Appeal No. EAT/635/96

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 15 November 1996

Before
MR JUSTICE J LINDSAY
MR A C BLYGHTON
PROFESSOR P D WICKENS OBE

THE PETERSHAM HOTEL LTD	APPELLANTS

MRS A CASTRO	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR J NEUBERT
(of Counsel)
Clerk to Mr J Neubert
3 Temple Gardens
Temple
London
EC4Y  9AU	
For the Respondent	MR J CROSFILL
(FRU)
MS A McDONALD
Citizens Advice Bureau
The Vestry House
21 Paradise Road
Richmond
Surrey
TW9  1SA	

			MR JUSTICE LINDSAY:   We have before us an appeal that concerns the decision of the Industrial Tribunal, given as a Reserved Decision on 26 March 1996, after a hearing held at London (South) on 15 and 16 February of this year.  It was a decision by the Chairman Miss Donnelly and two Members, Mr Jenkins and Mrs Tritton.  We are told that the two days, 15 and 16 February, were largely given over to evidence, and that even after those two days were finished, there were written submissions of law invited by and given to the Tribunal, and the decision was reserved until the 26 March.  

	It is a decision of some length.  The decision was in relation to the case between Mrs Castro, the Applicant, who had been a waitress at The Petersham Hotel Ltd., the Respondents.  The unanimous decision of the Tribunal was that Mrs Castro had been unfairly constructively dismissed, but that she had contributed to her dismissal to the extent of 5%.  Secondly, that her sex was an operative cause of her dismissal and that therefore she was unlawfully discriminated against on the ground of sex, contrary to Section 6(2)(b) read with Section 1(1)(a) of the 1975 Act.  Thirdly, it was held that the Applicant was engaged on like or broadly similar work, to that of the two male comparators chosen, Mr Eugenio Fraga and Mr Paul Delaney, and that there was no material difference between the male comparators and the Applicant, other than the difference of sex, which justified the difference in pay between Mrs Castro and those comparators.  Fourthly, it was held that the removal of the Applicant’s share of the TRONC - which we will have briefly to explain - was an unlawful variation in terms of her contract, contrary to the Equal Pay Act 1970 and could not be objectively justified.  It was therefore held as I have indicated and the case was adjourned until 10 July for a remedies hearing.

	We have before us today on behalf of the Appellant, The Petersham Hotel Ltd., Mr Neubert who appeared below for The Petersham Hotel and Mr Crosfill who did not appear below for Mrs Castro.  Mr Neubert has put in a very useful Skeleton Argument which, broadly speaking, raises four chief points.  

	Before I go further into those points, it would, I think, be right to give a brief indication of the background, but as it is so fully set out in the Tribunal’s decision I need not by any means give it fully.  Mrs Castro had been a waitress at The Petersham Hotel in Richmond for quite a long time, some seventeen years.  At the Hotel, as is not uncommon in the catering trade, a TRONC system was operated and the money received towards the TRONC pool was distributed and done initially, so far as we are immediately concerned, on a points system, under which Mrs Castro gained a certain percentage of the pool.  Things were not entirely happy so far as her employment was concerned.  She found in October 1994 that whereas some male colleagues had had a £10 a week rise, she had had only a £5 a week rise, notwithstanding that she had served longer than they had.  That was a factor that led to a certain amount of unease or displeasure on her part.  Moreover, as one could expect in a close community as amongst waiters at a hotel, it became known that that was so and she found it humiliating and hurtful that she had been rewarded a smaller increase than they had.

	Commonly she worked on Saturday lunchtimes, amongst other hours, but generally speaking she was asked whether she would be willing to work a Saturday and generally did.  In November 1994 there loomed a particularly important Saturday in that there was to be an international rugby match at the nearby ground at Twickenham and she found, when the roster was put up, that she was allocated to work on that Saturday without ever having previously being asked to do so.  She was still smarting from the discovery of the fact that she had a lower rise than her colleagues and when approached to work on that Saturday, she indicated that she would not but the reason she gave for not so working, was, unhappily, not true.  She said that she had taken another job that involved her working on Saturdays.  This was gone into in some detail at the Tribunal and the Tribunal held (although this fitted precisely with neither the evidence given on one side nor the other) that she had indicated that she would not be prepared to work Saturday lunches generally, rather than just the one Saturday lunchtime that involved the rugby match.  That discussion was on a Saturday.  Come the next Monday, it was indicated to her that her points system share of the TRONC was to be reduced.  Instead of having a given percentage, she was instead to receive £50 a week as a flat rate.

	The overall effect on her wage was that it amounted to a deduction of some £20 a week.  She complained to Mr Bowers, a Senior Officer in the hotel company, and he said that it was not his responsibility.  As time passed and finding her share of the TRONC not restored, and still smarting from the lower increase that she had received, she wrote a letter of resignation.  It is not immediately in our papers but it was before the Industrial Tribunal and it relies either chiefly or wholly on the reduction in TRONC points or TRONC percentage, which had by then come to be established.  She saw that as a loss of some £1,300-£1,560 per annum net of tax.  She had requested restoration of the points system in her favour, but the system stayed unaltered.  Moreover, once she had indicated she was not prepared to work that particular Saturday, or as the Tribunal found, Saturday’s generally, she was not offered the extra work which previously had come her way.  There were other offers made to her and they are gone into in some detail in the award of the Tribunal but I do not think I need set them out in any detail.  

	Against that background I now turn to the Skeleton Argument of the Appellant, which I have previously mentioned.  The first ground that is relied upon concerns a questionnaire sent out to the Hotel under the Sex Discrimination Act 1975 Section 74.  Section 74 provides a mechanism whereby a person aggrieved can ask questions of a respondent.  Sub-section (2) provides:
“Where the person aggrieved questions the respondent (whether in accordance with an order under subsection (1) or not)--

(b)  if it appears to the court or tribunal that the respondent deliberately, and without reasonable excuse, omitted to reply within a reasonable period or that his reply is evasive or equivocal, the court or tribunal may draw any inference from that fact that it considers it just and equitable to draw, including an inference that he committed an unlawful act.”

	The questionnaire sent out on behalf of or by Mrs Castro raises questions on the subject of the TRONC.  At three points in the decision of the Tribunal, looking at pages 20, 22, and 23 of our papers, there is a reference to the fact that the Tribunal regarded the Hotel’s answers as evasive and equivocal.  The chief reference runs as follows at the end of paragraph 25:

“...  The Tribunal noted that Mr Bowers answered the section 74 questionnaire and stated that he had no details of the tronc system, when it was clear from the evidence that emerged that the Respondent knew very well how the tronc system worked and the reply to [section] 74 questionnaire on this issue was evasive and equivocal.”

As I say, there are two further references to that.

	It does seem to us, (first of all, for the moment leaving aside the question whether the answers to the questionnaire were evasive or equivocal or both) that Section 74 does pose some difficulties as a ground on which an Appellant can usefully rely.  If the Tribunal finds the answers evasive or equivocal, then it may draw inferences of fact.  One might think that it would be entitled to draw inferences of fact in any case.  If complaint is to be made that on that score some particular inferences of fact were drawn, then it really behoves an Appellant to identify the precise inference of fact that is said to have been drawn, and then to demonstrate that that inference was false.  If the inference was in any event correct for other reasons, well then, of course, there would be no sensible complaint under Section 74.  That is a difficulty, as I see it, in the way of the Hotel, as Appellant.  But, quite beyond that, Mr Crosfill for Mrs Castro emphasises that there was indeed a degree at least of evasion, (he does not, I think, use the word “equivocation”) on the part of the Hotel.  I will not set out all the answers that were given or indeed all the questions, that run to several pages, but the one answer given to the question:  
“Please state how the point allocations were arrived at and any other rules and regulations governing the system”

The answer was:
“The Hotel has no detailed knowledge of the intricacies of the system.”

Mr Crosfill urges that they must have known the intricacies of the system; in the nature of things tips these days are often in large part, certainly in a substantial part, paid by way of credit card or by way of cheque, and the system that must have been used was that in the first place the Hotel company would have the benefit of those, then strip out from its general receipts that part that was attributable to service and then pay that out of its own monies back to the TRONC master - which is the term used in some cases for the person who regulates the TRONC - so that some real familiarity with the working of the TRONC system had to be in the Hotel company.  Moreover, precise details of the TRONC system had, at any rate as it had been in 1984, were known to the Hotel company as it had been set up by a Director of the Hotel company and it provided that any queries should go to the Director.  It is hard to believe in that context, says Mr Crosfill, that there was not a real knowledge of the working of the system.

	There were indeed also, as the Tribunal found, particular discussions relative to Mrs Castro’s particular case, between Mr Eskanazi, the Manager of the Hotel, and a senior officer of management, on the particular subject of Mrs Castro’s entitlement and the fact that it had been reduced.  Again, it is hard to believe that in the course of that discussion, says Mr Crosfill, a detailed knowledge of the TRONC system did not come to the mind of the senior management.  To say that the Hotel had no involvement would not be a fair way of putting the position of the company, and yet one of the matters raised by Mrs Castro in her questionnaire and answered by the company got the answer:
“At all material times the Hotel had no involvement in, .... the arrangements by which the Restaurant staff shared gratuities”

Plainly, there was some involvement and whether it was as full as it might have been or not, is neither here nor there.  It cannot be the case, as Mr Crosfill, rightly in our view urges, that one can escape giving a full answer to a Section 74 questionnaire by picking as an individual respondent someone who has insufficient knowledge of the subject, otherwise, as Mr Crosfill points out, one ends up with questions being directed to the company and the answer coming from the car-park attendant.

	On this subject, the Tribunal had evidence.  We, of course, are not in a position to hear evidence.  It is not our job to second-guess the Tribunal’s views on the evidence.  What has to be shown here, so far as this point is concerned and generally, is a complaint that no Tribunal properly instructing itself could have come to the conclusion to which it arrived.  We cannot find that to be the case in relation to the questionnaire.  Notwithstanding that the point is set out in useful detail by Mr Neubert in his Skeleton Argument, we do not attach weight to it.  We cannot conclude as his argument does, that the decision on that point was perverse.  

	The second point raised by Mr Neubert concerns the question of a fundamental breach of the implied condition of mutual trust and confidence.  It is the case that in relation to that subject the Tribunal quoted a passage from the judgment of Mr Justice Browne-Wilkinson as he then was, in Woods v W M Car Services (Peterborough) Ltd [1981] ICR 666 page 670 says: 
“... To constitute a breach of this implied term it is not necessary to show that the employer intended any repudiation of the contract: the tribunal’s function is to look at the employer’s conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it:”...
and the complaint here is that the Tribunal did not go on to cite the next immediate passage in the judgment that said:
“The conduct of the parties has to be looked at as a whole and its cumulative impact assessed.”

	I find it quite impossible to jump from the fact that the Tribunal cited a passage ending up with a row of dots and did not run on to include the later passage that that indicated that they did not have the later passage in mind.  When they cited, as they did, from the first part, relative to the employer’s conduct, they did that because it was at that stage particularly at the employer’s conduct that they were looking.  It does not follow from that that they had no sufficient regard to the conduct of the employee.  It cannot sensibly be argued that they did not have regard to Mrs Castro’s behaviour because they carefully assessed it and arrived, as I have indicated earlier, at an assessment that she was 5% liable in respect of contributory fault.  

	The complaint raised in the Skeleton Argument is that the Tribunal was wrong in law in failing to give any or sufficient consideration to the conduct of Mrs Castro.  That gave some consideration is quite plain from the 5% deduction.  Whether they gave sufficient is very much a question of fact, properly to be left to the Tribunal.  But it needs to be remembered that she was paid less than her male comparators.  She felt taken for granted when she found herself being put on the Saturday roster without being consulted.  She had been there seventeen years.  These are considerations which plainly the Tribunal was able to take into account and no doubt did take into account and we cannot find that such a case is made out on this ground that it affords any real assistance to the Appellant.

	The next ground in Mr Neubert’s Skeleton Argument is that the Tribunal’s decision that the Respondent’s sex was an operative cause of her treatment was a perverse finding.  An explanation was given by the Hotel company of why she had been treated as she had been treated, and it consisted of the fact that she had refused to work Saturday lunch times.  This was not seen by the Tribunal as being an adequate reason for the way in which she was treated.  The conclusion that the Tribunal came to was that, the reason given to them having proved unacceptable, (in the sense that they felt it was not sufficiently supported by the evidence) they were left with no apparent reason subsisting for the way in which she had been treated.  Inevitably, therefore, the Tribunal was left to draw such inference as it could from the whole body of the evidence and the way in which over a period of years Mrs Castro had been treated.  They came to the conclusion that the only visible remaining reason was that she was treated as she was because of her sex.  

	It is inevitable in this area of the law, that one commonly does not have direct evidence.  One cannot expect to limit cases to those where the employer throws up his hands and says “yes, it was because she was a woman”.  One has to get a feel from the whole body of the evidence.  That is what the Tribunal here did over two days.  They found that it was an operative cause.  In paragraph 27 of their decision they provide: 
“... The Tribunal therefore finds that the Applicant was constructively unfairly dismissed and there is an operative cause of evidence was that she was a female.”[I am afraid that the sentence, like other ones, is not wholly free of typographical and other errors.]

	In an area where one cannot expect direct evidence and where one has to rely on inference, we cannot say that here there was so little foundation for the finding at which they arrived that no Tribunal properly instructing itself could have arrived at such a conclusion.  So, again, we find that the argument advanced in the Skeleton is of no avail to the Appellant Hotel company.

	The fourth ground consists of an argument that it was an error on the Tribunal’s part to hold that there was no material difference other than a difference of sex between the male comparators and the Respondent which justified the difference in pay.  This is a difficult area because it is the case that Mrs Castro did not work the same hours as her male comparators.  She worked from breakfast, in the ordinary way, to the early afternoon (after lunch), and the male comparators worked split shifts beginning before lunch and going on till after lunch, then having a split and coming back onto duty for an evening shift that ran quite late because dinners were served and they were involved in the service of dinners.  It is the complaint here that the Tribunal failed correctly to apply the decision in Dugdale v Kraft Foods [1976] IRLR 368, and a passage from that is set out in the Skeleton Argument.  But the matter was considered by the Tribunal.  It had put to it the contention of the Hotel company that the different hours worked was the reason for the difference.  It rejected that finding.  That was an issue of fact, and again, unless there is some point of law that we can identify in the Appellant’s favour there, it is of no assistance to them.  We do not find that there, is in relation to the Tribunal’s handling of the comparators and the Dugdale case, an error in law that justifies any relief in the Appellant’s favour.

	An alternative ground, and this is the fifth ground in the Skeleton of the Appellant, concerns the fact, as I have just mentioned, that the men comparators with whom Mrs Castro wished to have herself compared worked a split-shift system.  The point here is laden with a little extra difficulty because the evidence included evidence that, at an earlier time at any rate, Mrs Castro had been loathe to work late in the evenings because she was frightened to have to walk home.  On that, although one recognises that generalisations are difficult and indeed we have had our attention drawn to the Kidd v DRG (UK) Ltd [1995] IRLR 190 that indicates that there is always a danger in relying upon generalisations, even so we have before us the findings of, so to speak, an informed jury on the point.  They, the Tribunal, took the view that there was sufficient evidence to support a view that there had been indirect discrimination, having regard to the facts, as they had heard them in evidence over a period.  Bearing in mind the difficulty in getting direct evidence and in weighing factors such as the fact that women might be less willing to work late at night than men, essentially matters for the Tribunal, we do not find that there is anything compelling in the argument of the Appellant.

	The last of the points raised by the Appellant concerns the reduction in TRONC that Mrs Castro suffered.  The heading of the Skeleton puts the point in the sentence:

“6.  The Tribunal erred in law in finding that the removal of the Respondent’s share of the TRONC was an unlawful violation of her contract.”

TRONC and its position in remuneration generally is a far from easy subject and it will be seen from the relatively recent cases of Nerva & Others v R L & G Ltd in the Court of Appeal in May of this year, where there was dissent, and in the other case Saavedra v Aceground Ltd [1995] IRLR 198, that really quite minor differences in fact can have different consequences in law, and that the question of quite what TRONC is can arise in different contexts.  In the Saavedra case the position was that money which should have been paid as a contribution towards those who provided service was being taken by the company employer, in whole or in part, for itself.  In the Nerva case the question was how far, if at all, what a man or woman received as TRONC was properly to be counted towards whether his employer was satisfactorily providing the statutory minimum remuneration.  Different contexts require different answers and slight differences in fact can have large differences in conclusion.

	It is apparent from the judgment of Lord Justice Staughton, one of the majority in the Nerva case that it is possible to have an entitlement to TRONC notwithstanding that the entitlement is not necessarily contractual.  In that case it was conceded that waiters had terms of contract which entitled them to TRONC, but at paragraph 14 of his judgment he says:
“... But the existence of such contracts seems to me of no consequence when one is deciding whether the tips count against minimum remuneration.”

	It seems to follow from that passage that TRONC can in these cases properly be regarded as remuneration, even if there is no contract on that behalf.  I thus do not see it as necessarily right to frame the question, as Mr Neubert did, as to whether the removal of the share of TRONC was a violation of contract.  It could, as it seems to me, be offensive, even if there was no strict contractual obligation that TRONC should be paid.  Leaving that aside, the finding of the Tribunal was that there was here a contract in respect of TRONC.  They went into that issue at some length, and at the risk of repeating myself, they did hear evidence over some two days.  We do not say that we would have come to a different conclusion, but whether we would have or not is irrelevant.  We cannot identify a fault in the Tribunal’s reasoning in relation to the diminution of Mrs Castro’s share of TRONC sufficient to amount to a point of law.

	Accordingly, having discussed at some length each of the points in Mr Neubert’s very helpful Skeleton Argument, which largely was followed in the course of oral development, we do not find that we can grant the Appellant relief.  It is not for us to say whether we would have come to the same answer as the Industrial Tribunal or, indeed, that we would have come to the same answer by the same route.  Our role is limited, as Mr Neubert and Mr Crosfill have both properly drawn to our attention, and, in that limited role, we find that we are unable to set the decision below aside.  Accordingly the appeal is dismissed.