Holland v Glendale Industries Ltd [1998] UKEAT 903_97_1405

EAT
Holland v Glendale Industries Ltd
[1998] UKEAT 903_97_1405 · 1998-03-26

JUDGE BUTTER QC :

This appeal and cross-appeal arise out of a decision of an Industrial Tribunal held at London (South). After a four day hearing the tribunal, in their extended reasons sent out on 10th June 1997, concluded unanimously that the employers were in fundamental breach of contract, that the applicant left as a result, but that his claim for constructive dismissal failed because he had not made clear to his employers the reason for his leaving.The main facts can be taken from the tribunal's decision. The applicant was employed in the parks and gardens of the London Borough of Wandsworth from May 1979 to April 1996. He was Parks foreman for the Western District of the Borough as from 1988 and was paid on a higher grade than was normally available for manual workers. The Borough was obliged to put its parks and gardens operation out to tender. An outside company, AAH, became the contractors and the applicant was transferred with the contract. He remained in effect a chargehand for five years with that company and was paid an extra sum of about £26 gross per week to reflect his status. In 1995 the respondents successfully tendered for the contract and the applicant transferred with this.The respondents were never properly informed of the details of the applicant's employment or that he was in practice in the position of a chargehand. After about two weeks the applicant was told that no extra payments would be made to him. Another younger man was offered the job of chargehand. According to the tribunal's findings, things went from bad to worse. They said:
"8. For a skilled man proud of what he had done in 17 years it must have been singularly galling to be faced, often directly, with complaints from the Council of unsatisfactory results."
He reacted very forcefully when, towards the end, a supervisor said to him, apparently jokingly, that they were all going to have their work cut out to catch up in the Spring and Summer. In addition, the applicant maintained that the respondents supplied inadequate tools and machinery. In February 1996 the respondents conducted a staff assessment which gave rise to widespread anger at what were regarded as unjust marks.Four or five weeks before the applicant finally resigned, a Ms Steele arrived on the scene as the contract supervisor. She was surprised when the applicant told her that he was leaving and when she informed the contract manager, a Mr Jermyn, of this he too was surprised.An important part of the tribunal's findings of fact are at paragraph 10 when they said:
"10. ... Ms Steele says she asked the Applicant why he was going and he said he was fed up and was going to take early retirement. Possibly in response to her surprise that someone as young as he could take early retirement, Ms Steels says, the Applicant stated that he had saved up and intended to spend time renovating the house in which he lived. ... on this crucial point the Applicant's evidence confirms that this was the explanation he gave for leaving. He says his pride would not permit him to reveal the true reason."
In relation to the question of fundamental breach, the tribunal were of no doubt that the applicant had been subjected to severe and increasing stress whilst he worked for the respondents. The tribunal reviewed the law in relation to fundamental breach and said that in the present case they were entitled to ask whether an accumulation of circumstances was sufficient to destroy the applicant's trust and confidence. They found that there were three fundamental breaches of contract in the space of six months which they summarised as follows:
"23. ... (a) The Applicant had an express contractual right to occupy a junior supervisory position by whatever name that might be known. The Respondent did not accord him that right. (b) The Applicant was expressly entitled to be paid in excess of the normal basic rate of pay and, by custom and practice, this had become an implied right to be paid for an extra five hours per week which the Applicant did not normally work. The Respondent refused to make such payments. (c) The trust and confidence of the Applicant was destroyed by an assessment of his ability and performance which we described during the hearing as derogatory. The fact that a number of employees were similarly treated does not alter the effect of this assessment."
The tribunal further summarised the respondents' conduct and concluded that the applicant plainly left their employment by reason of the effect of this course of conduct. They then went on to deal with the issue of affirmation which, realistically, is not pursued at the hearing of this appeal.In their clear and well reasoned decision, the tribunal then dealt with what is the crucial issue in relation to the appeal. They said that they had no difficulty in discarding the reason which the applicant gave for leaving his employment, namely that he intended to retire early, as a sham. In paragraphs 27 and 28 of the decision, they expressed themselves in this way:
"27. We are satisfied, therefore, that the Applicant in this case left his employment in response to a repudiatory breach of his trust and confidence and that he left without having reaffirmed his contract. Unfortunately for him, because he was a proud man and did not wish to say he had been forced out of his job, he gave a wholly incorrect reason for leaving. It was a reason known to be incorrect by his immediate supervisor but almost certainly not by Ms Steele or the out of touch Mr Jermyn.
28. If the law requires the Applicant to establish the real cause of his leaving and to show that he did, in fact, leave for that reason the Applicant in this case would have proved a constructive dismissal. If there was a constructive dismissal the tribunal would regard it as unfair. With great regret, however, the tribunal is convinced that the law also requires that the Applicant should make clear to his employer a reason for leaving which is consistent with constructive dismissal. There is no doubt that the Applicant did not do so in the present case and, on that ground alone, the tribunal find that he is unable to establish a claim for constructive dismissal."It appears from the reference to the immediate supervisor, a Mr Coles, that he was aware of the applicant's anger and dissatisfaction, but the vital finding of the tribunal is contained in the last two sentences of the decision, namely that the applicant had not made clear to his employer a reason for leaving consistent with constructive dismissal.The Industrial Tribunal rightly, but reluctantly, considered that the decisions of the Employment Appeal Tribunal in Logabax Ltd v Titherley [1977] IRLR 97 and Walker v Josiah Wedgwood & Sons Ltd [1978] IRLR 105 , were binding upon them. At the hearing of the present appeal, Counsel for the applicant has maintained that those decisions were wrongly decided and that the Employment Appeal Tribunal should now make this plain.Reliance is placed upon the precise words of s.

(c) of the Employment Rights Act 1996 namely that:

(1) ... an employee is dismissed by his employer if [ but ] only if-

. ..(c) the employee terminates the contract ... (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct."Similarly, attention is drawn to the well-known words of Lord Denning MR in the case of Western Excavating (ECC) Ltd v Sharp [1978] ICR 221 at page 226 A-C:
"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 contract, 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.
Accordingly, it is submitted, there is nothing in the doctrine of constructive dismissal which requires an employee to assert why is leaving. The question is simply one of causation. Did the employee leave as a result of the employer's conduct within the meaning of s. 95(1)(c) of the 1996 Act?In our view, however, s. 95(1)(c) must be considered in the light of the ordinary principles of contract. This aspect was dealt with in paragraphs 7, 10 and 11 of the report in Logabax . In that case there was dispute concerning the payment of commission in relation to a sales manager who decided to leave, stating "there is no question here of resignation or termination of employment by myself; the contract has simply expired". The Employment Appeal Tribunal held that he had not been constructively dismissed. In paragraph 11 of the report, Kilner Brown J. said:
"We next turn to the wider aspect which we believe para.5(2)(c) [ containing comparable provisions to those of the 1996 Act ] entitles a Tribunal to consider. But even there it seems to us that an employee must signify his attitude in a clear unambiguous fashion. Although it may be argued that an employee does not have to go so far as to demonstrate a fundamental breach as the common law requires, nevertheless the words of the sub-paragraph seem to us to imply that the employee must indicate that he is exercising his entitlement to claim a constructive dismissal."
The case of Walker related to a works manager who, when asked by the company why he had resigned, indicated that it was to take a better job although the reason why he had taken that job was because he was unhappy about the way he was being treated. The Employment Appeal Tribunal upheld the decision of the Industrial Tribunal that the employer's conduct did not amount to a repudiation of contract and that in any event the employee was not entitled to claim constructive dismissal since he had failed to indicate to the employers that he was treating their conduct as conduct entitling him to determine his employment. In giving the judgment of the Employment Appeal Tribunal, Arnold J dealt with this latter aspect at paragraphs 17 to 22 inclusive. A key passage is at paragraph 19 where he said:
"We think for our part that it is at least requisite that the employee should leave because of the breach of the employer's relevant duty to him, and that this should demonstrably he the case. It is not sufficient, we think, if he merely leaves - at any rate in any circumstances at all similar to the present. And secondly, we think it is not sufficient if he leaves in circumstances which indicate some ground for his leaving other than the breach of the employer's obligations to him."
Earlier, he quoted from the case of Logabax with apparent approval.Counsel for the applicant argues that there are differences of fact between the case of Walker and the present one. He maintains that the Walker decision is explicable simply on the basis that if there is a conflict of evidence as to what the real reason for the employee's departure was, then the tribunal is entitled to look at what was said to the employer as an indicator, and then to make a finding as to whether the employee did in fact leave because of the employer's conduct.We do not feel able to accept this latter proposition. We consider that in both the cases cited above, the Employment Appeal Tribunal were dealing with the general principle, namely that where one party by his conduct repudiates the contract and the other wishes to rely upon such repudiation, the latter party must by words and/or conduct make it plain that he is accepting the repudiation. Acceptance of a repudiation must be clear and unqualified: see, for example, the Court of Appeal decision (and not simply the decision of the Employment Appeal Tribunal which was cited to us) in Harrison v Norwest Holst Group Administration Ltd [1985] ICR 668 , in particular per Neill LJ at page 682. We do not consider that much assistance is provided to the applicant in the present case by the text or cases cited at paragraph 24-012 in Chitty on Contracts , 27th Edition, Volume I.In rare cases this principle might lead to injustice, as in the case discussed in argument on the hearing of this appeal. A young employee is bullied by his or her employer in circumstances which clearly entitle the employee to treat such conduct as amounting to constructive dismissal. The employee does not have the necessary courage to inform the employer of the reason for leaving but gives an untrue explanation such as, "I am leaving to look after my mother who is ill". The reality in that situation is that the Industrial Tribunal would probably be astute to conclude that the manner and circumstances in which the employee left, coupled with knowledge by the employer as to the true reason for this, were sufficient to bring home to the employer why the contract was being terminated. We can also imagine circumstances in which it would be manifestly unjust for an employer to face an allegation of constructive dismissal when the employee had parted on apparently amicable terms giving a plausible reason. In any event, we cannot allow policy considerations of this kind to affect what we regard as being the correct interpretation of the law in relation to constructive dismissal.For these reasons we are unanimously of opinion that, on the facts found, the tribunal were right in concluding as a matter of law that the applicant was not entitled to succeed in his claim for constructive dismissal.In these circumstances, it is not strictly necessary for us to consider the cross-appeal. We have, however, unanimously reached a decision about it which we can express briefly. The tribunal were in our judgment entitled to conclude upon the facts before them that there had been a series of actions on the part of the respondents which resulted in the destruction of trust and confidence. We reject the contention that the tribunal erred in law or acted perversely in reaching the decision which they did. We do not accept that it was necessary for the applicant to establish that the respondents had been guilty of deliberate actions intended to destroy the relationship. It is sufficient if their conduct was likely to destroy or seriously damage such relationship.Accordingly, we would in turn dismiss the cross-appeal.