LADBROKES BETTING & GAMING LTD v MS E ALLY [2006] UKEAT 0260_06_1105

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2006] UKEAT 0260_06_1105Case No Appeal No. UKEAT/0260/06Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
LADBROKES BETTING & GAMING LTDAPPELLANTMS E ALLYRESPONDENT
Before
Mr Justice SilberDate 11 May 2006
[1]APPEARANCES For the Appellant ANTHONY SENDALL (Of Counsel) Instructed by: Messrs Halliwells Solicitors 1 Threadneedle Street London EC2R 8AW For the Respondent No appearance or representation by or on behalf of the Respondent SUMMARY Unfair Dismissal – dismissal/ambiguous resignation When employee appealed successfully against a decision by her employer to dismiss her, did this mean that she had been continually employed up until successful appeal? Employment Tribunal said no. EAT said yes. THE HONOURABLE MR JUSTICE SILBERT Ladbrokes Betting & Gaming Limited ("the Appellants") appeal on the grounds that the Employment Tribunal sitting in Birmingham on 7 April 2006 made an error of law when it held that Mrs Eileen Ally ("the Respondent") had not been dismissed on 8 October 2005 in the light of a letter sent to the respondent by the Appellant on 19 December 2005.[2]The issue raised on this appeal is that when the appeal against dismissal of the respondent employee was allowed, did this mean that she had been continually employed from the date of the dismissal until the time when her appeal was allowed?[3]The facts which give rise to this claim are that the respondent had been employed by the Appellant at one of the Appellant's licensed betting offices. She had been issued with an employee handbook, and the opening paragraph of it stated that:
"This handbook, together with your statement of terms and conditions, forms the basis of your contract of employment with the Company."
[4]Pages 4 and 5 of the handbook contained disciplinary procedure and which also included a right of appeal. The relevant parts of it stated that:
"If an employee disagrees with any disciplinary action against them, they may appeal to the level of management above the level which determined the disciplinary act."
[5]On 8 October 2005, the respondent attended a disciplinary hearing before Mr Paul Simpson, who is the Area Operations Manager of the Appellant. At the conclusion of the hearing, Mr Simpson notified the respondent that she had been dismissed for gross misconduct. This decision was confirmed by a letter of 11 October, which incorrectly gave the date of dismissal as being 3 October. It should have been 8 October.[6]The respondent was advised of her right to appeal, which she invoked. The appeal of the respondent was heard by Mr Graham Weir, the Regional Director of Operations of the Appellant on 14 November 2005. According to the facts found by the Employment Tribunal, the respondent read from a prepared statement in which she asserted that the decision to dismiss her was unjust, and that she was only guilty of following the instructions of her manager. Mr Weir asked the respondent whether she was looking for her job back, and she replied:
"Yes, but I don't want particularly want it back because of the allegations."
[7]After the appeal hearing, Mr Weir considered the position before concluding that the decision was not wrong. He, however, decided that it would have been difficult for the respondent to disobey a managerial instruction and accordingly, he came to a different conclusion as to penalty.[8]On 19 December 2005, Mr Weir wrote to the respondent and the letter included the following paragraph, which is of importance:
"I have fully reviewed all of the available information to me and would advise you that it is my decision that you should be reinstated to your position of Cashier with immediate effect. Should you wish to accept this offer of a return to work, then I would ask that you contact Mr Paul Simpson, Area Operations Manager, upon receipt of this letter in order that he can arrange for you to work at an appropriate time. Should you not wish to accept my decision, then please advise my secretary, Mrs Linda McNeil at the enclosed address, of this decision."
[9]The respondent wrote to Mrs McNeil in a letter received by the Appellants on 3 January 2006, which said:
"Concerning the decision by Mr Graham Weir of reinstatement to my position of Cashier, I wish to inform you that I do not accept the decision made."
Mr Weir said in evidence, according to the finding of the Employment Tribunal, that:
"that he did not believe that he could insist that the Respondent return to work. Had she accepted his offer to return, he would have notified Mr Simpson and would have advised payroll. He believed that the claimant hadn't been paid for the period 8 October to 22 December and that the failure to pay was because she had rejected his offer. The claimant confirmed that she had not been paid from 8 October 2005 and that she was upset and angry when the offer came through. The letter made no reference to back pay."
[10]This appeal has to be considered in the light of section 95 (1) of the Employment Rights Act (1996) which provides that, insofar as is material that:
"For the purposes of this part, an employee is dismissed by his employer if (a) the contract on which he is employed is terminated by the employer, whether with or without notice."
[11]Mr Anthony Sendell, who appears on behalf of the Appellant today, contends that the Employment Tribunal erred in that it misconstrued the effect of the letter of dismissal of the internal appeal procedure, which led to the appeal of the respondent being allowed. His submission is that when the respondent lodged an appeal against the decision to dismiss her, the legal effect was to suspend the decision to dismiss from taking effect, pending the outcome of the appeal. His case is that if, thereafter, the appeal of the respondent was successful, she would be reinstated and she would receive full back pay for the period of suspension. If, on the other hand, she had been unsuccessful, the dismissal would take effect from the original date. In support of this submission, he relies first on the statement made by Lord Bridge of Harwich in his speech in West Midlands Co-operative Society v Tipton [1986] 1 Weekly Law Reports page 306 in which he quoted an extract from the judgment in J Sainsbury's Ltd v Savage [1979] ICR 96102, when it was said that:
"In our view, when a notice of immediate dismissal is given, the dismissal takes immediate effect. The provisions of this contract as to the appeal procedure continue to apply. If an appeal is entered then the dismissed employee is to be treated as being 'suspended' without pay during the termination of his appeal, in the sense that if the appeal is successful then he is reinstated and he will receive full back pay for the period of the suspension."
Lord Bridge's comment in relation to this, at page 310 H is that:
"I entirely agree with this reasoning in the absence of an express contractual provision to the contrary effect."
[12]The next case on which Mr Sendell relies is Roberts v West Coast Trains Ltd [2005] ICR 254 in which the applicant had been dismissed for misconduct on 6 November 2001 following a disciplinary hearing. He appealed against that decision, pursuant to the disciplinary procedure of his employers. On 5 February 2002, while that appeal was pending, he made a complaint of unfair dismissal at the Employment Tribunal. On 8 February 2002, the employers informed the applicant that as a result of his appeal, the sanction of dismissal would be replaced by demotion and a final written warning. The applicant did not return to work, and in August 2002, the employers wrote to the applicant saying that his employment would be treated as having been terminated by resignation.[13]The matter came before the Employment Tribunal on a preliminary issue as to jurisdiction, and it was held that the applicant had not been dismissed at the date of his complaint to the Tribunal because he had already lodged his appeal against dismissal. Nor had he been dismissed at the time of the Tribunal hearing, since by then, the applicant had been reinstated in accordance with his employment contract. This meant that, according to the Employment Tribunal, the applicant had not been dismissed and so he could not claim that he had been unfairly dismissed.[14]The applicant appealed unsuccessfully to the EAT and to the Court of Appeal. The approach of the Court of Appeal was that the effect of the employer's decision to substitute demotion for dismissal on the applicant's internal appeal, was to revive the contract of employment terminated by the earlier decision to dismiss, that being something that the applicant had agreed could be done as part of the disciplinary process - including the appeal procedure - which he himself had initiated. They also held the fact that he had made a complaint of unfair dismissal, when he was still in a state of dismissal before the appeal had been determined, did not affect that legal position.

Lord Justice Mummery said, in paragraph 26, of page 261:

"In summary, the effect of the decision on the appeal was to revive the contract of employment terminated by the earlier decision to dismiss. That was something which Mr Roberts had agreed could be done by West Coast Trains, as employer, as part of the disciplinary process, including the appeal procedure which he himself had initiated."
[16]He later explained at paragraph 32 of his judgment, at page 264 A:
"The decision taken on the appeal was not to offer Mr Roberts a new contract, which he could decide whether or not to accept. It was all within the terms of the existing contract, under which West coast Trains were entitled, on an appeal procedure, to quash an earlier decision to dismiss and to reinstate the contract, which had been terminated, by substituting a demotion of grade in accordance with the sanctions set out in the disciplinary procedure."
[17]Lady Justice Arden agreed with the judgment of Lord Justice Mummery, explaining at page 264 C in paragraph 34:
"The applicant's demotion was not a dismissal and the decision of the appeal process of the employer, made pursuant to the applicant's contract with the employer, to demote the applicant, resulted n the continuation f the original contract of employment. That is the normal result of an internal appeal procedure unless the contract otherwise expressly provides:"

Mr Justice Gage (as he then was) agreed with both judgments.

[18]Pausing at that stage, that case is, to my mind, clear authority for the proposition that - unless there was a contractual provision to a contrary effect as a result of an appeal process - the decision to dismiss is replaced by the decision which means that the employee is not to be regarded as having been dismissed. I add that, in this case, there are no contractual provisions which would prevent that having that effect in the present case.[19]I am fortified in coming to that conclusion by the decision of this Appeal Tribunal in London Probation Board v Kirkpatrick [2005] ICR 965 , in which the applicant had been dismissed from his employment by his employer. Two months later, on an internal appeal by the applicant, the EAT decided that he should be reinstated. One month later, the employer decided to reject the decision of the employer, and the applicant was dismissed. The employee then brought a claim for unfair dismissal arising from the initial dismissal. The Employment Tribunal rejected the employer's contention that the applicant did not have the necessary one year's continuous employment, because his continual employment was broken by a gap between the initial dismissal and any reinstatement. The Tribunal held that the employee's reinstatement removed any break in his service. That decision was upheld by the EAT. Judge Jeremy McMullen QC, giving the judgment of this Tribunal, explained at page 973 in paragraph 20:
"The consequence of the decision to reinstate the claimant as a matter of contract was that he was not regarded as having been dismissed, he was entitled to his ordinary wages, he must repay the element of his pay in lieu of notice which represented tax and national insurance not deducted therefrom, and he was entitled to restoration to the rights as a serving employee in the pension fund. During the gap he was entitled to pay in lieu of notice and to exercise his contractual rights of appeal. Thus during the gap his contract lived on for certain purposes and after the gap his contract was fully restored."
[20]The consequences of those decisions is that, in my opinion, the respondent in this case is not to be regarded as having been dismissed on 8 October 2005 in the light of the decision communicated to the respondent in the letter of 19 December 2005 in which it was said that:
"I have fully reviewed all the information available to me and would advise you that it is my decision that you should be reinstated to your position of Cashier with immediate effect."
[21]In coming to the decision that the appeal must be allowed, I have not overlooked the reasoning of the Employment Tribunal, which in paragraphs 20 and 21 of these reasons, was that: 20 "Essentially, the respondent argues that I should extend the principles outlined above and conclude that the offer of reinstatement removed the original dismissal and that accordingly no dismissal had taken place. I have concluded that the facts here are very different from those in Roberts and Kilpatrick. The claimant had a contractual right of appeal but the handbook does not set out what steps an appeal's officer can take. I accept that it must be implicit that the appeal's officer can conclude that the original decision was wrong and substitute a different decision from the one made originally. Were that not so, the appeal process would serve no purpose. In this case Mr Weir did not conclude that the original decision was wrong but did decide that he would make a different decision. It would have been open to him to write to the claimant along the following lines:
"I have upheld your appeal against the decision to dismiss. The dismissal no longer stands. I have reinstated your employment with effect from 8 October 2005. You will be paid your full contractual pay from 8 October 2005 until the date you receive this letter." 21 "
Instead, Mr Weir told the claimant that her position of cashier would be reinstated "with immediate effect". The phrase is ambiguous. I interpret it to mean that reinstatement would operate from the date of receipt of his decision. I do not accept that he was using the term reinstatement in the technical sense afforded by the Employment Rights Act 1996. He then frames his decision as an offer to return to work. The claimant was required to accept this offer before her pay would be reinstated. There was no misunderstanding, as there was in the case of Roberts . In this case the claimant was made an offer of reinstatement which, according to Mr Weir, she could accept or reject."[22]As I understand the decision of the Employment Tribunal and its reasoning, they appeared to be suggesting that there is a distinction, in legal effect between, on the one hand, the case where an officer concludes that a decision to dismiss was wrongly made, and on the other hand, where he concludes that the penalty should not be dismissal, but some other, or no other, sanction.[23]I am unable to accept that reasoning, because in both cases, the effect of the appeal being allowed is to stop the original decision to dismiss from taking effect, but to replace it with a decision which continues the employment of the employee. I agree with the point made by Mr Sendell in his admirable written skeleton that it makes no difference at all whether the decision on the appeal is that the initial decision was wrongly made, or that - although dismissal might have been permissible - some other penalty is more appropriate. Once the decision to dismiss is overturned, the inevitable consequence is (in the absence of any contractual provisions to the contrary) that the employment continues. Thus, for the reasons which I have sought to explain, the appeal will be allowed because the Appellant was not dismissed on 8 October 2005 as she alleges.[24]I ought to add that, as has been made clear in the authorities to which I have referred, the effect of the appeal process was that the employment of the respondent continued so that she is entitled to her wages for that period between the dismissal decision and the overturning of that decision on appeal. It appears, from the decision of the Employment Tribunal, that the respondent had not been paid from 8 October 2005. If that is correct, the Appellants would be well advised to make payment as soon as possible, but for the reasons which I have stated, the appeal should be allowed.

Cited in 1 later judgment