Larkin v Korean Airlines Co Ltd [1998] UKEAT 962_98_0111

EAT
Larkin v Korean Airlines Co Ltd
[1998] UKEAT 962_98_0111 · 1998-11-01

JUDGE PETER CLARK:

We have before us two appeals, listed consecutively for preliminary hearing, in this case. In the first appeal (EAT962/98) the employer Korean Airlines Co. Ltd (Korean) appeals against a decision of the London South Employment Tribunal, promulgated with extended reasons on 15 January 1998, upholding the Applicant, Mrs Larkin's complaints, both of unfair constructive dismissal and sex discrimination, (the liability decision). In the second appeal (EAT1241/98) Mrs Larkin appeals against that Tribunal's remedies decision following on from the liability decision. That remedies decision was promulgated with extended reasons on 18 September 1998.

The First Appeal

The factual background to the employer's appeal, taken from the Tribunal's findings contained in the liability decision reasons, was as follows.The Applicant first entered Korean's employment as a Reservations Sales Officer in May 1986. She left the employment in January 1989 when she discovered that her male colleagues were on double her salary and was not herself given a pay rise. She then moved to China Airlines with a £5,000 pay increase.In May 1991 she was asked to rejoin Korean, which she did, in the post of Cargo Sales Co-ordinator at Heathrow Airport, on a salary £9,000 greater than that which she had enjoyed when she left Korean in January 1989.When she was recruited back by Korean in May 1991, the then Cargo Sales Administration Manager, Mr Jung, told the Applicant that she was considered to have a lot of potential and indicated that she would eventually become sales manager in succession to Mr Frank Smith, then aged 56 years, on his retirement at the age of 65.The Applicant accepted in evidence that she had no guarantee of the Sales Manager's job, there was nothing in writing. She did however, have an expectation that she would get the job one day and believed that she was being trained for the job when Mr Smith eventually retired. She reported directly to him and deputised for him when he was away from the office.In January 1996 she took over Revenue Accounting on a temporary basis. In May 1996 she became pregnant and informed her new Cargo Sales Administration Manager, Mr Cho, who had succeeded Mr Jung, of that fact in July 1996.Just before she left on maternity leave on 20 December 1996 Mr Cho said to her "Anne-Marie, you do realise you will be Sales Manager one day".Her child was born on 27 January 1997. She returned to work after maternity leave on 18 August 1997. On that day she was called into the conference room by Mr Cho.He told her in a roundabout way that Mr Steve Tindale was going to be transferred into the Sales Department to be trained for the Sales Manager's job. She was astonished and asked him why she was not considered for the position. Mr Cho said that she had not been considered when the decision was made, she was on maternity leave. A few days later the Reservations Officer, Miss Muntroze, told the Applicant she knew who was going to be the next Sales Manager after Mr Smith retired, it was Mr Tindale. She said that she had been told so by Mr Cho.The Applicant was furious and humiliated after the conversation with Miss Muntroze. She sought a meeting with Mr Hahm, the Regional Manager.Before that meeting took place on 19 September, Mr Hahm wrote to Mr Tindale on 4 September. In that letter, he said this:
"Finally, I do have to point out that your promotion to the position of Sales Manager will not be automatic on Frank Smith's retirement. Rather, any decision on your promotion will always be based on your job performance. However, I am certain you rise to the challenges of your new position and will show us your suitability for the position of Cargo Sales Manager through the quality of your work."
On 19 September the Applicant met with Mr Hahm. There was a conflict between those two as to what was said. The Tribunal preferred the Applicant's account. Their findings on this aspect are set out at paragraph 26 of their reasons:
"......During this meeting, Mr Hahm denied that he had ever promised Mr Tindale the Sales Manager's post, saying that he would have to prove himself. She then told Mr Hahm what Mr Cho had told her, and that this had been subsequently confirmed by Mr Tindale. She asked him what Mr Tindale's position would be, and he told her that he would be a Sales Account Executive. She then asked what she was meant to do. Although he denied this, we accept the Applicant's version that Mr Hahm told her that she could arrange Mr Tindale's appointments and follow up on enquiries. Her reaction to this was to tell Mr Hahm that this confirmed that Mr Tindale would be senior to her, but Mr Hahm said that this was not true, and argued that the applicant was senior to Mr Tindale as she was in a higher salary group. Mr Hahm also said that he had to bring in Mr Tindale as there was a need to increase the number of staff in Sales, but the Applicant pointed out that the company's sales target had been increased so that it was not about thirteen times higher than it had been about ten years ago, and this had been achieved without any increase in staff. Mr Hahm said that he told the Applicant that she could be Sales Manager in two or three years time if she proved herself, but we do not accept this. Although it could have been an important statement, if made, it did not appear in Mr Hahm's statement, or in the IT3, and the Applicant denied it was made. We do, however, accept when the Applicant asked Mr Hahm why she had not been considered for the post of Sales Manager he said that no one had been considered, and that she had not been overlooked for promotion."
Following that meeting the Applicant told the Tribunal she was resigned to the fact that she was out of the running for the Sales Manager's job. Mr Tindale was the 'heir apparent'. She believed her career was over. She felt humiliated and pushed to one side.She began to look for another job, without success. On 8 October she went off sick. A few days later Miss Muntroze telephoned her, saying that the London Office, where Mr Hahm was based was very annoyed with her for being off sick as she had already taken too long off for maternity leave. The Applicant decided she had had enough. She gave 6 weeks notice of resignation on 19 October 1997, and in that letter said this:
"I feel that the present working conditions and environment Korean air is not what it was when I re-joined six years ago and along with the fact that I have been overlooked for promotion due to my absence for maternity leave, I have been left with no alternative."

The Tribunal's Conclusions

Unfair Dismissal

The Tribunal held that there was to be implied into the contract of employment a term of mutual trust and confidence. That is not controversial. They found that Korean was in actual or anticipatory breach of that term by informing the Applicant on 18 August that she was no longer the 'heir apparent' to the Sales Manager because she had been on maternity leave at the time when the decision had been taken to bring in Mr Tindale. That was a fundamental breach of the contract. Her mind had not been put at ease. The meeting with Mr Hahm on 19 September had not set her fears to rest. That was a fundamental breach of the contract. She had not waived the breach by delaying until the 19 October before handing in her notice of resignation. She resigned because of the fundamental breach. She was constructively dismissed. No potentially fair reason for dismissal having been advanced on behalf of the employer, that dismissal was unfair. She had not contributed to her dismissal.

Sex Discrimination

The Tribunal found that she had been directly discriminated against on the ground of her sex in that whereas prior to going on maternity leave she was the front runner for the post of General Manager, on her return to work on 18 August she was told that she was no longer in the running. A man, Mr Tindale, had moved to Sales with a view to succeeding Mr Smith about whom there had been some thought given to the possibility of early retirement. The only reason she had not been considered was because she was away on maternity leave. Only a woman can be absent on maternity leave.Further the discrimination was unlawful in that:(1) Korean had discriminated against her in the way it afforded her access to opportunities for promotion. She had been taken out of the running for eventual promotion to General Manager due to her absence on maternity leave.

(a) ; and/or

(2) that discrimination led to her constructive dismissal Section 6(2)(a) of the Act.

The Appeal

As for the finding of constructive dismissal, Mr Duggan submits that Korean could not be in breach of the implied terms of mutual trust and confidence because there was never any guarantee that the Applicant would succeed Mr Smith. He submits, on the facts as found, that Korean had not confirmed that the Applicant was out of the running for the post. It had merely affirmed that there was others in competition for the post. There was no guarantee that Mr Tindale would get the position.We reject that submission. Although it is correct to say that neither the Applicant, nor subsequently Mr Tindale, were guaranteed the Sales Manager position in due course, there are clear findings of fact by the Tribunal that prior to her maternity leave the Applicant had been left in no doubt that she would succeed Mr smith. After her return from maternity leave it was equally clear that she was out of the running, and that Mr Tindale was now the heir apparent. On these findings we are satisfied that, as a question of fact, the Tribunal were entitled to conclude that Korean were in breach of the implied term and that breach was fundamental or repudiatory.Next, it is submitted that the Tribunal were wrong in law and reached a perverse conclusion in finding that the Appellant had not waived the breach by delaying until 19 October before tendering her resignation. Again, we reject that submission.In our view, the Tribunal carefully considered the course of events between the 18 August and 19 October 1997. Initially, following the meeting with Mr Cho, the Applicant sought a meeting with Mr Hahm, the Regional Manager. That finally took place on 19 September. On 8 October she went off sick, never to return to work prior to her resignation. As a matter of fact and degree we hold that the Tribunal were entitled to conclude that the Applicant had not affirmed the contract in these circumstances.Accordingly we reject the employers appeal against the finding of unfair constructive dismissal.

Discrimination

There is no specific challenge to the finding of less favourable treatment, that is discrimination under Section 1(1)(a) of the 1975 Act. It is argued first that section 6(2)(a) cannot apply. That submission depends, in our judgment, on a view of the factual position as found by the Employment Tribunal which is not entirely correct. It was not a case of a man being considered in competition with the Applicant for the Sales Manager post when it became vacant. She was, the Tribunal found, out of the running, Mr Tindale was next in line. Her opportunity for promotion was lost because she had been absent on maternity leave.Further, we are satisfied that the Tribunal was entitled to conclude that it was the act of discrimination which led to the Applicant's constructive dismissal for the purposes of Section 6(2)(b) of the Act.In these circumstances we shall dismiss the First Appeal.

Second Appeal

In considering the appropriate level of compensation for the unfair dismissal and sex discrimination as found, avoiding any double recovery, the Tribunal in their remedies decision, made awards for injury to feelings under the 1975 Act and the basic award under the Employment Rights Act , together with a sum for loss of statutory rights. However, they made no award for loss of earnings under either statute. It is that aspect in respect of which the second appeal is brought by the Applicant.The facts material to the issue of loss of earnings as found by the Tribunal were these. Prior to giving notice on 19 October 1997, the Applicant had made enquiries of four airlines about prospective jobs. There were none available. She did not pursue further lines of enquiry within the airline industry, nor did she seek agency work. Instead, she applied for and was accepted on a Design Course at the Berkshire School of Art & Design. She began that course in December 1997 and at the time of the remedies hearing on 16 July 1998 told the Tribunal that she enjoyed the course and would not take an airline job if it turned up. She had therefore effectively taken herself out of the labour market.The evidence from Korean, through Mr Cho, was that she would have been able to find an airline job in about 6 months after leaving their employment on 28 November 1997. The Tribunal thought that was a reasonable estimate. Further, the Tribunal found that there were agency jobs available, although paying less than the airlines with the perks.The Tribunal accepted, based on their reading of the Scottish EAT decision in Simrad Ltd v Scott [1997] IRLR 147, that by opting to embark on the design course she had broken the chain of causation and was not entitled to recover any loss of earnings.In our view that conclusion, and the proper application of the principle in Simrad , and further the approach of this Tribunal in Mullarkey v Up The Creek Ltd , (unreported EAT/263/95) to which the Tribunal below referred, requires further full argument at an inter parte's hearing. We shall say no more about the merits of that argument, merely direct that the second appeal shall proceed to a full hearing. The case should be listed for half a day, Category C. No further directions are required, save for exchange of skeleton arguments, copies to be lodged with the EAT, not less than 14 days before the date fixed for the full appeal hearing.