Appeal No. UKEAT/0380/09/JOJ

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 24 March 2010

Before
HIS HONOUR JUDGE RICHARDSON
MR P GAMMON MBE
MRS L TINSLEY

MS B A SOUTHERN	APPELLANT

WADACRE LTD T/A WADACRE FARM DAY NURSERY	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR McDONOUGH
(Representative)	
For the Respondent	MR O’NEILL
(of Counsel)
Instructed by:
Messrs Keith Levin & Co Solicitors
“The Willows”
2 Rupert Road
Huyton
Liverpool
L36 9TF	

SUMMARY

PRACTICE AND PROCEDURE: Appellate Jurisdiction/Reasons/Burns-Barke
UNFAIR DISMISSAL: Constructive Dismissal

The Employment Tribunal (1) failed to determine the question whether the Respondents were in fundamental breach of contract, and (2) stated the conclusion that the Claimant “accepted the breach” without any reasoning.  Cases on affirmation considered: in the light of the principles applicable, derived from W E Cox Toner (International) Ltd v Crook [1981] IRLR 443, Waltons and Morse v Dorrington [1997] IRLR 488 and Bashir v Brillo Manufacturing Co Ltd [1979] IRLR 295, reasoning was essential.  There was no alternative to remission, given the lack of primary findings of fact on disputed issues.

HIS HONOUR JUDGE RICHARDSON 

1.	This is an appeal by Ms Barbara Southern (“the Claimant”) against a judgment of the Employment Tribunal sitting in Liverpool (Employment Judge Hewitt presiding) dated 15 June 2009.  By its judgment the Tribunal rejected her claim of constructive unfair dismissal.  Her claim was one of two claims heard together by the Tribunal against Wadacre Limited (“the Respondent”).

2.	The Claimant’s first ground of appeal is that the Tribunal failed to give any adequate reasons at all in respect of her claim, in particular reaching no conclusions as to whether the various matters on which she relied amounted individually or cumulatively to a fundamental breach of contract.  The Respondent accepts that the Tribunal did not reach any conclusions as to these matters, but says that the Tribunal’s conclusion that “any such breach was accepted by her” is unassailable.

3.	The Claimant’s second ground of appeal is that the Tribunal was perverse to reject her claim; in essence that there was only one conclusion to which the Tribunal, properly directing itself in law, could have come.  The Respondent says the contrary.

The Background Facts
4.	The hearing took what appears to us to be a surprising length of time: 3 days in August 2008, four further individual days spaced out between September 2008 and May 2009; and then two days in chambers for consideration by the Tribunal in May and June 2009.  Nevertheless the background facts can be summarised quite briefly.

5.	The Respondent runs a day nursery in Liverpool.  The Respondent, it appears, is a limited company; but the ultimate owner was and is Ms Matthew-Griffiths.  The Claimant is a qualified nursery nurse.  She began work at the day nursery in February 2006.  Also working at the day nursery was a Ms Forsythe, who was at that time deputy manager.

6.	In September 2006, on the resignation of the previous manager, Ms Forsyth was promoted to become nursery manager.  At the same time the Claimant became acting deputy manager.  They ran the nursery until April 2007.  But in April 2007 the Respondent appointed a business manager, Ms Susan Lant.  The Tribunal said that Ms Lant regarded herself as being in overall charge of the nursery, but that the interrelationship of her role and that of Ms Forsythe was never clearly defined.  This, said the Tribunal, created confusion in the day-to-day running of the nursery and led to friction in the relationship between Ms Lant and Ms Forsythe and (as a result) in the relationship between Ms Lant and the Claimant.

7.	It is plain that this friction came to a head in October 2007.  On 17 October there was a sharp argument between Ms Forsythe and Ms Lant over a rota.  Heated words were exchanged.  This led to a meeting at which Ms Forsythe asked to return to her original post as deputy manager.  On the Tribunal’s findings Ms Matthew-Griffiths agreed to this.  But in fact in early November when Ms Forsythe returned to work after a period of absence the Respondent maintained that she had resigned on 17 October.  On 6 November the Respondent required her to hand over her keys and leave the premises.   Ms Forsythe’s claim was heard at the same time as the Claimant’s claim; the Tribunal found (evidently rejecting the Respondent’s case) that she was dismissed and that the dismissal was unfair.

8.	It was the Claimant’s case that she too was involved in the incident on 17 October, and that she was verbally abused and insulted in the presence of colleagues and children.  It was also her case that shortly thereafter, on 23 October, her hours of work were increased from 37.5 hours to 40 hours without any discussion, proper notice or increase in pay.   It was also her case that, on 6 November, the very day that Ms Forsythe was dismissed, she was made the subject of disciplinary proceedings by Ms Lant for what she considered to be an understandable error in leaving heating on and not checking a window; and was demoted, given a final written warning and afforded no appeal.

9.	There is no doubt that on 8 November the Claimant went off sick with stress and anxiety.  She remained off work thereafter.

10.	On 2 January Ms Lant wrote asking the Claimant to attend a meeting on 8 January.  The Claimant was still suffering from stress.  On 7 January the Claimant wrote to Ms Matthew Griffiths as follows:
•	“I was verbally abused and pointed at in front of colleagues and children by Susan Lant (17-10-07).
•	I was told by Susan Lant that the atmosphere was better in the workplace while I was absent from work.
•	My hours of work were increased by 30 minutes a day without any notification or discussion.
•	I was given a written warning and demoted without prior notice and was not allowed a witness to that meeting.
•	When suggested to Susan Lant that a qualified and experienced member of staff should do the late shift and lock up, Susan replied that they are happy to do it, leaving me acting manager at the time feeling very concerned about the staff and children’s safety.  There was no trust in my work regarding the safety of the children, none of my opinions were taken into consideration, I felt permanently undermined.
•	While on sick leave due to stress, Susan Lant telephoned me at home and on my mobile to pressure me into attending a meeting regarding my sick leave, stating where and when it should take place.
I just feel constantly bullied in my workplace.”

11.	By letter dated 10 January Ms Matthew Griffiths invited the Claimant to a grievance meeting with Ms Lant on 18 January.  Ms Lant was, of course, the person about whose conduct the Claimant was complaining.

12.	By letter dated 15 January the Claimant responded as follows.
“After giving the matter further thought I have decided to resign my post with immediate effect.  The reasons for my resignation are as set out in my letter of 7th January.  I have lost all trust and confidence in the company and do not believe the meeting has been arranged in any genuine attempt to ensure that the unwarranted and unlawful disciplinary sanction be withdrawn, I would have expected this to happen before meeting.  I do not feel that there is any intention to deal with me in a proper and fair manner and that should I return to work that I would not continue to be bullied and harassed.  It is my belief that the “final written warning” was a prelude to dismissing me in any event.
I now ask that you deal with my grievance under the terms of the Modified Grievance Procedure which means that I do not require a personal hearing and ask that you deal with the grievance in writing.
I now intend to take proceedings in the Employment Tribunal, alleging constructive and unfair dismissal.”

The Tribunal’s Reasons
13.	The Claimant’s case as developed in her ET1 and at the Tribunal was that the Respondent was in breach of contract in several respects.  Her case encompassed both express breaches of contract concerning job and working hours, and also the implied term of her contract whereby an employer must not
 ". . . without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee."
(Malik v. BCCI [1998] AC 20 per Lord Steyn)

14.	She relied on the different allegations set out in her letter dated 7 January - except that the sixth and final reason given in that letter was not (at least by the conclusion of the hearing) pursued as an allegation of breach of contract.

15.	She relied, however, on one further point – the fact that the Respondent expected her to attend a grievance meeting conducted by the person against whom she had raised her complaints.  Thus her ET1 said (paragraph 25):
“The Claimant was astounded to see that she was expected to attend a grievance meeting conducted against the person against whom she had raised her complaints.  The Claimant had already lost all trust and confidence in the Respondent to treat her in a fair and proper manner and felt that she could not tolerate the situation any longer and asking her to attend a grievance meeting to be conducted by Ms Lant confirmed the Claimant’s decision to resign.”
And her witness statement said:
“23. I was astounded to see that I was to attend a grievance meeting conducted by the person against whom I had raised the complaints.  I felt that I had already lost all trust and confidence in the Respondent to treat me in a fair and proper manner and felt I could not tolerate the situation any longer.  Asking me to attend a meeting conducted by Ms Lant only confirmed my decision to resign.”

16.	The Tribunal set out the background to the Claimant’s claim in its reasons.  We have drawn on this background already in this judgment.  The Tribunal, however, made virtually no findings and drew no conclusions as to the different respects in which the Claimant said the Respondent was in breach.  There are for example no findings as to whether: (1) the Claimant was involved in the incident on 17 October and verbally abused by Ms Lant in front of colleagues and children; (2) her hours of work were increased by 2.5 hours per week without notification or discussion; (3) as to whether she was undermined and ignored even though (unlike Ms Lant) she was the acting deputy manager and qualified.  The Tribunal record the written warning and demotion but make no finding as to whether this was in breach of contract or proper, given the Claimant’s case that all she had done was commit an understandable error.

17.	The Tribunal’s self direction in law on constructive dismissal was:
“9.3 The leading case on constructive dismissal remains that of Western Excavating (ECC) Ltd v Sharp [1978] IRLR 27 CA.  That case establishes that an employee is entitled to treat himself as constructively dismissed if the employer is guilty of conduct which is a significant breach going to the root of the contract of employment; or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract.  The employee in those circumstances is entitled to leave without notice or to give notice, but the conduct in either case must be sufficiently serious to entitle him to leave at once.  The employee must make up her mind to leave soon after the conduct of which she complains.  If she continues for any length of time without leaving, she will be regarded as having elected to affirm the contract and will lost her right to treat herself as discharged.”

18.	The Tribunal’s conclusion was:
“At paragraph 8.12 above, the Tribunal has found the Claimant resigned for the reasons set out in her letter of 7 January 2008.  There are six reasons given, five of which relate to events that occurred some considerable time prior to her resignation.  Whether or not, individually or collectively, any of those five matters amounted to a fundamental breach of contract, any such breach was accepted by the Claimant by remaining in employment.  The final reason given by the Claimant relates to matters dealt with in paragraph 8.10 of the Tribunal’s findings of fact.  The Tribunal’s conclusion is that there was a letter from Ms Lant, followed by a telephone conversation and notwithstanding the fact that the Claimant was off sick at the time, those actions on the part of the Respondent did not, in the Tribunal’s view, amount to a fundamental breach of the Claimant’s contract.  The Tribunal is critical of the Respondent in the manner in which it proposed to deal with the grievance raised by the Claimant on 7 January (i.e. by allowing the grievance to be heard by the person about whom the Claimant was principally complaining), this does not form part of her reason for leaving.”

19.	The reference in this paragraph to paragraph 8.12 above appears to be a mistake.  The Tribunal must, we think, have meant paragraph 8.13 which read:
“8.13 The Claimant resigned her position by letter dated 15 January (G5) and stated in that letter that the reasons for her resignation are as set out in her letter of 7 January.  The resignation was said to be with immediate effect.”

Submissions
20.	On behalf of the Claimant Mr McDonough submits in the first instance that the Tribunal’s reasons are altogether inadequate.  There are no conclusions or reasons at all concerning the various respects in which she said the Respondent was in breach of the implied term of trust and confidence.  The Tribunal deals with the sixth, final, ground – but Mr McDonough says it has forgotten that this point was conceded during submissions.

21.	Further, Mr McDonough criticises the Tribunal’s reason for holding that “any such breach was accepted by the Claimant by remaining in employment”.  He says that this point was not taken at all in the ET3; it emerged for the first time in the final submissions of counsel for the Respondent.  He dealt with it orally, pointing out that the Claimant was off work from 8 November onwards with a stress related illness and submitting that she neither did nor should be taken as having accepted the breach.  The Tribunal, he submits, has not given any proper reasoning on this question either.

22.	Further, and in any event, Mr McDonough submits that the Tribunal has not dealt with the question whether the Respondent was also in breach of the implied term by directing the Claimant to attend a grievance meeting held by the perpetrator of the conduct about which she complained.  The Tribunal was plainly critical of the Respondent in this respect; but disposed of it by saying that it did not form part of her reason for leaving.  But it was her case that it did form part of her reason for resigning; and the Tribunal has not said why it rejected her evidence.

23.	Mr McDonough further submits that the Tribunal’s reasoning was perverse in various respects.  He submits that it was perverse to hold that calling her to a grievance meeting with the perpetrator did not form part of the reason for resignation; he says there is no sensible alternative reading of the letter dated 15 January.  He submits it was perverse to hold that the Claimant accepted the breaches when she was off work ill: he refers to and relies on Bashir v Brillo Manufacturing Co Ltd [1979] IRLR 295.  He says that she did not work a single day in the demoted post and issued a grievance as soon as she thought she might be fit to return to work.  He submits that it was perverse not to hold that her hours were increased from 37.5 to 40; and not to hold that the manner and outcome of the disciplinary hearing amounted to a fundamental breach of contract.

24.	On behalf of the Respondent Mr O’Neill, while accepting that the Tribunal made no findings on the allegations of breach, submitted that it was unnecessary for the Tribunal to do so.  Once granted that the Tribunal was deciding the case on the question of acceptance, there was no requirement upon it to determine other matters.  The Claimant lost on the question of acceptance – as long as the reasons on that point were Meek compliant, the reasons were not open to challenge.

25.	He submitted that the Tribunal’s reasoning on that point, albeit brief, sufficed in the circumstances.  There was a period of two months before she sent a grievance letter.  In terms of Western Excavating v Sharp [1978] IRLR 27, she had continued for a length of time without leaving, and was liable to be regarded as having elected to affirm the contract.  As regards the reason for resignation, no detailed reasoning was required, because the Claimant’s letter dated 15 January expressly said her reasons were those in the letter dated 7 January.

26.	Mr O’Neill submitted that the Tribunal’s reasoning was not perverse, and took us to Yeboah v Crofton (2002) IRLR 634 at para 93 in support of his submission.  He explained to us the issues which arose before the Tribunal on the question of hours, disciplinary process, grievance procedure and reasons for resignation.

Conclusions
27.	We are critical of the Tribunal’s failure to make findings and draw conclusions on the question whether the Respondent was in fundamental breach of contract as the Claimant alleged.

28.	Employment Tribunal procedure is governed by the Employment Tribunal Rules 2004 which are found in Schedule 1 to the Employment Tribunals (Constitution & Rules etc) Regs 2004.  Rule 30(6) sets out what should be included in written reasons:
“Written reasons for a judgment shall include the following information-
(a)	the issues which the tribunal or Employment Judge has identified as being relevant to the claim;
(b)	if some identified issues were not determined, what those issues were and why they were not determined;
(c)	findings of fact relevant to the issues which have been determined;
(d)	a concise statement of the applicable law;
(e)	how the relevant findings of fact and applicable law have been applied in order to determine the issues; and
(f)	where the judgment includes an award of compensation or a determination that one party make a payment to the other, a table showing how the amount or sum has been calculated or a description of the manner in which it has been calculated.”

29.	In Meek v City of Birmingham District Council [1987] IRLR 250 at paragraph 8, Bingham LJ stated that, although tribunals are not required to create 'an elaborate formalistic product of refined legal draftmanship', their reasons should:
“... contain an outline of the story which has given rise to the complaint and a summary of the Tribunal's basic factual conclusions and a statement of the reasons which have led them to reach the conclusion which they do on those basic facts. The parties are entitled to be told why they have won or lost. There should be sufficient account of the facts and of the reasoning to enable the EAT or, on further appeal, this court to see whether any question of law arises.”

30.	We are far from saying that an Employment Tribunal must resolve every question of fact raised by the evidence which it hears.  It must, however, identify the issues which it has to determine.  It must then either determine the issues or say why it has not done so: see rule 30(6)(a) and (b).

31.	In this case the Tribunal has not determined one of the key issues before it – namely whether individually or collectively the matters raised by the Claimant amounted to a fundamental breach of contract.  It does not say why it has not determined this issue.

32.	It may be that the Tribunal thought it adequate, since it was going to decide the case on the basis that any breach was accepted, not to make findings on the question of fundamental breach.  If so, we wish to state emphatic disagreement.  Two reasons will suffice.  The first is a matter of common justice.  The allegations were hotly disputed.  The hearing took seven days.  A further two days were spent in chambers.  The parties were entitled to expect that the Tribunal would resolve the key issues which took such a significant amount of time to litigate.   The second is a matter of prudence.  If there are several issues in a case, and the Tribunal only determines one of them, there is always a risk that it may be appealed on that issue.  If so, its lack of any findings on other key issues may come into sharp relief.

33.	Against that background, we turn to the Tribunal’s finding that the Claimant “accepted” any breach of contract by remaining in employment.

34.	The principles applicable are, we think, not in doubt.  It will suffice to mention three cases.

35.	In W E Cox Toner (International) Ltd v Crook [1981] IRLR 443 the Employment Appeal Tribunal, presided over by Lord Browne-Wilkinson, said this at 446, 13:
“Although we were not referred to the cases outside the field of employment law, our own researches have led us to the view that the general principles applicable to a repudiation of contract are as follows. If one party ("the guilty party") commits a repudiatory breach of the contract, the other party ('the innocent party') can choose one of two courses: he can affirm the contract and insist on its further performance, or he can accept the repudiation, in which case the contract is at an end. The innocent party must at some stage elect between these two possible courses: if he once affirms the contract, his right to accept the repudiation is at an end. But he is not bound to elect within a reasonable or any other time. Mere delay by itself (unaccompanied by an express or implied affirmation of the contract) does not constitute affirmation of the contract; but if it is prolonged it may be evidence of an implied affirmation ... Affirmation of the contract can be implied. Thus, if the innocent party calls on the guilty party for further performance of the contract, he will normally be taken to have affirmed the contract since his conduct is only consistent with the continued existence of the contractual obligation. Moreover, if the innocent party himself does acts which are only consistent with the continued existence of the contract, such acts will normally show affirmation of the contract. However if the innocent party further performs the contract to a limited extent but at the same time makes it clear that he is reserving his rights to accept the repudiation or is only continuing so as to allow the guilty party to remedy the breach, such further performance does not prejudice his right subsequently to accept the repudiation.”

36.	In Waltons and Morse v Dorrington [1997] IRLR 488 the Appeal Tribunal cited with (we think) implicit approval the following passage from the then text of Harvey on Industrial Relations and Employment Law:
“There is no fixed time limit within which the employee must make up his mind. It depends upon all the circumstances including the employee's length of service, the nature of the breach and whether the employee has protested at the change. Mere protest will not, however, prevent an inference that the employee has waived the breach, although exceptionally a clear reservation of a right might do so. Where the employee is faced with giving up his job and being unemployed or waiving the breach, it is not surprising that the courts are sometimes reluctant to conclude that he has lost his right to treat himself as discharged by the employer merely by working at the job for a few months.”

37.	In deciding whether an employee has affirmed the contract it is, we think, undoubtedly a relevant circumstance to take into account that the employee was off work ill at the time when he is alleged to have done so: see Bashir v Brillo Manufacturing Company Limited at paragraph 16, explaining in this respect the dictum of Lord Denning MR in Western Excavating v Sharp which the Tribunal cited in this case.

38.	The Tribunal’s conclusion that the Claimant had accepted any breaches was wholly unreasoned.  It is impossible to see what factors weighed with the Tribunal in reaching its conclusion; neither the parties, nor we, can tell whether the Tribunal applied the law correctly.

39.	We are doubtful whether the Tribunal understood the law correctly, for the following reasons.  Firstly, the Tribunal referred to the Claimant as having “accepted” the breach.  This is not the right formulation.  The question is whether, expressly or implicitly, the Claimant has affirmed the contract.  Secondly, the lack of any mention, within paragraph 10.2, of the fact that the Claimant went off sick immediately after the principal matters of which she complained, is startling.  We suspect the Tribunal may have fallen into the error of supposing that merely remaining in employment necessarily involved affirmation of the contract.  But the key point is that there is no adequate reasoning on the point.

40.	For these reasons the Tribunal’s finding in paragraph 10.2 cannot stand.  It follows that the appeal must be allowed.

41.	We turn to the question whether the Tribunal was right to say that the manner in which the Respondent proposed to deal with the grievance did not form part of her reason for leaving.  This was plainly an issue for the Tribunal to consider.  As we have shown, it was raised in the ET1 and in the Claimant’s witness statement.  Although the Claimant’s letter dated 15 January 2008 states that the reasons for resignation are set out in the letter of 7 January, it goes on to criticise the proposed grievance meeting.

42.	The Tribunal stated its conclusion that “this does not form part of her reason for leaving”, but did not say why it rejected her evidence on this subject.  This again is an unsatisfactory way to deal with an issue of some significance.  It was to our mind necessary to say, albeit only in a sentence or two, why the Tribunal rejected her evidence that part of her reason for leaving was the fact that she was invited to a meeting at which she would have to meet her perpetrator.

43.	We turn next to the submission that the Tribunal’s reasoning was perverse.  Given that the appeal will be allowed on the ground that the Tribunal’s reasoning was inadequate, the relevance of this submission is to the question whether the Appeal Tribunal can and should substitute its own decision for that of the Tribunal.  In effect, Mr McDonough’s argument is that the case was so clear that the only outcome compatible with law was that there was a constructive unfair dismissal.

44.	The Appeal Tribunal has a power to substitute its own decision for that of the Tribunal.  But we think the Appeal Tribunal must take care before reaching the conclusion that it is appropriate to exercise that power.

45.	The Appeal Tribunal hears appeals on questions of law: see section 21(1) of the Employment Tribunals Act 1996.  For that very reason it will not hear witnesses; seldom have a note of the evidence before the Tribunal; and it will not even have most of the documents which were before the Tribunal.  The fact that papers and materials for an appeal hearing are prepared in a manner appropriate to a body hearing questions of law carries with it many advantages; but it inevitably means that the Appeal Tribunal must be cautious before concluding that a decision can be substituted.  Sometimes the primary facts found by the Tribunal may mean that it is a short step for the Appeal Tribunal to reach a conclusion substituting its own view.  But where, as here, there is a wholesale failure to find primary facts, it is much more difficult to do so.

46.	In this case we do not think we can safely or properly substitute our own decision.  There were issues before the Tribunal as to (1) whether the Claimant was contracted to work 40 hours from the outset, and if not whether she accepted 40 hours, (2) the events of 17 October; (3) whether the disciplinary process was justified, (4) whether demotion was permissible, given that she was only an acting deputy manager, (5) whether she accepted demotion, (6) in what circumstances she delayed her resignation until January, (7) whether in fact the resignation was in part due to calling her to a grievance meeting with Ms Lant, a matter not directly mentioned in the letter of resignation. On all these issues there were conflicting arguments.  Even this is not an exhaustive list of the issues.  These are all matters which were for the Tribunal to determine.  Evidence and cross examination are relevant to them.

47.	We regret to say that we have no doubt that remission must be to a different Tribunal.  It is one thing to remit a case to a Tribunal which has in general performed its fact finding function, but has made a mistake in some particular respect.  It would be quite a different matter to remit a case to a Tribunal which has failed substantially to make findings on matters which it should have addressed.