had ensured the staffing arrangements were adequate to maintain the efficient operation of the business, and had organised myself to ensure that my time away from my position was kept to an absolute minimum.  All of which I saw as my responsibility.

To my surprise this is below what was expected, as indicated by your father, in a manner which I find totally unprofessional and unacceptable.

As this not the first instance I have received this type of treatment and, I fail to see how this situation can be improved, I feel I have no option but to terminate my employment.”

In short, the claimant resigned not because of any act or failure to act on the part of either of the partners or of a fellow employee but because of Mr Yorke’s conduct. 

The Tribunal’s Judgment 
7.	The Tribunal stated that they required to decide whether the test for constructive dismissal was satisfied and referred for guidance to the case of Western Excavating (ECC) Ltd v Sharp [1978] IRLR 27, noting that that meant that there were three elements that were necessary for the claim to succeed, namely:

“•	breach of the contract of employment, 
•	which is sufficiently fundamental to go to the root of the contract, and
•	which caused the claimant to resign and do so without significant delay.”
 
(Tribunal, paragraph 19) 

They make no reference to the terms of s.95(1)(c) of the Employment Rights Act 1996. 

8.	The Tribunal goes on to state, at paragraph 20:
“The breach complained of was Mr Yorke’s unwarranted interference in the working arrangements which had been agreed between the claimant and her manager, shouting and reprimanding her in the presence of an employee, whose line manager she was, and then his reaction to her using her lunch break to attend her doctor after twice explaining she had a health concern and was unwell.”

and at paragraph 21, they state further:
“The question was whether Mr Yorke’s conduct on 13 July was such as to entitle the claimant to resign and to resign without notice.” 

That is a question which they answered in the affirmative, concluding that Mr Yorke’s conduct was “seriously unreasonable” (paragraph 23) and comparable to that of the store manager in the case of Morrow v Safeway Stores [2002] IRLR 9.  On that basis, they found that the claimant had been constructively dismissed.

Relevant Law 
9.	This case concerned a claim for constructive unfair dismissal and it is, accordingly, important to remember that any such claim has a basis in the provisions of not just s.94 but also s.95 of the Employment Rights Act which insofar as is relevant for such a claim provides:
“95(1) For the purposes of this Part an employee is dismissed if (and, subject to subsection (2)….., only 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.”
(our emphasis)

10.	The question of whether or not an employee is entitled to terminate his contract without notice on account of the conduct of his employer falls to be determined in accordance with the law of contract, in particular, in accordance with what the law says regarding what terms are to be implied in a contract of employment.  For the purposes of a claim of constructive dismissal, it is now well established that the employer’s implied obligation (often referred to, by way of shorthand, as being the “implied term of trust and confidence”) is not to:
“… without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.” 

(Malik v Bank of Credit and Commerce International SA [1997] IRLR 462 per Lord Steyn at paragraph 56.) 

11.	It is, however, plain that the focus is on the employer’s conduct and that one does not get to the point of considering whether or not the conduct complained of amounts to breach of the implied term of trust and confidence unless it is first established that the conduct complained of is conduct of the employer (or for which he can, in law, be held responsible). 

Respondents’ Case on Appeal 
12.	Mr Muir, for the respondents, made two principal submissions.  The first was that the Tribunal had erred in finding that the facts of the present case were comparable to those that pertained in the case of Morrow v Safeway Stores.  They were, he said, quite clearly distinguishable. 

13.	His second submission was that the Tribunal had erred in relying on the conduct of Mr Yorke as a basis for their findings.  He was not the employer nor was he a fellow employee for whom the employers were vicariously liable.  The logic of the Tribunal’s judgment was that if an employee has an argument with or is verbally abused by a third party then that is a “green light” to their being entitled to resign without allowing for there being any investigation by the employer into the circumstances.  There were no findings that the employer contemplated, encouraged or condoned Mr Yorke’s actings.  Until the claimant had gauged the reaction of her employers, she was not in any position to assert that she had lost trust and confidence in them. 

14.	Finally, Mr Muir submitted that if we were not to uphold his main submissions we should, at least, remit the case to the Tribunal to consider whether or not the award should have been reduced to reflect that the claimant had refused an offer of reinstatement.  It was agreed between parties that such an offer had been made. 

Claimant’s Response 
15.	Ms McCrossan indicated that it was not accepted that Mr Yorke was an outsider and it was not possible or appropriate to seek to distinguish Morrow, a case which, so far as the facts were concerned had been remitted for a rehearing, the final outcome of which was unknown.  

16.	Ms McCrossan said that it was attractive to view Mr Yorke as an outsider if one looked at paragraph 1 of the Tribunal’s findings, where they found that he was neither a partner nor an employee of the firm.  However, that had to be read, in the light, she said, of the finding that the claimant regarded him as her “overall boss”.  That was clearly suggestive of him being in a position of seniority.  He had been held out to be in a position of responsibility in respect of whom staff members were not dissuaded from their belief that they had to follow his instructions.  The manner in which the shop operated was that Mr Yorke put himself forward as being in a position of responsibility. 

17.	Separately, Ms McCrossan, recognising that what was not before the Tribunal (and was, therefore, not determined by them) was any question of whether or not the employer’s conduct after the incident on 13 July 2006 afforded the claimant grounds for resignation, submitted that it would open to this Tribunal to remit for that matter to be considered, a submission which was firmly resisted by Mr Muir. 

Discussion
18.	We are readily satisfied that the Tribunal erred in law.  It was not open to them to find that the claimant had been constructively dismissed unless the cause of her resignation was conduct on the part of her employer or for which, as a matter of law, they were responsible.  But, on the Tribunal’s findings, the cause of her resignation was not her employer’s conduct.  It was not the conduct of a fellow employee for whose conduct the respondents’ were, in the circumstances, liable.  The cause was the conduct of a third party.  They made no finding that the employers held out Mr Yorke to be included amongst those who employed her or amongst those who were employed by them.  The findings that they make in paragraph 1, to “set the scene” are to the contrary.  The finding that the claimant regarded Mr Yorke as her overall boss is neither here nor there so far as the position of her employers or any representation that they made to her is concerned.  Nor was there, as was rightly observed by Mr Muir, any finding that the respondents contemplated, encouraged or condoned Mr Yorke’s actings in any way. 

19.	We can see that the conduct of a third party could be relevant in a constructive dismissal case.  If, for instance, an employer were to fail without reasonable and proper cause, to take reasonable steps to control the behaviour of a third party who repeatedly causes upset and distress in the workplace, we can see that such failure might be seen as being in breach of the implied term of trust and confidence.  This is not, however, such a case.  The Tribunal made no such findings.  They limited their findings and their focus to the conduct of Mr Yorke and make no criticism of the employer’s conduct at all. 

20.	In the foregoing circumstances, the claimant could not begin to satisfy the requirements of s.95(1)(c) of the Employment Rights Act.  She resigned not because of the conduct of her employer but because of the conduct of a third party.  That being so, it was not open to the Tribunal to go on and consider whether Mr Yorke’s conduct was sufficiently unreasonable to justify the claimant’s resignation or whether it was comparable to that of the store manager in the Morrow v Safeway Stores case or not.  It could never have justified the claimant’s resignation. 

21.	In these circumstances, we do not require to determine whether any differences that existed between the facts of the present case and those of Morrow v Safeway Stores were such as to show that, if the conduct complained of had been that of the employer, it would have justified the claimant’s resignation.  We would simply observe that being able to distinguish as between the facts of Morrow and the facts of any case under consideration would not necessarily mean that the test for unfair constructive dismissal was not met.  It is, rather, in such a case, a matter of applying the fundamental principles of law to which we have already referred. 

22.	It follows that the appeal falls to be upheld. 

23.	As regards Ms McCrossan’s submission that in that event, we should remit the case to the Tribunal to have them determine whether the respondents’ conduct after the incident between the claimant and Mr Yorke was such as to show that she had been unfairly constructively dismissed, that would be quite inappropriate.  Firstly, it would amount to giving the claimant an unwarranted “second bite at the cherry”.  If that is what her case was meant to be about then she had the opportunity to make that case at the hearing before the Tribunal.  Secondly, we do not see how such a case could get off the ground given the terms of the claimant’s letter of resignation which make it clear that she resigned because of Mr Yorke’s conduct on 13 July 2005 not because of any failing on the part of the respondents’ to deal with it.

Disposal
24.	We shall, accordingly, uphold the appeal and dismiss the claim.