East Suffolk Local Health Services NHS Trust v Palmer [1996] UKEAT 948_95_2902

EAT

East Suffolk Local Health Services NHS Trust v Palmer

[1996] UKEAT 948_95_2902 · 1996-02-29

"(i) The applicant is to be treated as having been dismissed by the respondent.

(ii) The reason for such dismissal is redundancy.

(iii) The amount of the redundancy payment ... is adjourned ..."

It is necessary to deal with two preliminary matters first. The Industrial Tribunal dealt with the case on the basis that Section 45 of the General Whitley Council Regulations applied. It is common ground that the Applicant's entitlement had become statutory on the repeal of Section 99(1)(c) of the Employment Protection (Consolidation) Act 1978 . It is agreed that nothing turns on this. The second matter is that the first ground of the appeal is that the Industrial Tribunal has failed to give proper or sufficient reasons for its decision. Mr Wallington, who appears for the Appellant, has not sought to rely on this as a discrete ground of appeal. He accepts that, in view of the correspondence which passed between his clients and the Tribunal Chairman, it would not be proper to argue lack of particularity amounted in itself to an error of law. Mr Wallington does reserve the right to refer to the absence of certain factual findings as going to the central issue of the appeal.

There is little dispute as to the essential background to this case. The Respondents were closing their hospital at Blythburgh where the Applicant worked and transferring its activities to a rebuilt hospital at Aldeburgh. It is common ground that there was a surplus of employees and that the vacancies at the new hospital were to be allocated by open competition between the total staff concerned. There was no criticism of the procedures that were adopted and there was full consultation. The options available to the employees included the possibility of early retirement, redundancy or applying for a post at the new hospital. The Applicant decided to apply for a post in the new hospital and was sent the relevant application form and contract. The contract which she signed on 14 May, stated that it was "commencing on 1 June 1994". It is clear from the Applicant's application form for the new post, the notes about her interview and the matters which she raised after receiving an offer of new employment, that she was concerned about the prospect of travelling to the new hospital in view of her own particular personal difficulties.

In paragraphs 7, 8, 9, 10 and 11 the Tribunal sets out its findings concerning the course of events which have given rise to this application. It is appropriate to set out paragraphs 7, 8, 9, 10 and 11 in their entirety:-

"7 The applicant, in April, was taken ill with bronchitis. She sent in a number of medical certificates giving this as the diagnosis. She told us (and we accept) however that, although this was the initial diagnosis, it was subsequently changed to stress related asthma. The matron of the hospital who gave evidence (while unable to comment on the diagnosis) confirmed the existence of such a condition. The applicant stated that the stress arose from the fact that she was dependent on her husband taking her to and from her home in Beccles to work at the weekends (her agreed time of work); his job however had changed to a substantial extent and he certainly could not guarantee in future to be available for this on all occasions. If she had stayed at Blythburgh there would be no such problem as, if he was away, other members of the family lived close at hand and could assist with the reduced distance. It became clear to her that she could not fulfil the new post. She accordingly sent in a letter dated 25 May explaining the problem and stating:

`... I think it best that I finish work when Blythburgh closes'.

8 The respondents submitted that there could be no dismissal - referring to cases stipulating the necessity for definite preciseness such as for example on the date of closure (which was not exactly known). On these facts however it was common ground that the hospital was to close and that the employees had the right to apply for a redundancy. We find that, notwithstanding the signature of the new contract to take effect from 1 June, the applicant was entitled to change her mind and withdraw her acceptance of the new position which it was impossible for her to fulfil. The practical and common sense interpretation of the situation is that it was an acceptance of the redundancy situation as at the close of the hospital and was not a separate and unrelated resignation.

9 If this were wrong we would find in the alternative that there was a statutory trial period under section 84(3) - This section being expressly incorporated in the General Whitley Conditions. Sub section (6) gives the employee the right `for whatever reason' to terminate the contract during the trial period. The letter however was dated prior to the commencement of the trial period - namely 1 June.

10 The purpose of the legislation however is to compensate employees and it would be contrary to such intention and serve no fruitful purpose either to an employer or an employee if there had to be a sterile period of silence, prior to the commencement of a trial period without revealing the fact that the employee had found the contract - for a valid reason - impossible of performance and was unable to fulfil it.

11 On this basis the employee is to be treated as having been dismissed under sub section 6(b)."

In his helpful skeleton argument Mr Wallington, with endearing candour, accepts that if the Applicant had declined the offer of employment she would have been dismissed and entitled to redundancy payment. He further accepts that, on the facts as found in paragraph 7 of the decision, the employer could not sensibly have argued that she had unreasonably refused an offer of suitable alternative employment, so as to be able to avail themselves of the defence under section 82(5) of the Employment Protection (Consolidation) Act 1978 . Further, Mr Wallington concedes that had the Applicant commenced work at Aldeburgh and resigned during the trial period prescribed by Section 82(6), 84(3) and 84(4), she would have been entitled to be treated as having been dismissed and to receive a redundancy payment (her refusal to stay with the new job not being unreasonable).

Mr Wallington concedes that at first blush it does seem as though the employer is trying to exploit a loophole fortuitously arising by the timing of the events. He does, however, point out that the tribunal is bound to apply the law not a broader conception of what is considered reasonable. He also points out that the effect of paying the Applicant a redundancy payment would be that the employer would have to still recruit someone to take the job that she now was not taking and that the merits are not one sided whatever the natural sympathy there might be for the Applicant's position.

Central to the Appellant's submission is that the tribunal in its decision implicitly found, or assumed, the Applicant was dismissed without ever identifying the act of dismissal. Mr Wallington contends that we should regard the Applicant's letter of 25 May as being a termination by mutual agreement. He cites as authority for that proposition the case Birch v University of Liverpool

[1985] ICR 470

In that case a scheme was adopted by the University and the Liverpool Union Liaison Committee to facilitate an early retirement scheme. The background was that there was a need to reduce by some 300 the number of employees over the next few years. The scheme itself said that it was not a redundancy scheme, and therefore any retirement under the scheme is subject to the agreement of both the University and the member of staff concerned. The Applicant in that case applied for early retirement, obtained it and subsequently sought a redundancy payment. The Court of Appeal ruled that the Applicant was not entitled to a redundancy payment since it was a termination by mutual agreement. It is clear from the judgment of Slade LJ at page 484F that there were crucial distinctions between the facts that pertained in that case and the facts in this case:-

"However, the highest it can be put on the facts of the present case is that the university had given implicit warnings of possible redundancies to come. This is not, on its agreed facts, a case where the employees had been told that they were personally no longer required in their employment, or where they had been expressly invited or placed under pressure to resign. It is therefore distinguishable, for instance, from East Sussex Council v Walker [1972] 7ITR 280.

Two points, in my view, are of considerable importance in considering paragraph 13 of the industrial tribunal's decision. First, there was no evidence, or finding by the tribunal, that the employees were in any way led to believe that they would be compulsorily retired before normal retiring age, if they did not voluntarily apply for premature retirement under the premature retirement compensation scheme. Secondly, there is no finding that the university led the employees to believe that they would be entitled to a redundancy payment if they applied for premature retirement under the scheme. ... Paragraph 2 of the scheme states in terms that it is not a redundancy scheme and that therefore any retirement under it is subject to the agreement of both the university and the member of staff concerned."

In the judgments of both Lord Justice Ackner and Lord Justice Slade the words of Sir John Donaldson MR in Martin v Glynwed Distribution Ltd

[1983] ICR 511

and 519 are quoted with approval:

"Whatever the respective actions of the employer and employee at the time when the contract of employment is terminated, at the end of the day the question always remains the same, `Who really terminated the contract of employment?' If the answer is the employer, there was a dismissal within paragraph (a) of section 55(2) of the Act of 1978. If the answer is the employee, a further question may then arise, namely, `Did he do so in circumstances such that he was entitled to do so without notice by reason of the employer's conduct?'..."

We accept Mr Wallington's submission that for there to be a dismissal notice of termination must clearly communicate when the termination is to take place, and he has referred us to the case Doble [Appellant] v Firestone Rubber Co Ltd

[1981] IRLR 300

However, in the present case there are no findings of fact made by the Tribunal which would enable us to say whether or not, as a matter of law, it could be said the question "who really terminated the contract?" can be answered. In a letter of 2 December 1993, the Applicant was told:-

"The opening of the new hospital will coincide with the closure of Blythburgh Hospital ... We will therefore be arranging to meet staff on an individual basis to discuss their concerns and help them to consider the available options. ..."

The Tribunal has not adverted to or made any findings at all as to whether there was such a meeting and what if anything the Applicant was told.

In a letter of 24 March 1994 to the Regional Office of the relevant trade union, UNISON, Mr Allan, the Human Resources Manager wrote:-

" ... We have now sent redundancy notices or letters of appointment to the majority of staff at Blythburgh Hospital. ..."

The letter went on to indicate that in a few cases where this had not been done, this was because a grade or discipline was in short supply or there was difficulty over hours and they were therefore still considering the position.

There is in the Tribunal decision no precise finding of fact as to when it was envisaged the hospital would close, and when in fact it did close.

Mr Thornton, on behalf of the Appellant, has not sought to put his case on the basis of a dismissal pursuant to Section 83(2)(a) of the Act. It may well be that a tribunal considering the matter might conclude that the answer was that there was no dismissal within that section. However, in the absence of detailed findings of fact, it is difficult for us to say that as a matter of law it was not open to the Tribunal to have reached a decision that there was a dismissal under Section 83(2)(a) of the Act.

Before this Tribunal Mr Wallington has developed the argument that was foreshadowed in his skeleton argument namely:-

"8. ... There is no suggestion that the Respondent was constructively dismissed within Section 83(2)(c); the proposed closure of the hospital was not in itself a breach of contract albeit it would necessitate lawful termination in due course."

Neither the Applicant nor the Respondent was professionally represented at the hearing before the Industrial Tribunal and there are no formal pleadings in Tribunal proceedings. We cannot accept that the question of constructive dismissal was not in the mind of the Tribunal. We have already set out the terms of paragraph 8 of the decision and the sentence that contained therein:

"8 ... The practical and commonsense interpretation of the situation is that it was an acceptance of the redundancy situation as at the close of the hospital and was not a separate and unrelated resignation."

This is clearly redolent of a tribunal grasping at the concept of constructive dismissal.

Mr Wallington's proposition "that the closure of the hospital was not a breach of contract albeit it would necessitate lawful termination in due course" is not, in our view, a sufficient answer to the issue as to whether a tribunal on these facts was entitled to come to the view that there was a constructive dismissal.

In the absence of specific statutory prohibition in general terms any employer is in law entitled to close down the undertaking which they operate. However, the Employment Consolidation Act in terms defines dismissal including constructive dismissal in redundancy cases Section 83(2)(c). Whilst, as a matter of reality in the overwhelming majority of cases, dismissal takes place in formal manner, the operation of constructive dismissal still applies in a proportion of cases.

Changing an employee's place of work without contractual power to do so by virtue of an express or implied mobility clause can constitute constructive dismissal. This is a proposition so trite it is unnecessary to quote authority for it. There are no explicit findings of fact as to the terms of the contract or the extent to which the move to Aldeburgh constituted a breach that would amount to constructive dismissal.

Mr Thornton, who appears for the Respondent, has referred us to the case of Turvey & Others vCW Cheney and Son Ltd

[1979] ICR 341

. At the time when that case was decided the relevant provisions were Section 3(2)(a),(b) and (c) of the Redundancy Payment Act 1965 , as amended by the Employment Protection Act 1975 , and the relevant statutory provisions now are Sections 83(2)(a), (b) and (c) of the Employment Protection (Consolidation) Act 1978 . At page 346 paragraph F, Mr Justice Bristow poses as a fundamental question these matters:-

"1. Has the employee been dismissed, so that section 3(2)(a) applies? Or does section 3(2)(b) apply (this we think will be rare in redundancy cases)? Or has the employee been told, without being dismissed within the meaning of section 3(2)(a) or (b), that his work is coming to an end and he is being offered another job but that if he will not take it he will be dismissed? This is a repudiation of his contract putting him in the section (3)(2)(c) situation with period X within which to make up his mind.

2. If he is in the section 3(2)(a) or 3(2)(b) situation, the industrial tribunal will go straight on to deal with section 3(3) and the subsequent subsections creating the trial period. If he is in the section 3(2)(c) situation and starts working in the new job, making it clear, expressly or by implication, that he does so on trial without committing himself to a new contract or a renewed contract with variations, then, when he leaves the job, is period X still in existence, or has it elapsed because his conduct shows that he has by then committed himself to the new contract or contract with variations? In answering this question the considerations examined by Phillips J. in the Air Canada case

[1978] ICR 1202

, 1208 should be taken into account together with any other circumstances which a tribunal may think could throw light on what can be a difficult question.

3. If, but only if, the answer is that there is a new contract or a contract renewed with variations and so period X has expired before the employee walks out, the tribunal then goes on to deal with section 3(3) and the subsequent subsections creating the trial period."

Mr Thornton has submitted that this case is on all fours with the Turvey v Cheney and Son case, and he says that it is clear from that that the Applicant's contract has been repudiated for the purpose of Section 83(2)(c). He then goes on to argue that the Turvey case decides that where an employee has had her contract repudiated in these circumstances, she has a period of X within which to make up her mind as to whether to accept the new job. If, within that period she decides not to take up the new job, she is treated as dismissed because the employee has chosen to accept the employer's repudiation.

Mr Thornton argues that at paragraph 8 of its decision, when the Industrial Tribunal decided:-

"8 ... notwithstanding the signature of the new contract to take effect from 1 June, the applicant was entitled to change her mind and withdraw her acceptance of the new position which it was impossible for her to fulfil. ..."

These words were in effect merely reiterating the central proposition contained in Bristow J decision in Turvey .

Mr Thornton says that we should construe the Applicant's letter of 25 May, as the acceptance of the employer's repudiation and she was to be treated as dismissed pursuant to the operation of Section 83(2)(c) of the legislation as it is now drafted. Mr Thornton contends that we should view her letter of 25 May as only referable to the old contract. He points out that the new post was only starting on 1 June 1994. She wrote the letter prior to its commencement and thus could not be terminating something that had not yet started. Her intention in relation to that letter was clearly to accept her employer's repudiation thus terminating the old contract which had not yet ended.

Turvey's case does not stand like some neglected signpost pointing to a right of way that has long since been lost. Rather it is a milestone along a well trodden road of authority. As Sir John Donaldson said in Sheet Metal Components Ltd v Plumridge

[1974] ICR 373

at 376:-

"It is without doubt the law that there is no dismissal where both parties to a contract of employment freely and voluntarily agree to vary its terms. This happens whenever there is an increase in rates of pay or a promotion. However, the courts have rightly been slow to find that there has been a consensual variation where an employee has been faced with the alternative of dismissal and where the variation has been adverse to his interests. As Sir John Brightman said in Shield's Furniture Ltd v Goff [1973] ICR 187, 190:

`What is an employee expected to do in these circumstances? He does not want to be out of a job. Nor, if he is a conscientious workman, does he want to let his employer down if this can be avoided. In most cases, therefore, he goes to the new job. He goes with an open mind. There is a period when he is uncommitted. During that period he makes up his mind whether he will accept the new employment, in which case he is not entitled to a redundancy payment; or whether he will leave or, in legal language, accept the employer's repudiation."

In paragraph 10 of the Tribunal decision we consider that the Chairman accurately sets out in homely language the general position:-

"10 The purpose of the legislation however is to compensate employees and it would be contrary to such intention and serve no fruitful purpose either to an employer or an employee if there had to be a sterile period of silence, prior to the commencement of a trial period without revealing the fact that the employee had found the contract - for a valid reason - impossible of performance and was unable to fulfil it."

We have taken the arguments raised by Mr Wallington seriously because we have made no secret of the fact that we have little sympathy with the merits of his argument which would, in our view, create an anomaly which would cause an injustice. If there is a supervening matter such as a change in family circumstances or in this case a deterioration in health - which means an employee comes to a genuine decision that she cannot do justice to the new job - is she to be solemnly required to at least start a job and wait before pointing that matter out? On a purely pragmatic level that can increase the difficulties for an employer who has less notice of what is going to occur. It can cause unfairness to fellow employees who are still working out their own contract and may be found to take on the new position. It can increase the expenses to the employer who might have to advertise for new recruits when, as we have already indicated, there may be a pool of people only too happy not to be dismissed through redundancy, and to forfeit their redundancy payment.

The conclusion for Mr Wallington offends every instinct of fairness enshrined in good industrial practice. It goes further: the law has to deal in a variety of circumstances with the effect of the party delaying taking action. Where a party delays and sleeps on his or her rights it can cause injustice to others. It would be contrary to every doctrine about the significance of delay if an employee, who makes her position clear at the first available opportunity, thereby forfeits a right which she would have if she delayed in asserting that right.

We have considered whether there was a duty on the management when they received Mrs Palmer's letter of 25 May, to advise her that she would be forfeiting her redundancy payment if the law was as they believe it to be. We have briefly looked at the case of Scally and Others v Southern Health and Social Services Board and Another

[1991] ICR 771

. In that case the House of Lords held there was a duty on an employer to inform an employee of a contractual right which would be to their advantage, namely the facility to buy in extra years under a pension scheme. We do not consider that we can equate the situation that arose in that case with the facts of the present case. But in the unanimous view this Tribunal, as a matter of good industrial practice, many employers who were confronted with the situation where a long serving employee was, through ignorance, taking a course which would mean that they would forfeit rights to which they would otherwise have been entitled, would have taken it upon themselves to advise the employee accordingly.

We must make it clear that there is no finding by the Tribunal and no evidence before us that in any way Mr Allen, the Director of Human Resources inveigled the employee to take this course. We are not suggesting that.

CONCLUSION

The circumstances in this case are different from that in Birch's case. Because of paucity of facts found by the Tribunal, we do not consider we could exclude the possibility of a Tribunal finding that there was a dismissal under Section 83(2)(a) of the Act.

In our view, it would be open to a Tribunal, considering all the circumstances of this case to reach the view that the Applicant had been constructively dismissed under Section 83(c) and that she had not forfeited her right to the redundancy payment because on the authorities to which we have referred, she had a period of time in which to make up her mind.

Our difficulty is that although we think that it may very well be, from the outline of the primary facts, that the Applicant would have satisfied the tribunal that she had been dismissed we accept the fundamental contention of Mr Wallington that the Tribunal have assumed a dismissal rather than determined and identified it.

Had the Tribunal made the basic findings of fact to which we have adverted then it would have been possible for them to have reached the decision they did. But, although the question of constructive dismissal is foreshadowed in those parts of the decision to which we have drawn attention, there is no detailed consideration of the issues that arise and certainly no formulation of the broad terms in which constructive dismissal applies.

With heavy heart we have come to the view that this case must be remitted to a differently constituted Industrial Tribunal for them to make such findings of fact as will enable them to reach a decision on whether there was a dismissal, and to set out clearly what those findings of fact are. The present decision is really no more than a brief survey of the conclusions to which they have come without making the factual findings which would entitle them to come to this decision.

We consider that at the moment for us to uphold this case we would be usurping the role of the Industrial Tribunal as the fact finding body.

We had an interesting argument before us, as to whether in any event the Tribunal decision can be justified on the basis that the Applicant did decline the new post within the period allowed under Section 84(4). The statutory trial period commences with the ending of the employee's employment under the previous contract.

Mr Thornton has argued that if it is found that the old contract ended on 14 May 1994, when Mrs Palmer accepted the offer of the new employment, then her letter of 25 May 1994 terminating the contract was written within the trial period, and she is deemed to be dismissed pursuant to Section 84(6), she elected to terminate the contract within the trial period. As this argument bases itself on reaching a decision which we do not consider it is open for us to reach on the basis of the inadequacy of the reasons found by the Industrial Tribunal, it was unnecessary to consider this highly ingenious argument. We would only go on to say that, if that becomes a live issue, we consider that any Tribunal would not only wish to consider the letter by the matron in reply to Mrs Palmer's letter of 25 May, but would wish to make findings of fact about was of the conversation which preceded the writing of the matron's letter back to the Applicant.