Appeal No.  UKEAT/0052/05/RN

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH EH3 7HS

	At the Tribunal
	On 20 December 2005

 
Before
THE HONOURABLE LADY SMITH
MR P PAGLIARI
MR P M HUNTER

 
ARNOLD CLARK AUTOMOBILES LTD	APPELLANT

 

 
(1) RICHARD G STEWART (2) BARNETTS MOTOR GROUP LTD	RESPONDENTS

 
Transcript of Proceedings
 
JUDGMENT

 

 

 
 
	APPEARANCES

 
For the Appellant	MR D WHYTE
Solicitor
Messrs Bishops
Solicitors LLP
2 Blythswood Square
Glasgow 
G2 4AD
 	
For the 1st  Respondent	MR R G STEWART
In Person	
For the 2nd Respondent	Neither present nor represented	

SUMMARY

Claim for unfair (constructive) dismissal, breach of contract and failure to inform and consult contrary to TUPE Regulations.  Prior to instituting the tribunal claim, the claimant’s solicitor had sent a letter to the respondents detailing the ways in which it was alleged that they had breached the claimant’s contract of employment and failed to comply with the relevant TUPE Regulations requirements and what the claimant sought by way of compensation in respect thereof.  The letter was marked ‘Without Prejudice’ and finished by intimating that if the respondents did not confirm their acceptance of the claimant’s proposals within fourteen days, they would recommend that he should proceed to make appropriate claims in the Employment Tribunal without further intimation.  The Employment Tribunal held that the sending of the letter, though not expressly stated to be a grievance letter, amounted to compliance with the requirements of s.32 of the Employment Act 2002.  The Employment Appeal Tribunal agreed.  It did not matter that the details of the claimant’s grievance was set out in a letter of claim or that it was marked ‘Without prejudice’.

THE HONOURABLE LADY SMITH
PRELIMINARIES
1.	This case concerns a claim brought before the Employment Tribunal  in which the claimant alleges unfair (constructive) dismissal , breach of contract and failure to inform and consult with him contrary to the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (“TUPE”).
 
2.	The first respondents were said to be the transferor and the second respondents the transferee. The present appeal was brought by the second respondents and not opposed by the first respondents.
 
3.	I will refer to the parties as claimant and respondents.
Introduction
4.	This is an appeal against a Decision of an Employment Tribunal, sitting at Edinburgh, Chairman Mrs S Craig, sitting alone, registered with Extended Reasons on 30 May 2005. The claimant was represented there by Mr A Murdoch, solicitor and before us he represented himself. The second respondents were represented there and before this tribunal by Mr Whyte, solicitor.
 
5.	The decision of the Employment Tribunal was that the claimant had complied with the requirements of s.32 of the Employment Act 2002 and that the tribunal could, accordingly, consider his complaint of unfair dismissal.
The issues
6.	The sole issue for determination by the tribunal was whether the claimant had complied with the requirements of s.32 of the Employment Act 2002 since, if he had not done so, he was not entitled to proceed with his claim for unfair dismissal.  There was no discussion before the tribunal as to whether any failure to comply would affect the other aspects of his claim. 
The Judgment
7.	The tribunal held, having considered the particular facts and circumstances of the case, that s.32 had been complied with in that a letter sent to the second respondents by the claimant’s solicitor was held to have constituted the intimation of a grievance.
The appeal
8.	The second respondents appealed against that decision alleging, in their notice of appeal, that the tribunal misdirected themselves in finding that the claimant’s solicitors’ letter was an intimation of grievance; it was a letter of claim and not a letter which evinced any intention of invoking the second respondents’ grievance procedure. 
The legislation 
9.	The relevant legislative provisions are those contained in s.32(1), (2), (3) and (6), and Schedule 2 paragraphs 6 and 7 of the Employment Act 2002 (‘the 2002 Act’) together with the definition of ‘ grievance’ contained in paragraph 2 of the Employment Act 2002 (Dispute Resolution) Regulations 2004 (‘the 2004 regulations’) and paragraph 6(1) of those regulations: 
 
“32   Complaints about grievances
 
(1)  This section applies to the jurisdictions listed in Schedule 4.
(2)  An employee shall not present a complaint to an employment tribunal under a jurisdiction to which this section applies if –
(a)   it concerns a matter in relation to which the requirement in paragraph 6 or 9 of Schedule 2 applies, and
(b)   the requirement has not been complied with.
(3)   An employee shall not present a complaint to an employment tribunal under a jurisdiction to which this section applies if –
(a)   it concerns a matter in relation to which the requirement in paragraph 6 or 9 of Schedule 2 has been complied with, and
(b)   less than 28 days have passed since the day on which the requirement was complied with.
(6)   An employment tribunal shall be prevented from considering a complaint presented in breach of subsections (2) to (4), but only if –
(a)   the breach is apparent to the tribunal from the information supplied to it by the employee in connection with the bringing of the proceedings, or
(b)   the tribunal is satisfied of the breach as a result of his employer raising the issue of compliance with those provision in accordance with regulations under section 7 of the Employment Tribunals Act 1996 (c 17) (employment tribunal procedure regulations).  ...
 
Schedule 2
Step 1: statement of grievance
6.	6.        The employee must set out the grievance in writing and send the statement or a copy of it to the employer
Step 2: meeting
7.	7.        (1)  The employer must invite the employee to attend a meeting to discuss the grievance.
(2)	(2)     The meeting must not take place unless –
(a)	(a)     the employee has informed the employer what the basis for the grievance was when he made the statement under paragraph 6, and 
(b)	(b)     the employer has had a reasonable opportunity to consider his response to that information.”
 
Employment Act 2002 (Dispute Resolution) Regulations 2004 (‘the 2004 regulations’)
2   Interpretation
‘grievance’ means a complaint by an employee about action which his employer has taken or is contemplating taking in relation to him; … Application of the grievance procedures
(1)   The grievance procedures apply, in accordance with the paragraphs (2) to (7) of this regulation, in relation to any grievance about action by the employer that could form the basis of a complaint by an employee to an employment tribunal under a jurisdiction listed in Schedule 3 or 4, or could do so if the action took place.”
This is a claim for unfair constructive dismissal and in terms of Schedule 4 to the Act, the provisions of s.32 apply to such claims..
The facts
10.	The claimant was the General Manager of the first respondents, who traded from a site at Mitchelson Industrial Estate in Kirkcaldy. It appears that the first respondents sold their business to the second respondents with effect from 22 October 2004. It is said that the second respondents proposed to appoint a different employee to the post of General Manager, in place of the claimant. There was, according to the claimant, no discussion or consultation with him regarding the proposal and he considered that he was left with no option but to resign and did so, on 22 October 2004.
 
11.	The claimant’s solicitor wrote to the second respondents by letter dated 28 October 2004, in the following terms:
“We have been instructed by Mr Richard Stewart, formerly General Manager of Barnetts Motor Group’s Mazda and Skoda franchises and used car and budget car departments at the Barnett groups site at Mitchelson Industrial Estate in Kirkcaldy.
Mr Stewart advises that Barnett Motor Group’s businesses conducted form these sites were sold to the Arnold Clark Group with effect from Friday, 22 October.  From the information provided to us by our client, it seems apparent that the sale of these businesses was a relevant transfer in terms of Regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (“the TUPE Regulations”).  From the discussions that we have had with our client, it seems evident that both the Barnett Group and the Arnold Clark Group have materially breached the TUPE Regulations and our client’s Contract of Employment.  As a consequence, unless matters can be amicably resolved in early course, our client intends to pursue appropriate claims in the Employment Tribunal or courts as appropriate.
The particular matters in relation to which our client intends to pursue the Tribunal proceedings can be detailed as follows:-
1.	1.      Breach of Regulation 10 of the TUPE Regulations.
In terms of Regulation 10, certain duties were incumbent upon the Barnett Motor Group Limited to inform and consult with representatives of our client and other affected employees concerning inter alia any measures which it was envisaged would be taken by the Arnold Clark Group following the relevant transfer of its businesses to it.  No such consultation took place and, in particular, there was no consultation concerning the proposal to replace our client as General Manager with Mr Keith Emmer.  Notwithstanding the fact that the principal obligation to consult rested with our client’s former employers, the Barnett Group, liability for this failure to consult transfers by operation of Regulation 5 of the TUPE Regulations,to the Arnold Clark Group.  In terms of Regulation 11(11) of the TUPE Regulations, the compensation that our client is entitled to receive in respect of this failure is up to 13 weeks pay.  Given the gross failure to enter into any meaningful consultation whatsoever and the consequent implications for our client, we are firmly of the view that an Employment Tribunal will award the maximum compensation in this instance.
2.	2.      Constructive Dismissal
Our client has advised us in detail of the circumstances of his replacement as General Manager by Mr Keith Elmer.  In particular, our client has detailed the conversation that he had with you and Mr Elmer late in the afternoon of Friday, 22 October at which our client was eventually left with no option but to resign his position.  The decision to replace our client with Mr Keith Elmer without consultation and without any discussion with him or explanation to him as to how this would affect his position going forward amounted to a material breach of the implied duty of mutual trust and confidence in our client’s Contract of Employment.  In the circumstances, our client has accordingly been constructively unfairly dismissed.  Unless satisfactory compensation is offered our client will proceed with a claim to the Employment Tribunal for unfair dismissal and breach of contract.
3.	3.      Quantification of our client’s claims
In relation to the breach of Regulation 10 of the TUPE Regulations, our client quantifies his claim at 13 weeks pay which, based on his basic wage, totals £9,000 gross or approximately £6,750 net.
In relation to our client’s claim for constructive unfair dismissal, our client is entitled to a basic award of £270.  In relation to the compensatory element of our client’s claim, our client will be starting new employment on Monday, 1 November.  His basic salary will be some £6,000 less than his basic at the Barnett Motor Group Limited.  It is reasonable to assess our client’s claim for loss of future earnings over a 12 month period, which equates to a loss of £6,000 gross or approximately £4,500 net.
Our client will have no earnings for the week commencing 25 October and has also lost the use of his company car during that period.  My client reasonably estimates his net loss during that week at £600.  In addition, it will be one year before our client has accrued statutory rights with his new employment and we assess our client’s claim in respect of loss of statutory rights at £250.
Our client also has a claim in respect of your company’s breach of contract.  But for your client’s material breach of contract our client would not have terminated his employment.  It is reasonable to assume that our client would have continued in his current employment through to the year end at which point he would have earned a loyalty bonus of £2,000 gross.  In addition, our client would then have been entitled to benefit from his employer’s bonus scheme, details of which have been provided to us by our client.  Having regard to the financial performance of those parts of the Barnetts Motor Group for which our client was responsible up to 22 October 2004, it is estimated that he would have achieved a bonus of approximately £14,500 gross by the year end.  The total net entitlement to bonus is estimated at £12,375.
Having regard to all of the foregoing and taking into account appropriate deductions for tax and national insurance, we assess our client’s claim in respect of all of the foregoing heads at £24,375.
You should now pass this correspondence to your own solicitors and have them contact us.  If we do not hear from them within 14 days of confirmation that the foregoing proposals are acceptable, we shall recommend to our client to proceed without further warning with appropriate claims in the Employment Tribunal.
Without prejudice”
 
12.	The second respondents’ solicitors replied to that letter by letter dated 8 November 2004, refuting all claims made. There was some further correspondence between solicitors in the course of which the claimant’s solicitor continued to press his claims and the second respondents’ solicitor continued to refute them.  The claimant then, on 7th February, 2005, presented a claim to the Employment Tribunal. 
Respondents’ case
13.	On behalf of the second Respondent it was contended that, bearing in mind that the purpose of the regulations was to achieve the resolution of disputes without resorting to litigation, the letter sent by the claimant’s solicitor, was not a statement of a grievance. The word ‘grievance’ was not used. Nothing was said in it either expressly or impliedly so as to seek to invoke the statutory or other grievance procedure. The letter concluded with the words ‘Without prejudice’. The whole tone and thrust of the letter was that it was adversarial rather than conciliatory with a view to extra – judicial resolution of the parties’ differences. The intention behind the letter was to claim financial compensation, not to invoke a grievance procedure. 
 
14.	Mr Whyte referred to the recent decision of the Employment Appeal Tribunal in the case of Shergold v Fieldway Medical Centre UKEAT/0487/05/ZT and acknowledged the criteria for the statement of a grievance that were set out there but submitted that the letter in this case still failed to qualify as a statement of grievance for the reasons already stated.
 
15.	Separately, Mr Whyte submitted that the definition of ‘grievance’ in paragraph 2 of the regulations ought to be ignored. The relevant regulation was contained in paragraph 6(1) of the 2004 regulations and if the paragraph 2 definition for grievance was inserted where the word ‘grievance’ appears in that paragraph, the result was incomprehensible. It would mean that the full text of regulation 6(1) would be to the effect that the grievance procedures apply in relation to:
 
“any complaint by an employee about action which his employer has taken or is contemplating taking in relation to him about action by the employer…..” .
 
If, however, the literal meaning of the word ‘grievance’ was then used, its application favoured, it was submitted, the first respondents’ case that the letter was not a clear invocation of a grievance procedure.
 
Claimant’s Case 
16.	The claimant relied on the tribunal’s reasoning. He added, by way of comment that the second respondents had had fourteen days to respond to his solicitor’s letter and discuss matters further.  That was all that was required. 
The legal principles
17.	Under the relevant provisions of the 2002 Act and the 2004 regulations certain grievance procedures now require to be available to employer and employee. Failure to follow the set procedures in cases to which they apply is liable to have an adverse effect on any subsequent tribunal award.  Further, in certain cases, of which the present claim in respect of constructive dismissal is an example, an employee will not be allowed to present a claim to an Employment Tribunal if he has not, prior thereto:
 
“set out his grievance in writing” (2002 Act , Sch 2 para 6)
 
and waited 28 days ( 2002 Act s.32). 
18.	That would seem to mean that he must , to use the definition of ‘grievance’ that is contained in paragraph 2 of the 2004 regulations, intimate in writing to his employer any grievance which constitutes a complaint about action which his employer has taken or is contemplating taking in relation to him. In this case, the claimant’s grievance was, plainly, a complaint about action taken by his employer.
 
19.	As regards the first respondents’ argument to the effect that the definition of ‘grievance’ contained in paragraph 2 of the 2004 regulations , does not apply , for the reasons which we have noted, we do not feel able to uphold that argument. Whilst we fully agree with Mr Whyte that the drafting is poor and, on a literal approach, leads to a nonsensical result, We are satisfied that the correct analysis is that tautology has, unfortunately, been achieved.  That being so, the interpretative tools that come into play in cases of ambiguity or contradiction do not arise. The words :
 
“about action by the employer”
 
in the second line of regulation 6 , appear to be quite unnecessary but the meaning is obvious, namely that the first condition for the applicability of the grievance procedures set out thereafter is that the employee has a complaint about action taken by or contemplated by his employer , in relation to him. 
 
20.	Otherwise, the legal principles to be applied appear to be simple. According to the statute, if a claimant who wishes to bring certain claims before the Employment Tribunal (including a claim that whilst he has resigned , he has done so in circumstances which amount to constructive dismissal) has failed, prior to trying to do so, to set out his grievance in writing to his employer, the tribunal cannot entertain his claim. However , that immediately gives rise, in the context of this case, to two questions:  if the claimant’s solicitor intimates a grievance, is that sufficient for compliance or are the statutory provisions to be interpreted as requiring the claimant to effect the written intimation himself? Also and more fundamentally, if the written intimation is a letter of claim that includes an ultimatum in respect that it threatens the institution of proceedings within 14 days if settlement on the terms proposed is not reached, finishing with the words ‘ without prejudice’, can it properly be regarded as the intimation of a grievance  within the meaning of the statute? 
 
21.	We can deal shortly with the first question. We see no good reason why the normal rules of agency should not apply here. That means that a grievance can be set out and sent to an employer by a solicitor instructed by the claimant to do so. 
 
22.	As regards the second question, the essence of the argument for the second respondents was that the intimation of a grievance requires to be on the basis that the claimant accepts that the employer has to be given a reasonable opportunity for consideration of the matter raised and to attend a meeting to discuss it with the employer with a view to seeing whether resolution can be achieved. A letter referring to the grievance but written not in that spirit but by way of claim and threat cannot, so the respondents’ argument goes, be properly regarded as a grievance within the meaning of the statute. 
 
23.	The claimant, on the other hand, approached matters before the tribunal from an attractively simple standpoint and adopted that approach for the purposes of the hearing before this tribunal. A ‘grievance’ is a complaint. The claimant was obliged to intimate the nature of his complaint to the second respondents in writing, prior to seeking to institute tribunal proceedings. The letter sent by his solicitors did detail his complaint.   Whilst it also set out what he was claiming and indicated how he would proceed if settlement was not reached, that did not matter. 
 
24.	Recent discussions of the question of what amounts to intimation of a grievance have taken place in the Employment Appeal Tribunal and are summarised in the case of Shergold. There, considering the new statutory grievance procedure scheme as a whole, the President states, at paragraph 26:
 
“It is quite plain that the purpose of this legislation was to encourage conciliation, agreement , compromise and settlement rather than the precipitate issue of proceedings.” 

25.	That comment is in accordance with what was stated by the Department of Trade and Industry in the preamble to the consultation paper on the proposals for the introduction of statutory dispute resolution procedures:
“Employment disputes are bound to arise from time to time. Most employers and employees recognise that it is best for these disputes to be raised first - and preferably resolved – in the place of work, rather than in an employment tribunal or court.” 
 
and with what was stated by the Parliamentary Under Secretary of State for Employment Relations, Competition and Consumers, in the foreward to the Government Response to Public Consultation which was published on 20 January 2004:
“The Government aims to set a sensible and practical minimum standard that applies to all organisations including the smallest employers. This will help up to 7.2 million employees who , should they face problems at work , currently have no opportunity for discussions with their managers. For employers, it offers the best possible chance of resolving disputes early on without the disruption and expense of protracted tribunal cases.” 
 
26.	However, neither the primary legislation, the 2002 Act, nor the subsequent statutory instrument , the 2004 regulations, require that, to start the ball that is the new grievance procedure rolling, the employee need do anything more than write down his complaint and send it to his employer. There is no requirement for the use of any particular form or style nor any requirement that the grievance be the only thing that is written in whatever document is sent. It does not even need to be signed.  It does not need to contain a request for discussion or a meeting. All that is, it would seem, required is that the employer is put on notice, in writing, that the employee is complaining about his actual or apprehended conduct in relation to that employee. It does not have to be by way of invitation to discuss or meet. It does not have to be in a tone which suggests any willingness to consider conciliation or amicable resolution at all, however laudable and desirable such an objective may be and however much it may have been the intention of the government that this legislation would achieve that objective. There is, it would seem, nothing  to prevent the intimation of grievance being aggressive and nothing to prevent it being contained in a letter which threatens tribunal proceedings if the employee’s demands are not met. Again, that may not be what was envisaged by those who planned and devised this legislation but its terms are such as to make an aggressive and threatening letter from a solicitor on behalf of an employee as capable of qualifying for the requirements of s.32 of the 2002 Act as a polite and understated letter from an employee provided it contains within it a statement of his grievance. 
 
27.	It is, accordingly, not at all difficult to agree with the criteria identified by the President in the Shergold case between paragraphs 30 and 38, namely that:
1.	the statutory requirements are minimal and are simply that the grievance must be in writing;
2.	the grievance in question must relate to the subsequent claim;
3.	the fact that the grievance is contained in a letter of resignation, would make no difference at all;
4.	it is not necessary to spell out in the writing that intimates the grievance that it is a grievance or that the employee seeks to invoke the relevant grievance procedure;
5.	there is no requirement that an employee must also comply with any contractual grievance procedure that exists;
6.	the question of whether or not the employer had an opportunity to respond is not relevant to the question of whether or not the grievance was intimated in writing to him.  
Conclusions
28.	Applying the principles that we have discussed above to the facts of this case, we should begin by stating that just as, in Shergold, it was held that it did not matter that the statement of grievance was contained in a letter of resignation, it does not, in our view, matter that in this case, the statement of grievance was contained in a letter of claim written by the claimant’s solicitor. For the reasons discussed above, it does not seem to us that the statutory provisions prevent such a letter being regarded as an effective intimation of grievance. It also follows from that discussion that we do not regard it as fatal that the letter failed to use the word ‘grievance’ or that it failed to spell out that the employee wished to invoke a grievance procedure. 
 
29.	We have given careful consideration to the question of whether or not the inclusion of the phrase ‘Without prejudice’ ought to lead to a different conclusion. The argument seemed, at first blush, to be persuasive. How could it be said that a claimant was intimating a statement of grievance if, at the same time, he was reserving his right to say something different at a later date?  However, the message did not change. The claim put before the tribunal was in respect of the matter complained of in his solicitor’s letter.  Given that the statement of grievance requires to relate to the subject matter of any subsequent claim, he would have been in difficulty if the claim presented to the tribunal was different in substance but it was not. On reflection, it seems to us that the use of the ‘Without prejudice’ formula did not prevent the letter being viewed as a statement of grievance for the purposes of s.32 of the 2002 Act.  
 
30.	In these circumstances, the appeal falls to be dismissed. We will pronounce an order remitting the case back to the Employment Tribunal to proceed to a hearing on the merits of the claimant’s complaint of unfair constructive dismissal.