MR NORMAN ROSSITER v PENGRAGON PLC [2001] UKEAT 243_00_0902

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 243_00_0902Case No Appeal No. EAT/243/00Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR NORMAN ROSSITERAPPELLANTPENGRAGON PLCRESPONDENT
Before
His Honour Judge A WilkieDate 9 February 2001
[1]APPEARANCES For the Appellant MR ANTHONY KORN (of Counsel) Messrs Willmett & Co Solicitors 18a Bridge Street Maidenhead Berkshire SL6 8LS For the Respondents MR GUY PRITCHARD (of Counsel) Retail Motor Industry Federation Ltd 201 Great Portland Street London W1N 6AB JUDGE WILKIE QC : This is an appeal by Mr Rossiter against the decision of the Employment Tribunal sitting at Reading which dismissed the appellant's claim for unfair dismissal against his erstwhile employer, Pendragon plc. The decision is in two parts. The tribunal ruled that:
"The applicant was not constructively dismissed under Regulation 5(5) of the Transfer of Undertaking Regulations 1981 and the question of automatically unfair dismissal under Regulation 8(1) does not arise."
The second part of the decision was that:
"The applicant was not constructively dismissed under Section 95(1)(c) of the Employment Rights Act 1996 but resigned."
[2]In this judgment we deal with each of these findings separately. We first consider the finding in respect of the Transfer of Undertaking Regulations.[3]It was common ground that in October 1997 Lex Ford was acquired by the Pendragon Motor Group PLC so that the Transfer of Undertaking (Protection of Employment) Regulations 1981 applied to the acquisition. It was also common ground that on 15th February 1999 the appellant handed the respondent a letter of resignation on the grounds that his position in the company had become untenable. He claimed that he had been constructively dismissed by the respondent, and that this was an automatically unfair dismissal because, he claimed, the termination of his employment was by reason of a substantial change that had been made in his working conditions to his detriment. Accordingly he had been constructively dismissed. Furthermore, it was said that the dismissal was by reason of the transfer or a reason connected with it so as to make his dismissal automatically unfair.[4]The nub of this part of the appeal is paragraph 23 of the tribunal's decision which, in so far as it is relevant, reads as follows:
"Neither Regulation 5(5) or Section 95(1)(c) standing on their own, give an employee rights other than to terminate his contract; to establish remedial rights Regulation 5(5) must be read in conjunction with Regulation 8(1) that states that any dismissal connected with the transfer is unfair … Section 95(1) which states that an employee is dismissed when a situation under subsection (c) arises and under subsection (c) an employee who is entitled to terminate his contract in order to claim unfair dismissal can only terminate if his employer has committed a fundamental breach of contract. It follows that the right to claim constructive dismissal can only arise if there has been a dismissal following upon breaches of contract and it is in the Tribunal's view that if there have been no breaches of contract then no cause of action can arise in respect of constructive dismissal either under the Employment Rights Act or automatically unfair dismissal under the Regulations. Whilst the test to be applied are different in respect of unfair dismissal and dismissal under the Regulations, it must be a condition precedent in both cases that there should be a dismissal. …"
[5]The appellant argues that the tribunal is wrong as a matter of law and authority in concluding that it is necessary for an applicant to establish constructive dismissal, in the context of a transfer of an undertaking, for him to show that there has been fundamental breach of contract by the respondent. The appellant argues that whilst that is the test established by the authorities where the claim is for constructive dismissal not in that context, the combined effect of the Directive, the Regulations, the statute and decided authority is that it is sufficient for there to be a constructive dismissal in the context of a transfer of an undertaking for there to have been a substantial change in his working conditions to his detriment regardless of whether that involved a fundamental breach of contract.[6]The respondent, on the contrary, argues that the proper construction of the Regulations and the statute permit of only one possible reading. That is that the rights of an employee to resign and claim constructive dismissal in the context of the transfer of an undertaking are coextensive with the rights of an employee to claim constructive dismissal where the context is otherwise. As it is established by authority that, in the absence of a transfer of an undertaking, the right to claim constructive dismissal is dependent upon there being a fundamental breach of contract by the employer then it must follow that an employee claiming constructive dismissal arising out of the transfer of an undertaking must similarly establish a fundamental breach of contract by his employer. In so far as there is authority which suggests the contrary, the respondent argues that such authority is by way of obiter and is wrong and, in so far as it is represented by a decision of the this tribunal on the point, that decision is plainly wrong and we should express our disagreement with it in accordance with the well established principles governing such matters.[7]The Employment Rights Act 1996 by section 95(1)(c) provides:
"(1) For the purposes of this Part an employee is dismissed by his employer if (and, subject to subsection (2) and section 96, only if)- … (c) the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct."
If an employee is dismissed then he has the right under section 94 not to be unfairly dismissed and section 98 governs the question whether the dismissal is fair or unfair by reference to the reason for dismissal and whether the employer acted reasonably or unreasonably in treating that reason as sufficient to dismiss.[8]There are special provisions where the context is the transfer of an undertaking. The European Council Directive 77/187/EEC concerns the approximation of the laws of Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, business or parts of businesses. One of the paragraphs in the preamble to that Directive provides:
"Whereas it is necessary to provide for the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded."
Section II of the Directive is headed "Safeguarding of Employees' Rights". Article 4.2 of the Directive provides as follows:
"If the contract of employment or the employment relationship is terminated because the transfer within the meaning of Article 1(1) involves a substantial change in working conditions to the detriment of the employee, the employer shall be regarded as having been responsible for termination of the contract of employment or of the employment relationship."
[9]A European Council Directive does not have direct effect in English law unless one of the parties is an emanation of the State. Neither of the contending parties is an emanation of the state. However, under Article 8, Member States were under an obligation to bring into force the laws, regulations and administrative provisions needed to comply with this Directive within two years of its notification. The TUPE Regulations of 1981 were the means by which the United Kingdom Government gave effect to that obligation under the Directive. Paragraph 5 of those Regulations provides, in so far as is relevant, as follows:
"(1) Except where objection is made under paragraph (4A) below, a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee. (2) Without prejudice to paragraph (1) above, but subject to paragraph (4A) below, on the completion of a relevant transfer- (a) all the transferor's rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this Regulation to the transferee; and (b) anything done before the transfer is completed by or in relation to the transferor in respect of that contract or a person employed in that undertaking or part shall be deemed to have been done by or in relation to the transferee. … (5) Paragraphs (1) and (4A) above are without prejudice to any right of an employee arising apart from these Regulations to terminate his contract of employment without notice if a substantial change is made is his working conditions to his detriment; but no such right shall arise by reason only that, under that paragraph, the identity of his employer changes unless the employee shows that, in all the circumstances, the change is a significant change and is to his detriment."
Paragraph 8(1) of the Regulations provides that where any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of what is now Part X of the 1996 Act as unfairly dismissed if the transfer or a reason connected with it is the reason or principal reason for his dismissal.[10]It is trite law that in circumstances other than that of a transfer of an undertaking a claim for constructive dismissal can only succeed if the applicant shows that the employer has committed a fundamental or repudiatory breach of contract (see Western Excavating (ECC) Ltd v Sharp [1978] QB 761 .[11]Mr Pritchard for the respondent points to the fact that in the Directive the preamble speaks of the need to ensure that employees' rights are safeguarded. Further the opening words of paragraph 5(5) of the TUPE Regulations speak of the Regulations as being without prejudice to any right of employee arising apart from these Regulations to terminate his contract of employment without notice. On the basis of these two passages he argues that the Regulations do not confer any right to claim constructive dismissal but merely preserve existing rights to do so. He, therefore, argues that the entitlement of an employee to resign and claim constructive dismissal in the context of a transfer of an undertaking can be no greater in extent than the right of an employee to do so where there is no such context. He goes on to conclude, therefore, that as the employee in the non-transfer of undertaking context has to show a breach of contract then the employee in the transfer of undertaking context can be no better off than that and therefore has to satisfy the same requirement.[12]Mr Korn for the appellant puts his case on two bases. The first is that there is, indeed, a free-standing right to claim unfair dismissal based on the Regulations which is separate and distinct from the normal right to claim unfair dismissal under domestic legislation. His alternative submission is that even if there is no such free-standing right the domestic right must be construed purposively so as to give effect to the Directive. The Directive requires the Member State to legislate so as to fix the employer with liability where termination of the contract or the employment relationship is terminated because the transfer has involved a substantial change in working conditions to the detriment of the employee. He argues that because this is not couched in purely contractual terms the purpose of the Directive is plainly not limited to fixing liability in the employer only where there has been a breach of contract. He therefore argues that domestic legislation should be and can be construed purposively so as to give effect to the Directive.[13]We have been referred to a number of authorities on this point.[14]Mr Korn reminds us that the words of paragraph 5(2) of the Regulations are wide and are not to be construed as limited to contractual rights, powers, duties or liabilities. They apply in addition to the rights, powers and liabilities which arise in connection with the contract (see DJM International Ltd v Nicholas [1996] IRLR 76 , Bernadone v Pall Mall Services Group and others [2000] IRLR 487 ).[15]He also reminded us that the European Court of Justice has approached the application of Article 4(2) of the Directive without distinguishing whether the matters complained of amounted to a breach of contract. He suggests that this supports his proposition that in the context of a transfer of undertakings the question of breach of contract is an irrelevant one, being replaced only with the question whether there has been a substantial change in working conditions within the meaning of Article 4(2). He has referred us to the case of Merckx and another v Ford Motor Co Belgium SA [1997] ICR 352 . It is right to say that that case concerned the entitlement of an employee to object to a transfer. In the concluding paragraph of the judgment, however, the European Court of Justice in giving its decision goes out of its way to say that where the contract of employment or the employment relationship is terminated on account of a change in the level of remuneration awarded to the employee (without having considered whether or not that was a breach of contract) Article 4(2) of the Directive requires the Member States to provide that the employer is to be regarded as having been responsible for the termination.[16]We were referred by both counsel to the case of University of Oxford v Humphreys and Associated Examining Board [2000] IRLR 183 . In that case Mr Humphreys was employed by Oxford University. His contract was tenured. In 1995 the University announced its intention to transfer that part of the undertaking within which he was employed to the Associated Examining Board. Mr Humphreys prior to the transfer exercised his right under Regulation 5(4A) of the Regulations to object to being employed by AEB on the grounds that the transfer would involve a significant change in his working conditions to his detriment as a result of the change in identity of his employer. Once the transfer took place Mr Humphreys brought an action against the University claiming damages for wrongful dismissal on the grounds that the proposed transfer constituted a constructive dismissal. He relied upon Regulation 5(5). The Court of Appeal decided that where a transfer of an undertaking would involve a substantial and detrimental change in an employee's terms and conditions of employment within the meaning of Regulation 5(5) the employee is entitled to treat his contract as terminated by the employer and to seek compensation. The Court of Appeal gave Regulation 5(5) a purposive construction and read the words "without prejudice to any right of an employee arising apart from these Regulations" as having the effect of overriding the provisions of Regulation 5(4B) which provides that the termination of a contract of employment with the transferor on the occasion of the employee objecting the transfer shall not be treated, for any purpose, as a dismissal by the transferor. The Court of Appeal stated that its construction of Regulation 5(5) was in accordance with the purpose of Article 4(2) of the Directive as interpreted in the Merckx case, that if the terms of engagement with the transferee would be significantly different from those obtained with the transferor and the difference would be detrimental to the employee, then the employee was to have the option of treating his employment as terminated and obtaining compensation. We were referred to certain passages in the judgments in Potter LJ's judgment at paragraph 31, he says, inter alia :
"paragraph 5(5) dealt with Article 4 by preserving the rights of an employee arising apart from the Regulation (i.e. all existing common law and statutory rights) to terminate his contract of employment without notice if a substantial change was made in his working conditions to his detriment (i.e. constructive dismissal)" and at paragraph 40: "
The only remaining question is whether the reference in para.(5) to the employee's right to terminate 'if a substantial change is made in his working conditions to his detriment' precludes a remedy by an employee who (like the claimant in this case) treats himself as constructively dismissed because the proposed transfer would necessarily result in such a detrimental change. In my view it does not. Whereas the language may be more appropriate to a case where the employee does not follow the objection route, but waits until after transfer to treat himself as dismissed, it does not seem to me limited to that position. If a substantial change would inevitably result from transfer (as is conceded here to be the case), then, as it seems to me, the moment of transfer itself effects the change. Such a construction is any event necessary in my opinion in order to give full effect to Article 4(2) of the Directive as elucidated in Merckx ." In his judgment at paragraph 60 Moore-Bick J reminded himself of the requirement to construe domestic legislation in a purposive manner so far as possible to give effect to the Directive as it has been construed by the European Court. He reminded himself of the decision of the House of Lords in Litster v Forth Dry Dock and Engineering Co Ltd [1989] IRLR 161 on how far the court may properly go to achieve that end. We were reminded in the same context of the similar principle in enunciated in Webb v EMO Air Cargo (UK) Ltd [1993] ICR 175 at page 186D-G.[17]We were also reminded of the case of Berriman v Delabole Slate Ltd [1985] ICR 546 . That was a case in which the transferee offered a transferred employee a reduced rate in pay in order to put him on the same pay basis as that of their existing employees. He refused the offer and left employment and claimed unfair dismissal. He was held to have been constructively dismissed and the issue was whether the dismissal fell within Regulation 8(1) of the TUPE Regulations or within Regulation 8(2) of the same Regulations (which provide that if the reason was for an economic, technical or organisational reason entailing changes of the workforce then the question fell to be decided in the normal way and not by virtue of a statutory deeming of the dismissal to be unfair). Thus the question whether the reduction in pay was contractual or otherwise and whether that affected the right to claim constructive dismissal was not in issue in that case. We were referred, however, to an obiter dictum by Browne-Wilkinson LJ as he then was at page 549G in which he says as follows:
"The combined effect of these Regulations and the Act of 1978 is as follows: on the transfer of a business, the employees of the transferor become the employees of the transferee. An employee has the right to treat himself as constructively dismissed by any detrimental change in his working conditions (Regulation 5(5) but the question of whether his dismissal is fair is dealt with by Regulation 8."
[18]We were referred to two unreported decisions of the Employment Appeal Tribunal which seem to be much more directly in point than any of these other authorities. The first in time was the case of Servicepoint Ltd v(1) Mr Clynes(2) Wigfalls Plc . That was decided on 14th March 1989 by a panel presided over by the then President Wood J. That was a case in which the applicant claimed constructive dismissal arising out of what the tribunal concluded was an attempt to alter his terms and conditions of employment which constituted a repudiation of his terms and conditions of employment at common law. In essence this case was argued on the same basis as Berriman namely whether the dismissal fell within Regulation 8(1) or Regulation 8(2). The EAT concluded that the tribunal had correctly decided that it fell within Regulation 8(2). In its decision, however, the Industrial Tribunal had directed itself on the basis that in addition to constituting a repudiation of the terms and conditions of employment at common law, the conduct of the employer also constituted a substantial change in his working conditions to his detriment in accordance with Regulation 5(5). The EAT commented on this dual approach of the Industrial Tribunal. They said as follows at page 12D-G of the transcript:
"… But it is interesting to note that this Tribunal, in giving its reasons, referred to constructive dismissal, but also referred directly to the provisions of Regulation 5(5) of the 1981 Regulations. It was not necessary for either the Decision in Berriman or the Decision in this case to equate the wording in Regulation 5(5) with constructive dismissal. It may be that the Regulations should be read as a whole and that where the Regulations have clear wording, then they should be applied, without necessary reference to the principles of constructive dismissal. We are supported in the clear application of the Regulations without being inhibited by the provisions of 1978 Act, by a very recent Decision of their Lordships in House of Lords in the case of Litster …"
From a reading of the speeches in Litster it seems to us quite clear that the clear intent of the Directive and thereafter of the Regulations must be given full force.[19]The second unreported decision to which we were referred is the case of Dabell v Nofotec Co Ltd . That was decided on 20th February 1992 by a panel of the EAT presided over Pill J as he then was. The applicant's case was put both on the basis of unfair dismissal under the then Employment Protection (Consolidation) Act 1978 and on the basis of the 1981 Regulations. The tribunal had dismissed his application. His first submission on appeal was that the tribunal had failed to distinguish between these two issues which depend upon different considerations. Reference was made to part of the passage in Servicepoint Ltd v VE Clynes to which we have referred above. The second submission was that the tribunal had, in any event, failed properly to apply the test for constructive dismissal. That second submission was not accepted. The EAT considered that the tribunal were aware of the correct constructive dismissal test and applied it referring, as it did, to a series of "breaches of contract". The EAT returned to the central point made by Mr McMullen on behalf on behalf of the appellant namely the confusion he alleged in the tribunal's consideration respectively of unfair dismissal and of dismissal under the Regulations. Counsel for the respondent to the appeal appears to have accepted that the tribunal was correct to consider that there were two separate approaches in respect of constructive dismissal and dismissal pursuant to the Regulations. He is recorded as pointing out that the tribunal in two places asked themselves two separate questions namely "was there a fundamental breach" and "was there a significant change to his detriment within the meaning of Regulation 5". The EAT go on at page 9H to 10C as follows:
"That might be sufficient support for finding that they did indeed apply separate tests to the two issues. However, it is difficult to understand why, in their final paragraph, paragraph 12, the Tribunal stated: "
In all the circumstances … the Tribunal unanimously find that there was not a fundamental breach by this employer which entitled this applicant to resign on the 23 September 1985." That suggests that they had misunderstood the test to be applied under the regulations.

(j) having set out the statutory provisions they say:

"Finally we cannot overlook that in these cases it is the employee who opens the case and seeks to persuade the Tribunal of the breach which led to his resignation."
That too might indicate that they have not applied the tests which the regulations require." The EAT upheld the appeal, inter alia , on the basis of these misdirections.[20]Mr Korn argues, and Mr Pritchard accepts, that the Dabell v Nofotech decision is one in which the ratio of the EAT's decision is that there are, indeed, separate rights to resign and claim unfair dismissal which arise respectively from the domestic legislation and from the Regulations. Under the domestic legislation the "breach of contract" requirement established by Western Excavating (ECC) Ltd v Sharp holds sway. Where, however, the claim is in the context of a transfer of an undertaking there is a right to claim under the Regulations giving effect, on a purposive construction, to the Directive and that this is not dependent upon establishing a breach of contract but, rather, depends solely on whether there has been a substantial change in his working conditions to his detriment regardless of whether that involves a breach of contract.[21]If that be right then plainly the tribunal in the present case erred in its approach as enunciated in paragraph 23 of its decision in addressing solely the question whether the changes complained of constituted breaches of contract either singularly or cumulatively.[22]Mr Korn and Mr Pritchard did cite to us a number of other authorities which were very much peripheral to the main issue with which we have to deal and we mean no discourtesy to either of them by omitting to mention them specifically.[23]Mr Pritchard reminded us of the status of decisions of the Employment Appeal Tribunal. In particular whilst we are not bound by previous decisions of the EAT such decisions will only be departed from in exceptional circumstances or where there are previous inconsistent decisions. Where exceptional circumstances exist and a previous decision is considered to be plainly wrong the approach recently taken by the EAT is to direct that the erroneous decision should no longer be followed by the Employment Tribunals rather than to perpetuate the uncertainty caused by two inconsistent decisions of equal standing.[24]In our judgment paragraph 5(5) of the Regulations does not, even when read in conjunction with paragraph 8(1) of the Regulations, give rise to any new free-standing right to claim unfair dismissal on the grounds of constructive dismissal. On the contrary paragraph 5(5) explicitly acts by preserving existing rights which arise otherwise than under the Regulations. However we respectfully agree with Potter LJ in University of Oxford v Humphreys that the rights preserved are all existing common law and statutory rights to terminate his contract of employment without notice in circumstances where a substantial change is made in the employee's working conditions to his detriment. We agree with Potter LJ's characterisation of those rights as being a right to claim "constructive dismissal".[25]The right to resign and claim to have been constructively dismissed is couched in the Employment Rights Act 1996 section 95(1)(c) in general terms that is to say where the employee terminates the contract in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct.[26]The "breach of contract" test is not a statutory one but arises from the court's construction of that statute in a purely domestic context.[27]Where an alleged "constructive dismissal" arises in the context of a transfer of an undertaking the context is not purely domestic but arises from the Directive of the European Council and the concomitant obligation to give effect to the Directive in English law. The decision of the European Court of Justice in Merckx , in our judgment, is implicitly on the basis that Article 4(2) of the Directive is concerned to place responsibility for termination of a contract of employment or employment relationship on the employer if a transfer of undertakings involves a substantial change in working conditions to the detriment of the employee and that this is so regardless of whether that change constitutes a breach of contract. In recognition of this and in compliance with the requirement of the Directive Regulation 5(5) is couched in similar terms referring to a substantial change in working conditions to his detriment. In our judgment that Regulation, together section 95(1)(c), is to be subject to a purposive construction so as to give effect if at all possible to the Directive. The clear opening words of Regulation 5(5) make it clear that the right has to arise otherwise than under the Regulations. That right does arise if at all under section 95(1)(c). Accordingly it is that section which has to be construed in a purposive way so as to give effect if at all possible to the Directive. In our judgment the wording of section 95(1)(c) is sufficiently wide to bear a construction which does not require the employer's actions complained of to constitute a breach of contract. In our judgment that section by its drafting is apt to be construed so as to enable anyone who suffers a substantial change in his working conditions to his detriment to resign and claim constructive dismissal under section 95(1)(c). The fact that, in a purely domestic context, section 95(1)(c) is given a different construction does not, in our judgment, preclude that section being given a wider purposive construction having regard to the duty so to construe it to give effect to the Directive where the context so requires.[28]Were we in any doubt as to the correctness of this conclusion we are comforted by the way in which Browne-Wilkinson LJ as he then was expressed himself in Berriman when he was describing the combined effect of the Regulations and the then Act of 1978. It therefore follows that, in our judgment, the obiter dictum of the EAT in the Servicepoint case and the decision of the EAT in Dabell were correct in law in so far as they identified two ways in which constructive dismissal under section 95 may be construed depending, respectively, upon whether the right claimed was the purely domestic one or the one which has a special meaning by virtue of the operation of the Directive and the Regulations giving effect to it.[29]It therefore follows that, in our judgment, Mr Korn's alternative submission is correct, namely that in the context of a transfer of undertakings section 95(1)(c) has to be construed so as to give effect to the Directive as incorporated into English law by the Regulations, and that this calls for a different construction from that which applies in the purely domestic context. In particular it does not require the tribunal to find a breach of contract in order to give rise to the entitlement to resign and claim constructive dismissal under 1996 Act. It therefore follows that in our judgment the Employment Tribunal in this case misdirected itself in paragraph 23 of its decision and, accordingly, on this issue the appeal must succeed. 9th February 2001[30]We now consider the appeal against the finding that there was no constructive dismissal in the purely domestic context of a claim for unfair dismissal. The claim for constructive dismissal was put on the basis a number of particular alleged breaches of contract as well as on the cumulative basis of a breach of the implied term of trust and confidence in respect of which the specific alleged breaches and a number of other incidents were prayed in aid.[31]Mr Korn in his very helpful submissions to us today has identified five headings under which he says there were substantive errors made by this Employment Tribunal on this issue and a sixth procedural error which he says he has identified.[32]The first issue concerns the cumulative effect of the various incidents. The tribunal dealt with this way of putting the matter at paragraphs 35 to 38 of their decision. In paragraph 35 they cite, and Mr Korn says cite accurately, the relevant passages in the judgment of the Court of Appeal in Lewis v Motorworld Garages Ltd [1985] IRLR 465 . In paragraph 36 the tribunal purport to apply the test set out in Lewis . Mr Korn argues that there are two manifest errors in the approach they have taken as evidence in paragraph 36. The first is that he says that the tribunal have failed to take into account certain earlier actions which were said by the applicant to have been breaches of contract in their own right but which the tribunal has in an earlier part of their decision concluded did not amount to breaches of contract. He says that the tribunal have only had regard to certain final actions which did not on any view amount to a breach of contract and have failed to consider all the matters of complaint cumulatively, whether individually amounting to breaches of contract or not. In so doing, he is putting a particular construction on the following sentence in the decision:
"36. … In the present case, the Tribunal find that the earlier actions by the respondent did not amount to breaches of contract and the final actions did not have the cumulative effect of giving the applicant grounds to terminate his employment. …"
In our judgment, whilst this sentence could have perhaps been even more clearly expressed that it was, we do not find that it contains any manifestly erroneous error of law in approach. On the contrary, we believe that it correctly applies the test which had been set out in the preceding paragraph and that to construe it otherwise would effectively be to comb through the decision with a fine toothcomb, an approach which it has frequently been said is not appropriate in an appellate jurisdiction considering Employment Tribunal decisions. We are of the view, therefore, that there is no error of law manifest in that sentence. The second way of putting it is that Mr Korn says there is a further error of law evidenced by the last sentence in paragraph 36, which reads as follows:
"Further, in the Lewis case the employee was the only employee affected by the change and in the present case, all the Sales Executives were subject to the changes which the applicant complains about."
Mr Korn says the error of the tribunal was taking into account the reactions of fellow-employees when considering the question of an individual's complaint of breach of the fundamental term of trust and confidence. He points out, rightly, that the reactions of fellow-employees will normally only be appropriate on the issue of the reasonableness of the dismissal once a constructive dismissal has been established. Were that what the sentence in paragraph 36 truly meant, then there would be something in this ground of appeal. However, we are perfectly satisfied that so to read this sentence would be to distort it. On the contrary, it seems to us that all that this sentence is recording is that on the evidence presented to the tribunal it did not appear to them that the applicant was being singled out for treatment. It is trite law that the singling out of an employee for particular treatment in the form of victimisation can be a relevant matter in considering whether there has been a breach of the implied term. The test the tribunal has to apply is the objective one of the response of a reasonable employee to the employer's conduct. Therefore, in considering the totality of the employer's conduct the question whether what is complained of was an act aimed at an individual or one applied across the board is relevant and not one which it would be an error of law to consider. Accordingly, we conclude that there is no error of law on this particular point.[33]The second point concerns average commission. The tribunal deal with this at paragraph 26 of their decision. Their conclusion was that there was no breach of contract when the employer unilaterally decided no longer to pay holiday payment on the basis of average commission earnings during the preceding 12 months. Mr Korn has correctly pointed out that the way in which this tribunal has expressed themselves is less than satisfactory. On the face of it, it seems to say that the scheme was non-contractual in the sense that it was not referred to in his contract of employment either with Lex Ford or with the respondents. He has drawn our attention to the primary documentation. That documentation makes it clear that the salary and commission scheme was indeed a contractual one. The provision providing for payment for holidays, inter alia , on the basis of an average payment for commission earnings over the previous 12 months is contained within that scheme and is, therefore, to that extent a contractual term. So too, however, is the term under which the Company reserves the right to amend or withdraw this scheme at any time without any notice. Thus, whilst the decision of the tribunal is less than satisfactory in appearing to say that the scheme was not contractual when it manifestly is, in the result, it was not in error because it is clear from the express terms of the scheme that the employer, did have a contractual entitlement to amend the scheme if it so wished, including withdrawing the arrangement by which holiday pay was calculated by reference to average commission earnings. Therefore, in our judgment, there is no error of law in the tribunal's conclusion that the withdrawal of that arrangement did not amount to a breach of contract.[34]Mr Korn's next argument on this part of the case concerns the alteration in the rate of commission payable to the applicant. His complaint as far as this concerned is not on the basis of the correctness of the underlying decision. It is clear that the contract of employment, insofar as it incorporated the commission scheme, did give the employer the right, unilaterally, to vary the terms of the scheme in the way that happened here. Mr Korn's point, however, is that in the course of evidence, though not at any earlier stage, Mr Rossiter had asserted that the contractual effect of the scheme had been varied in his particular case because of a promise he had been given by the previous owners of the business, that his rate of commission would continue and would be "red circled". The implication of this would be that it overrode any contractual entitlement the employer had to vary the terms as to rates of commission. This was not a complaint which was articulated in the Employment Tribunal application form nor was it articulated in the letter before action carefully drafted by solicitors acting for the applicant, nor, apparently, was it contained in the written evidence-in-chief of the applicant. Apparently it arose in the course of oral evidence. Mr Korn's complaint about the decision of this tribunal is that he says that the tribunal failed to make any finding of fact in relation to this central issue. He has shown us his skeleton argument before the tribunal which makes it clear that this was an issue which he was pursuing there. He reminds us that if a tribunal remains totally silent on a matter of importance in respect of a case, then that plainly amounts to an error of law. This much, if authority were needed, is apparent from the unreported decision of the Employment Appeal Tribunal in Miss Brannon v Wilkinson Hardware Stores Ltd EAT/712/98 . The tribunal decision on this issue is contained at paragraph 25. They say this:
"… It is clear that whilst the applicant, quite understandably, was unhappy about this change, he nevertheless accepted it and when applying for his monthly commission, he submitted claims based on the new structure and never raised the matter formally until his solicitors wrote to the respondents; had he held a genuine belief that the respondents were not entitled to make the change, we would have expected him to the grievance procedure in a formal way but he never did and we conclude he knew that he had no permanent rights to the high commission paid by Lex Ford …"
In our judgment, whilst it is somewhat elliptical, it is clear that in this passage the tribunal were addressing themselves to the question whether there was some specific permanent entitlement to be paid commission at this rate and they were rejecting the contention which the applicant had made to that effect. Plainly it would have been better had they specifically addressed themselves to the assertion that was made in the late stage at which it was made and contrasted it with the documentation in the case, but we think that it overstates the matter considerably to say that they have either ignored it or have failed to manifest from their decision that they concluded that he well knew that he was not entitled to this rate of commission on a permanent basis. Therefore, in our judgment, there is nothing in this point of appeal.[35]The fourth matter which Mr Korn has advanced today, concerns the assertion that there was in the way in which the respondent introduced these various changes a pattern of behaviour of want of consultation or even, to an extent, discussion, which constituted a breach of the implied term of trust and confidence. He acknowledges that the tribunal has taken the respondent to task on this issue. In particular at paragraph 32 they say:
"… There were various changes over a period of time and the employers could have implemented them in a more tactful way but at the end of the day, the result would have been the same."
Furthermore, at paragraph 37 the tribunal say that though "satisfied that even if in some respects they did not handle the matter very well their conduct was not seriously unreasonable." and in paragraph 38 they say:
"In the opinion of the Tribunal viewed objectively, the employers could have dealt with the various changes in a manner more consistent with their own "values" but their failure to do so did not impact on the applicant in such a way that viewed objectively he could properly conclude that they were repudiating the contract. …"
Mr Korn, frankly, concedes that this is a challenge on the basis of perversity - that is to say that no reasonable tribunal properly directing itself could have concluded other than that this pattern of behaviour did constitute a repudiatory breach of contract on the basis of breach of the implied term of trust and confidence. He has cited the colloquial, but well known, test we should apply namely whether our reaction to the tribunal's decision in this respect, is to the effect that "my goodness was not there something wrong with that". Well we have considered that test and we have considered the material before us and we concluded that this was not a conclusion to which this tribunal came perversely. Plainly they were aware of the shortcomings; they did apply their minds to the question whether those shortcomings were sufficient to constitute repudiatory breach of contract and they concluded in their judgment, as the industrial jury, that it did not amount to such serious conduct as to satisfy that test. In our view, that was a view to which they were entitled to come and not one which was, on any view, a perverse one. Therefore, we do not accept that this ground establishes, on behalf of Mr Korn's client, a good basis for upholding his appeal.[36]Mr Korn has raised two other substantive issues. The first concerns the question of the change in the hours of work. The tribunal dealt with this at paragraph 27 of the decision. Mr Korn makes three criticisms of this paragraph. The first is that he says that they have wilfully ignored the operation of the Workings Hours Directive in a case where the applicant through his solicitors was asserting that the hours that he worked broke the terms of the Regulations giving effect to that Directive. There was no claim before the tribunal under that legislation. In our judgment the sentence relied on by Mr Korn to support this proposition does no more than say that such a claim not being made, this tribunal did not consider that claim. In our judgment there is nothing wrong with that and any other construction is a distorted construction and amounts to nit picking. The second complaint Mr Korn makes of this particular paragraph is the assertion by the tribunal that Mr Rossiter never complained about the hours of work. It is right that he did not complain formally about the hours of work before his solicitors raised the matter very shortly before he resigned his employment. The essence of the complaint made in that letter before action was the way in which the terms and conditions were changed so far as hours of work were concerned as well as the excessive hours that were being worked. It seems to us that the tribunal were perfectly entitled to take into account the absence of any complaint made by Mr Rossiter in determining whether his complaints passed muster in terms either of a specific alleged breach of contract or cumulatively and there is no manifest error in their approach. Finally, Mr Korn effectively says that this was perverse finding by the tribunal when they concluded that the hours worked were scarcely consistent with unreasonable hours particularly in the context of this particular trade. We disagree, accordingly, in our view, there is no point in Mr Korn's criticisms of paragraph 27, which can support a successful appeal.[37]Mr Korn's final substantive point concerns paragraph 28 in which the tribunal deal with the assertion that the applicant was subject to demotion and reduction in his responsibilities to the extent that there was a constructive dismissal. Once again Mr Korn criticises the tribunal's decision for failing to deal with specific points such as the areas of responsibility that he had, the changes that took place and, accordingly, the extent to which the reduction in those responsibilities did or did not amount to a fundamental breach of contract. This paragraph of the decision states the essence of the complaint, namely that there was a clear loss of status, which amounted to demotion, and there was further gradual erosion of responsibilities. The tribunal go on to speak of the changes in job titles and the various layers of management that were introduced. They conclude that the changes were largely peripheral and that none of them resulted in the applicant's demotion. They further concluded that his "whole responsibilities for selling cars remained at the same basic salary level." In our judgment, it is clear that what they are saying is that neither of the bases for the complaint is made out. It is right to say that they do not go into a blow by blow account of the way in which they reach that conclusion, but we do not think that it is incumbent on the tribunal to deal with every detail in respect of a complaint of constructive dismissal when what is involved is a whole range of incidents over a significant period of time. It is sufficient for the satisfaction of the requirement that they give reasons for their decision; that the tribunal identifies the basis of complaint and indicates the way in which they either accept or do not accept complaint. Whilst we agree that this paragraph is on the short side and it might have been gone into in greater detail, we are not satisfied that the inadequacies are such as to make this a ground of appeal which we should uphold.[38]Finally, the procedural point. It is right to say that in the latter part of their decision, and in particular at paragraphs 37 and 38, this tribunal direct themselves to a specific case: Brown v Merchant Ferries Ltd [1998] IRLR 682 which is a Northern Ireland Court of Appeal case. They refer themselves to the way in which the Court of Appeal in Northern Ireland in that case dealt with the test to be applied in cases of constructive dismissal. Mr Korn makes no criticism of the way in which they have recorded the gist of that decision. His complaint is that he and Mr Pritchard should have been given the opportunity to have made submissions, possibly in writing, on the way in which that particular case would or would not have supported their respective submissions. As Mr Pritchard points out, although the test being enunciated in that case is the identical and familiar test, the way in which they put it is, in a sense, more friendly to applicants than the more traditional way of expressing it. In particular, it explains that there is a role for the question of an employer's unreasonableness, it being an evidential matter. Where an employer's conduct is seriously unreasonable that may provide sufficient evidence that there has been a breach of contract. On the face of it, as we have indicated, that is an approach which opens up avenues of argument for applicants, which otherwise they might be unaware of. No doubt Mr Korn, as he has indicated to us, would have wished to address the tribunal on the basis that the various incidents complained of did demonstrate a seriously unreasonable manner, habit or pattern of behaviour so as to evidence a breach of contract. However, in our judgment, he would not effectively have been doing any other than reminding the tribunal of that which they had already reminded themselves, that unreasonableness does have a part to play. He has had before us the full opportunity to address these argument. We have been unpersuaded by him that there is anything erroneous in the approach of this tribunal on any of these specific or cumulative incidents. Accordingly, we are of the view that had the opportunity been given Mr Korn would have been no more successful in that avenue of argument than he was before the tribunal or has been before us on this particular issue. Therefore, whilst we agree that procedurally it would be sensible for tribunals who are minded to refer themselves to specific authorities and to base the substance of their decision on it, to ask representatives if they wish to have the opportunity to make submissions on those authorities, that, in itself, is insufficient to warrant upholding Mr Korn's appeal on this part of the case.[39]Therefore, for all the reasons that we have given this afternoon, the appeal of Mr Rossiter insofar as it is an appeal against the dismissal of his claim for unfair dismissal based on domestic constructive dismissal does not succeed. We therefore remit this case to a differently constituted tribunal for them to consider this matter on the basis of the TUPE point, on the basis of the approach involved which we have identified in the first half of this judgment.