Valor Heating Ltd v Nelder [1994] UKEAT 292_92_1801

EAT

Valor Heating Ltd v Nelder

[1994] UKEAT 292_92_1801 · 1994-01-18

MR JUSTICE TUDOR EVANS: This is an appeal by Valor Heating Limited, who were the employers of the Respondent, against the Judgment of an Industrial Tribunal sitting in Liverpool on 7th and 20th January 1992 in which it was unanimously held that the Appellants had constructively and unfairly dismissed the Respondent.

The Appellants are a Company manufacturing gas appliances. The Respondent, who was a very long serving employee, worked for them from September 1945, when he was 15 years of age, until his employment came to an end on the 23rd March 1991.

For the last 20 years of his employment he had been one of the four service engineers employed by the Appellants. His area was the North West North Wales Region. Early in 1991 a redundancy situation arose in the appellant Company and there became a need to make redundant a number of their employees, including one of the four service engineers. The situation, as the Tribunal found, arose because of financial problems caused by the recession.

The Appellants then went through a process of selection applying a matrix which is described in paragraph 6(g) of the decision. The result was that they selected the Respondent, preferring him to the other three service engineers, for redundancy. One of the grounds for this selection was that the Respondent had failed to obtain a "pass" when he had sat the Gas Regulation Course. The Respondent was informed of his failure to pass on 1st March 1991. On the same day, he received the terrible news that his wife who had been seriously ill since the previous February was suffering from incurable cancer.

Mr Daniels, the Appellants' Spares and Services Manager, spoke to the Respondent about the redundancy on the telephone.

On the 4th March 1991 there was a meeting between Mr Daniels, Mr Hollands, who was the Appellants' Personnel Manager and the Respondent, in which the question of the Respondent's redundancy was discussed. A subsequent meeting, between the three, took place in mid-March but it then happened that a Mr Leaver, one of the four service engineers whose area was the South Wales and South West Region, resigned from his position. As a result, on the 22nd March 1991 Mr Hollands wrote to the Respondent as follows:

"Further to our second meeting held to discuss the reductions necessary to our staffing levels and the subsequent telephone call from Mr Daniels, we confirm that another engineer has resigned.

The number of service engineers is now at the required level.

We are therefore able to offer you the opportunity of remaining in employment with us.

However, we understand from comments made at our meetings that you would not be unhappy to be declared redundant. If this is still the case we are quite prepared to let your redundancy stand."

There was a little delay before the Respondent replied but on the 27th March 1991 he did so in these terms:

"Re your letter of Redundancy, please forward all redundancy payment due to me plus any other moneys i.e. pensions etc that go with the loss of my job. I accept redundancy."

On the 28th March redundancy and other monetary payments were sent to the Respondent and then, on the 16th May 1991, he found out that his job was being advertised in a local newspaper.

What I have just said is a summary of the undisputed facts before the Tribunal but there was a substantial body of disputed evidence.

The case for the Respondent was that on the 1st March he was told by telephone that he was redundant, and that, at the meeting on the 4th March he informed Mr Daniels and Mr Hollands that he objected to redundancy. He said that he had never accepted that it was he who should be chosen and that he was unhappy at the method adopted for selection. But, at the second meeting in mid-March, according to the Respondent, he was offered the choice of either accepting the severance or remaining in the Appellants' employment but on the condition that he would cover Mr Leaver's area which, as I have said, was the South Wales and South West Region. According to the Respondent, the offer of Mr Leaver's area was "no good" to him and his view was that, even if he took the job, he would not last very long because he had not obtained the necessary Gas Certificate. Therefore, faced with the choice, he had no alternative but to choose the redundancy, thereby effectively resigning from his job as service engineer. The case for the Respondent was that there was an implied term in the contract of employment of mutual trust and understanding, that the presentation of the choice, which I have just described, constituted a breach of the term and that he had been constructively and unfairly dismissed. I may add that that case of constructive dismissal was added, with leave, by amendment at the hearing.

The case for the Appellant employer can be stated quite simply. It was that the Respondent agreed to accept redundancy at the meeting on the 4th March and that the anticipated compulsory redundancy was subsequently withdrawn when Mr Leaver resigned. The Respondent was then offered the choice of redundancy or remaining in his old job as a service engineer on his Region, that it was the Respondent's decision and he volunteered to go, thus rejecting the offer to remain in his old position. It was the Appellants' case that the Respondent resigned and that he had not been dismissed.

There was thus a clear, and as both Counsel accept, a crucial question of fact for the Tribunal to decide on the conflicting evidence called on behalf of the Appellants and that of the Respondent as to precisely what was said at the mid-March meeting.

In paragraph 7 of the decision, the Tribunal, having referred to the extreme length of the Respondent's service, to the fact that on the 1st March 1991 he was told about his wife's fatal illness, to the fact that on the following day he was told he was being considered for redundancy and the fact that despite Mr Leaver's resignation, the matter of redundancy, as the Tribunal put it, "continued to go forward," said:

"What are we to make of all this in terms of the relevant law? Before going on to answer that, we would hasten to say that we do not impute to the respondent any improper or unworthy motives in relation to what they did. They were faced with a most difficult situation, not only in terms of employment but because of the very unfortunate personal background of the applicant at that time. In the last resort, we have to look at the situation `in the round' not placing undue emphasis upon any one factor. Doing that, the question really appears to resolve itself into `did the respondent, in all the known circumstances, deal with this problem in as careful, caring and sensitive way as would a reasonable employer?' To that question, after very considerable deliberation we must ultimately give a negative answer. We accept Mr Donovan's suggestion that this may very well be a situation where the respondent has, although not deliberately, and we stress that, mislead the applicant as to the situation he was in. A situation was allowed to develop in his mind to the stage where, as he said in evidence, `I felt which ever way the cat jumped I was going to lose my job totally'. If he has been allowed or made to feel that that was so, then, even if it was not in fact. an accurate assessment of the situation, it means that there was, at that stage, a breach of the term or mutual trust and confidence which ought to exist between an employer and his employee. In such circumstances and applying the test to be found in the case of Western Excavating (ECC) Ltd v. Sharp [1978] IRLR 27 , he was constructively and unfairly dismissed."

The first question which we have to decide in this appeal is whether the Industrial Tribunal did make a finding on the crucial question as to what was said at the mid-March meeting and whether, on a balance of probability, they accepted the Respondent's account of what happened.

Mr Swift, on behalf of the Appellants, submits that no such finding was made. He draws attention to the passages which we have quoted and in particular to the passage in which the Tribunal said:

"If he has been allowed or made to feel that that was so, then, even if it was not in fact, an accurate assessment of the situation, it means that there was, at that stage, a breach of the term of mutual trust and confidence . . ."

That passage particularly the words "even if it was not in fact," in the submission of the Appellant, indicates that the Tribunal were not making a finding of fact.

Mr Donovan submits that the Tribunal did indeed make the crucial finding of fact as to which account the Tribunal preferred and the basis of that submission lies in the acceptance of the Appellants' evidence, referring to the way in which he felt that he was going to lose his job totally. Counsel submitted that that sentence can only mean that they accepted the Respondents' account because the sentence only makes sense in the context of the Respondents' evidence. But Mr Donovan frankly admitted that the subsequent sentence does not sit very easily with his construction. It was suggested that the sentence in question may represent an "olive branch", as it were, held out to the Appellants by the Tribunal because it was making findings of fact against them. He has referred us to the decision in Cawley v. South Wales Electrical Board

[1985] IRLR 89

in, paragraph 17 at page 92, in which this Tribunal said that it is appropriate to adopt a robust approach to the findings of an industrial tribunal. Accordingly, Counsel invited us to conclude that the Industrial Tribunal made the crucial finding of fact and that they came to the conclusion that the employer had constructively dismissed the employee, having presented him with a choice, intolerable to him, of either taking a redundancy or of remaining in their employment but going to work in the South Wales South West area.

We have considered very carefully the critical passages in the decision, together with the submission of each Counsel but we are sorry to have to say that, in this particular case, the Industrial Tribunal did not make a finding on the crucial question of fact and that the way in which the matter is expressed is all put on a tentative basis and in particular to the words "even if it was not fact an accurate assessment" indicate that the crucial question of fact was not being decided.

That, by itself, is sufficient to justify the conclusion that this appeal must be sent back to the Industrial Tribunal to make a finding on the crucial issues between the parties relating to the meeting in mid-March. But it is right to point out that Mr Swift raises other matters which we must consider briefly.

First, he submitted that the sentence in question, which we shall not repeat yet again, shows that the Industrial Tribunal was not applying an objective test to decide whether there was a breach of contract but a subjective test, namely, did the Respondent think that there was a breach of contract?

Mr Donovan submitted that the Respondent was in the state of mind that he felt, whichever way the "cat jumped", he was going to have to lose his job totally and that that was applying the objective test of a breach of contract. We doubt whether that submission is well founded but even accepting it what of the next sentence? We consider that an objective test of breach of contract was not applied in this case. There is another criticism of the test applied by the Industrial Tribunal.

Secondly, it was submitted by Mr Swift that there was no finding that the breach of contract was serious. Again, we feel bound to say, looking carefully at the passage in paragraph 7, that that criticism is also, in our view, well founded.

In the result, for the reasons we have given, we have no alternative but to allow this appeal and the case must be sent back, we think to the same Industrial Tribunal, to deal with these matters:

First, a finding must be made, in clear terms, as between the evidence for the Appellant and the Respondent's evidence, as to what happened at the crucial mid-March meeting. Whose evidence does the Tribunal accept?

Secondly, when deciding whether there was a breach, the objective test must be applied.

Thirdly, if a breach is found then the Tribunal must decide, and state, whether the breach amounted to a serious breach.

Finally, if the Industrial Tribunal find that there was a breach and there was a constructive dismissal they must find whether the dismissal was fair or unfair.