MRS H SHAW v CCL LTD [2007] UKEAT 0512_06_2205

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2007] UKEAT 0512_06_2205

Case No Appeal No. UKEAT/0512/06

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MRS H SHAWAPPELLANT

CCL LTDRESPONDENT

Before

His Honour Judge McMullen

Date 22 May 2007

[1]APPEARANCES For the Appellant MISS DEE MASTERS (of Counsel) Instructed by: Messrs Abel-Brown Solicitors 18a Orange Street Uppingham Rutland LE15 9SQ For the Respondent MR DAVID MEREDITH (Representative) Peninsula Business Services Ltd Riverside New Bailey Street Manchester Lancashire M3 5PB SUMMARY Unfair dismissal – Constructive dismissal Sex discrimination - direct Sex discrimination - indirect The Employment Tribunal made substantial findings of unlawful discrimination, not appealed. However, the Respondent's rejection of the Claimant's application to work part-time on her return from maternity leave was an act of direct and indirect sex discrimination. The Claimant left promptly in response. The Tribunal misconstrued the Claimant's application holding effectively that it was about flexible working and did not contain an application to work part-time. On the correction of this error, the only conclusion was that the Claimant was constructively dismissed. In the circumstances of this case, the act of direct and indirect discrimination constituted repudiation of the contract which was accepted promptly by the Claimant when she resigned for that reason. There was no explanation or defence of fairness and so the dismissal was unfair. HIS HONOUR JUDGE McMULLEN QC This case concerns the interesting point of the relationship between a breach of the anti-discrimination statute and a fundamental breach of contract giving rise to a claim of unfair dismissal. The judgment represents the views of all three members. We will refer to the parties as the Claimant and the Respondent. Introduction

[2]It is an appeal by the Claimant in those proceedings against the judgment of an Employment Tribunal sitting at Leicester over four days including a day in chambers, Chairman Mr J A Caborn, registered with reasons on 12 July 2006. The parties were represented respectively by Miss D Masters of Counsel and Mr D Meredith of Peninsula Business Services Limited. The issues, refined by a number of CMDs, were whether in the treatment of the Claimant leading up to the severance of the relationship by her resignation on 5 April 2005 there was discrimination contrary to the Sex Discrimination Act 1975 and a constructive unfair dismissal.

[3]The Respondent denied discrimination and contended that the Claimant resigned and did not resign in response to any of the acts of the Respondent; but if so, that none of those constituted a repudiation.

[4]The Tribunal decided in the Claimant's favour on substantially all of her case save for constructive unfair dismissal. It dismissed, as being out of time, a complaint for flexible working under section 80H of the Employment Rights Act 1996 but it will be necessary to return to this topic.

[5]The Tribunal went on to decide an application for review which it rejected, there being no just or equitable reason to extend time. It then awarded the Claimant £18,527.23. The Claimant appealed against the constructive dismissal aspect of the judgment. The Respondent appealed against other aspects, but all of those were dismissed without a contested hearing. There is on the file a further appeal against the amount of the remedy relating to loss of earnings which is yet to be dealt with and was stayed pending the outcome of this judgment. Directions sending this appeal to a full hearing were given in chambers by HHJ Pugsley. The legislation

[6]The relevant provisions of the legislation and the jurisprudence are not the subject of any dispute and we can do no better than record the Tribunal's findings:

"8. Sex Discrimination Act 1975 6 (2) It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her (a) in the way he affords her access to opportunities for promotion transfer or training or to any other benefits facilities or services or by refusing or deliberately omitting to afford her access to them or (b) by dismissing her or subjecting her to any other detriment 8. S47C of the Employment Rights Act 1996 provides that" an employee has the right not to be subjected to any detriment by any act or any deliberate failure to act by his employer done for a prescribed reason"

. Prescribed reason is defined in S47C (2) and includes "pregnancy childbirth or maternity". Regulation 19 of the Maternity and Parental Leave Regulations 1999 states that "an employee is entitled under section47C of the 1996 Act not to be subjected to any detriment or any deliberate failure to act by her employer done for any of the reasons specified in paragraph (2) and which include pregnancy and having given birth to a child. 9. The Employment Rights Act 1996 (the 1996 Act) provides by S94(1) that- "an employee has the right not to be unfairly dismissed by his employer": Dismissal is defined in S95 of the 1996 Act and an employee is dismissed by his employer if- "….the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he entitled to terminate it without notice by reason of the employer's conduct" This form of dismissal is commonly referred to as "constructive dismissal". In Western Excavating (ECC) Ltd v Sharp

1978 ICR 221

Lord Denning said- "….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 employers conduct. He is constructively dismissed". 10. If an employee is dismissed, then for the purpose of determining whether the dismissal is fair or unfair it is for the employer to show the reason or if more than one the principal reason for dismissal and that it is either a reason falling within S98(2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held. Fair reasons for dismissal are referred to in S98(2) of the 1996 Act and where the employer has fulfilled the requirements of S98(1) it is then necessary to have regard to the provisions of S98(4) of the 1996 Act. 11. By S99 of the 1996 Act an employee who is dismissed is regarded as unfairly dismissed if the reason for dismissal is of a "prescribed kind" and which "includes, pregnancy, childbirth or maternity" and the "dismissal takes place in prescribed circumstances"." Employment Rights Act 1996 Part VIIIA gives the right to apply to work flexibly. The facts

[7]The Claimant joined the Respondent on 15 April 2002 where she was employed as an Area Sales Executive. In 2003 she became pregnant and reported this to her management. She had a number of absences due to sickness. She began maternity leave on 2 April 2004. There was a number of issues around her return to work.

[8]On 29 November 2004 she submitted a request for flexible working via email and it is important to recognise that her request was in this form:

"I would like to return to work with CCL, however I would only be willing to do this on a part-time basis. I would like to work a maximum of two days per week equating to 14 hours. I am flexible as to which days these would be and also to whether they would be made up of part days or full days. With regards to the logistics of my role with CCL, I am very keen to be no more than 100 miles from my home town at any time. As I am sure you will appreciate this is because I need to be able to get back quickly if there is any problems with my son. I will not be able stay out overnight. I hop this is enough information for you to make a decision about my request of part-time work."

She also raised another issue relating to sex discrimination which was taken no further. In response, the Respondent said this:

"Thanks for your email regarding your request to return to work on flexible hours. I would like you to complete a DTI flexible working application form."

One was sent to her. This is a standard form issued pursuant to regulations made, we think, under section 80F(5)(a) Employment Rights Act 1996 . In this the Claimant was asked to:

"describe your current working pattern; days, hours and times worked" to which she replied: "full time, five days per week, working all areas of the United Kingdom."

The next question is:

"Describe the working pattern you would like to work in future; days, hours, times worked" to which she replied: "two days per week equating to 14 hours. No more than 100 miles from my home town of Leicester. Not to work or be away on business overnight."

That, for one reason or another, was not dealt with by the Respondent until 15 February 2005 when a director refused the request. Part of the refusal was based upon the Respondent's perception of difficulties that a change to two days a week would create, including a requirement that there be two part-time members of staff. The Claimant responded on 1 March 2005 acknowledging that her request for her application for flexible working hours had been refused and she wished to appeal, in terms comparing herself with a full-time employee.

[9]On 4 April 2005, her period of maternity leave ended, it having been preceded by the rejection of her application just three days earlier and on 5 April she resigned. She said this:

"As you are aware my maternity leave came to an end on 4 th April 2005. I made an application to work flexibly because of my changed circumstances, which was declined by CCL. I consider this to be completely unreasonable. I am however left with no choice but to offer my resignation for the position of Sales Executive, to be effective immediately. I am sorry that it has to come to however, due to child care reasons I am unable to work on a full time basis."

Proceedings were started claiming a range of discriminatory acts and constructive unfair dismissal. The Tribunal upheld the majority of the Claimant's claims and in particular found these: (i) Direct sex discrimination on the basis that the Respondent failed to allow her to return to work on a part-time basis; (ii) Direct sex discrimination in attempting to remove her company car; (iii) Indirect sex discrimination in imposing a requirement upon her to work full-time on returning to work after maternity leave which could not be objectively justified; (iv) Breach of section 47C of the 1996 Act in failing to allow her to return to work part-time; (v) Breach of section 47C in relation to the company car; (vi) Breach of regulation 19 of the Maternity and Parental Leave Regulations 1999 in failing to allow her to return to work on a part-time basis. (vii) A similar breach in relation to the company car.

[10]However, her complaints of constructive unfair dismissal contrary to section 99, (pregnancy-related dismissal) was rejected since she was not dismissed within the meaning of section 95(1)(c) as to which the Tribunal found the following: 40. The claimant complains that she was constructively unfairly dismissed. Ms Masters for the claimant at paragraph 42 of her submission, states that the "claimant relies upon the acts of direct sex discrimination…detriment contrary to Regulation 19 and section 47C…and indirect sex discrimination….". She continued, the claimant "… also alleges that if the Tribunal considers that these incidents are not discriminatory they still amount to freestanding repudiatory breaches of contract regardless of their non-discriminatory nature". Mr Meredith submits "Even if her allegations of fundamental breaches are correct this part of the claim must fail. They were not the reason for her resignation. She resigned because her request was refused and this part of the claim must be dismissed, for that reason in every respect" - … Mr Meredith submitted "...it is clear that her resignation was as a result of the unreasonable refusal of her request for flexible working….it is absolutely clear that Mrs Shaw resigned because her application for flexible working was refused"48. … The Tribunal is satisfied the claimant resigned her employment because of the respondent's rejection of her request for flexible working pursuant to section 80F of the 1996 Act. The respondent was not obliged to accept the request and by rejecting it, of itself, was not to breach the claimant's contract of employment. The respondent considered the request and having done so rejected it. After an appeal, which was rejected, the claimant resigned but which resignation was not in response to a fundamental breach of her contract of employment that is a breach of a fundamental nature going to the root of the contract and which justifies the employee terminating it without notice but because her request for flexible working pursuant to the legislation had been unsuccessful. The Tribunal is aware that in the context of a "last straw" resignation the final matter in a chain of events need not necessarily of itself be a breach of contract but that when taken cumulatively with other matters, the employee is entitled to say enough is enough I am resigning. In this case the claimant did not say that she was resigning because of a series of matters, which cumulatively caused her to say that "this is the last straw, I am resigning...". She resigned because she considered the rejection of her flexible working request to be "completely unreasonable".

49. The Tribunal having considered the evidence in the context of the relevant law and having noted the respective submissions accepts and prefers Mr Meredith's submission that the reason for the claimant's resignation did not relate to a breach of an express and / or implied provision of her contract of employment. The resignation was because the respondent refused the claimants request for flexible working as it was entitled to. … In these circumstances, the tribunal has unanimously concluded that the claimant was not dismissed pursuant to section 95(1)(c) of the 1996 Act and therefore her complaint of constructive unfair dismissal fails. In coming to that latter conclusion the Tribunal addressed itself to the correct authorities Western Excavating ECC Limited v Sharp

[1978] ICR 221

, Woods v WM Services Peterborough Ltd

[1981] IRLR 347

and Lewis v Motorworld Garages Limited

[1985] IRLR 465

. The Claimant's case

[11]The practical utility of this appeal, as the Claimant's counsel accepts, is pre-emptively to head off the appeal yet to be dealt with against the award made for loss of earnings. This seemed to be a particularly unattractive way to begin an appeal, but we agreed to listen to the arguments and to form a view about them. The simple proposition advanced by the Claimant is that given that there were so many findings of breaches of anti-discrimination statutes, the Claimant's response to them was immediate. She left as a result of the way in which she had been treated and that way was condemned by the Tribunal as directly and indirectly discriminatory and was a detriment. Thus the Tribunal ought to have found in its otherwise exemplary judgment that the Claimant had suffered a fundamental breach of contract in that it went to the root of the relationship entitling her to resign and to treat herself as dismissed within the meaning of section 95(1)(c).

[12]The contention is that any act of discrimination is a breach of the implied term of trust and confidence. If that is not accepted, then the breach in this case was made out in the light of the particular acts of discrimination committed by the Respondent. The flaw in the Tribunal's approach was not to recognise that the Claimant had made a claim for flexible working. Had it done so, there would be a straight line from the discrimination to the reason for leaving and that would mean a constructive dismissal. The Respondent's case

[13]On behalf of the Respondent it is contended that the Claimant had never, prior to leaving, suggested that the acts of which she then complained in the Tribunal proceedings constituted sex discrimination. The case made by the Claimant for flexible working was an indissoluble package. It was a claim for part-time working on two conditions - not working more than 100 miles from home and not staying overnight. If those two conditions were not met then the whole package would fail. The Claimant never did, as Mr Meredith put it, break up the package. Discussion and conclusions

[14]We consider there is force in Miss Masters' argument that a breach of the statute can give rise to a claim for constructive dismissal. In Nottinghamshire County Council v Meikle

[2005] ICR 1

this was said by Keene LJ in the Court of Appeal:

"34 It was not really argued before us that the persistent failure of the employer to carry out those reasonable adjustments did not amount to a fundamental breach. The tribunal found that they amounted to unlawful discrimination and, given the duration of them and the finding that, even at the time of her resignation, there would have been little improvement in cover if Mrs Meikle had returned to work, it seems to me to be clear that the employer was in breach of its obligation to maintain the trust and confidence of its employee. There are many cases where similar or lesser failures in respect of discrimination have been held to breach that implied term, such as Bracebridge Engineering Ltd v Darby [1990] IRLR 3, where the Employment Appeal Tribunal held that the failure by an employer to treat an allegation of sexual harassment seriously was a breach of that implied term, which entitled the employee to treat the contract as having been repudiated."

An extension of this principle was made by the EAT, HHJ Serota QC and members in Greenhof v Barnsley Metropolitan Borough Council [2006] ILR 98 where this appears:

"10. Now, it seems to us in this case that the employment tribunal found unequivocally that there had been a serious breach of the obligation on the part of the respondent over a period of time to make reasonable adjustments as it was obliged to do under the Disability Discrimination Act. It follows, in our opinion, that that was almost bound to be a breach of the implied term of trust and confidence which Mr Greenhof would be entitled to treat as being a repudiatory breach of contract, as he purported to do. Now, it may be that there are circumstances in which there can be a breach of the obligation to make reasonable adjustments which might not be regarded as repudiatory, but we do not see how, having made the finding it did in the present case, there was any way in which the respondent's conduct could be regarded as anything other than repudiatory."

[15]Building upon that approach of linking discrimination to constructive dismissal it is also useful to consider what Lord Hoffman said in Johnson v Unisys Limited

[2001] IRLR 279

which was the following at paragraph 35:

"My Lords, the first question is whether the implied term of trust and confidence upon which Mr Johnson relies, and about which in a general way there is no real dispute, or any of the other implied terms, applies to a dismissal. At common law, the contract of employment was regarded by the courts as a contract like any other. The parties were free to negotiate whatever terms they liked and no terms would be implied unless they satisfied the strict test of necessity applied to a commercial contract. Freedom of contract meant that the stronger party, usually the employer, was free to impose his terms upon the weaker. But over the last 30 years or so, the nature of the contract of employment has been transformed. It has been recognised that a person's employment is usually one of the most important things in his or her life. It gives not only a livelihood but an occupation, an identity and a sense of self-esteem. The law has changed to recognise this social reality. Most of the changes have been made by Parliament. The Employment Rights Act 1996 consolidates numerous statutes which have conferred rights upon employees. European law has made a substantial contribution. And the common law has adapted itself to the new attitudes, proceeding sometimes by analogy with statutory rights. The contribution of the common law to the employment revolution has been by the evolution of implied terms in the contract of employment. The most far-reaching is the implied term of trust and confidence."

[16]The first issue in this case is to determine what the Tribunal understood to be the request for flexible working pursuant to section 80F. It must be said that the Tribunal had dismissed the claim based upon this Part of the statute in itself as out of time, but it went on to find that the reaction of the Respondent to the request for part-time working was directly and indirectly discriminatory and a breach of section 47C. There is substance in the contention that the Tribunal had lost sight of the finding it had already made that the Claimant sought a flexible working arrangement on her return to work which included a reduced working pattern. That is clear enough from the documents we have cited (para 6 above). The claim for flexible working begins with an insistence on the difficulty she has in working full-time and a request to work part-time. She offers to be "flexible". The Respondent treats it as "a request for flexible working" and supplies the DTI flexible working application form. Section 80F under Part VIIIA Flexible Working does deal with the number of hours a person is required to work. The two questions asked of the Claimant and completed by her on the DTI form so indicated. Indeed, it might be thought that this is the prime purpose of a flexible working arrangement. It deals with the number of hours to be worked by a person who has to care for a child. Our acceptance today that the part-time working claim "is embedded" in the flexible working claim is a complete answer to this case. Yet the Tribunal treats the Claimant's request for flexible working and wanting to work part-time as separate issues. They were not. They were part of the same application. The vehicle chosen by the Respondent, it must be noted, was to supply the DTI flexible working form. It was not part of the Claimant's claim. As a matter of reality, what she wanted was to work less hours and to travel less far. The Respondent ought to have dealt with that. There is no challenge now to the findings that its response was discriminatory. The question is: did the Claimant leave in response to that action by the Respondent and was it such as to indicate an intention by the Respondent no longer to be bound by the essential terms of the contract, in this case the term relating to trust and confidence?

[17]We resolve the first issue in favour of the Claimant. She signed because of the Respondent's rejection of her request for flexible working. That can only mean, as a matter of construction and in its context, rejection by the Respondent of her claim to work part-time as well. If one simply interposed the words, "Flexible including part-time working" then the Tribunal's analysis would be correct. There can be no doubt that the Claimant left as a result of the response overall to her request.

[18]The next question is whether or not there was a constructive dismissal. In our judgment Miss Masters puts her case too high and in any event we do not need to answer it. We do not need to decide whether in every case a finding of direct or indirect discrimination constitutes a constructive dismissal, that is, an attack on the contract going to its fundamentals. We do not need to decide that bold submission because, applying Meikle and Greenhoff , the treatment of the Claimant here in the form of direct and indirect discrimination constituted a failure to carry out the duty to maintain trust and confidence between the parties. The flat rejection of the Claimant's case because she was a woman, or the application of a condition which adversely impacted upon women, was capable of amounting to, and we hold in this case was, a fundamental breach. There is no question about timing. She resigned promptly and the reason for it was the rejection of her application, thus all the elements are in place pursuant to Western Excavating for the finding of a constructive dismissal. No argument is maintained by the Respondent about fairness. In those circumstances we hold that the Tribunal made an error in failing to correctly to construe the application the Claimant made as including a claim for part-time working. Indeed that is clear to us from Mr Meredith's ready acceptance before us that this was caused by the change in her circumstances requiring her to do child care. Conclusion

[19]The appeal is allowed. Both parties accept that the question we have dealt with is one of law and it would be open to us, having detected the error, to substitute a finding of unfair dismissal. We do.