Appeal No. UKEAT/0355/09/DM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 21 January 2010

Before
THE HONOURABLE MR JUSTICE LANGSTAFF
MR B BEYNON

MR I SAWAR	APPELLANT

SKF (UK) LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR D McCARTHY
(of Counsel)
Instructed by:
Partners Solicitors
7a, D’Arblay Street
London
W1F 8DF	
For the Respondent	MR E WILLIAMS
(of Counsel)
Instructed by:
Denton Wilde Sapte LLP
Regency Court
208 Upper Fifth Street
Milton Keynes
Buckinghamshire  
MK9 2HR

SUMMARY
CONTRACT OF EMPLOYMENT: WRONGFUL DISMISSAL
UNFAIR DISMISSAL: CONSTRUCTIVE DISMISSAL
PRACTICE AND PROCEDURE: PERVERSITY

An employee claimed that a Tribunal was perverse to reject his claim that the employer must have been in breach of the implied term of trust and confidence in circumstances where he had refused to provide a company car of  the style requested by the employee, then criticised the employee to a junior employee and others outside the company for the way he handled complaints about the car he was given, then circulated - to the same junior employee and outsiders - an “apology” from the line manager who had done this, before as a last straw rejecting an appeal in respect of an internal grievance so tersely as to provide little or no reason for its rejection.  The Employment Appeal Tribunal held that although such conduct might often, even usually, amount to a breach of the implied term, the Tribunal here was entitled, by regard to the context, to determine the claims against the employee as it had.

THE HONORABLE MR JUSTICE LANGSTAFF
Introduction
1.	In a decision of 11 February 2009, an Employment Tribunal at Bedford dismissed claims that had been made to it by the Appellant employee that he had been constructively dismissed, that he had been unlawfully discriminated against on racial grounds and that the employer had broken his contract by failure to give notice.  That latter claim was withdrawn during the course of the hearing and therefore plays no further part in this appeal.

2.	Before the hearing began we had anticipated first that there might have been a Tribunal of three sitting in the Employment Appeal Tribunal, and secondly, that we might have had to consider what are current legal issues arising in the apparent conflict between the approach of the Employment Appeal Tribunal in Scotland and the approach taken by different constitutions of the Employment Appeal Tribunal in England as to whether or not a failure in the conduct of grievance procedures by an employer gives rise to a right to claim constructive dismissal.  We have in the end, first, sat as a panel of two, since one lay member was unable to attend today and we have done so with the consent of the parties.  Secondly, we have in the end not been troubled by any significant citation from authority.  This appeal rests centrally on whether or not the findings of the Employment Tribunal were, in their context, perverse.

3.	Perversity is a high hurdle for any appellant.  A Court of Appeal such as this Tribunal must be in a position to view the conclusions of the Tribunal below as being wholly impermissible.  We need not set out in detail the several cases which in their different ways give expression to the same point.  Whether it is the supposed reaction of the reasonable bystander in the words “Oh my goodness, that must be wrong” or whether it is simply, in the terms wholly impermissible, or some other such phrase, that, expressed differently, but to the same end, is how we must approach the central submissions made by Mr McCarthy on behalf of the employee Appellant here.

The Underlying Facts
4.	The employee was employed as a manager by the Respondent employer.  He was in a senior position, managing “competitive research and E2” at a salary of £80,000 per year, in a company which engaged 500 employees.

5.	The issues arose in respect of his entitlement to a company car.  He wished to have a convertible car.  He was told that that was not permissible within the scheme operated by his company.  He was told that by his immediate line manager, a Mr Welby.  Accordingly, in May 2007 he ordered and obtained a different vehicle, a four-door Audi.  Some eight months later, in January 2008, problems developed with the car.  He raised those problems with Lex, who leased the vehicle to his employer for his use.

6.	In February 2008 matters came to a head about the problems from which the car suffered.  The employee, instead of dealing with Lex through his employer, dealt with them directly.  He authorised remedial work on the car.  He was told by Mr Welby that he should not himself deal with the car.  In summary, on two occasions (on 13 February and 14 February 2008) Mr Welby emphasised and re-emphasised that it was for the company and not for the employee to deal with the issues which had arisen in respect of a car which was leased to the company.

7.	Then, toward the end of that month, a substitute vehicle, intended for use for a temporary period of some six weeks whilst the initial vehicle was returned to Germany for investigation, was offered to the employee.  He refused it.  He refused more than one such offer.  The reasons for his doing so were that it might not have a heated car seat and it appeared it did not have front parking sensors.

8.	Mr Welby, the Tribunal found, then wrote an email to the Claimant on 14 March.  That email contained a mixture of instruction to the employee and observations about the quality of his conduct.  It included these two paragraphs:
“I am at a total loss to understand your actions in this matter or why you have been prepared to embarrass the company in this way.  I can only conclude that for some reason you have been determined that the vehicle will be rejected and, to achieve that end, have been prepared to make any amount of nuisance of yourself to the large number of people trying to help you.”

9.	And:
“I must caution you that allocation to you of a Company vehicle is a Discretionary Benefit and any further failure by you to follow the Company’s instructions in this or any other matter will result in its permanent withdrawal.”

10.	That email was sent by Mr Welby internally to the company to the employee, but also to a senior manager, a Ms Smith, and a junior employee who managed the car leasing scheme for the employer, a Ms Fox; and outside the company to two employees of Audi, Messrs Anderson and Wilson, who had been engaged for Audi in attempting to resolve the problems which had arisen.

11.	The Appellant’s complaint is not now specifically about the content of this email, in the sense that the comments were necessarily unjustified, but about the fact that comments which were made should not have been made to others as, in effect, part of a public dressing down of a senior employee by his line manager.  The employee did not, however, choose to resign over it at the time.

12.	On 17 March he complained to a still more senior employee.  Within a few days he spoke to Mr Welby himself - Mr Welby explained why it was he had written the email as he had - and on 21 April he entered a grievance within the employer’s grievance procedure.  He was interviewed by Ms Smith, who dealt with that grievance, as were Mr Welby and Ms Fox.  She concluded, on 8 May, that the employee’s position and reputation within the company was undamaged but noted that the email which Mr Welby had sent had gone beyond that which was necessary to bring the matter back in line with company policy.  Ms Smith therefore requested Mr Welby to prepare a letter of apology, which he, Mr Welby, agreed to do.

13.	On 14 may Mr Welby wrote an email.  The Tribunal regarded it as an apology, and although that was in contention before the Tribunal it is now accepted that it was an apology.  In its material terms it reads as follows:
“As you know, Sharon Smith has now completed a thorough and comprehensive investigation into your concerns that you have suffered discrimination on the grounds of race, disability and success.  
I sincerely hope that you are now content that neither I nor the Company has discriminated against you on any of these grounds and we can both put those particular concerns aside.  
As part of her investigation Sharon formed the opinion, however, that the e-mail I sent you went ‘beyond that which was necessary to bring the matter back into line with Company policy’.  
I can assure you that my intention was not to cause offence or deal with the matter in a ‘heavy handed’ manner, seeking only to address the issues raised by the affair.  However, if the email was perceived as unjustified or an inappropriate response to the situation that had arisen, I am very pleased to express my full and unreserved regret accordingly ...”

14.	That email was sent not just to the employee and Sharon Smith but also to Ms Fox, Mr Anderson and Mr Wilson.  That had been requested, so the Tribunal found, by the employee, but it is plain that when he made that request he had not seen the terms of the apology.

15.	It is plain that a close reading of the text of the apology would indicate that the employee had brought a claim that he had been discriminated against, that claim had been rejected, that this had been done as part of a grievance procedure and that therefore the confidentiality that might be expected to attract to the contents of a grievance had been broken.  The result was, in the employee’s contention, to expose him further to adverse comment external to the employer and to compound the adverse effects of the circulation of the earlier email upon him, and he objected to it.

16.	Accordingly, he wrote on 23 May to complain that the letter of apology was contemptuous and that he felt compelled to resign.  He wrote a formal appeal letter.  The appeal was heard by Mr Hanson.  Mr Hanson expressed the conclusion of that appeal in these terms:
“After careful consideration I decided to uphold the Deputy Managing Director’s decision that there exists neither evidence nor grounds for reasonable belief that you have been discriminated against.” 

17.	The employee then instructed solicitors, if he had not earlier instructed them, to act on his behalf.  They wrote on 25 June, indicating that the employee might very well regard what had happened, taken overall, as entitling him to resign and claim that he had been constructively dismissed, but offered a face-to-face discussion about the issues.  The employer, for its part, in an email of 30 June 2008 to the solicitors, rejected any suggestion that the company had fundamentally breached the implied term of trust and confidence and expressed the hope that the employee would return to work as soon as he was able, promising to support him in doing so.  The employee took a little while to consider that email and then, on 8 July, wrote a letter, accepted by both parties as being the effective letter of resignation, giving the reasons for resigning on the first page.

18.	The claim which the employee brought before the Tribunal thus gave rise to those issues which are common to cases of constructive dismissal, namely: firstly, was there a repudiatory breach of contract committed by the employer?  Secondly, did the employee resign in response or partly in response to that breach?  This is not quite how the Tribunal expressed this principle, though nothing turns upon the difference in expression.  Thirdly, did the employee, by his conduct since the last of the events which amounted to a repudiatory breach, so conduct himself as to lose his right to resign in consequence of the breach?  That is sometimes called affirming the breach or waiving the breach, though neither term is, in our view, appropriate.  The legal issue is whether the employer having conducted itself in a manner which indicates that it may well not fulfil its obligations to the employee in the future, the employee is thereby relieved of the obligation resting upon him to fulfil his own obligations: this being a right or entitlement which may be lost by his own conduct if it indicates that, despite the employer’s behaviour, he nonetheless wishes to continue with the contract as it was.

19.	The acts upon which the Tribunal focused were considered in an extensive and carefully considered Judgment, running over some 27 pages.  The Tribunal found, so far as constructive dismissal was concerned, that there were a number of aspects in respect of which the employer could justifiably be criticised.  There are a number of other criticisms which were raised and wholly rejected.  At paragraph 7 the Tribunal set out extensively its conclusions as to constructive dismissal.  It dealt, in turn, with what was called a “moratorium on convertibles”, that is the refusal conveyed by Mr Welby to entertain the suggestion that the employee might have a convertible car rather than one of another body style; the content and the circulation of the email of 14 March; the behaviour of both parties in respect of the relationship with Lex and Audi; the manner in which the Respondents dealt with the Claimant’s grievance in terms of process, time taken and outcome; the content and circulation of the apology of 14 May (though the extent of consideration by the Tribunal of the circulation of that email is a matter which will fall for more detailed consideration in our Judgment below); and the alleged failure of the Respondent to give anything more than the bland reasons for rejecting the appeal which Mr Hanson had given in the letter to which we have already referred.

20.	Each of those matters was looked at individually.  The Tribunal then said this, at paragraph 7.18:
“Having looked therefore at the individual components of this course of conduct, the Tribunal then turned its attention to looking at the course of conduct as a whole and to ask the question as to whether the Respondents had behaved so badly in this course of conduct that, looking at it objectively, the Claimant could not reasonably be expected to continue to work for this employer ...”

21.	Although the phraseology may not correspond entirely with the legal test, which might be whether objectively there had been a breach which might entitle the Claimant to resign rather than obliging him to do so, nothing turns on that.

22.	The Tribunal focused then on three particular aspects of the acts and omissions it had been considering separately.  It regarded the email of 14 March first as being largely self‑explanatory as to the background to the remarks made in it, and noted that the employee was well aware of the context; second, that the failure, as they held it to be, by the employer to deal with explaining their approach, had to be seen in the context of what had happened; and third, it singled out the request made to Mr Welby to apologise for his use of the apparently offensive terms and noted that Mr Welby had had a meeting five days after the email to explain his reasons.  All that is at paragraph 7.19.  Then the Tribunal concluded in these words:
“Whilst the failure of the Respondents to give a reasoned decision on the appeal is regretted, and similarly the copying of the memo of 14 March outside the organisation being also not in the best industrial practice, and there is potentially some slight disadvantage to the Claimant in relation to a convertible car, the Tribunal, in taking account of the course of conduct as a whole, characterised these failings as no more than peccadilloes, and did not find that the course of conduct was such as to entitle the Claimant to argue, or the Tribunal to conclude that the Respondents, without reasonable and proper cause, had acted in such a manner as was intended or likely to threaten or destroy the relationship of trust and confidence.”

23.	The latter words are almost a completely correct recitation of the test deriving from Malik v Bank and Credit and Commerce International SA [1998] AC20 against which contentions that the implied term of trust and confidence has been broken has to be judged.  The word “threaten” is not used in the classic formulation of this test, rather the word “damage” is, but nothing in this case turns upon that.  The Tribunal purported to be applying a test which was correct and appropriate.

24.	When it came to deal with unlawful race discrimination, the Tribunal concluded that it could not hold that the inference that treatment of the employee was on the grounds of his ethnic origins was made out.  Accordingly, both direct discrimination and harassment failed, as separately did a claim of less favourable treatment on the grounds of nationality.  Explanations had been given which satisfied the Tribunal on the facts.  It held that the employee had failed to make out that he was treated less favourably, therefore, on racial grounds in relation to his nationality.

25.	There is one criticism, and one criticism only, made before us in argument by Mr McCarthy, although other matters were adumbrated in his skeleton argument and Notice of Appeal.  We should record that, having seen the skeleton argument submitted by Mr Williams, who appears for the employer, Mr McCarthy expressly accepted the statement of law that it contains.  He argues, however, that in one respect the Tribunal did not take into account, and deal with, an argument which had been raised before them.  That was an argument in respect of the circulation and content of the email of 14 May.  What is said is that the Tribunal were asked to consider whether or not the fact that the email referred to the Claimant’s grievance concerning race discrimination being rejected, coupled with the fact that that was copied to third parties, had been separately and distinctly dealt with by the Tribunal.

26.	When the Tribunal came to consider what facts were relevant to the race discrimination claim, it limited itself (paragraph 7.22) to three specific matters.  Those were: the copying in of third parties to the 14 March email (nothing is said there about the 14 May email); the failure of the Respondents to give a reasoned decision on the appeal and in response to the solicitor’s letter of 25 June; and the denial of the Claimant’s entitlement to a convertible car.  Mr McCarthy argues that the Tribunal should also, consistent with the arguments that had been put before it, have dealt with the case which he had been advancing, and clearly advancing, as to the way in which the 14 May email had been constructed and circulated.

27.	The case against these findings is raised under a number of heads by Mr McCarthy.  He begins by arguing that taken together, and in some cases even on their own, the findings that the Tribunal made were such that necessarily they must have found that there had been a breach of the implied term of trust and confidence.  He relied upon, first of all, the moratorium, where the Employment Tribunal had found that the employee had been prevented from considering or requesting a convertible car and he points to the finding (see paragraph 7.2) that there never was such a moratorium.

28.	He accepts, however, as he is bound to do, that the Tribunal did say, at paragraph 7.29, as a finding of fact, that there was an explanation for the apparent moratorium, which was that Mr Welby had made a mistake.  He had believed that there was such a moratorium.  He did not know that another senior employee, Ms Smith indeed, had a convertible car, and he would have acted in the same way in respect of anyone who had requested a convertible car from him.  The Tribunal say expressly that they accepted that explanation and found it reasonable, cogent and satisfactory.

29.	Next, Mr McCarthy argued that, taken together with the other matters which had occurred, or separately, the email of 14 March necessarily had to be seen as a breach of the implied term.  To give a dressing down, in effect in public since two employees of Audi were concerned, was so to demean and diminish him in the eyes of outsiders that his position would objectively become untenable or could be reasonably be regarded as such by the employee concerned.  It was entirely inappropriate for a line manager to write in such terms to outsiders and to junior employees.  The appeal decision on this was open to criticism.  He said that although the Tribunal accepted that the content was appropriate as between line manager and employee, that that was not the same as revealing the content of such discussions to outsiders, and that any employer acting in such a way must necessarily be regarded as acting beyond the pale.  It was simply not good enough to dismiss it, as this Tribunal did at paragraph 7.20, as being “not in the best industrial practice” or “no more than a peccadillo”.

30.	He argued that the grievance procedure had been flawed; that the outcome of the grievance was such that the Employment Tribunal should have considered that the failure to give reasons by Mr Hanson, coupled with the wrongful acceptance by Ms Smith in the course of the grievance procedure that there had been no restriction on the claimant’s choice of car, when in fact there had been, coupled with the circulation of the letters of 14 March, compounded by the circulation of the email of 14 May, were such that, taken together, there was only one conclusion to which this Tribunal could and should properly have come.

31.	Separately, though combined with those matters, Mr McCarthy took the point that we have already identified in respect of the discrimination claim, in the context too of the claim for constructive dismissal.  That is, he raised the argument whether the Tribunal had dealt at all properly with his case that the fact that the email of 14 May 2008 referred to the Claimant’s grievance as having claim of race discrimination had been rejected and that that was copied to third parties. This was simply not dealt with.  This, in our view, is a serious point, which we shall consider separately here. It has given us some pause for consideration.

32.	Mr McCarthy points to the specific findings which the Tribunal made about the May apology.  It said, at paragraph 7.15:
“As to the issues raised for the first time in the course of the appeal, which is the question of the content of the apology letter and that Mr Welby by copying it had divulged the  nature of Mr Sawar’s grievance to third parties, Mr Hanson considered that the apology letter was sufficient --”

33.	Pausing there, that was actually identifying the issue.  The Tribunal continued:
“-- and in the view of the Tribunal he was entitled to come to that conclusion.”

34.	It then went on to deal with the copying of the letter and noted that the Claimant had asked for the letter of apology to be copied to the same persons who had received a copy of the 14 March email, and continued in this regard (paragraph 7.16):
“As to the 14 May apology (or so-called apology) letter, the Tribunal accepted that it was adequate.  Failure to use the word ‘apology’ did not, in the Tribunal’s finding, render the email unapologetic.  In the Tribunal’s finding, the email went as far as could reasonably be expected to express regret for the offence caused by the use of certain words.”

35.	Mr McCarthy objects that the focus in those paragraphs is not upon the extended circulation of the email of 14 May, but upon whether or not there was an apology.  That had been an issue but it was not the only issue, as indeed the opening words at paragraph 7.15 demonstrate.  What, for his part, Mr Williams argues is that the Tribunal had dealt, at paragraph 3.4 and paragraph 4.44, with the issue of the email and at paragraph 7.16 had made it clear that in its view, having just reminded itself of the issues relating to this email, the letter was adequate, or (paragraph 7.15) sufficient.  He accepted that the reasoning could have been more clearly linked to the allegation which was made, but he maintains that the Tribunal had here before it, and had dealt with, the argument which had been put before it.

36.	Insofar as Mr McCarthy’s main thrust was that the Tribunal had not dealt with an argument which he had raised, we do not think this can be sustained in the light of the contents of paragraph 7.15 and 7.16 in the context of the decision as a whole.

37.	It is a different issue whether the Tribunal sufficiently explained its reasoning.  Here, however, though we have some sympathy with the points made by Mr McCarthy, again we reject his submissions.  We do so for these reasons.  First, it is important and essential that those who win and those who lose Tribunal cases should receive sufficient by way of reasoning to know why it is that that has happened.  Second, the reasoning should be sufficient to assist the decision-maker by reminding him of the points which he must consider and bear in mind.  Third, it entitles a court on review such as this to know whether a Tribunal has reached its decision upon a permissible basis.  However, we also note that Tribunal’s decisions are not to be regarded as though they were carefully drafted statutes or trust deeds.  In a Tribunal such as this, dealing over as many pages with the issues as it did, and having the number of issues before it which it had, it is inevitable that  conclusions on some aspects of the case will be dealt with more tersely than they are on others.

38.	The decision is likely to reflect the weight of the arguments before it but it does not have to record every point, nor deal with every point, providing it does sufficient to fulfil the three intertwined objects we have expressed at paragraph 37.  Here, we must put the issues in respect of the 14 May email in context.  The Tribunal said, at paragraph 7.18, that it had looked at the individual components of the course of conduct and turned its attention to looking at the course of conduct as a whole.  It had found only those actions to be significant that we have recorded as arising in paragraph 7.19.  It reached an overall Judgment - but the subject matter of that Judgment was whether or not there had been a breach of contract.  The importance of the copying of the email of 14 May to other parties was only as to whether it could assist the Tribunal in reaching its decision on that central point, whether there had been a breach of contract or not.

39.	In that light, it is clear that the parties would be in no doubt that the reason for the decision which the Tribunal ultimately made in this case was that it did not, in this particular context, regard what had been done by the employer as being necessarily sufficient for it to conclude that there had been a breach of the implied term of trust and confidence.  If it had done, then (see Morrow v Safeways Stores Plc [2002] IRLR 9), it would have concluded inevitably that the employee was entitled to claim constructive dismissal.

40.	As to the other matters which Mr McCarthy raised, we have to focus upon the approach which the Tribunal took.  The question for us is whether it was wholly impermissible for it to reach the findings which it did at paragraph 7.20 in this context, on these facts.  We can well understand, and indeed would expect, that in most cases where an employer gives a dressing down to an employee in front of others who are not employees of the company, or who are junior employees of the company, that the employee who is subject to the telling off will be entitled to regard that as a repudiatory breach by the employer.  But that is to view the action in isolation.  There may be circumstances in which that is not the case.  Every case must necessarily turn on its own facts and be decided in its own context.  That is why, despite our view as to what we would normally expect a Tribunal to find, we cannot say that this Tribunal was not entitled to come to the conclusion it did, having particular regard to the context.  That context, as the Tribunal itself pointed out, included the fact that the senior employee who had exposed the Appellant to the criticism he did in the email of 14 March, was himself taken to task for it and required, effectively, to write an apology.  It is accepted now that a sufficient apology in terms of content was indeed written.

41.	We do not see the circulation of that apology and the reference within it to a grievance as necessarily requiring the Tribunal to regard the original failing as having been compounded.  Nor can we see that the Tribunal was bound to find a last straw (for this was put before the Tribunal as a “last straw” case) in the failure of Mr Hanson to give reasons.  He was criticised for that by the Tribunal.  The Tribunal were alert to the criticism to be extended to the employer generally for failing to ensure that the employee knew that he had a free choice of car.  The Tribunal were alert to the failings of the employee’s senior manager in his conduct in respect of the email.  This is not a case in which the Tribunal were blind to the failings of the employer.  It is a case in which it was in a position, having heard the evidence and considered the documents, to evaluate those findings and those failings in the context of all that had occurred.

42.	Whatever our decision (had we been members of the Tribunal) might have been, we are satisfied that the conclusion to which the Tribunal came was one to which it was entitled to come, on the evidence before it.

43.	I should add this.  Particular reference was made by Mr McCarthy at the start of his submissions to the importance of the understanding of lay members on a Tribunal and for that matter lay members on an Appeal Tribunal, in evaluating the effect of the employer’s conduct in respect of the two emails which are central.

44.	The lay member in this panel throughout has been inclined to think that the Tribunal below was exactly right to criticise the conduct in respect of the emails of 14 March, as it did.  But in common, he surmises, with the lay members of that Tribunal, he too in the context would wish to emphasise that he would not have regarded what had happened as having gone so far as to amount to a breach of the implied term of trust and confidence.

45.	It is particularly reassuring, and an important aspect of sitting in this Tribunal, to have input of this nature from a lay member, and because of the nature of the submissions in this case, it is appropriately specifically to mention it.

Conclusion
46.	For those reasons we reject this appeal both in respect of the constructive dismissal claim and the unfair dismissal finding upon the ultimate and only ground upon which it was advanced, that of perversity.