Burton v Northern Business Systems Ltd [1994] UKEAT 608_92_1605

EAT
Burton v Northern Business Systems Ltd
[1994] UKEAT 608_92_1605 · 1994-05-16
HIS HONOUR JUDGE J HULL QC: In this case Mr Burton complained of unfair dismissal by his employers, Northern Business Systems Ltd. He was first employed by them as a warehouseman and driver on the 26th September 1988. Very shortly afterwards, in November 1988, he became manager of the warehouse; he was not in strictness a member of the company's management, nor did he discipline the men in the warehouse, but undoubtedly his was a superior position with extra responsibilities. I do not think I need mention any other matters until the 1st July 1991 when Mr Burton had the misfortune to injure his back whilst he was trying to carry a heavy load, with the aid of some other men, and he had to go off sick. We do not have the details of that, but he remained off sick for a considerable time.On the 29th July 1991, there was a meeting between him and another Mr Burton who was the Managing Director; at that meeting the Applicant, having been off work for something like four weeks, was informed that the employers wished to reorganise their staff in the warehouse. In particular, he himself (it was proposed) should go back as a van driver, and another man, it was said, would be taking over his responsibilities in the warehouse. In the view of the Applicant that was equivalent to the other man taking his job and he would be back to his original job as a warehouse man and driver. He thought, rightly or wrongly, that this would involve a reduction in his pay and he was not at all happy about this.Shortly afterwards, on the 6th August, he wrote to the Managing Director (at page 33 of our Bundle):
"I am writing to you about our meeting on Monday when you said that Jim White had been made Warehouse Manager, you said this was because I was not doing my job properly but when we discussed this in detail you seemed to accept my arguments. You offered me a job as a van driver instead.
I am writing to say that I did the job to the best of my ability and no-one had complained before about how it was carried out. I do not accept therefore that there were any real problems with the way I did my job and do not agree that I should have been sacked from that job. But it is your decision however and since Jim has been appointed there seems to be little that I can do about it. I therefore have to think about your offer of the van drivers job you know I am off sick at the moment and not really in a position to decide what to do about this situation. Although I do not accept my demotion I would like more time to think about it and will give you my final decision as soon as possible after returning to work."By now five weeks at least had elapsed since he had had the misfortune to injure himself and clearly the employers would expect to reach a decision about matters fairly quickly. So it would have been quite open to them to write back, not merely, perhaps, disputing some of the account given by the Applicant in his letter, but saying to him, "we see what you say about your illness and your need to think about this question but we are afraid with the lapse of time it really is not something we can now wait to make our minds up about, we must ask you for your answer within seven days, saying whether you do, or do not, accept the job as van driver which has been offered to you, failing which we shall have no alternative but to insist that you do it, and if you do not, you will be dismissed". A letter of that type could have been written and it could have said, "we are sorry of course about your illness but you must make up your mind."They did not do anything of the sort, on the contrary they continued to pay the Applicant his full pay. There was apparently no regular sick pay scheme so the alternatives were, with this firm, either to go on paying full pay or simply to pay statutory sick pay, as is envisaged in a document which we have seen relating to sickness. Eventually, as we can see at page 35, the firm did take matters further. They did not answer the letter or refer to what was said in it but the Managing Director wrote as follows:
"I apologise for writing to you during your absence.
It has been necessary that I write, in order that you are advised in advance of the proposed adjustment related to your continued earnings during absence.As you are aware, I have until now been able to continue paying you full earnings since your last day at work (approximately ten weeks).In view of this, and the company not operating a sick pay scheme, (ie: any payments made during absence are purely at the discretion of management) it is required that I re-consider the situation regarding continued absence.Whilst I remain sympathetic to your illness, I have decided that the point has been reached, where I regretfully have to advise you that any payments for absences extending beyond the 30th September 1991, shall relate to Statutory Sick Pay only."and then he dealt with other matters. He says:
"I have received your most recent medical certificate, however, there seems to be no indication as to when you shall be able to return to work.
Obviously, during this period, it is required that your duties are transferred to alternative members of staff. In view of this please arrange earliest possible date, confirmation via your general practitioner as to the further expected duration of recovery, in order that we can make arrangements accordingly.I trust your health is improving, and in the meantime, look forward to hearing further from you."Although it was a humane and thoroughly decent letter, it was not in any way replying to the points which the Applicant had made in his letter, namely that he wanted time to think about the matter and could not make up his mind; and that he would give the final decision after returning to work.Then he was summoned to a meeting with the Manager and at that meeting he had prepared a letter of resignation. Finding that his employers were adamant that he must do the van driver's job he handed in his letter of resignation.Those were the circumstances which led to his application. On the 18th October he applied to the Industrial Tribunal for compensation and in their answer, the IT3 as it is called, which is at page 12, the employers said that the Applicant was not dismissed, in other words, he had resigned, that was their case.He said of course, "I terminated my contract", adopting the language of Section 55 of the Act, "in such circumstances that I was entitled to terminate it with or without notice by reason of a breach by the employer entitling me to do so". That was the issue that had to be decided by the Industrial Tribunal. It was a relatively short issue. The Applicant told the Tribunal:
"that although he had written this letter out he intended to make a last attempt to get the Manager, Mr A C Burton to change his mind and give him back his former job and that he only intended to hand in this letter if this were not possible."
There was a conflict of evidence, said the Tribunal, about what had happened at the meeting and the Applicant told the Tribunal that he could not take up the former position, or indeed the position of driver or any other position, because of the condition of his back at the time, and the Manager said that what the Applicant had told him was that he was not prepared to come back to work and that his role would be changed and that he was unable to do a driving job owing to his state of health.The Tribunal found themselves unable to resolve that conflict of evidence. They certainly did not find that either of these men was not giving evidence honestly or anything of that sort. Then they went on and I am coming to the crucial part of their decision:
"We find that by changing the applicant's job from that of warehouse manager to that of van driver there was a reduction in his status and a substantial change of his duties. This amounted to a breach of his contract of employment and had he resigned on 29 July 1991 he would have been entitled to terminate his contract without notice by reason of the employer's conduct and therefore he would have been regarded as having been dismissed within the meaning of section 55(2)(c) of the Employment Protection (Consolidation) Act 1978."
and the Applicant was entitled to take some time to consider whether to resign. He could not however, postpone his decision indefinitely. Although he was off work he continued to be paid at his full rate of pay and he accepted this pay for the months of August and September. He wished as he said to "keep his options open" but the option whether or not to accept the repudiation was not one that could be kept open indefinitely. His illness did not prevent him from considering the matter, we find that by 27th September 1991 he must be regarded as having acquiesced in the reorganisation. The position was not changed by the meeting of 27th September, the breach had taken place on 29th July. We do not see how the Applicant could be making a final attempt to have his former job back when he knew that he would not be able to carry out its duties. At the time of his resignation, by accepting pay he had acquiesced in the re-organisation and his resignation did not amount to a dismissal.Now it appears at first impression that there the Industrial Tribunal, sitting in Carlisle, fairly close to another jurisdiction, were not applying the law of England; acquiescence is a different concept from affirmation. When one party to a contract has committed a breach which goes to the root of the contract and which entitle the other party to treat the contract as being at an end, the other party is, as it is sometimes said, put to his election. If he affirms the contract he is then confined to his remedy in damages. He cannot thereafter treat the contract as being at an end. As Mr Speirs reminded us the rule is that you cannot "approbate and reprobate" and that, for these purposes, was part of English law as well as Scottish law, it is an illustration of the doctrine of election between inconsistent remedies.The question in English law is not whether he acquiesces but whether he affirms and we have had cited to us today cases in the employment field which make that distinction very clear. It also appears to us that it may well be that the Tribunal were confusing themselves in another way by referring to his illness, because of course it might unhappily be necessary to dismiss him in respect of ill health in due course. It might be impossible for him to carry out his duties. But it would not as a matter of law be impossible for him either to affirm the contract or to accept the repudiation as terminating it, being inconsistent remedies, notwithstanding that he was extremely unwell, if that was the position, and quite unable to return to work. So it does seem, in paragraph 11, the Tribunal were not asking themselves the right question, or if so they were doing so in confused language. The question is, as I say, the Tribunal having found that there was, on the 29th July, conduct which showed a breach going to the root of the contract, whether thereafter Mr Burton, the Applicant, did anything to affirm the contract. We were referred to the well known case of Western Excavating (EEC) Ltd. v. Sharp [1978] ICR 221 . In that case, in the course of giving judgment, Lord Denning, the Master of the Rolls, said at p.226A:
"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 contact, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all or, alternatively, he may give notice and say he is leaving at the end of the notice. But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains; for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract."
Mr Speirs cites that to us and relies on that passage, as being a passage of great authority. Of course that was in the context of a contract of employment in which, generally speaking, employer and employee are in daily relations and contact with each other; the employee carrying out his duties, the employer carrying out his duties, which certainly on either hand normally involve acts by each party. There are many serious obligations owed by the employer as well as by the employee whilst the employee is at work, and so it can justly be said in the overwhelming majority of cases that after a short while at work on new terms, which perhaps he was not bound in any way to accept, the employee is clearly showing that he affirms the contract and that he is continuing on the new and changed terms which the employer has insisted on and each party is acting on the basis that the contract, as altered, has been affirmed. It may very well be that one party or the other can then say "but I have claims arising out of this". "I have a claim for damages" the employee may say "in respect of a breach of contract". But at any rate if he has affirmed the contract he cannot thereafter treat it as repudiated by the employer and exercise his undoubted right, which existed beforehand, to say, "I treat your behaviour as being an act of dismissal, and I treat myself as being dismissed, I resign in such circumstances that I am entitled to regard your breach as going to the root of the contract and I do so accept it".That being the situation Mr Mort, to whom we are grateful, with Mr Speirs, for putting the matter very tersely to us, referred us to the case of W E Cox Toner (International) Ltd v. Crook [1981] IRLR 443. In that case Browne-Wilkinson J, as he then was, said at page 446, paragraph 13, dealing with position of employer and employee at paragraph 13 it was said:
"It is accepted by both sides (as we think rightly) that the general principles of the law of contract apply to this case, subject to such modifications as are appropriate to take account of the factors which distinguish contracts of employment from other contracts. Although we were not referred to 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 any 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: Allen v. Robles [1969] 1 WLR 1193. 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: Farnworth Finance Facilities Ltd v. Attryde [1970] 1 WLR 1053.
It is against this background that one has to read the short summary of the law given by Lord Denning MR in the Western Excavating case. The passage `moreover, he must make up his mind soon after the conduct of which he complains; for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged' is not, and was not intended to be, a comprehensive statement of the whole law. As it seems to us, Lord Denning was referring to an obvious difference between a contract of employment and most other contracts. An employee faced with a repudiation by his employer is in a very difficult position. If he goes to work the next day, he will himself be doing an act which, in one sense, is only consistent with the continued existence of the contract, he might be said to be affirming the contract. Certainly, when he accepts his next pay packet (ie, further performance of the contract by the guilty party) the risk of being held to affirm the contract is very great: see Saunders v. Paladin Coachworks Ltd [1968] 3 ITR 51. Therefore, if the ordinary principles of contract law were to apply to a contract of employment, delay might be very serious, not in its own right but because any delay normally involves further performance of the contract by both parties. It is not the delay which may be fatal but what happens during the period of the delay: see Bashir v. Brillo Manufacturing Company [1979] IRLR 295."and he also referred to Marriott v. Oxford Co-operative Society [1970] 1 QB 196, and he said:
"This decision to our mind establishes that, provided the employee makes clear his objection to what is being done, he is not to be taken to have affirmed the contract by continuing to work and draw pay for a limited period of time, even if his purpose is merely to enable him to find another job."
We were also referred to Bashir v. Brillo [1979] IRLR 295. That was a case in which the employee, a Mr Bashir, who was in a superior position as a supervisor, was involved in a disturbance with another employee.
"The next day, both men were suspended pending further investigation of the incident. On 31st May, the other employee was dismissed but Mr Bashir was offered a non-supervisory job in another department at a lower rate of pay. However, the following week Mr Bashir remained off work and on 9th June he reported sick and applied for sick pay under the company's sickness scheme. Under this scheme, the same rate of sick pay applied to a supervisor and to the alternative job which he had been offered.
During Mr Bashir's absence, there was correspondence with his solicitor and the company's in which it was made clear that Mr Bashir did not accept the alternative job. On 8th August, Mr Bashir himself wrote to the company indicating that unless he was offered a job at the same rate of pay as he had previously been earning, he would have no alternative but to treat the company's action as a repudiation of his contract of employment. On 4th September, his solicitor sent a letter saying that since the company was not prepared to reinstate Mr Bashir as a supervisor or to give him a different job with the same rate of pay, he accordingly terminated his employment, accepting a repudiation of his contract by the employers and that that amounted to a constructive dismissal.An Industrial Tribunal dismissed Mr Bashir's complaint of constructive dismissal because of the time lag between the repudiation relied on and Mr Bashir's acceptance of that repudiation."and they relied upon what Lord Denning had said in Western Excavating v. Sharp . Then the Employment Tribunal allowed the appeal and remitted the case to a differently constituted industrial tribunal and the case was cited to us because of some important observations which fell from this Tribunal, which was chaired by Slynn J, as he then was, as President of the Employment Appeal Tribunal. This Tribunal said at p.297, paragraph 15:
"It seems to us that here if Mr Bashir had gone back and had worked for a period without evincing his acceptance of the repudiation, then clearly it would have been too late for him to bring a claim for constructive dismissal. But through the period Mr Bashir, or his advisors, were here saying, very positively, that he did not accept the new position which his employers sought to offer him. There is only one matter which can be relied on by the company to suggest that he had in any way affirmed the contract. That is the application for, and the receipt of, sick benefit paid by the company, which is accepted by both sides to be consistent with the continuation of a contract of employment. Indeed, both sides were saying, right to the end, that Mr Bashir was still employed by the company.
But that does not, of itself, seem to us to be necessarily fatal to Mr Bashir's claim. It seems to us that when the Master of the Rolls is talking about the employee continuing for any length of time without leaving "[that of course is the Western Excavating case] "he is referring to a situation where the employee actually does the job for a period of time without leaving, or if he does some other act which can be said to affirm the contract as varied. The most that can be said here is that Mr Bashir, by applying for and taking the sick benefit, was affirming the existence of a contract of employment. He said it was employment as a supervisor and he would accept no employment at a lesser wage. But because the amount of sick pay is the same for a supervisor as for a labourer or other worker in the kind of job which Mr Bashir might have done, it does not seem to us that it can be said that by the receipt of sick pay he has done an act to affirm the contract is varied.Accordingly here it seems to us that the Industrial Tribunal, although quite rightly seeking to apply the decision of the Court of Appeal in Western Excavating v. Sharp, have attached too much to the mere passage of time. What they really had to consider was whether, he not having worked, there were other factors which could be taken as showing an election to affirm the contract as varied. On the very special facts of this case, where the employee was absent sick for some 2 1 / 2 months after the act of the employer which is relied upon as a repudiation, and where the employer was also pressing the man to take the new job, realising that he was refusing it, but going on to pay him sick pay, it seems to us that Mr Bashir was still entitled, at the end of the period, to say when he was ready, or apparently ready, to go back to work that he accepted the repudiation.Accordingly, it seems to us that he was not here barred by any conduct of the kind which the Master of the Rolls had in mind in Western Excavating v. Sharp . Accordingly we consider that here the Industrial Tribunal came to the wrong conclusion and we could allow the appeal."In the light of those cases which greatly, of course, illuminate this whole topic, we ask ourselves what can be made of the facts here, directing ourselves that the finding of the facts and such proper inferences as can be drawn from them is a matter for the Industrial Tribunal and not for us. What it boils down to is this: is there anything in the facts here which could justify the Industrial Tribunal in finding that in all the circumstances there had been an affirmation by the Applicant of the contract following the breach which they found took place on the 29th July, two months before the termination of the contract by Mr Burton's resignation? As we have already pointed out, so far from the Applicant immediately affirming the contract he went back and after a week he wrote a letter from which we have already cited; after saying that he had objected to what had happened and that he disagreed with the decision:
"I therefore have to think about your offer of the van driver's job. As you know I am off sick at the moment and not really in a position to decide what to do about this situation. Although I do not accept my demotion I would like more time to think about it and will give you my final decision as soon as possible after returning to work."
So there he was saying "I am not able to make up my mind at the moment, I reserve my position" which of course is the very opposite of saying "I affirm the contract". It is true, as we have said, that he was receiving his pay, this was in the nature of a concession, it was pay which was entirely consistent, as in the Bashir case, with his previous employment in the more responsible position of Manager of the Warehouse.That letter which was, presumably, wholly unsatisfactory to the employers met with no response whatever. The employers never said "we must ask you to make up your mind now". It is true that the Industrial Tribunal has found that his disability, which is a purely physical injury, did not in fact prevent him from thinking about the matter and making up his mind. But that was what he had said to the employers, to paraphrase, "I am not affirming this contract, I am reserving my rights" and the employers, so far from writing back, or indeed getting in touch with him to say "we are sorry, we cannot accept this attitude, we are going to insist that you must elect now whether to accept, if you do not we shall have no option but to dismiss you", simply left the matter in silence: until the 13th September, more than a month later, when the Managing Director wrote to say "I am sorry you have been ill for such a long time, we are going to have to reconsider paying you at the full rate which we have done and we must now consider reducing you to statutory sick pay". They were still not dealing with his letter and so matters still stood in statu quo ante that is to say, on the basis of the letter of the 6th August 1991. Then the Applicant wrote out his resignation, took it to the meeting and being dissatisfied at the meeting handed it in. Is there anything in this story so far that could possibly amount to affirmation by the Applicant of the contract? It appears to us that there was nothing that could possibly amount to an affirmation. There was, of course, the fact that this Applicant delayed, and the Tribunal found that he need not have delayed, he was in a perfectly good condition to make up his mind if he chose to do so; but he had delayed on the express basis that he was keeping all his options open, he reserved his position. His employers did absolutely nothing to say "this is intolerable to us and we cannot allow you to keep your position open in this way". On the contrary, they went on paying him on the basis of his former job right up to the time when these men had their further interview, he and his Manager. In those circumstances we have to accept what is said on the highest authority, namely, that mere delay does not amount to affirmation, it must be delay coupled with acts from which it can be inferred that the innocent party is affirming the contract. Here, there appear to us to be no acts of affirmation whatever. Absolutely to the contrary, he insisted that he was keeping his position open. His employers, if they did not like that, had a simple and straightforward remedy in their hands, they never took it, on the contrary they continued to pay him in the face of his defiant statement that he was keeping his position open. It appears to us that this Industrial Tribunal had no evidence upon which they could possibly find that this contract had been affirmed. Certainly it is not correct to treat it as though it is a case of acquiescence where very different considerations apply, including such questions (which arise in Equity) as has one party changed his position in such a way that it would be unfair for the other party to insist on his rights? Acquiescence is a different concept from affirmation, in English if not in Scottish law, and we find that this Tribunal misdirected itself and therefore reached a decision which is insupportable as a matter of law.We find that the only conclusion from what happened here, on the basis of this Tribunal's findings, was that indeed the Applicant was dismissed when he saw the other Mr Burton, the Manager, on the 27th September and handed in his resignation. He was entitled by virtue of the rules of common law and Section 55 of the Employment Protection (Consolidation) Act 1978 to say that he was then and there being dismissed by his employerThat, of course, leaves entirely undecided the questions whether the dismissal was unfair, whether if so it was contributed to by the conduct of the Applicant or whether on other grounds, of which we say nothing having no knowledge of them, his compensation may fall to be reduced in any way and (of course), what the proper size of that compensation, if any, should be. Those are matters for the Industrial Tribunal. We think the better course, since many of the matters which we have had to canvass in the course of this judgment are matters which will have to be considered again as part of the facts of the case, is to remit this case to a differently constituted tribunal with a request to continue the hearing on the basis that we find that there was a dismissal of the Applicant, by the Respondents, on the 27th September 1991.