Khan v HGS Global Ltd & Anor (Unfair Dismissal: Dismissal/ambiguous resignation) [2015] UKEAT 0176_15_1611

EAT
Khan v HGS Global Ltd & Anor (Unfair Dismissal: Dismissal/ambiguous resignation)
[2015] UKEAT 0176_15_1611 · 2015-11-16
[1]I refer to the parties as the Claimant and the First and Second Respondents, as below. The appeal is that of the Claimant against a Judgment of the London (Central) Employment Tribunal (Employment Judge Lewis, sitting with members on 16-19 February 2015; “the ET”), sent to the parties on 23 February 2015. The Claimant was then represented by a consultant but now appears by Mr Dutton of counsel. The representation of the First and Second Respondents before the ET was as for this appeal. By its Judgment the ET dismissed the Claimant’s claim of unfair dismissal. Specifically, it found that the Claimant’s employment had come to an end by mutual termination; he was not dismissed, so there could not be an unfair dismissal. The Background Facts and the ET’s Conclusions[2]The Claimant was employed by the First Respondent at its call centre in Chiswick, from where it operated campaigns for customers, including the Second Respondent. At the relevant time the Claimant was employed as a team manager on a campaign for the Second Respondent. In March 2013, the Second Respondent decided it would in-source this work to be carried out from its premises in High Wycombe. That amounted to a relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).[3]During the collective consultation process relating to the transfer, employee representatives raised concerns about the extra distance employees transferring to the Second Respondent would have to travel. Responding to those concerns, it was announced that those who would face a journey time in excess of 1¼ hours would have the option of(1) relocating to the Second Respondent’s employment at High Wycombe,(2) applying for any available roles within the First Respondent, or(3) potential redundancy.[4]The Claimant was one of those facing a journey time of over 1¼ hours if he transferred to the Second Respondent. In individual consultation meetings it was made clear he had the three options outlined above. Given time to consider his position, the Claimant opted for redundancy; a choice he confirmed in later meetings. His employment ultimately terminated on 8 June 2013, the date of the transfer to the Second Respondent. His severance package included a statutory redundancy payment plus pay in lieu of notice and holiday pay.[5]These facts, the ET concluded, did not give rise to a dismissal; the Claimant’s employment ended by mutual consent. This was not a situation where an employee with a journey time of over 1¼ hours was not allowed to transfer. That option remained open, as did the option of applying for a vacancy with the First Respondent. The Claimant was repeatedly advised of the options; he was never told he would not be permitted to transfer nor put under pressure to opt for redundancy. Apart from adopting the terminology of “not reasonable” to describe a journey time of over 1¼ hours - a description which emerged from collective consultation and was used to indicate those who would not be excluded from a redundancy package if they chose not to transfer - the options had been described in neutral terms. The undesirability of the long-distance journey was not exaggerated, nor was it suggested that it might be better to take redundancy. Indeed, the Second Respondent took the view that journey time was reasonable. Redundancy for those who did not share that view was granted as a concession to a concern raised by employee representatives.[6]The ET was satisfied the Claimant understood he was being offered a choice, not being pushed out and he did not feel pressurised. He made an informed decision his employment should be terminated. The termination was thus by mutual consent. The fact that the mechanism by which that agreement was effected was by way of dismissal for redundancy did not alter that. This was, in truth, not a dismissal, and there was therefore no unfair dismissal. Submissions The Claimant’s Case[7]Mr Dutton, now appearing for the Claimant, does not shy from the fact that the case he now advances was not put below. He says this is permissible because these are pure points of law; see Birch and Humber v University of Liverpool [1985] IRLR 165 . Whilst in Scott v Coalite Fuels & Chemicals Ltd [1988] ICR 355 EAT, Wood J had said that points of law would generally not arise in these circumstances - these matters being substantially questions of fact - that was only if the ET had asked the right question as a matter of law in the first place.[8]The correct approach had to recognise that where an employee volunteers for dismissal there is still a dismissal. Thus in Burton, Allton & Johnson Ltd v Peck [1975] IRLR 87 QBD, Griffiths J had recognised that in a redundancy situation one would expect a consultation exercise and a call for volunteers but “the fact that all that is done does not prevent the dismissal, when it comes, being a dismissal” (paragraph 13). See, further, the approval of that approach on the part of Slade LJ in Birch ; and Optare Group Ltd v TGWU [2007] IRLR 931 EAT (Wilkie J presiding). In this case, the ET had asked the wrong question. It asked (see paragraph 36) whether the Claimant had been pressurised but that was not determinative; it was simply one possibly relevant factor ( Hellyer Bros Ltd v Atkinson and Dickinson [1992] IRLR 540, per Knox J at paragraph 20). The question who really terminated the contract of employment was not the real issue; the key question was what had the Claimant really been volunteering for? If it was to be dismissed, then that is what had happened; he was dismissed. The background discussions leading to his volunteering for dismissal did not change that fact (see Peck ). The termination letter was undoubtedly a letter of dismissal.[9]Applying the correct test, there was plainly a dismissal. The redundancy situation was instigated by the Second Respondent (see the ET’s Reasons at paragraph 21). The second option - to apply for roles with the First Respondent - was a non-option; see paragraphs 16 and 19 of the ET’s findings, which related to the Claimant’s unsuccessful attempts to apply for vacancies. In any event, if the Claimant was agreeing to being dismissed, then he was dismissed.[10]Making plain he no longer pursued other points raised in the Notice of Appeal or skeleton argument, Mr Dutton contended the ET had failed to ask the correct question and had thereby erred in its approach. When the right question was asked, there was only one answer: the Claimant had been dismissed; the EAT should so find. The Respondents’ Case[11]The submissions before me were largely made on behalf of the Second Respondent and then adopted by the First Respondent, albeit with some additional observations. In general terms, the Respondents argued that the Claimant’s submissions privileged form over substance. Section 95(1)(a) of the Employment Rights Act 1996 (“ERA”) defined dismissal as where the contract under which the Claimant was employed had been terminated by the employer. That required the termination to be by the employer alone (see Birch at paragraph 39). Where mutually agreed termination was advanced, the right question was: who really terminated the contract of employment? In assessing that, the ET had to look at the factual reality rather than the form of the relevant transactions ( Birch at paragraph 40).[12]The Second Respondent’s default position had been that - if there was no objection and no opting for redundancy on the part of any employee - the employees would transfer. It was the Claimant’s case below that he was put under so much pressure he had no choice. It was that argument that the ET was addressing, and the Atkinson case allowed that pressure could be a relevant factor. That said, although the ET had answered that question (as it was bound to do given how the Claimant was putting his case), it had not limited itself to the issue of pressure. At paragraph 36 it was plain the ET was aware of the distinction between Peck and Birch . The ET looked at the substance and concluded that this was not a dismissal. Accepting there was terminological confusion in the termination letter, that was a permissible approach.[13]As for any future redundancy situation, the ET answered this point at paragraph 43: potential future uncertainty and redundancy did not mean that the Claimant voluntarily opting to leave earlier amounted to dismissal (see the obiter comment to this effect by Ackner LJ in Birch ). Had the Claimant not said he wanted to take the severance package, there would have been no redundancy; there was no general redundancy exercise in the offing at that stage. So far as the Respondents were concerned, all would transfer over. The Claimant was not offering to be dismissed; there would be no dismissal if he did not volunteer for the severance package. This was properly to be described as termination by way of mutual consent. Neither party could bring about the termination of the employment without the consent of the other.[14]Ultimately, this was a matter for the ET; it was not for the EAT to interfere. Although the question might give rise to issues of law, generally it will be a matter of fact (see Scott ).[15]For the First Respondent Mr Huddleson adopted Mr Gray’s submissions but further observed that this case fell within the second category recognised by the EAT in Optare at paragraph 27. The Claimant was not running a perversity appeal, and it was necessary to bear in mind the broader evidence before the ET on which its findings of fact were based, which went some way beyond the dismissal letter. The Claimant in Reply[16]Accepting it had been the Claimant’s case below that he had been pressurised, that did not relieve the ET from the obligation to apply the correct test but it had failed to do so; it nowhere said anything about the importance of volunteering for dismissal. The Relevant Legal Principles[17]A dismissal for these purposes is (relevantly) defined by section 95(1) ERA , as follows: “(1) For the purposes of this Part an employee is dismissed by his employer if (and, subject to subsection (2), only if) - (a) the contract under which he is employed is terminated by the employer (whether with or without notice),[18]In terms of the distinction between resignation and dismissal, the test essentially remains as proposed by Sir John Donaldson in Martin v Glynwed Distribution Ltd [1983] ICR 511 at page 519G: “… Whatever the respective actions of the employer and employee at the time when the contract of employment is terminated, at the end of the day the question always remains the same, “Who really terminated the contract of employment?” …” (Original emphasis)[19]The case law recognises that in certain circumstances a contract of employment can be terminated by mutual agreement without there being a dismissal for the purposes of section 95 (see Birch ). Such a consensual termination requires freedom of choice on the part of the employee. If there is no real choice, the termination will be a dismissal. So, where an employee responds to the employer’s announcement of an established fact - for example, there will be no more work for them - and is thus volunteering to be dismissed, that will be a dismissal by the employer ( Atkinson ). Similarly, where an employee ‘resigns’ in circumstances where the choice was resignation or dismissal.[20]Another way of putting the question posed by Sir John Donaldson in Martin can be seen to have emerged in Optare , where Wilkie J, in considering whether volunteers in a redundancy exercise should be counted for the purposes of assessing the collective consultation requirements, identified the relevant issue as follows:
“27. … What was the cause of the termination of their employment? If it was that they volunteered to be made redundant, what was it that the volunteers were volunteering for? Was it to be dismissed as part of the redundancy exercise or was it, in some way separate from that exercise, their agreeing to a consensual termination of their employment which might have a knock-on effect on the redundancy exercise? …”
[21]So, an element of voluntarism on the part of an employee does not necessarily give rise to termination by way of mutual agreement still less resignation. If the employee is really volunteering to be dismissed, there will be a dismissal for section 95(1) purposes. The truth of the situation will inevitably have to be assessed against the factual context as found by the ET. Thus, the fact that an employee volunteers as part of a consultation exercise does not mean that she is not still volunteering to be dismissed (as Griffiths J recognised in Peck ). A redundancy exercise will generally involve consultation with the employee and may well include a call for volunteers. In such circumstances the employees are volunteering to be dismissed; the fact that they are volunteers will not prevent there being a dismissal for statutory purposes.[22]On the other hand, there can be other circumstances, perhaps less commonplace, where, as the EAT recognised in Optare , an employee is agreeing to a consensual termination of their employment that does not amount to volunteering for dismissal. Thus in Birch the employees’ applications for early retirement - albeit in circumstances where the employer had indicated it would be looking to make workforce reductions and might have to make redundancies in due course - the correct analysis of the situation was held by the EAT (as upheld by the Court of Appeal) to have been that this was a case of consensual termination and not dismissal. In that case, the statutory predecessor to section 95 was held to be (per Slade LJ):
“39. … directed to the case where, on a proper analysis of the facts, the contract of employment is terminated by the employer alone. It is not apt to cover the case where, on such an analysis, the contract of employment has been terminated by the employee, or by the mutual, freely given, consent of the employer and the employee. In a case where it has been terminated by such mutual agreement, it may properly be said that the contract has been terminated by both the employer and the employee jointly, but it cannot, in my view, be said that it has been terminated by the employer alone.”
[23]Slade LJ continued:
“40. The authorities, I think, require one to look at the realities of the facts, rather than the form of the relevant transactions, in deciding whether the contract has been ‘terminated by the employer’ within the meaning of the subsection. As Sir John Donaldson, MR put it in Martin v MBS Fastenings (Glynwed) Distribution [1983] IRLR 198: ‘Whatever the respective actions of the employer and employee at the time when the contract of employment is terminated, at the end of the day the question always remains the same, “Who really terminated the contract of employment?” ’ I agree with what Lord Justice Ackner has said in relation to that passage. The Master of the Rolls did not expressly advert to the possibility that a termination of a contract of employment could be effected by the action of both employer and employee, but I do not read his judgment as negativing such a possibility. On the facts of the present cases it seems to me that, in answer to the question posed by him, there can be only one answer: that is that the contract of employment in each case was terminated not by the employer but by the freely given mutual consent of the employer and employee.”
[24]That the law should recognise the possibility of consensual termination of an employment contract was further acknowledged in Birch by Ackner LJ:
“28. The decision whether or not there has been a dismissal within the meaning of s.83 has to be decided before one considers whether the result of that dismissal is to entitle the employee to make a claim for redundancy payments. The two are disassociated. Miss Cotton has shown us no authority for the proposition, which I find a strange one, that the mere fact that the requirement of the business for employees is expected to diminish, should make it in law not possible to have a determination of the contract by mutual consent. I put to her the simple example of an employer who envisages some time in the future, eg because of new technology, the need to slim down his workforce and makes an offer to those who are prepared to resign rather than to wait to volunteer for redundancy and supports that offer with a financial inducement which is far in excess of what is likely to be obtained under the redundancy legislation. It seems to me clear that in such a situation, assuming no question of any coercion of any kind, that if that offer is accepted there can be no question of there having been a dismissal. Yet that is a situation which presupposes what has been referred to conveniently as a ‘redundancy situation’. It is true that in Martin ’s case at page 201, Sir John Donaldson MR said: ‘Whatever the respective actions of the employer and employee at the time when the contract of employment is terminated, at the end of the day the question always remains the same, “Who really terminated the contract of employment?”
If the answer is the employer, there was a dismissal within para.(a) of s.55(2) of the Act of 1978. If the answer is the employee, a further question may then arise, namely, “Did he do so in circumstances such that he was entitled to do so without notice by reason of the employer’s conduct?” ’ The fact that the Master of the Rolls did not refer to a situation where the contract was determined by mutual consent, to my mind merely indicates that he was not considering that unusual situation, and not that he was deciding that such a situation could not exist.”[25]As the EAT noted in Scott , provided an ET has expressly followed the analyses in the Martin and Birch decisions, because the issue is essentially one of fact it will be rare for a point of law to arise in this context. Provided the right question has indeed been addressed, the factual assessment will be for the ET, and it will not be open to this court to interfere.[26]For completeness I make clear that arguments have not been addressed to me relating to the possible relevance of TUPE , specifically Regulation 4(7)-(11), although I recognise that it has been held that a change to an employee’s workplace might amount to a substantial change in working conditions ( Tapere v South London & Maudsley NHS Trust [2009] ICR 1563 ). Here, however, that is not how the Claimant sought to argue his case. Discussion and Conclusions[27]As Mr Dutton acknowledges, the way the Claimant’s case is now put is not the same as below. To that extent there may seem a degree of unfairness in his criticism of the ET’s reasoning, but I think he is right that how the Claimant presented his case below did not absolve the ET from applying the correct test in terms of determining whether or not there had been a dismissal for section 95(1) purposes.[28]The ET’s self-direction as to the relevant legal principles is recorded at paragraph 36 of its reasoning. It correctly referred to the Court of Appeal guidance in Birch and allowed there was a distinction between a dismissal and termination by way of mutual freely given consent. It is right that the ET then went on to emphasise the issue of pressurised resignation, but that, as Mr Dutton acknowledged, reflected the way in which the Claimant had put his case.[29]Where I consider Mr Dutton may have as point is in the ET’s failure to expressly allow the possibility that the employee’s non-pressurised consent was given in circumstances that might still amount to a dismissal. The volunteer for a redundancy dismissal may volunteer freely but is still volunteering to be dismissed. Paragraph 36 does not engage with this possibility in terms; it does not allow for the rather more subtle distinction identified in Optare .[30]Is that failure to identify this possibility necessarily fatal? Mr Dutton contends that it must be: the termination letter expressly stated that if the Claimant did not opt to relocate, his “role would be made redundant on transfer and [he would] … be dismissed by reason of redundancy”. That letter goes on, however, to speak more neutrally of the Claimant’s employment being terminated. Moreover, I agree with the Respondents: it would be wrong for me to simply look at the wording of a letter that is (as Mr Gray has characterised it) terminologically challenged. The ET heard evidence as to the actual nature of the choice offered to the Claimant and plainly considered that this provided the relevant context.[31]Allowing, as I do, that the termination of the Claimant’s employment had to be analysed in context, did the ET’s failure to specifically set out the Optare distinction render unsafe its conclusion that this was truly a consensual termination? Mr Dutton has made clear how he would argue the point: as a team leader, the Claimant faced the possibility of redundancy in due course if he did transfer over to the Second Respondent; he had no success applying for alternative positions in the First Respondent and was presented with the option of redundancy given that his new journey time would now fall into the “unreasonable” category. In those circumstances, he was volunteering only to be dismissed; there was no real choice. Mr Gray disagrees. The ET found that the reduction in the number of team leaders was an issue to be looked at subsequently (paragraph 43); the Claimant was not being offered redundancy as part of an exercise in headcount reduction. The Respondent’s default position was that the Claimant and all employees in his position would transfer over. If no one took the redundancy option, there would be no dismissals; everyone’s employment would, at least at that stage, continue. That there might be a redundancy exercise at some future point did not mean the Claimant was volunteering to be dismissed as part of such an exercise at that time.[32]Turning to the ET’s explanation of its reasoning (paragraphs 42 to 47), I consider the Respondents are correct. It may not have posed the Optare distinction in express terms in its earlier self-direction, but the ET’s conclusions make plain it did not consider the Claimant was volunteering for dismissal. The designation of the new journey time as “unreasonable” was that of the employee representatives not the Respondents. This was not a case where the Claimant was claiming a substantial difference in terms and conditions such as to mean he had been dismissed by virtue of Regulation 4(9) TUPE . Specifically, this was not a situation where any employee who had a journey length of 1¼ hours would not be allowed to transfer; it was left as a matter for them (paragraph 42). The Claimant was never told he had no choice, and:
“43. There was never the remotest suggestion that if the claimant opted to transfer, he would be told that he could not do so anyway because of the journey time. …”
[33]The redundancy option was “presented at all times as an extra option which the claimant might like to take up” and, “the claimant was well aware that he had a free choice” (paragraph 45). The ET had regard to the termination letter and noted that the Respondents had put the Claimant’s choice into effect by formally dismissing him but expressly found that was merely the mechanism (paragraph 46): it represented the form not the reality.[34]In my judgment, the ET correctly followed the Court of Appeal’s guidance in Birch and looked at the factual reality rather than the form of the relevant transactions ( Birch , per Slade LJ at paragraph 40). Whether or not it expressly stated the question, I am satisfied the ET had in mind the need to consider the issue whether the Claimant was in reality volunteering for dismissal. In any event, I consider it clear - given the ET’s findings of fact and the conclusions derived therefrom - that this question could only be answered in the negative. For all those reasons, I dismiss this appeal. Application[35]My judgment in this matter having been given orally, Mr Dutton applied for permission to appeal. Given that the correct test was whether the Claimant was volunteering for dismissal, he suggests that this was less than clear on the ET’s findings. Alternatively, there was a compelling reason for an appeal given that this point - whether a formal dismissal might amount to consensual termination - should be considered by the Court of Appeal.[36]The approach I have adopted is as laid down in Optare , which follows the guidance in a line of other authorities (in particular in Birch ). Applying that approach, I consider the issue in this case was answered by the ET’s findings of fact and conclusions. In the circumstances, I do not consider a further appeal has a real prospect of success or that there is any compelling reason for this matter to be considered by the Court of Appeal.