Novakovic v Tesco Stores Ltd (Unfair Dismissal: Constructive dismissal) [2016] UKEAT 0315_15_0103

EAT
Novakovic v Tesco Stores Ltd (Unfair Dismissal: Constructive dismissal)
[2016] UKEAT 0315_15_0103 · 2016-03-01
[1]Mrs Novakovic, who I will refer to as “the Claimant”, appeals from the Decision of Employment Jude Elliot (sitting alone), following a hearing at the London (South) Employment Tribunal on 24 and 25 March 2015, with Written Reasons sent to the parties on 27 March 2015. The Tribunal found that Tesco Stores Ltd, the Respondent, had committed a repudiatory breach of contract but that the Claimant had affirmed that breach prior to her resignation on 12 September 2014, with effect from 19 September 2014. Accordingly her claims of constructive unfair dismissal and unlawful deductions from wages failed and were dismissed.[2]The Claimant commenced employment with the Respondent on 2 December 2000. At the material time her role was that of Service Manager in the Wimbledon Metro store. In September 2013 she noted shortfalls on the self service tills in the store. She informed the Store Manager and reported it on the End of Week Finalisation Report. In November 2013 she discovered from CCTV footage that a cleaner had been stealing money from the tills. The following month the Respondent started disciplinary proceedings against the Claimant in respect of the shortfall on the tills. On 30 December the Claimant lodged a grievance with the Group Personnel Manager.[3]Following a disciplinary hearing on 27 February 2014, the Claimant was demoted to the post of Customer Assistant; this was two grades below her role of Service Manager. The reason given by Mr Morson, who conducted the hearing, for his decision was because he believed the Claimant “should stand over the process for cash routines and process and her actions caused a threat to the business and profit line”.[4]The Claimant appealed and the appeal hearing took place on 10 April 2014 before Mr Oliver Hill, Store Operations Manager. Mr Hill upheld the appeal in part, as he considered that demotion by two grades was too harsh. He reduced the sanction to demotion to Team Leader, one grade below her original role. Mr Hill confirmed his decision by letter dated 7 May 2014.[5]Following the appeal, the Claimant worked in the role of Team Leader at a different store and was paid at the Team Leader’s rate of pay. On 7 July 2014 the Claimant signed a contract of employment for the role of Team Leader Express. The rate of pay in that contract was given as £356.30 per week, which was less than half of what she had been earning as Service Manager.[6]On 7 August the Claimant raised a further grievance concerning her demotion and sought to be restored to her previous position with the salary that went with it. On 27 August Mr Hill wrote to the Claimant informing her that the internal process had concluded and that a grievance could not be used to continue that process.[7]On 12 September 2014 the Claimant sent a letter of resignation giving one week’s notice, terminating her employment with effect from 19 September. The reason for her resignation was set out in the second paragraph of that letter, as follows:
“I really did not want it to come to this and have tried to give you every opportunity to remedy the wrong that was done to me, but you have not only delayed responding to me, you have also completely refused to consider my position. Accordingly, I believe that I have had no choice but to take this decision due to the fact that I consider you to be in fundamental breach of contract because you wrongfully and unreasonably significantly changed my job which meant the halving of my salary. You also subjected me to undue treatment and did not carry out an appropriate grievance procedure in line with my contract. In addition, you have unreasonably damaged my career prospects.”
[8]The Claimant suffered depression and was on antidepressants, which she said had hindered her search for new employment.[9]The Tribunal found that the reason the Claimant resigned was as set out in her resignation letter. Her demotion and consequent loss of salary was the reason for her resignation. Further, the Tribunal found that the disciplinary process was seriously flawed. The Tribunal at paragraph 126 of the Reasons for the Judgment stated:
“126. I find that the failings in the way in which the disciplinary procedure was conducted coupled with a disproportionate finding of gross misconduct leading to demotion, amounted to a repudiatory breach of the claimant’s contract of employment. She resigned in response to this breach.”
[10]The Tribunal then at paragraphs 127 to 132 considered the question “Was the breach affirmed?” The material findings of the Tribunal on this issue are as follows. First, the Claimant can have been in no doubt whatsoever that a demotion would have led to a reduced salary (paragraph 127). Second, the Claimant commenced work as a Team Leader and worked in that role in April, May, June and July before attempting to raise another grievance about the matter on 7 August 2014. This grievance did not change matters; it related to the disciplinary process and the decision to demote her (paragraph 128). Third, the Claimant attended work between April and September 2014. Significantly, on 7 July 2014 she signed terms and conditions of employment as a Team Leader with the salary details clearly stated. She gave no indication of working under protest or of signing the Team Leader contract under protest. She signed directly underneath the words “I understand and accept the terms and conditions outlined” (paragraph 129). Fourth, this contract then became her contract of employment. The Respondent was not in breach of any express term by paying the Claimant as a Team Leader (paragraph 130). Fifth, any last straw forming part of the repudiatory breach took place on 10 April 2014 when Mr Hill informed the Claimant of the appeal outcome. She affirmed the contract by attending work in the Team Leader’s role and signing a Team Leader’s contract without protest on 7 July 2014. Her attempt to raise a grievance on 7 August 2014 was an attempt to reopen a process which had been concluded (paragraph 131). Sixth, by continuing to work as a Team Leader from April to September 2014 and by signing a Team Leader’s contract without protest, the Claimant affirmed the Respondent’s breach of contract (paragraph 132).[11]Ms Charlotte Davies, for the Claimant, advances three grounds of appeal against the Tribunal’s finding that the Claimant affirmed the Respondent’s breach. First, that the Tribunal erred by failing to take account of material evidence on the issue of the Claimant’s protest against her demotion to the Team Leader role. Second, that the Tribunal reached a perverse conclusion that the Claimant gave no indication of protest against her demotion. Third, as the Tribunal’s finding of lack of protest was central to it’s decision that the Claimant affirmed the contract, it should have set out clear reasons why it rejected her evidence of oral protest and reached the conclusion that she did not protest.[12]Each of these grounds is based on the Tribunal’s finding that the Claimant gave no indication of protesting her demotion. It is that finding that is at the heart of this appeal.[13]The legal principles to be applied are not in dispute. W E Cox Toner (International) Ltd v Crook [1981] IRLR 443 remains the leading case on the doctrine of affirmation as it applies where an employer is in fundamental breach of an employee’s contract. Mr

Justice Browne-Wilkinson in his judgment said so far as it material:

“13. … Mere delay by itself (unaccompanied by any express or implied affirmation of the contract) does not constitute affirmation of the contract; but if it is prolonged it may be evidence of an implied affirmation: Allen v Robles [1969] 1 WLR 1193. Affirmation of the contract can be implied. Thus, if the innocent party calls on the guilty party for further performance of the contract, he will normally be taken to have affirmed the contract since his conduct is only consistent with the continued existence of the contractual obligation. Moreover, if the innocent party himself does acts which are only consistent with the continued existence of the contract, such acts will normally show affirmation of the contract. However, if the innocent party further performs the contract to a limited extent but at the same time makes it clear that he is reserving his rights to accept the repudiation or is only continuing so as to allow the guilty party to remedy the breach, such further performance does not prejudice his right subsequently to accept the repudiation …”
[14]It is the Claimant’s case that she made clear to the Respondent that she would only perform the role of Team Leader under protest while she sought to have the decision to demote her overturned. In support of this contention, Ms Davies relies on the witness statement of the Claimant where she stated at paragraph 46:
“46. Between May and August 2014 I contacted the Tescos’ Group Personnel Manager by telephone and spoke to my Store Manager, Store Personnel Manager and to the Regional Express Manager in person to tell them how badly I felt about my demotion, to tell them that it was wrong, that the situation was unacceptable and to try and have the decision overturned.”
[15]Following the Rule 3(10) application before Mr Justice Langstaff, the then President, the Claimant’s solicitors wrote to the Respondent’s solicitors on 4 December 2015:
“We refer to paragraph 6 of the EAT Order. You will note from the Notice of Appeal that the Claimant relies on paragraph 46 of her statement and says that this was not challenged by the Respondent. Whilst we believe that this was clearly the case from the hearing, for the sake of completeness, we would be grateful if you could let us know whether you disagree with our … recollection.”
There has been no response to that letter. Mr Orlando Holloway, who appears for the Respondent, as he did before the Tribunal, does not suggest that this evidence was challenged before the Tribunal. Indeed he accepts it was unchallenged.[16]I note that the Claimant’s witness statement continues at paragraph 47:
“47. The last I heard on the subject was from the Group Personnel Manager when I had asked them to clarify whether the demotion was for a fixed term. It took them ages to respond. Some sort of reply finally came on 11 August 2014 from the Group Personnel Director who informed me that she could not comment on the appeal decision and that I would have to re-apply through the manager’s options programme, in order to secure a manager’s position in the future. It also said that a grievance outcome letter would be sent in respect of my February grievance. …”
At paragraph 53, the Claimant stated:
“53. On 12 September 2014, without having received any grievance outcome, feeling sick and depressed I just wanted to leave as it was apparent that I was not going to get any justice. I therefore had no choice but to submit my resignation on 12 September 2014 and my last day at Tescos was 19 September 2014.”
Mr Holloway does not suggest that these paragraphs in the witness statement were challenged before the Tribunal.[17]The President, granting permission for this appeal to proceed, commented at paragraph 7 of this Judgment that:
“7. … the Tribunal plainly thought the absence of protest was a matter of some importance in the objective assessment of whether there had been conduct which meant that the Claimant was accepting that her contractual relationship with her employer should continue notwithstanding its breaches, it may be that its conclusion could be said to be [a] material misapprehension of facts. …”
[18]Ms Davies points in particular to paragraphs 129 and 132 of the Reasons in support of her submission that the Tribunal erred in disregarding the Claimant’s evidence that she was working under protest. At paragraph 129, the Tribunal stated:
“129. … She gave no indication of working under protest or of signing the Team Leader contract under protest. …”
At paragraph 132, the Tribunal stated:
“132. I find by continuing to work as a Team Leader from April to September 2014 and by signing a Team Leader’s contract without protest, the claimant affirmed the respondent’s breach of contract. …”
[19]Mr Holloway submits that in those two passages, in paragraphs 129 and 132 that I have quoted, and in addition in paragraph 131 where the Tribunal state: “131. … She affirmed the contract by attending work in the Team Leader’s role and signing a Team Leader’s contract without protest on 7 July 2014. …” the Tribunal made reference to an absence of protest from the Claimant on three occasions. On each of those occasions the references are to an absence of protest at the time of signing the terms and conditions, rather than an absence of protest by the Claimant at any stage. There was, Mr Holloway submits, a good reason for that. The Tribunal noted at paragraph 99 of the Reasons that the Claimant had said in evidence that she had accepted the terms and conditions set out in the Team Leader contract of employment; and indeed she had. She signed the contract expressly accepting the terms and conditions. That is the context in which paragraphs 129, 131 and 132 must be read. Mr Holloway contends that at no point did the Tribunal conclude that the Claimant did not protest about her demotion in any way after 10 April 2014. Indeed the Tribunal expressly referred to the Claimant’s grievance of 7 August 2014 which is an example of such a protest (and the only written example). The Tribunal concluded that by working in the role from April 2014, and by signing the terms and conditions on 7 July 2014 without protest, the Claimant affirmed her contract. The oral protests that the Claimant made that are referred to paragraph 46 of her written statement pale into insignificance, submits Mr Holloway, by comparison with the express acceptance by her in writing on 7 July of the new contract. The Judge omitted to refer to the oral protests, but for the reason he advances Mr Holloway submits this was not an omission of significance.[20]I do not accept this submission. First, it seems to me that in paragraph 129 (if not in paragraphs 131 and 132) the Tribunal is saying that throughout the period from April to September the Claimant gave no indication of working under protest. Second, even if that is not so and Mr Holloway is correct in his construction of all three paragraphs, I do not consider the Tribunal was justified, having regard to the authorities, in ignoring the protests made by the Claimant throughout the period she worked as Team Leader. The evidence relating to the signing of the contract on 7 July may be powerful evidence of affirmation, but I agree with Ms Davies that focussing exclusively on 7 July is to consider the issue of affirmation too narrowly.[21]When determining the issue of affirmation, the Tribunal is under a duty to consider all relevant evidence. It seems to me that the Tribunal failed to have regard to all the material evidence. It may be that on 7 July 2014 the Claimant signed a Team Leader’s contract without protest. However, in the light of the unchallenged evidence of the Claimant, it cannot be said that “She gave no indication of working under protest” (paragraph 129) or that, on Ms Davies construction (paragraphs 131 and 132) she worked as a Team Leader from April to September 2014 without protest.[22]This highly significant evidence supporting the Claimant’s case that she only worked as Team Leader under protest, which is directly relevant to the issue of whether she affirmed the Respondent’s breach, was not dealt with in the Tribunal’s Decision. In the light of this unchallenged evidence the Tribunal, plainly in my view, erred in finding that the Claimant worked as Team Leader without protest.[23]For these Reasons, this appeal succeeds. This is not a case, as counsel recognise, where this Tribunal can substitute its own view for that of the Employment Tribunal. That being so, this case must be remitted to the Employment Tribunal.[24]The only question is whether it should go back to the same Tribunal or not. Ms Davies submits that if the case were to be remitted to the same Tribunal there is a real risk that it will be naturally tempted to reach the same result on affirmation, and that this Tribunal cannot have sufficient confidence that it would be willing to come to a different conclusion on this issue. I understand the concern, but applying the well known test in Sinclair Roche & Temperley v Heard [2004] IRLR 763 , I am satisfied that this is a case where I can and should remit to the same Tribunal. In reaching this conclusion I have given careful consideration to the “second bite of the cherry” concern, but directing the Tribunal, as I do, to consider with care the unchallenged evidence of the Claimant with regard to the protests that she made to a number of members of the Respondent’s management between May and August 2014, I am satisfied that the Tribunal will consider carefully this evidence, and thus be willing or enabled to come to a different conclusion, if so advised. It would in my view be disproportionate for this case to go to a new Tribunal and for the whole case to start afresh when it can be remitted to the same Tribunal to determine one narrow, albeit important, issue.[25]Accordingly, I allow this appeal and direct that the issue of affirmation of breach be remitted to the same Tribunal. ADDENDUM[26]I have read the correspondence between the parties’ solicitors since the hearing of this appeal as to whether the determination of the issue of affirmation of contract will involve the hearing of oral evidence. For the avoidance of doubt I make clear that I do not consider there should be any further oral evidence at the remitted hearing.