Appeal No. EAT/0716/02/SM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 7 March 2003

Before
HIS HONOUR JUDGE J McMULLEN QC
MR J C SHRIGLEY
MR A D TUFFIN CBE

MRS B J COW	APPELLANT

SURREY AND BERKSHIRE NEWSPAPERS LIMITED	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MISS NAOMI CUNNINGHAM
(of Counsel)
Instructed By:
Free Representation Unit
4th Floor
Peer House
8-14 Verulam Street
London WC1X 8LZ	
For the Respondent	MR PAUL HOLMES
(of Counsel)
Instructed By:
Messrs Perkins Mainman
1 King Street
Manchester M2 6AW	

JUDGE J McMULLEN QC:

1	This case is about when an employee who is claiming constructive dismissal must resign.  We will continue to refer to the parties as Applicant and Respondent.  It is an appeal by the Applicant in those proceedings against a Reserved Decision of an Employment Tribunal sitting at London South, Chairman Miss R.A. Lester, registered with Extended Reasons on 25 May 2002. 

Introduction

2	The Tribunal had sat for a day then called for written submissions which were exchanged between the parties with further comments thereon, in accordance with the procedure in London Borough of Barking and Dagenham v Oguoko [2000] IRLR 179 EAT.  The Applicant represented herself and is now represented by Miss Naomi Cunningham of Counsel, through the auspices of FRU.  The Respondent was represented by a Solicitor and today by Mr Paul Holmes of Counsel.

3	The Applicant claimed that she had been constructively unfairly dismissed.  The Respondent denied dismissal.  It contended the Applicant had affirmed her contract of employment, did not resign in response to any change in her contract but also that, if she was dismissed, it was for redundancy, in which case she refused suitable alternative work and was thus not entitled to a redundancy payment.  Alternatively, she was dismissed for some other substantial reason and the dismissal was fair.

4	The essential issue as defined by the Employment Tribunal was to decide whether there was a dismissal, constructive or otherwise, and then consider fairness and remedies.  It found that was not dismissed.  The Applicant appeals against that finding on grounds set out in a Notice of Appeal and in a skeleton argument and oral submissions today.  The grounds are the Employment Tribunal built into its findings a requirement of reasonableness on the part of an employee accepting repudiation by her employer.  Secondly, that affirmation of a contract of employment requires some communication, express or implied to the employer, and that none existed in this case.  Directions were given in this appeal at a preliminary hearing by Judge Altman and Members on 6 November 2002.

The legislation
5	Section 95(1)(c) of the Employment Rights Act 1996, says this:

“(1)	For the purposes of this Part an employee is dismissed by his employer if (and ... only if) –
(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.”

The facts
6	The Applicant was employed by the Respondent or its predecessors from 15 July 1992 until she resigned by letter dated 4 March 2001.  She was Area Controller for the distribution of newspapers, both free and purchased, in Esher, Surrey.  Working from her home which was near Guildford, she had responsibility for supervisors in the area, who in turn supervised the delivery of the newspapers.

7	The Respondent reorganised its business in 1998.  Considerable changes in the Applicant’s work were required, including that she attend at the Respondent’s office in Guildford every week day afternoon instead of working from home.  Again, in September 2000, the Respondent informed the Applicant of further changes in her working conditions.  She had accepted the previous changes but did not accept these.  The changes made her extremely unhappy.  She indicated that the circumstances put to her constituted a constructive unfair dismissal, and that she would consult her Solicitor for advice.  She decided to put the matter into the grievance procedure.

8	The Applicant had complained that the changes made her work uncongenial and arduous.  The culmination in the grievance procedure was reached on 12 February 2001, when her grievance and appeal were both dismissed.  That communication reached her a day or so later and on 4 March 2001 she resigned and contended, before the Employment Tribunal, that she had been constructively dismissed.

9	The Tribunal found that the Applicant had been faced by fundamental changes in her contract in September 2000.  We take that to be a finding in her favour that there was a fundamental breach by the Respondent.

10	The Applicant continued to work and to draw pay until February 2001, while she was operating the grievance procedure.  The Tribunal thus was concerned to separate two periods: 

a.	from September to 13 February 2001, while the grievance procedure was en train; 
b.	from receipt of the letter dismissing her grievance on about 13 February to 4 March 2001.  

11	The Tribunal decided that the Applicant had affirmed the contract during that second period, it being described as about three weeks which it held to be not very long.  The Tribunal took into account that the Applicant had had a number of months to see the effect of the new job, and the new changes in the terms and conditions upon her working arrangements as imposed in September 2000.  The Tribunal then said this:

“It would be unreasonable for her not to have contemplated, during this period, the situation she would be in were her grievance to be dismissed in the end …
The decision to resign was a big decision for her and that she needed to discuss the matter, particularly the financial situation, with her husband.  But again, this could reasonably have been done over the previous months.”

The Tribunal then went on to find as follows:
“In all the circumstances of the case the Tribunal decides that the Applicant affirmed the contract;  she delayed her resignation until 4 March (continuing to work and to be paid during that period) for no reason that leads the Tribunal to find that there was no affirmation in this case.”

Tribunal directions

12	The Employment Tribunal directed itself to Section 95(1)(c) (above) and the relevant authorities which it is common ground are contained in a correct self-direction at paragraph 15 of the Reasons.  These are Jones v F Sirl & Son (Furnishers) Ltd [1997] IRLR 49, Western Excavating (ECC) Ltd v Sharp [1978] ICR 221 and W E Cox Toner (International) Ltd v Crook [1981] ICR 823.

Submissions

13	On behalf of the Applicant Miss Cunningham submitted that the Tribunal had erred in law in its conclusion that the Applicant had not been constructively dismissed.  The criticism is as to the use of the words “unreasonable”, “reasonably” and “reason” in the three passages we have cited at paragraph 11 above.  She contends that this is to introduce into the law relating to affirmation of a contract of employment a requirement of reasonableness akin to the band of reasonable responses for unfair dismissal applied to Section 98(4) of the Employment Rights Act in Post Office v Foley [2000] IRLR 827 CA.  This would be novel and unfair, given the balance of power in the employment relationship.  Even if it were appropriate to introduce reasonableness, then it would be a band of reasonableness, symmetrical to, as she put it, the application of Section 98(4).  The Tribunal is not to substitute its judgment as to what would be reasonable in those circumstances.

14	Secondly, Miss Cunningham contends that the communication of the Applicant’s affirmation has to be express or implied, acknowledging the contention by Mr Holmes that in employment relations most affirmations are by implication, rather than express, for why else should such cases arise so frequently?  Miss Cunningham contends that the test is objective and that the conclusion to be drawn is that of a reasonable employer to the action, conduct or words of an individual employee.  It is submitted that the Employment Tribunal did not find that the Applicant made any express or implied affirmation.

15	On behalf of the Respondent, Mr Holmes contends that a fair reading of the passages we have cited indicates that the Tribunal was not considering the question of reasonableness of the employee’s behaviour, but simply assessing all the circumstances of the case.  The word “unreasonable” in its first citation may well mean “improbable”.  It is clear, in any event, that the Tribunal was acknowledging that it is possible to have regard to the first period during which the grievance procedure was operating, in order to consider what period of time must elapse before it could be said that the Applicant had impliedly affirmed the contract.  Affirmation is a matter of implication from the primary facts, for example, the Applicant continuing to work and being paid, and having some five months to consideration what to do should the grievance go against her.  

16	Mr Holmes contends that although the facts are similar to the Cox Toner case (above), the Tribunal did not regard itself as bound by the facts of Cox Toner, to come to the conclusion that the Respondent’s submissions were correct.  

The legal principles

17	The leading authority of Cox Toner has been relied on by both Counsel in this case.  That was a judgment of Mr Justice Browne-Wilkinson, presiding with Members at the EAT.  The facts do bear a similarity to the facts in our case but we are, of course, concerned with the essential holding of the EAT, rather than a direct match of the facts.  In that case a Director of a Company was threatened with dismissal because of complaints about his conduct.  The allegations of misconduct were not withdrawn, despite the employee’s repeated denials.  Six months later his Solicitors wrote, saying that the employee would resign unless the allegations were retracted.  On 6 February 1980, the employers refused to withdraw the allegation and on 3 March 1980 the employee resigned.  During the period he had continued to work and accept salary.  There was thus a seven months’ delay between the original repudiation of the contract and the resignation.  The Employment Tribunal decided that that period did not amount to an affirmation and that the employee was unfairly dismissed.  The EAT allowed an appeal, holding that the Tribunal had erred in concentrating only on whether the employee’s delay in resigning amounted to an affirmation.  The Tribunal ought to have considered other possible evidence of affirmation.  

18	The essential issue, therefore, was how to characterise delay.  Mr Justice Browne-Wilkinson cited the passage from the judgment of Lord Denning MR, in Western Excavating, (above) as follows, at page 827 of the Cox Toner judgment.

“The employee is entitled in those circumstances to leave at the instant without giving any notice at all or, alternatively, he may give notice and say he is leaving at the end of the notice.  But the conduct must in either case be sufficiently serious to entitle him to leave at once.  Moreover, he must make up his mind soon after the conduct of which he complains:  for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged.  He will be regarded as having elected to affirm the contract.”

Mr Justice Browne-Wilkinson set out the law relating to affirmation, which was the common ground of those appearing before it, as follows:  see page 828F:

“If one party (‘the guilty party’) commits a repudiatory breach of the contract, the other party, (‘the innocent party’) can choose one of two courses:  he can affirm the contract and insist on its further performance or he can accept the repudiation, in which case the contract is at an end.  The innocent party must at some stage elect between those two possible courses:  if he once affirms the contract, his right to accept the repudiation is at an end.  But he is not bound to elect within a reasonable or any other time.  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 applied affirmation:  Alan Robles [1969] 1 WLR 1193.  Affirmation of the contract can be applied.  Thus, if the innocent party calls on the guilty party for further performance of the contract, he will normally be taken to affirmed the contract since his conduct is only consistent with the continued existence of the contractual obligation.”

Mr Justice Browne-Wilkinson, who was mindful of the comments of Lord Denning, indicated the difficulty of applying them in every employment situation, for he said at 829 C:

“An employee faced with a repudiation by his employer is in a very difficult position.  If he goes to work the next day, he will himself be doing an act which, in one sense, is only consistent with the continuing existence of the contact, ie he might be said to be affirming the contract.  Certainly, when he accepts his next pay packet (ie further performance of the contract by the guilty party) the risk of being held to affirm the contract is very great:  see Saunders v Paladin Coachworks Ltd [1967] 3 ITR 51.  Therefore, if the ordinary principles of contract law were to apply to a contract of employment, delay might be very serious, not in its own right but because any delay normally involves further performance of the contract by both parties.  It is not the delay which may be fatal but what happens during the period of the delay:  see Bashir v Brillo Manufacturing Co [1979] IRLR 295.”

He went on to say, at 829G, in respect of a further decision cited by the EAT:

“This decision to our mind establishes that, provided the employee makes clear his objection to what is being done, he is not to be taken to have affirmed the contract by continuing to work and draw pay for a limited period of time, even if his purpose is merely to enable him to find another job.”

19	Thus it was, in Cox Toner, that the EAT turned to consider the two relevant periods, similar as they are in duration to the ones in our case.  The EAT did not find it necessary to decide whether or not the six months that the Applicant  had continued to work, draw his pay and object, was beyond the period during which delay did not operate to defeat the affirmation.  It however considered the second period, that is, after the unequivocal rejection by the Applicant’s Solicitors and his resignation.  The Employment Tribunal in the Cox Toner case was overturned, because it considered simply the period of delay, whereas what ought to have occurred, was a consideration of all of the circumstances.  That is why Mr Justice Browne-Wilkinson posed this question, at page 831 A

“When that ultimatum was rejected, what possible justification can there have been for a further delay of nearly one month?  He had told the employers of his decision to resign.  When, therefore, despite their refusal to withdraw the allegation, he continues to work and presumably draw his salary for a further month thereafter, viewed from the angle of the employers it must have appeared that he had decided not to resign but to continue in the employment, thereby electing to affirm the contract.  The industrial tribunal say that he took a little time to look around and make alternative arrangements and did not consider the delay unreasonable.  We consider that, if the industrial tribunal had directed itself properly and taken into account the factors we have mentioned above (and in particular that during the further month he was still working) they could not properly have reached the conclusion that he did not thereby affirm the contract.  To stay at work for a period of one month to ‘look around’ starting from the initial breach of contract might well not have been fatal:  but to work for a further month, six months already having elapsed, seems to us inconsistent with saying that he had not affirmed the contract.”

Conclusions

20	In our judgment those conclusions are apt for the determination of the present case.  The Employment Tribunal did not consider the period of delay in isolation, but looked at the period during which the grievance was being operated.  It also considered the fact that the Applicant continued to work, and continued to be paid, and indeed had had a pay increase notwithstanding that she was unhappy with the work.  

21	The conclusion the Tribunal reached was a matter of fact for it alone.  When it talked about what was reasonable, it was really discussing what was a reasonable period of time during which, from the perspective of the employer, the Applicant could be considering her position.  At the end of such a reasonable period the employer was entitled to assume that the Applicant was going to put up with the defeat of her grievance.  She worked on.  That is a conclusion of fact that was open to the Tribunal.  It appears to us a comparatively short period, at least if there had been no intervening grievance procedure.  Three weeks in which to make up your mind about something as serious as constructive dismissal would, in many cases, not be an unreasonable delay, as we see it, but we are not the judges of fact in this case and whether we would have treated that period, bolted on to the unsuccessful grievance time, would have concluded differently is irrelevant.  

22	We have to say that a grievance procedure operated by an employer which takes five months to reach its outcome is most unlikely to meet any test of reasonableness.  Nevertheless, that was not the issue before the Employment Tribunal, nor should it be assumed that the relationship between the five months during which the employer operated the grievance procedure, and the three weeks which was available to the employee before she was deemed to have affected an affirmation, should not be taken to be a precedent.  There really is no relationship between the two and the correct approach is, as this Tribunal did, to look at the period of delay, what occurred during the delay following the final rejection of the grievance, and the circumstances which the Applicant and the employer were in during the five months when the grievance was running.  The Tribunal has, it seems to us, done all of those matters.  We will dismiss the appeal.

23	We heard submissions from both Counsel about what should be the disposal of this case, should we have allowed the appeal.  It would have to go back.  This would be a time-consuming and expensive process.  The Tribunal had a full day’s evidence and retired for one day to consider the submissions made to it.  We see no reason why the Tribunal did not make alternative findings on the basis that it might have been wrong in law on its primary finding, so that we would have available to us the Tribunal’s reasoned judgment on dismissal, reason for dismissal, and fairness.  We can well understand a Tribunal, at the end of a long day, in order to save further costs, deciding not to hear further evidence on alternative cases. But if, as in this case, the whole of the case has been put before it, a Tribunal should discharge its function and give a judgment on all of the issues.  If it had done in this case, and had our decision been otherwise, we would have been able to accede to the submissions of both Counsel, and make decisions on the basis of clear findings on those issues the Tribunal set itself to decide.  

24	Miss Cunningham asked for permission to appeal.  She identified no grounds or point of law.  She was obviously being expeditious in her submissions and we will assume that everything that we have said give her grounds for appeal.  She must ask the Court of Appeal for that, since we see no reasonable prospect of success. 

25	We would like to thank both Counsel very much for their careful approach to this case.