Appeal No. UKEAT/0238/08/ZT

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 21 August 2008

Before
HIS HONOUR JUDGE ANSELL
MR K EDMONDSON JP
MR T STANWORTH

MR J MACKENZIE	APPELLANT

BILLING AQUADROME LIMITED 	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR P GREEN
(of Counsel)
Instructed by:
Messrs Shoosmiths Solicitors
Witan Gate House
500-600 Witan Gate West
Milton Keynes   MK9 1SH	
For the Respondent	MR D NORTHALL
(of Counsel)
Instructed by:
Messrs DLA Piper UK LLP Solicitors
Bridgewater House
101 Barbirolli Square
Manchester  M2 3DL	

SUMMARY
UNFAIR DISMISSAL:  Dismissal/ambiguous resignation
The Tribunal failed to make clear findings about the date of termination or the manner in which the employment contract was terminated.

HIS HONOUR JUDGE ANSELL

1.	This has been a full hearing of an appeal against a decision of the Bedford Tribunal, which heard evidence over five days in July and November 2007, producing written reasons which were sent out to the party on 19 February 2008.  In that decision the Tribunal rejected the Claimant’s case of unfair dismissal.

2.	The reasons themselves are brief in the extreme, running only to some eight paragraphs over two pages, which in itself is somewhat surprising in the light of the fact that there was five days of evidence.  

3.	The background facts in the areas in dispute appeared from the ET1 and ET3.  The Appellant before us, Claimant below, had been employed since 1 July 2005 as a sales manager and was responsible for generating sales of caravans on the Billing Aquadrome site.  The employment dispute figured around his bonus and certainly that bonus at one stage was quite substantial, amounting to a figure of over £200,000 per annum.

4.	New owners took over the business in March 2006 and the dispute from that time figured around the employer’s attempts to alter the bonus arrangements.  We do not need to go into the details of what happened during the following few months.

5.	The Tribunal, we understand, heard considerable evidence about the matters leading up to the complete termination of the employment contract in February 2007.  The Tribunal gave an oral decision at the time as well as providing written reasons afterwards.

6.	The parties have attempted to obtain from the Tribunal a transcript of the oral reasons that were given and we understand that the tape is no longer available.  Attempts have been made between the solicitors to agree a note of the judgment.

7.	It certainly appears that the oral reasons went into more detail in relation to the negotiations between the parties from March 2006 up to February 2007.  The decision itself records in paragraph 3 that in the light of their decision, which means their decision concerning termination, they do note that the Respondents: 
“… did conduct themselves in a manner likely to damage trust and confidence.”

8.	It was not until 31 January 2007 that the Claimant received further information relating to the bonus that was due to run from 1 February of that year.  Those new proposals upset the Claimant and according to his ET1 it meant a considerably reduced level of bonus being paid on the same figures as he had previously achieved.

9.	In particular it then goes on to refer to a meeting which occurred in early February where the Claimant met Mr Paul Calvasbert of the employers and according to the Claimant’s ET1 Mr Calvasbert told the Claimant he had been informed the deal was non‑negotiable and suggested that he speak to Ms Barbara Drake, the HR Manager, which he did.  He told her that he believed that the employers were proposing a fundamental breach of contract and his ET1 sets out the position: 
“She asked him if he was resigning he said that he would need to seek advice from a solicitor before he took any further action.”   

10.	When he spoke to Mr Calvasbert following this conversation he again repeated he needed to take advice from his solicitor who would write to the Respondent.  The Claimant returned to work following this meeting and worked the weekend as normal.

11.	On Sunday, 4 February Mr Calvasbert arrived at Billing Aquadrome and asked the Claimant if his position remained the same as it was on Friday.  The Claimant confirmed to Mr Calvasbert he believed the change to the scheme amounted to a fundamental breach of his contract of employment and he was not willing to accept it.

12.	Mr Calvasbert mentioned the word “resignation”.  The Claimant told him not to use that word as it was something that he had not mentioned.  Mr Calvasbert asked the Claimant to hand over his keys and leave the premises when he had completed the paperwork he was doing as it was unacceptable for the Respondent to have incomplete paperwork following the termination of the Claimant’s employment.

13.	At paragraph 22 of the ET1 the main allegation is one of dismissal on that date, but it goes on to say:
“Further, or in the alternative, whilst the Claimant is clear he did not resign and was dismissed, the Claimant asserts that the change to the bonus scheme which was carried out with no consultation or notification amounted to a fundamental breach of his contract of employment which would have entitled the Claimant to treat himself as having been unfairly dismissed by the Respondent.”

14.	The ET3 in paragraph 15 denied that the new bonus scheme was a fundamental breach of contract, denied any other breaches which went to the heart of the trust and confidence between the parties and dealt with the events of 2 and 4 February in this way:  
“On Friday 2 February 2007, the Claimant advised Mr Calvasbert that he was resigning.  He said he was consulting his lawyer.  Mr Calvasbert told him that he should go through the proper channels.  On Sunday 4 February 2007 the Claimant confirmed to Mr Calvasbert that he was resigning and that the letter would arrive from his solicitor the next day.  Given that he told the Respondent the fact that he was resigning, the Respondent decided that to protect the business he would not be required to work his notice period and he left the site and was paid for the following month while not required to work.”  

15.	So, the issue certainly on the ET3 alleges resignation, which was thereafter accepted by the employers.

16.	The reasons in paragraph 4 and 5 deal with events on 2 and 4 February and having dealt with the events of 2 February at the end of that paragraph they make a finding that the Claimant did not resign at the meeting of 2 February.

17.	It then goes on in these terms: 
“At about 5.00pm Mr Calvasbert telephoned Mr Dawson his superior and informed him that Mr MacKenzie had resigned.  Irrespective of whether it is justified or not Mr MacKenzie had a reputation for hot blooded outbursts and it is clear from their evidence that neither Mr Dawson nor Mr Calvasbert were certain of the actual position.  Mr Dawson reported the exchange to the Board but neither were surprised to find that Mr MacKenzie had attended for work on 3rd of February and was at work on the 4th.”

18.	Then the reasons at paragraph 6 go on to deal with the key date, 4 February, in these terms:  
“It is Mr Calvasbert’s evidence that Mr MacKenzie confirmed to him on that day that he maintained his wish to resign from the Company and that a letter would be forthcoming from his Solicitors.  In consultation with Mr Dawson it was determined that the better course would be to send Mr MacKenzie home on full pay and await the promised letter.  Late in the afternoon after Mr MacKenzie had completed his paperwork this is what occurred.  Mr MacKenzie’s account of this episode appears at paragraph 98 of his statement.  He does not suggest that he was told in express terms that he had been dismissed only that he should leave Billing.  Mr Calvasbert is adamant that he did not dismiss Mr MacKenzie.”

19.	The remaining two paragraphs of the decision in full read:
“7.	Conclusions: Constructive dismissal is a concept which contains elements of determination and causation.  It is for the claimant to discharge his burden of proof by showing that he resigned because of either a present or anticipated fundamental breach of his contract.  It is a concept which requires him to exercise a choice either to acquiesce to the breach or act upon it.  The Claimant has stridently argued throughout that he did not resign and he has called evidence to support that contention.  The evidential requirements of the concept are not satisfied by the presence of a fundamental breach and a termination of the employment alone.  Causation is a quintessential element and the Claimant in order to succeed must be able to say I resigned and I did so because of my employer’s fundamental breach.  This is not evidence that the Claimant could plausibly give in the face of his denial of resignation and it is not before us.  The Claimant has not discharged the burden of proving that he was constructively dismissed.  
 8.	That takes us to the question of whether there was a de facto dismissal.  Both parties are represented by solicitors and Counsel and it is not incumbent upon us to alter or look outside of the ‘pleaded’ case.  The question for us therefore is whether there was a dismissal on 4th February 2007.  We note that there is no allegation of express words of dismissal and we note that on the account of both parties the antipathy flowed from Mr MacKenzie to his employers.  The evidence of the two participants to the meeting is diametrically opposed.  Contact between the parties from this point forward was solely between solicitors so no further insight can be gleaned from it.  This is one of those relatively rare cases where the solution lies with the burden of proof and we are not satisfied that there was a de facto dismissal.”

20.	The members of this Tribunal, having read through that decision and seen the written submissions from both parties, came to court today with the clear view that this brief decision was unfortunately deficient in terms of its findings and conclusions on the key issue as to how the contract came to an end around about 4 February 2007.  We expressed that view this morning to both counsel.

21.	Counsel for the Respondents, Mr Northall, following a brief adjournment, indicated to us that he had heard our views and did not seek to put further submissions before us, although he did not in any way resile from the position adopted in his written submissions which was that this decision was a good one and could stand.  The brief argument that we have heard today has figured around what is to happen if we are not satisfied that this decision is a good one in terms of the three possibilities of either sending it back on the Burns/Barke basis, simply for some further reasons; sending it back to the same Tribunal for a list of further issues for reconsideration; or sending it back to a fresh Tribunal for a complete re‑hearing against the background where we know that the previous Tribunal spent five days on the case and obviously with costs implications for both parties; Mr Green on behalf of the Claimant pointing out that for an individual Claimant not able to set off VAT or legal costs as a business expense makes it even more expensive.

22.	The deficiencies in the decision coming from, as we understand it, an experienced employment judge and lay members, we identified as follows.

23.	The key deficiency is a failure to make any findings as to what occurred on 4 February other than a fleeting note in paragraph 8 that the antipathy flowed from Mr MacKenzie to his employers.  The inference from the Tribunal’s decision, although they do not express it directly, is that the employment contract came to an end on 4 February.  Certainly there is no suggestion that the Claimant worked thereafter.  There is a finding that he was asked to leave Billing and we understand, although it is not specifically stated, that money in lieu of notice was paid, taking us to 4 or 5 March 2007.

24.	Assuming, therefore, that the employment contract came to an end as a result of something that happened on 4 February, what was it that brought an end to that employment contract?  In general terms there are four possible ways that an employment contract can come to an end.  There can be a mutual termination, there could be frustration of the contract, and then the two normal ways, one of dismissal, actual dismissal, and the other of resignation.  If resignation then that would lead on to the subsidiary but important issue of whether that resignation flowed from a fundamental breach of contract on behalf of the employers.  In other words constructive dismissal.

25.	This decision has failed to identify how precisely this employment contract came to an end.  It clearly did come to an end on that day but how?  It seems to us that it is incumbent upon this Tribunal to make a finding as to whether in objective terms there was a resignation.  

26.	They had dealt with the issue as far as 2 February in making a clear finding that he did not resign at that meeting, and yet on the day when resignation became the key issue the Tribunal failed to make that finding.

27.	If objectively there was a resignation then they would have to go on to consider, in the light of their previous finding that there was conduct likely to damage trust and confidence, whether that was effectively a constructive dismissal.  If the Tribunal were not satisfied that objectively there was a resignation then it seems to us that the only alternative must be that there was a dismissal.  In other words that the employers, assuming that there would be a letter flowing from either the Claimant or his solicitor the following Monday, had jumped the gun by escorting him off the premises and instituting the payment of notice monies.

28.	The Tribunal have looked at this issue in terms of express words of dismissal.  It seems to us that that is far too narrow a way of looking at this issue.  If employers have mistakenly taken the view that there was an effective resignation and thereafter taken action from their position to terminate the contract, it seems to us that that has the potential to amount to a dismissal, irrespective of what particular words were used by the employer on that occasion.

29.	All these are issues which are missing from the Tribunal’s analysis.  Those matters flow from the Tribunal’s basic task of making clear findings as to what was done and was said on 4 February.  There was no way round that task and whilst it is in the practice of this court not to criticise Tribunals if they fail to go into each and every fact which has been raised before them, it does seem to us that in a case of this nature involving issues of resignation, actual dismissal and constructive dismissal, it was necessary to analyse in some detail what took place on 4 February, make clear findings of fact and then to come to conclusions on the law based on those findings.

30.	We need only cite a brief passage from an authority in the Appellant’s written submissions, Comfort v Lord Chancellor’s Department [2004] EWCA Civ 349 CA where at paragraph 32 Gibson LJ said as follows: 
“With all respect to the EAT in arriving at a different conclusion, in the circumstances it seems to me plain that the ET erred in coming to its decision on constructive dismissal without making findings on the evidential dispute about the meetings and without explaining why it left that factual dispute out of the count.  That failure on so important a matter in controversy constitutes, in my judgment, an error of law.”

31.	It follows we hope, from the comments we have made, that this decision is defective in key areas and there therefore remains the issue as to what action we should take.

32.	We do not find that a simple request through a Burns/Barke letter to fill in the gaps is sufficient.  There are both factual and legal issues to be considered here which cannot simply be done in the course of correspondence to and from the Tribunal.  

33.	The realities are either it goes back for reconsideration to the same Tribunal with clear guidance from us as to the issues, or a fresh hearing.

34.	We are aware of the principles set out in the Sinclair Roche case which seem to us to indicate that save in exceptional circumstances the matter if possible should go back to the same Tribunal.  They heard the facts over a number of days and whilst the hearing did take place some time ago there are presumably detailed notes of evidence that could be available to them and they could be reminded of the key areas through helpful submissions, oral submissions, of counsel.  

35.	The factual areas in dispute may well be quite narrow.  It does primarily; it seems to us, relate to the events of 4 February.  It may not be necessary for them to go into the history of the bonus dispute in the light of the finding that they have made that there was a breach of trust and confidence.

36.	On the other hand it is argued by the Appellant that there are so many defects in the Tribunal decision that this is one of those cases where the errors are so numerous that it would be better for the confidence of both sides if the matter is looked at afresh by a new Tribunal.

37.	We have thought about this matter very carefully and on balance and after careful consideration we are minded to send the matter back to the same Tribunal for full reconsideration.  In the light of the comments that we have made in this decision and in the light of a list of issues that we will invite them to reconsider.  We would invite counsel now to spend a little time together trying to agree a list of issues.

38.	As I have indicated already, we do not necessarily want the Tribunal to look into the whole history again, and that may be a saving of time.  There is, I repeat, a finding of fact or conclusion, certainly at the end of paragraph 3, as to the nature of the Respondent’s conduct which is clear and it seems to us does not need to be reconsidered.  Obviously there will have to be consideration of the effect of that behaviour if there was a resignation.

39.	We trust that these comments are sufficiently clear for counsel to be able to draft now some questions between them.  Then I will invite one of you to go away and type them up and email them to my clerk this afternoon and it will be annexed to an order.  But my colleagues and I would like to see them, certainly, in draft form within the next half an hour.