Rentokil Ltd v Morgan [1995] UKEAT 703_95_2811

EAT
Rentokil Ltd v Morgan
[1995] UKEAT 703_95_2811 · 1995-11-28

JUDGE CLARK:

This is an appeal by Rentokil against a finding of the Brighton Industrial Tribunal, Chairman Mr R Peters sitting alone, that it had dismissed the Respondent Mr Morgan within the meaning of Section 55 of the Employment Protection (Consolidation) Act 1978 . The Respondent's evidence before the Tribunal and un-contradicted by the Appellants was, that after 27 years service, at a time when he held the position of Managing Director Property Care Services, he was called in to see the Regional Managing Director Mr Roger Payne on 14 June 1994. According to the Respondent, Mr Payne said:
"I have some bad news for you, I am going to terminate your employment as of today."
There had been no prior warning that his employment was to end. He had no other job to go to. He was 51 years old. He did, however, have a contractual entitlement to twelve months notice. The Respondent was asked to return at 2.00 p.m. When he did so, they were joined by the company Legal Adviser Mr Ward-Jones. He had with him a number of letters for the Respondent, including a resignation letter which was to take immediate effect. The Respondent said he was not prepared to sign the letters and that he would go away and take advice. He consulted a solicitor, Mr Agombar. The severance package proposed by the company included terms providing that the Respondent handed in his resignation, whereupon he would receive one year's gross salary, that is £67,500.00. Mr Agombar entered into discussions with Mr Ward-Jones on behalf of the company. He wrote a "Without Prejudice" letter on 20 June 1994 stating:
"Our client is entitled to treat your actions as constructive dismissal and he now takes this step with dismissal being effective as on 15th June 1994."
With minor alterations, the severance package proposed on 14 June was finally accepted by the Respondent on 8 July. The severance agreement which he signed was expressed to be in full and final settlement of all claims, whether at statute or common law, in connection with the termination of his employment. However, it was not in the form required by Section 140(3) of 1978 Act by then in force, and thus did not operate as a compromise agreement so as to oust the jurisdiction of the Industrial Tribunal; although it was a sufficient compromise of any common law claim for damages for wrongful dismissal. We note that the Respondent's solicitor expressly reserved his right to bring a complaint of unfair dismissal during the course of a telephone conversation with Mr Ward-Jones on 4 July.Having made findings of fact on the evidence, the Chairman considered the submissions made by Counsel on each side. He was helpfully referred to three authorities, Sheffield & Oxford Controls Company Ltd [1979] IRLR 133 , Martin v MBS Fastenings [1983] IRLR 198 Court of Appeal and Logan Salton v Durham C.C. [1989] IRLR 99 . His findings and conclusions are set out in paragraphs 17-19 of the extended reasons, and I should set them out:"17. After careful consideration of the facts of the preliminary issue and the case law to which I have been referred I find that the cause of the Applicant's resignation is because he was left with no real choice. He was told that he was being dismissed and he was presented with a non-negotiable "severance package" which was not acceptable to him in settlement of all his claims. Whichever way he jumped he had no job. With the "resignation" at least he got some money in the hand but no job. Without the "resignation" he got no money and no job although he would be left with the right in the bush to commence a wrongful dismissal action.18. The resignation letter is part and parcel of the severance agreement and cannot be treated in isolation as a resignation. Accordingly the real question is whether the agreement caused the termination of employment (no dismissal) or whether the termination was the cause of the agreement (dismissal).19. I have no hesitation in finding that the employment relationship was terminated by the Respondent, that the position had not moved on to the Applicant being motivated by the "severance agreement" so as to terminate the employment by agreement and that the Applicant was dismissed."Mr McDermott on behalf of Rentokil, submits that the Tribunal Chairman's decision was flawed in law. First he says that the Chairman was wrong to look simply at the question of causation. He must look at the agreement reached between the parties. He relies particularly on clauses 2 and 14 of the Agreement. They provide;
"2. You [the employee] will sign forms of resignation from the offices which you hold in the Group in the terms of the annexed drafts.
14. On the basis that we make the payments and provide the warranties and references referred to above, you agree to accept the above terms in full and final settlement of all or any claims which you may have against any company in the Group or any of their respective officers or employees whether at statute or common law in connection with the termination of your employment."He argues that Mr Morgan had the advantage of independent legal advice before entering into that agreement. He received valuable consideration for his resignation, including one year's gross salary. He avoided the risks of litigation and he had a real choice as to whether or not to enter the agreement. There was no duress. Looked at in this way, the Chairman was bound to conclude that the employment was ended consensually. Further, he places reliance upon the observations of Wood. J. in Logan Salton v Durham C.C. [1989] IRLR 99 paragraphs 22 and 23. In particular in paragraph 23, Wood. J. says:
"In our judgment, and particularly in the judgment of the lay members, in the resolution of industrial disputes it is in the best interests of all concerned that a contract made without duress, for good consideration, preferably after proper and sufficient advice, and which has the effect of terminating a contract of employment by mutual agreement (whether at once or on some future date) should be effective between the contracting parties, in which cases there will probably not have been a dismissal within s.55. However, as Sir Denys Buckley stated in Glynwed that is an issue of fact for the Tribunal."
Alternatively he says that the decision was perverse, in that the Chairman could not properly make the finding in paragraph 17 of the extended reasons, that Mr Morgan was presented with a non-negotiable severance package which was not acceptable to him, in settlement of all his claims. Taking that last point first, we accept Mr Dulovic's submission that there was ample evidence on which that finding could be based. That is, the evidence given by Mr Morgan which appears at page 3 of the Chairman's Notes of Evidence, which are before us.As to the question whether the Chairman mis-directed himself in law, we should refer first to the judgment of Sir John Donaldson in Martin v Glynwed Distribution ICR [1983] page 519 G:"... at the end of the day the question always remains the same, who really terminated the contract of employment?"...The Chairman answered that question at paragraph 19 of his reasons. Without hesitation he found that the employment relationship was terminated by the employer. We are satisfied that the undisputed facts supported that finding. Put another way, we look at the way in which the question was posed by Arnold. J. in Sheffield v Oxford Controls Company Ltd ICR [1979] page 398 H-399 A. He said:
"The question is whether the resignation contained in the heads of agreement of the employee brought about in those circumstances is really something which terminated the contract of employment on the employee's initiative or whether, because it was made as a result of a threat that he would be dismissed if he did not resign, the result is that that was a dismissal by the employers notwithstanding the intermediate negotiation."
The Chairman here found on the evidence that it was the second situation postulated by Arnold. J. He asked himself the correct question in paragraph 18, and in our judgement was entitled to answer it as he did on the material before him.We remind ourselves that our powers to interfere with a decision of the Industrial Tribunal are limited to correcting errors of law. As was pointed out by the Court of Appeal in Martin and this Tribunal in Logan Salton , the question as to whether or not a dismissal took place is essentially one of fact. That, subject to the question of perversity, is the preserve of the Industrial Tribunal. In these circumstances this appeal must be dismissed. Leave to appeal refused. No order as to costs.