Lees v Imperial College Of Science Technology And Medicine (Redundancy) [2016] UKEAT 0288_15_1401

EAT
Lees v Imperial College Of Science Technology And Medicine (Redundancy)
[2016] UKEAT 0288_15_1401 · 2016-01-14
[1]For Written Reasons delivered on 1 June 2015, though they had been intimated earlier orally in brief, a Tribunal at London (Central) - Employment Judge Auerbach, Mr Brockmann and Ms Flanagan - rejected the claims made by the Claimant. She argued she had been unfairly dismissed. The Claimant appeals.[2]The right to a redundancy payment is conferred by statute. It is therefore to the terms of the statute to which regard must be paid. Entitlement to such a payment is dependent upon there having been a dismissal (section 135(1)(a)). Here, care must be taken to understand what section 136 of the Employment Rights Act 1996 (“ERA”) provides as to the circumstances in which there is a dismissal. Section 136(1) provides as follows, so far as material:
“(1) Subject to the provisions of this section … an employee is dismissed by his employer if (and only if) - (a) the contract under which he is employed by the employer is terminated by the employer (whether with or without notice), … (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.”
[3]The contract of service with an employer is that which is referred to in section 136(1)(a). There is a distinction between the termination of a contract with an employer and the termination of service for the employer more generally. In the latter case an employee may remain in the service of the same employer as that employee had served previously, but he is nonetheless dismissed in law if his contract has terminated and been replaced by a fresh contract, at least in the absence of a truly consensual termination. His contract has ended, though he goes on serving. The general point is well demonstrated by the case of Hogg v Dover College [1990] ICR 39. At page 42 in the Judgment of the Appeal Tribunal, delivered by Garland J, the Tribunal said this in respect of an Appellant who had been a teacher and head of department:
“Up to 31 July, the applicant, who was well and sympathetically treated by the employers, was head of history; he was employed to teach full-time at a full salary plus such allowances to which he was entitled. On 31 July, he was told that he was no longer head of history; that he would not be employed full-time and he would come down to eight periods a week plus general studies and religious education; that the salary he would receive would be exactly half the new scale which superseded the Burnham scale. It seems to us, both as a matter of law and common sense, that he was being told that his former contract was from that moment gone. There was no question of any continued performance of it. It is suggested, on behalf of the employers, that there was a variation, but again, it seems to us quite elementary, that you can vary by consent terms of a contract, but you simply cannot hold a pistol to somebody’s head and say: “henceforth you are to be employed on wholly different terms which are in fact less than 50 per cent of your previous contract.”
We come unhesitatingly to the conclusion that there was a dismissal on 31 July; the applicant’s previous contract having been wholly withdrawn from him. Even if we were wrong about that, we would take the view that there was a constructive dismissal … because the industrial tribunal found, and this is also a matter of the law, that there were fundamental changes in the terms offered to the applicant - I will not repeat how fundamental they were. The question then arises whether he accepted the employers’ conduct as a repudiation of their obligations to him or whether it has to be said that by his conduct there was, in the event, no acceptance or indeed, an affirmation. Of course, one asks: affirmation of what? It could only be of a totally different contract. This is not the affirmation of the continuance of the contract where one term has been broken; this is a situation where someone is either agreeing to be employed on totally new terms or not at all. …” (Pages 42D-43A)[4]This distinction between continuing service with the same employer and termination of a contract with the employer needs to be borne in mind. The Background Facts to the Present Appeal[5]The Claimant was employed by Imperial College for just short of 28 years from November 1986 until October 2014. She worked as an employee seconded to the Clinical Trials Evaluation Unit (“CTEU”) at the Royal Brompton Hospital, a post funded by the Hospital Trust. She became the Joint Assistant Director of the CTEU in 2004. The Respondent (“Imperial”) established its own Clinical Trials Unit in 2009. Proposals to merge the two units came to nought, and the Trust decided to close and disband the CTEU. Accordingly, the continuation of the Claimant’s contract as Joint Assistant Director of the CTEU was at risk. It was to be anticipated that there would no longer be the job for her to continue to perform as she had been doing.[6]The Tribunal found in respect of a claim that she made before it for a redundancy payment that her employment had been due to end on 31 August 2014 but that the employer wished to retain her services in a similar though different capacity and expected to offer her suitable alternative employment so declined to set out any redundancy terms. It entered into discussion with her in relation to suitable alternative employment that might be offered to her to retain her in service.[7]The sections of Part XI of the ERA 1996 are such that if suitable alternative employment is offered and is unreasonably refused by an employee faced otherwise with dismissal for redundancy, any entitlement to a redundancy payment upon dismissal by termination of the original contract is then lost. If, however, there is dismissal in a situation in which either there has been no offer of suitable alternative employment or there has been, but it has been reasonably refused, the employee is then entitled to payment.[8]Thus since the Tribunal found that the Claimant had been offered suitable alternative employment, but had not unreasonably refused, the question arose whether she was dismissed.[9]The Tribunal found that she had been on annual leave after 16 May 2014. It was proposed that she should start what was then anticipated would be accepted as suitable alternative employment on 16 June, her duties at the CTEU no longer needing to be fulfilled after that. On 12 June she rejected that offer. Therefore at that stage she was, subject only to resignation, still employed by the Respondent. Unless she resigned by her act in refusing to accept the proposed new employment, she was still employed upon the same contract under which she had acted as assistant director of the CTEU. The Tribunal found that she was entitled to three months’ notice in respect of that contract.[10]The Tribunal went on to ask if she had been dismissed expressly by the employer. It found that she had not. The question for it then was whether she had resigned in circumstances that came within section 136(1)(c). The Tribunal found that she had resigned. It did so in circumstances of some uncertainty, since neither party was willing to commit itself in clear terms to whether there was or was not a resignation, whether there was or was not a dismissal, and if there were no dismissal what duties if any the Claimant was to be expected to do during what was her notice period, if indeed there was one. At paragraph 104 the Tribunal said:
“104. … doing the best we could, we thought that the analysis that the Claimant had resigned with effect from 16 June 2014 [that being the date of a letter her solicitors had written], was actually the correct analysis. The combination of the communications from her side up to, and on, that date, amounted to a resignation. Further, it was to be inferred, in the absence of contrary indication, and given the reference in her email of 12 June, to the notice period, that she was doing so by giving the notice required of her, namely three months, so that it therefore took effect to terminate her employment on 15 September.”
[11]In a subsequent part of its decision, from paragraphs 143 to 148, it dealt with whether this resignation was in circumstances that fell within section 136(1)(c), even though it did not mention that section in terms during its discussion. It recognised that for there to be a constructive dismissal there had to be a repudiatory breach (what it called a fundamental breach of contract) by the employer which was at least a contributory cause of her resignation. It then turned, somewhat surprisingly, to consider the breach of the implied duty of trust and confidence. The case that had been advanced in the ET1 by the Claimant did not directly deal with that term or any alleged breach of it in this particular context. Rather, the ET1 said at paragraph 30 that:
“The Claimant’s 12 June 2014 email constituted the Claimant’s resignation in circumstances amounting to constructive dismissal by the Respondent for the purposes of s.95(1)(c) and/or s.136(1)(c) of ERA for the reasons set out above (in particular, the termination of the Claimant’s post as Assistant Director of the CTEU and/or the Respondent’s failure to offer suitable alternative employment).”
[12]The Claimant also raised an argument that she had been subject to direct age discrimination. The Tribunal set out the substance of that at paragraph 3 of its decision, so far as material:
“3. As to direct age discrimination, the treatment complained of in the particulars of claim was that the Respondent refused to acknowledge the fact of the Claimant’s redundancy and/or asserted that it had offered her suitable alternative employment. The claim that such treatment was because of age arose in relation to her membership of the University Superannuation Scheme (USS). Being over age 50, she would, if made redundant at the relevant time, have been entitled to draw an enhanced pension before the age of 60, which would have to be funded, to a degree, by the Respondent. That type of funding obligation was referred to as “pension strain”
. The claim was that the impugned treatment had been influenced by the desire to avoid the pension strain cost; and that a hypothetical employee aged under 50 (whose redundancy would not attract a pension strain cost) would not have been treated in the same way.”[13]It was accepted between the parties that if the decision to act as complained of in paragraph 3, by refusing to acknowledge redundancy and asserting that suitable alternative employment had been offered, arose at all because of pension strain then age discrimination would be made out. Thus at paragraph 109 when the Tribunal began its discussion of age discrimination it began by saying:
“109. The factual premise of this claim was that the Claimant’s entitlement, if made redundant, to an enhanced pension, and the associated pension strain cost that the Respondent would have to bear in that situation (we call this the “pension strain risk”), materially influenced the Respondent’s conduct in (a) refusing to declare the Claimant redundant and/or (b) insisting that the Head of Surgical Trials role was suitable for her.”
[14]It gave itself a direction as to the applicable law at paragraph 110. That has not been subject to any particular criticism before me and appears on the face of it to be an adequate and proper self-direction of law. As part of that it said that there was a potential issue as to whether the statutory burden of proof had shifted or whether there was a sufficient basis to draw a common law influence of discrimination or neither and then commented:
“110. … But, if the Respondent in any event satisfied us that pension strain cost was not a material factor, then, whether the burden would otherwise, first, have shifted to it, would not matter. Thirdly, even if the burden did shift, the standard of proof, by reference to which the Respondent had to satisfy us, was still balance of probabilities.”
[15]It set out the submissions and then at paragraph 123 confessed it had spent a considerable time deliberating on the age discrimination claim, which it had not found easy. At paragraph 124, immediately after that confession, it said:
“124. Firstly, for the purposes of our deliberations, we assume that there was sufficient material for the burden of proof to pass to the Respondent. So we considered whether, looking at the overall picture, we were satisfied that the explanation or explanations of the treatment complained of, did not include any material concern about having to make a pension strain payment if the Claimant were declared redundant.”
[16]Having said at paragraph 110 that it really did not need to decide whether the burden of proof had shifted, and given that it had noted that the parties were in effect agreed that if the pension strain cost was any material part of the Respondent’s reasons for behaving as they did in committing the alleged acts of discrimination it was proved, it is perhaps difficult to understand why the Tribunal thought it necessary to refer to the burden of proof at all. It gave no reasons for thinking it had shifted. It went on in analysing the evidence in the light of this shifting and at paragraph 130, having set out a number of comments on the evidence, said that:
“130. … It was not necessary, in order [to] fully explain [Ms Lynch’s conduct], to infer some extra ingredient of her being peculiarly actuated by the pension strain cost, even though she was aware of it.”
[17]The general thrust of what the Tribunal said was that the professor to whom the Claimant had reported whilst Assistant Director of the CTEU, and Ms Lynch, who was the officer of the Respondent principally concerned with the events, wished to retain the Claimant in service. They were keen that she should accept a job they thought was suitable alternative employment. It was at the same salary grade. It was doing work that had a significant resemblance to much of the work that she had been doing as Assistant Director of the CTEU. It had been in negotiations with the Claimant since the start of 2014, when the spectre of dismissal for redundancy had first arisen, in order to see if she would accept that particular post or some similar post. It had agreed that she could do so on a less than full-time basis to meet her own personal commitments as they were at the time.[18]The conclusion to which the Tribunal came was expressed in paragraph 141. It said: “141. Standing back and looking at the overall picture, we found that, whilst the fact that declaring the Claimant redundant would incur some significant cost, may have been a contributing factor to the Respondent’s stance on the matters in question, if the burden of proof had passed to it, then it had satisfied us that it was more likely than not that pension strain cost was not a specific influence, and that considerations other than that wholly explained the impugned treatment. To put it another way, we were satisfied that, had the Claimant been under 50, that treatment would have been the same.” (Original emphasis)[19]In its analysis coming to that conclusion the Tribunal had observed at paragraph 135 as to the explanations that had been advanced by the Respondent:
“135. … given this combination of explanations for why the Respondent did not take the step of simply dismissing the Claimant (for redundancy, but on the basis that she had no redundancy pay entitlement) at this point, we saw no particular compelling reason to infer that it was also the desire specifically not to incur the pension strain cost that influenced that stance.”
The Appeal[20]The appeal was advanced by Miss Seymour on two grounds. The first was that the Tribunal was bound on the facts to have found that there was a constructive dismissal; in any event, it had approached the issue in the wrong way. Secondly, as to age discrimination, she argued that the Tribunal had - in its closing sentence at paragraph 130 and had in paragraph 135 - applied a test which imposed too high a standard when seeking to see whether an inference could properly be drawn. Adopting the word at paragraph 130, she said this was the test of “necessity”; though the test in paragraph 135 is expressed as “no particular compelling reason to infer”, it is not significantly different, in her submission, from a test of necessity. First, given that the burden of proof had shifted, it should be assumed there had been discrimination unless there were a satisfactory explanation. The inference, in effect, was already to be made in favour of the Claimant. In any event, to apply a test of necessity to draw an inference is not to apply a test on the balance of probabilities. It is to place the bar too high. In deciding whether pension strain considerations influenced the behaviour at all in any material way, it could not properly take into account explanations on the one hand but reject the inference to the opposite effect in the manner it did.[21]Miss Seymour argued that the Tribunal had made a finding that had not been put forward by either party, namely that cost, she put it, was a consideration (the Tribunal’s actual wording, as pointed out by Mr Kemp in his skeleton argument in response, was “may have been”), and neither party had an opportunity to make submissions about it. It is accepted by both counsel before me that thinking that cost may be or was a consideration as opposed to pension strain cost being a particular consideration was not something raised by the Tribunal with the parties. She argued that the Tribunal failed to appreciate that its substituted finding was itself tainted with age discrimination, that being the question of whether cost was a factor at all. Further, it was perverse of the Tribunal to make the finding it did: she contended that there was evidence before the Tribunal that was to the effect that although the cost of redundancy as such was merely some £20,000, the pension strain cost would amount to around £½million in addition. I have to say those figures are not apparent from anything in the Tribunal Judgment, and therefore I regard them as forensic assertion for present purposes.[22]The response of Mr Kemp was that the grounds in respect of constructive dismissal sought to re-argue matters of fact. It is established (see Martin v Glynwed Distribution Ltd [1983] ICR 511, per Sir John Donaldson, paragraphs 514F-H and 520C) that the question whether an employee has been dismissed or has resigned is one of pure fact. He argued that the Claimant was driven in these circumstances to suggest that the Tribunal must have applied the wrong test, and he described the different formulations of the test in the recent Court of Appeal case of Eminence Property Developments Ltd v Heaney [2010] 43 EG 99 CA, per Etherton LJ at paragraph 61, applied by the Court of Appeal in an employment appeal, that of Tullett Prebon plc v BGC Brokers LP [2011] IRLR 420 CA, per Maurice Kay LJ at paragraph 20, that the employer must by its actions have abandoned and altogether refused to abide by the contract. This was recognised to be no different from the conventional approach by HHJ Burke QC in this Tribunal in Leeds Dental Team Ltd v Rose [2014] IRLR 8 , which, he submitted, this Tribunal had applied. Therefore, in his submission, it had adopted the correct approach.[23]The age discrimination appeal could not be founded on use of the word “necessary” in paragraph 130 taken on its own. The reference to cost as a possible factor in the reasoning of the employer did not suggest the Tribunal had adopted an argument that should have been put to the parties for consideration, since what the Tribunal was considering was the essence of the case, which was whether pension strain cost as such had had any part in that reasoning. Perversity was simply too high a hurdle to be demonstrated here, where the conclusion was certainly permissible on the facts. In essence, the Tribunal had concluded that the reason for the behaviour by the employer was that it thought it had made an offer of suitable alternative employment, wishing as it did to retain the Claimant in employment, and therefore was not influenced at all by the cost of enhanced pension should she be made redundant: it had never thought she would be. Discussion[24]Some opening remarks. The Judgment of the Tribunal is well written, but lengthy and descending into considerable detail. It may sometimes be that focusing upon detail prevents the bigger and broader picture being made easily visible. Secondly, in a situation in which an employee is employed to do a particular job and their contract of employment provides that that job will be given to the employee to do, by the employer, at a prescribed rate of pay, in response to a promise on behalf of that employee to do that work on the terms and conditions otherwise contained in the contract, it is of the essence of the contract that that work be made available for the Claimant. If it is not, then will usually constitute a breach of contract that goes to the root of the contract, is a fundamental departure from the contract, or indicates an intention by the employer to abandon and wholly refuse to perform the contract as agreed.[25]Accordingly, just as in Hogg , where, as here, an employee is engaged to do work that the employer will not continue to provide, the employee (as it seems to me almost inevitably) is within the scope of section 136(1)(c), subject only to any other term in the contract. which might prevent it being a breach, whether anticipatory or actual. Recognising the force of this point, Mr Kemp argued that the contract here provided for a flexibility clause, which prevented a breach of the agreement that the Claimant would perform specific work amounting to a repudiation of the contract as a whole.[26]One of the concerns that I have is that the Tribunal made no specific reference to the contract of employment, though I have been shown, I am told, the whole of the documentation that was before it relating to that contract. The job description, which appears on its face to be a contractual document, describes the title of the job as “Assistant Director, Clinical Trials and Evaluation Unit” and gives its location as being at the Royal Brompton Hospital. The contract is, I am told, and as is suggested by a further document that is associated with the job description, is related to the standard terms of employment of Imperial. At page 2 of the 11 pages of that document, under the heading “Job Responsibilities”, there is a passage titled “Job Titles and Duties”. It reads:
“Job titles are specified in the contract of employment. Duties are specified in the job description or as directed by the immediate manager. The College reserves the right to change job titles or duties, within the scope of the grade, following appropriate consultation.”
[27]Mr Kemp argued that in order to determine whether the contract was terminated the Tribunal could have taken into account the fact that the employer had the right under that provision to change job titles or duties within the scope of the grade following appropriate consultation. If it had done so, then it could be said that there was no breach of contract.[28]The difficulty, it seems to me, with this submission is threefold. First, it is not the way in which the Tribunal here approached the case. Secondly, the parties conducted themselves at all times as if they were anticipating that the contract of the Claimant as Assistant Director of the CTEU would terminate. The expression “suitable alternative employment” only comes into play in this context if there is first a dismissal, because it is only if there is a dismissal that there is any entitlement to a redundancy payment. If there is suitable alternative employment, the entitlement may be lost if unreasonably refused, but there has first to be that dismissal. If the contract were truly to continue, and if the approach of the employer under its terms was that it did so, there would have been no need to consider the question of a redundancy payment and suitable alternative employment at all. It would simply have told the Claimant that her contract continued, but that it was entitled to and had changed the work. Thirdly, if the college had wished to exercise the right within the contract, it would on any reasonable approach be expected that it would tell the employee concerned that it was proposing to exercise its power under this particular part of the contract. There is no sign in the findings of fact made by the Tribunal that that is what this employer ever purported to do.[29]I shall return to these points later in this Judgment. First, though, I must set out my conclusion that the Tribunal did not deal, as it seems to me, with the argument that was put in the ET1, which focused centrally on the change in nature of the job duties. Instead, it asked about the implied term of trust and confidence. In my view, it allowed itself to be sidetracked in doing so because once it started on this path it became concerned with the good faith of the employer, about the employer’s desire to keep the Claimant in employment, and about the question of whether the Respondent had a reasonable basis for thinking that the proposed job was suitable alternative employment. It did not therefore focus upon whether there was a dismissal within section 136. It did not focus upon whether there had been a fundamental breach of terms other than the implied term of trust and confidence. Yet there was an obvious candidate it should have considered: here there was a proposed change of job content, where the change was significant, as it might be thought, not least because the changes between the one contract and the other were such that the Tribunal concluded that it was unsuitable as alternative employment and that it was not unreasonable of the Claimant to reject it.[30]I am satisfied, therefore, but for one matter, that if the Tribunal had properly directed itself, it would have been bound to conclude that there was a constructive dismissal. The employer proposed to terminate the contract under which the Claimant was employed, or had already done so, and this termination could not be prevented from being a dismissal because the Claimant had unreasonably rejected an offer of suitable alternative employment since she had not, nor was it suitable. The one matter that gives me hesitation is the impact of the job titles and duties clause upon which Mr Kemp founds his submissions. He has successfully persuaded me that I ought not to substitute the decision of this Tribunal for that of the Tribunal below because it is just arguable that if the Tribunal had focused upon that particular clause and asked whether in fact the contract in these circumstances was being continued and not abandoned it might have the effect that the Claimant was not then entitled to resign as she did, and it would follow that she was not then entitled to a redundancy payment. (No argument was addressed as to the effect, if any, of the right to terminate on notice). As I have indicated, there are significant hurdles, as it seems to me, in the path of the Respondent in making these arguments, but I cannot say that it is out of the question that they might succeed. In saying so, I bear in mind that because of the way in which the argument proceeded below the Tribunal may not have focussed fully on whether there was a breach, which if there was justified resignation, and failed to focus upon the precise wording of section 136, to which I drew attention earlier.[31]For that reason, as will become apparent, I shall remit this issue to the Tribunal for further consideration. Age Discrimination[32]There is much to be said here for the view that the Tribunal was simply saying that the real reason for the approach of the Respondent was that it wished to retain the services of the Claimant. It thought that it had made an offer that was suitable to achieve this which it expected would be accepted, and for those reasons had not acknowledged the fact of her redundancy and asserted that it had offered her suitable alternative employment. I am, however, satisfied that though this may well be a fair reading of the Tribunal Judgment, it did not adopt the approach that it should have done in reaching this decision. Its reasoning is open to these difficulties. First, it did not say why it thought the burden of proof should be reversed. As I have indicated, in this particular case it need not have dealt with that issue at all. However, having reversed the burden of proof, even if that was only for the sake of arguing the strongest case against the point of view it was going to express, it then had to place the burden of proof upon the Respondent to show that it did not take into account the factor that it is said they did. Proof of a negative is never easy, but, though it may be that the word “infer” used at paragraph 130 and used again at paragraph 135 may be adopted simply because there was no express evidence to that effect, it then had to be approached on the basis that it was for the Respondent to satisfy the Tribunal that there was no such ingredient. Unless proved otherwise, it would be assumed there was. The inference was already drawn, by virtue of the statutory shift of burden. It is difficult to understand why then in that context the Tribunal should say what it did in the last sentence of paragraph 130 and in all of paragraph 135. The test of necessity or its analogue in paragraph 135 go beyond an assessment on the balance of probabilities, which is how one might expect an inference to be drawn as to what amounted to a reasonable inference from all of the facts.[33]It seems to me that the Tribunal here did not articulate as it should have done quite how it was expecting the burden of proof to operate. It apparently adopted too high a standard in respect of the inferences of discrimination that it rejected. Therefore I cannot be satisfied that its conclusion is one to which it was entitled to come, because it reached it in part by erroneous reasoning. It may well be that the matters that have been drawn to my attention by Miss Seymour are infelicities of expression in setting out a fairly simple point of view, that the cost never crossed the mind of the Respondent because it thought all the time that the Claimant would continue in its service, but the Tribunal did not put it that way, and it is its wording that one has to focus on, since it is the only means of knowing on appeal what it was. It follows that the appeal in respect of this ground too must also be allowed. Disposal[34]The consequence of the appeal is that the appeal on both grounds is upheld. Mr Kemp argues that the matter should be returned to the same Employment Tribunal; Miss Seymour is agnostic as to whether it should be the same or a fresh Tribunal, though argues that there may be some delay if it is the same. I have had regard to the particular considerations as set out in paragraph 46 of Sinclair Roche & Temperley v Heard [2004] IRLR 763 , number 19 in the Familiar Authorities Bundle at the EAT. It seems to me that although proportionality and time are not significant in this case and although the Tribunal expressed a view, in the end the Judgment itself shows an attention to detail and a care that encourages me to think that the professionalism of the Tribunal is such that it will carefully look at the issues and be prepared to change its mind as to its conclusions should it think it appropriate to do so. I shall therefore remit the case to the same Employment Tribunal for further hearing.[35]I leave it open to the Tribunal whether it wishes to hear any more evidence - if so, I would expected that to be limited to the issues in respect of the contract - but I do not encourage it. Otherwise, I anticipate that the remitted hearing will be one for submissions in the light of the evidence that the Tribunal heard last March, in dealing with both the issues of constructive dismissal - whether the contract was terminated or not - and that of age discrimination.