Kenwood Ltd v Austin [1992] UKEAT 388_90_2105

EAT

Kenwood Ltd v Austin

[1992] UKEAT 388_90_2105 · 1992-05-21

JUDGE HAGUE:

This is an appeal by employers, Kenwood Limited, ("Kenwood"), against the Decision of an Industrial Tribunal sitting at Southampton which was sent to the parties on the 8th June 1990. By that Decision the Tribunal found that the Applicant, Mrs Margaret Austin had been unfairly dismissed and made an award in her favour in a sum which totalled just over £6,000.

Mrs Austin was aged 58 at the date of termination of her employment and she had worked for Kenwood for 23 years. She started as a machine operator at the Kenwood factory in Havant in 1967. In 1973 she was promoted to leading hand. In 1986 she was appointed quality control inspector. She was clearly a responsible employee, very good at her job and was highly regarded by Kenwood. For 19 years she had worked on a two shift system, that is to say alternate weeks from 6 am to 2 pm or from 2 pm to 10 pm. She did not work, and never had worked, on the night shift from 10 pm to 6 am. It appears that she alternated with one other quality control inspector; there was a third one who worked only the night shift.

We emphasise these points because we think that a good deal of the Industrial Tribunal's Decision depends on the particular personal circumstances, and record of Mrs Austin.

In or shortly before 1989, Kenwood decided to make some alterations in the supervision of the shifts. The first thing they did was to organise for the shift supervisors to work a three shift system. After a little trouble that was arranged. A little later on they decided that the standards and consistency of quality control would be improved if the quality control inspectors no longer worked on their existing shifts but rotated on a three shift system in the same way as had been organised for the supervisors. Kenwood decided that this change was commercially necessary, and they commenced negotiations with the three quality control inspectors in about July 1989. The three inspectors, including Mrs Austin, all agreed that a rotation system of that kind would be more efficient, but initially all of them opposed the change for personal reasons. Discussions then took place between Mr Fredlington, the manufacturing director, and Mr Murray, the quality assurance manager and all three inspectors. It is quite clear that there was, in this case, ample consultation between Kenwood and the relevant employees, in particular Mrs Austin, and no one has suggested the contrary.

As to the other two inspectors, one who was younger eventually agreed to work the three shift system, and the other (who had always worked nights) wanted to go on working nights and agreed to accept demotion to a machine operator in order to continue on the night shift. But Mrs Austin was adamant that she could not work the night shift. She had her own particular reasons. She was not in good health, as we will come to in a moment; she had her family reasons; and she was firmly of the view that she simply would not do it, as for 19 years she had worked the double shift system and did not want to change.

Mr Fredlington made her two offers of alternative employment. The first, which was made formally, was that she should stay on her two shift system but become again a machine operator. Kenwood would safeguard her pay for one year, but after that she would lose approximately £8 per week. Mrs Austin was not enamoured of that suggestion, mainly because she thought she would lose status. The second offer, which was an informal one, was that she should remain as a quality control inspector but on the day shift only; she would then lose the unsocial shift premium which was about 20% of her basic pay. She declined that alternative also. Jumping ahead a little, the Tribunal found that she was not being unreasonable in refusing those offers.

On the 12th October 1989 Mrs Austin received a formal notice of a change in her terms and conditions of employment, informing her that she would have to work the three shift system with effect from the 8th January 1990. The letter also stated that a failure to comply with these arrangements would constitute a breach of her terms and conditions of employment. She was asked by the letter to sign and return an enclosed copy of the letter, but she did not do so because the revised arrangements were unacceptable to her.

On the 30th November 1989 Mrs Austin became depressed and consulted her doctor. On 10th December she went sick and stayed off sick for some time. The 8th January 1990 then went past, with Mrs Austin still off sick. But when she received her wages for the week ending the 12th January, she also received her P45. That was sent to her quite plainly in error because she had not resigned, she had not given notice that she was terminating her employment, and she had not received any notice of dismissal. It seems to have been sent to her because it was known that she was unwilling to fall in with the new arrangements. When Mr Wheeler, the Personnel Director, found out about the sending of the P45, he telephoned Mrs Austin and apologised and the next day wrote a letter repeating his apology. But at the same time he reminded her about the change of shift arrangements which she was supposed to comply with. By the letter, which is dated the 16th January 1990, he summarised the previous situation and the two alternative employments we have mentioned, and then said this:

"Regretfully you were not able to accept these and as a consequence it must regretfully be deemed that your employment came to an end on the 8th January 1990."

In our view it was perfectly clear that it was that letter, and nothing else, which terminated Mrs Austin's employment. The Tribunal in its Decision has found, and expressly stated, that at no time did Mrs Austin resign and that her employment was terminated in the way we have mentioned.

That was not, however, what Kenwood said in the documentation before the Tribunal, because it alleged that Mrs Austin was not dismissed but had left on her own accord. Moreover, Mrs Austin herself, in her application to the Industrial Tribunal, had herself alleged that she was constructively dismissed. It was no doubt as a result of these allegations that the question of "constructive dismissal" arose and was considered by the Tribunal. However, the plain fact is that she was not constructively dismissed. A true constructive dismissal occurs where an employee terminates the contract and is justified in doing so by reason of the employers' conduct, a circumstance mentioned in Section 55(2)(c) of the Employment Protection (Consolidation) Act 1978. However, the Tribunal used the phrase "constructive dismissal", in one or two places in their Reasons (we think inaccurately), and made a determination about whether there had been a breach by Kenwood of its contract of employment with Mrs Austin.

The case does not, for the reasons we have given, turn on that, but we think we should make a few comments about it. It appears to have been common ground that the Company Rules (which were not produced before the Tribunal or before us) contained a provision which read as follows:

"The working hours of individuals are advised on their offer of employment but the company reserves the right after due notice to re-arrange such hours to meet the requirements of the business."

It also seems to have been common ground that those Rules form part of the terms and conditions of employment. On that the Tribunal found as follows in paragraph 13 of their Decision:

"The Tribunal finds, however, that the right of the company to re-arrange the working hours of its employees did not entitle them to change their shift pattern and to require them against their will to change from working day shifts to working on the night shift. The Tribunal finds that there was no term in the applicant's contract that entitled the respondent company to require the applicant permanently to work on a three shift system including two weeks out of six on the night shift. The applicant (a woman aged 58) had for the past 19 years worked on the two watch [sic] system and had never worked on the night shift."

We think the Tribunal has put that matter rather too widely and that the Company Rule set out above does, within certain limits, enable Kenwood to re-arrange the shift systems and in appropriate cases to require employees to work on the night shift. However, as with all clauses of that kind, the discretionary power conferred upon the employer is not an absolute and blanket one and, as we have said, has certain limitations. The exact scope of those limitations is a matter of some difficulty which we do not propose to go into in this case. What we do agree with is the Tribunal's finding that in this case, having regard to the particular personal circumstances and record of Mrs Austin, Kenwood was not entitled to require her to work the night shift. That is quite a different matter from saying that the clause did not in general terms require employees to do that. All we say, and we think this the real reason for the Tribunal's decision on that point, is that it was not permissible for Kenwood under that Rule to require Mrs Austin to work on the night shift. As regards other employees it would depend on the circumstances.

We turn now to the law in this case, which is contained in Section 57 of the 1978 Act. Subsection (1) reads as follows:

"In determining for the purposes of this Part whether the dismissal of an employee was fair or unfair, it shall be for the employer to show - (a)what was the reason (or, if there was more than one, the principal reason) for the dismissal, and (b)that it was a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."

The first two sentences of paragraph 16 of the Tribunal's Reasons read as follows:

"The Tribunal finds that the reason for the dismissal was some other substantial reason, namely a re-organisation for commercial reasons of the shift working pattern of the quality control inspectors. The Tribunal finds that the respondent company by constructively dismissing the applicant because of her refusal to accept working on the three shift system and her unwillingness to accept the alternative employment offered did not act reasonably."

We have already discussed the inappropriate use of the word "constructively", but it seem to us plain that the Tribunal are there saying that the substantive reason for the dismissal was that there was a re-organisation of the shift system for quality control inspectors on solid commercial grounds and Mrs Austin would not fall in with that and had refused the alternative offers that had been made to her. In other words, the Tribunal found that the employer had shown the reason and had shown that it was a substantial reason of a kind such as to justify the dismissal of Mrs Austin, and so had fulfilled with the requirements of Section 57(1).

Now we turn to Section 57(3) which is the crucial one. This reads (as amended) as follows:

"Where the employer has fulfilled the requirements of subsection (1), then . . . . . the determination whether the dismissal was fair or unfair having regard to the reason shown by the employer, shall depend on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case."

As we have said, the employer in this case has fulfilled the requirements of subsection (1) and the next question is whether the dismissal was fair or unfair. That depends on whether, in the circumstances, the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee. One has to look at the reason for the dismissal and decide whether a reasonable employer would regard it as a sufficient reason for dismissing the employee. It is quite plain that what one is looking at is the reason for dismissal and not the manner of dismissal. So one cannot take into account, for instance, the question of whether the employee was given sufficient written notice of dismissal or matters of that kind, see e.g. A Treganowan v. Robert Knee & Co Ltd

[1975] IRLR 247

. What the Tribunal has to do is to put themselves in the position of the actual employer including all the circumstances affecting that employer's undertaking and ask themselves the question "Would a reasonable employer in this situation have regarded the reasons given as sufficient for dismissing the employee?"

It seems to us that the Industrial Tribunal in this case did do that. What they said at the end of paragraph 16 of their Reasons was this:

"We find that the response of the respondent was not within the range of reasonable responses by an employer and it is our unanimous decision that the dismissal of the applicant was unfair."

Mr Bishop has argued that the use of the word "an" in the phrase "by an employer" shows that they were applying the wrong test, but we do not agree. We think all they were doing was asking themselves whether the hypothetical reasonable employer in Kenwood's circumstances could treat the reason as a sufficient reason for dismissing. It is true that the Tribunal did not elaborate on what they meant by the "response of the respondent". Mr Bishop has suggested, that what they meant was the manner in which Mrs Austin had been dismissed, the muddle over the P45, and so on. With all respect, we do not think that that is really a fair reading of the Industrial Tribunal's Decision. In coming to their finding, it seems to us that what the Tribunal were really looking at were the matters which they had just been discussing in the immediately preceding paragraph 15, which went into the alternatives which had been offered to Mrs Austin and emphasised the 19 years on the two shift system to which she has been accustomed and to which her family arrangements had been adjusted.

In our view, what the Tribunal were deciding was that, having regard to the particular circumstances of Mrs Austin, it was not sufficient for Kenwood simply to have made her the two alternatives which she had reasonably refused to accept, but that Kenwood should have gone on and made further responses. These might perhaps have involved finding her an alternative employment, or making her an offer of early retirement with compensation, or something else of that kind. It seems to us that that was a matter well within the discretion of the Tribunal. It was clearly not a perverse decision and therefore is not one we can interfere with.

For those reasons we think this appeal must be dismissed.

We add two things. First, although the Tribunal make a finding in paragraph 17 that there was not a redundancy situation, we are not at all clear that was really so. It might be said (and we put it no higher than that) that she was effectively redundant because what Kenwood needed was a quality control inspector working on the three shift system, and no longer required the working only a two shift system. Second, in view of the terms of Mrs Austin's representative's letter received by the Appeal Tribunal on 14th August 1990, we think it is unfortunate that there has not been more contact between the parties with a view on settling this matter; however, in saying that we must not be taken as implying any criticism of Kenwood or its representatives.