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and by the respondents from


									                                                                                            FORM EMPROT 3

                  STATES OF GUERNSEY
                                                                                            For office use only.
                  BOARD OF INDUSTRY                                                         Case No: 032/02

       On a complaint of unfair dismissal, or failure by an employer to provide a written
       statement of reason(s) for dismissal, this award, (subject to the rights of appeal to the
       Royal Court, as set out in the Law), is legally binding and is the final decision of the

                               Adjudication Hearing held on 19th May 2003


Applicant: Mr Michael Welch              and      Respondent: Westward Investments Ltd.

Adjudicator: Mr Peter Woodward

Nature of Dispute: During the period April 1999 to November 2002 Mr Welch was employed as a Front
of House Manager with Westward Investments, his primary role to sell Time Share units. Mr Welch claimed
that a series of seasonal contracts constituted continuous employment during this period and thus entitled him
to bring a claim under the 1998 law. He claimed that whilst in this employment, his position had become
intolerable as the result of persistent attempts to vary his contract of employment by the employer without his
agreement or consent and with a unilateral decision to reduce his base pay. Mr Welch contended this went to
the root of his employment contract. In consequence he lost trust and confidence in his employer and he saw
no course open to him other than to resign. He claimed unfair dismissal (constructive) under The
Employment Protection (Guernsey) Law, 1998.

Westward Investments Ltd. contested the claim, arguing firstly that the case could not be heard as it did not
qualify under the two years continuous service rule, and, in the event that this argument was not upheld, that
there was no dismissal, rather an expiry of a fixed term contract.

Adjudicator’s Decision: Following a comprehensive review of testimony and relevant documents the
Adjudicator found that the employment had been continuous from 1999 to 2002 and that there was sufficient
testimony and written evidence to prove that, on the balance of probabilities, Westward Investments Ltd.
acted in such a way that their conduct amounted to a repudiation of the implied term in the contract of
employment of trust and confidence. Mr Welch’s claim was, therefore, upheld.

Amount of Award (if applicable): £9,786.54

NOTE: Any award made by an Adjudicator may be liable to Income Tax
     Any costs relating to the recovery of this award are to be borne by the Employer

     Signature of Adjudicator:          Mr P. Woodward                            Date:   2 June 2003
                                                                                FORM EMPROT 3A

                                                                                For office use only.
              STATES OF GUERNSEY                                                Case No: UD032/02

              BOARD OF


The Law referred to in this document is The Employment Protection (Guernsey) Law, 1998.

1.     The Claim

       1.1    The Plaintiff, Mr Welch, claimed in the EMPROT1 (Application Form) to have
              been continuously employed by Westward Investments Ltd. for the period April
              1999 until 11th December 2002. These dates were disputed by Westward
              Investments in the EMPROT2 (Response Form), in which it was claimed that Mr
              Welch had been employed under a series of “seasonal” contracts and therefore did
              not have the two years of continuous employment, required by the Employment
              Protection (Guernsey) Law, 1998, in order to bring a claim of unfair dismissal.

       1.2    At the commencement of the Hearing on the 19th May 2003, the issue of
              continuous employment was given consideration prior to any decision to hear the
              alleged case of Unfair Dismissal. It was the Adjudicator’s decision that, given the
              specific details of Mr Welch’s case, the claim of continuous employment should be
              upheld and the case for unfair dismissal should be heard. The representations by
              both parties relating to this issue are dealt with, in detail, in this document.

       1.3    Mr Welch claimed in the EMPROT1 that he had been dismissed unfairly, and that
              the dismissal was “Constructive”. He gave, as his primary reasons, a unilaterally
              imposed decrease in his weekly pay, and asserted that Mr Vermeulen had set a
              2003 sales target that was, in Mr Welch’s words, “not remotely achievable”. Mr
              Welch alleged that, during these negotiations with Mr Vermeulen, other verbal
              offers further reduced his prospective pay for the year 2003. Mr Welch claimed
              that the relationship between himself and his former employer had broken down to
              such an extent that he no longer had trust or confidence in that relationship.

       1.4    Westward Investments claimed in EMPROT2 that the contract between them and
              Mr Welch had expired with the end of the season and that no dismissal had taken
              place. It was stated that, as Mr Welch had rejected his 2003 contract, discussions
              to find “another way forward” did occur but to no avail. Westward Investments
              Ltd. claimed that Mr Welch left the company on good terms and was subsequently
              surprised that Mr Welch had lodged a complaint of unfair dismissal. The
              representations by both parties relating to the alleged unfair dismissal issue are
              dealt with, in detail, in this document.
2.   Representatives

     2.1   Mr Christopher Vermeulen, a Director of Westward Investments Ltd.,
           represented the company.

     2.2   Advocate Jessica Roland represented Mr Welch

3.   Witnesses

     3.1   For Westward Investments:

           Mrs Anne Keyho
           Mr Mike Radford

     3.2   For Mr Welch:

           Miss Bancroft

     3.3   Called by the Adjudicator:

           Mr Christopher Vermeulen

4.   Documents

     4.1   Entered by Plaintiff (Mr Welch)

           EE1: - Documentation Pages 1 to 129 & “Authorities” Pages 130 to
           EE2: - Further documentation including “Right to Work” & Housing
           Licence Applications
           EE3: - Correspondence from States of Guernsey Housing Authority

     4.2   Entered by Respondent (Westward Investments Ltd):

           ER1: - Documentation including witness statements and various letters
           listed from “A” to “K” relating to the continuing employment issue.
           ER2: - Documentation including Timeshare sales details and additional
           witness statements relating to the unfair dismissal claim.
           ER3: - UK Court of Appeal judgement in the case of Curr-v-Marks &
           Spencer PLC
           ER4: - Letter from Guernsey Hotel & Tourism Association
           ER5: - Payroll documentation for Mr Welch and correspondence from
           Mr Vermeulen
           ER6: - Opinion from Westward Investments on subject of what
           constitutes and what does not constitute continuing employment
           ER7: - Further Opinion from Westward Investments on the subject of
           what constitutes and what does not constitute continuing employment.
5.   Findings of fact

     5.1    It should be noted that the period of alleged continuous employment by
            Mr Welch was strongly contested by Westward Investments; the
            respondent claimed that Mr Welch had undertaken a series of discrete
            and unconnected seasonal contracts. Thus the EMPROT1 and
            EMPROT2 are in fundamental disagreement as to the period of
            employment. Similarly the calculation of gross earnings for the last 3
            months is disputed between the parties. What is agreed between the
            parties is that Mr Welch did enter the employment of Westward
            Investments in April 1999 and was in their employ in November 2002.

     5.2    Whilst it is clear that the primary role of Mr Welch was to sell
            Timeshare units for Westward Investments during the years 1999,
            2000, 2001 and 2002, there is a lack of clarity as to the total range of
            duties required of Mr Welch; as evidenced by the “seasonal contracts”
            and the submissions made to Housing and Licensing Authorities.

     5.3    During the hearing, Mr Vermeulen testified that Westward Investments
            did not have written Disciplinary, Capability or Grievance procedures.

6.   Evidence & Submissions related to the issue of “Continuous

     Advocate Roland opened for the Plaintiff and made the following points:-

     6.1    It should be noted that Section 4 (1) (b) of the law only specifically
            excludes fixed term contracts of two years or more where the dismissal
            consists only of the expiry of the term without its being renewed, there
            is no general exclusion of fixed term contracts.

     6.2    Attention should be paid to the Royal Court Appeal of January 2002 in
            Garenne Group Limited-v-Maura Falla, where the Bailiff, ruling on an
            issue of defining continuous employment, had expressed the opinion
            that it should not be subject to an artificially restricted view.

     6.3    The Guernsey law is drafted differently from the 1996 UK
            Employment Protection Act and the recent UK Court of Appeal ruling
            on Curr-v-Marks & Spencer PLC Limited was an attempt to have a
            four year break of employment counted as continuous under that UK
            legislation. There is no equivalent to this legislation in Guernsey law.

     6.4    However the Garenne-v-Falla and Curr-v-Marks & Spencer cases both
            have a common element in that those hearing these appeals both
            required that there be a general principle of looking at the reality, or
            otherwise, of the respective employment relationships.
6.5   Another distinction between Curr-v-Marks & Spencer and Welch-v-
      Westward is that Mrs Curr was required to resign by virtue of her
      agreement with her employer and unlike Curr-v- Marks & Spencer, Mr
      Welch knew what his work would be, knew what pay he would
      receive, and at what location he was required to carry out his duties

6.6   Advocate Roland stated that if one viewed the entirety of the
      employment relationship of Mr Welch with Westward Investments that
      one could discern a continuing mutuality of obligation, and there was
      evidence of a continuing employee / employer relationship. Turning to
      the copy of the contract for season 2000 in EE1 (pages 2/3) there is
      emphasis on the year 2000, not on the season, and whilst the letter
      states that effective sales cover would be required over a 33 week
      period it does not state that this is the only obligation. This letter states
      that Mr Vermeulen would be “happy to review your contract at the end
      of 2002”. It was also noted that the contract required 6 days cover for
      the 33 weeks (with no exclusions for Bank Holidays) and that
      “holidays and time off must be taken outside weeks 10 to 44 unless
      agreed by the Director”. The following year required “effective 6 day
      a week sales cover for 39 weeks” i.e. the weeks 7 to 45 inclusive with
      Bank holidays as workdays if they fell in this period, the remaining
      weeks of the year being available for unpaid leave.

6.7   Advocate Roland drew attention to the way Mr Welch was treated
      throughout the year, receiving correspondence and telephone calls
      from his employer outside of the “effective sales cover” periods and
      whilst Mr Welch was allegedly not under any contract of employment.
      Evidence of such requirements can be found in the section EE2.

6.8   Attention was also drawn to the “Declaration of Lawful Residence”
      which was granted to Mr Welch on the basis that he was named as a
      full time member of staff of La Grande Mare Hotel and was not
      employed elsewhere; evidence of this requirement can be found in
      section EE2, and also on page 7 of EE1. In addition the
      correspondence from the Housing Authority referenced in EE3 sets out
      the position that if this had been described by the employer as a
      “seasonal” post then authority for a housing licence would only have
      been granted for the specific weeks of that employment. Advocate
      Roland drew attention to the most recent licence granted, March 27th
      2002, that permits Mr Welch to dwell in his own residence provided
      that he continued to be employed on a full time basis by La Grande
      Mare Hotel. All these licences were granted on the basis that Mr
      Vermeulen had stated that it was full-time employment. It should also
      be noted that in the residence applications Mr Vermeulen stated that
      Mr Welch worked a minimum of 48 hours per week.

6.9   Finally Advocate Roland addressed the issue of the yearly negotiations
      which were timed to coincide with the end of one seasonal period,
      these negotiations resulted in an outcome that committed both parties
      to continuing contractual arrangements and in the opinion of Advocate
       Roland created an expectation that Mr Welch would assist with sales
       enquiries outside of the “effective sales cover” periods.

Mr Christopher Vermeulen responded to these points as follows:

6.10   Mr Welch had been issued a different contract from that issued to other
       staff at La Grande Mare and that Mr Welch clearly understood the
       intent of this difference in contracts. The contract for Mr Welch did
       not stipulate holiday entitlements, sick pay provision or other elements
       of the normal full time contract for Grande Mare employees. Mr
       Welch would have been aware of these differences.

6.11   The periods of contracted work were clearly stated in the seasonal
       contracts, however he anticipated being able to give Mr Welch new
       contracts each season.

6.12   Mr Welch understood the “spirit” of these contracts and knew he could
       not be called in to work for the winter of 2000, although Mr
       Vermeulen accepted that, in winter 2001, telephone calls may have
       occurred outside the contract period and Mr Welch may have called
       into the office, although he would not have been dressed for work.

6.13   Given the nature of the Timeshare market and the need for continuity
       of sales support for clients, it was sensible that both parties agreed at
       the end of each season the terms for the following season.

6.14   In regard to housing licences and the use of the term “full time
       employee” Mr Vermeulen stated he was acting as a good employer,
       using his best endeavours to assist Mr Welch in finding his own

6.15   Mr Vermeulen commented that the wording of “a seasons notice” in
       the contracts could have been better phrased but in the Guernsey
       employment market, with the difficulties of finding a replacement, he
       felt obliged to include this stipulation.

6.16   He drew the attention of the hearing to a letter from Guernsey Hotel
       and Tourism Association (ER4) in which the current president of this
       association, Mr Carl Symes, stated his opinion that once a person
       ceased to be on the payroll and there were no deductions for social
       security or income tax then their employment must have ceased.

6.17   I took note of two witness statements offered by Mrs Keyho and Mr
       Radford, employees of La Grande Mare.

6.18   Mr Vermeulen stated in summary, that Mr Welch was not under an
       obligation to his employer when each season had finished, had no
       obligation to keep contact and Westward Investment had no right to
       oblige Mr Welch to work outside of the season. It was further claimed
       that during the “out of season” periods Mr Welch would not have
           breached any contract by not turning up to work and that there was “no
           Social Insurance during any periods of unpaid leave”. Mr Welch, it
           was contended, worked under discrete yearly contracts. Mr Welch
           quoted the UK Court of Appeal decision in Curr-v-Marks & Spencer
           as giving guidance in this issue.

7.   Adjudicators Decision on issue of “Continuous Employment”:

     7.1   The Adjudicator explained to both parties that whilst not required to
           follow UK decisions such as Curr-v-Marks & Spencer, that they do
           give valuable guidance to Adjudicators’ decisions under the Guernsey
           law. The Adjudicator noted that both parties had presented substantive
           and reasoned arguments.

     7.2   The Adjudicator drew attention to the differences between the Curr-v-
           Marks & Spencer case and Welch –v- Westward; namely that in the
           UK case neither the timing, the place nor the duties of any new post
           were known, further that resignation had been required of Mrs Curr to
           enter into the M&S Career Break Scheme for a number of years.
           There were significant differences in the reality of the two cases.

     7.3   The Adjudicator also drew the attention of both parties to a UK
           decision in the House of Lords, Ford-v-Warwickshire County Council
           that had addressed the issue of a series of fixed term contracts versus
           the issue of continuous employment and had provided some principles
           that could also serve as guidance in Welch -v- Westward. In the Ford
           case, the House of Lords judgement stated that it may be possible for
           an employee who has worked under successive fixed term contracts to
           show that his absences between contracts were periods in which, by
           arrangement or custom, he was treated as still employed.

     7.4   The Adjudicator’s decision that the employment was continuous is
           underpinned by the following points:

     7.5   In the Garenne-v-Falla judgement the opinion of the Bailiff was that
           the issue of continuity should not be artificially circumscribed, that one
           should look to the reality of the whole situation.

     7.6   A simple calculation of 39 weeks at 48 hours minimum a week being
           worked by Mr Welch in 2001 and 2002 results in an expected working
           year of 2072 hours. This is significantly higher than for many full-
           time employees in Guernsey who are contracted to work possibly as
           little as 35 hours a week on a full time basis. Evidence was given that,
           apart from his birthday each year, Mr Welch worked 6 days a week in
           the “seasonal periods” regardless of statutory holidays. Mr Welch also
           gave testimony that he had not claimed unemployment pay from any
           authority during the period April 1999 to December 2002; this, in my
           opinion, is indicative of the perception Mr Welch had of his ongoing
           relationship with his employer.
     7.7    The wording of successive contracts indicates a continuity of
            employment, and indeed the requirement for a seasons notice was
            onerous and indicates a long-term obligation. It is also noteworthy that
            each successive “seasonal contract” was negotiated before the
            exhaustion of the previous one, adding to the sense of a continuous and
            underlying commitment by both parties.

     7.8    Mr Vermeulen consistently represented the employment to the relevant
            housing and licensing authorities as full time, and authority to live in
            Guernsey was granted only on the basis that Mr Welch performed no
            other work on the island.

     7.9    Evidence was entered that Mr Welch did support his work colleagues
            outside of the “seasonal weeks” by telephone and visits to the sales
            office; there is evidence of a continuing obligation by Mr Welch to
            give this support. One can only conjecture what might have been the
            employers’ response if Mr Welch had refused to answer client queries
            or assist with client issues during the winter periods and had stated that
            it was not his concern because he was not employed by Mr

     7.10   I do not find the argument that Mr Welch knew his contract was
            different from that of other Grande Mare employees to be persuasive.
            Mr Vermeulen negotiated with Mr Welch from a position of
            considerable strength; if Mr Welch wished to take this employment
            then it seems to me that the terms were primarily those determined by
            Mr Vermeulen.

     7.11   I am not persuaded by the letter from the Guernsey Hotel and Tourism
            Association that the contract of every “seasonal employee” should be
            treated as the same. It is the role of an Adjudicator to look into the
            specific contract of the particular employee who has brought a claim
            and establish in those particular circumstances if a continuing contract
            of employment might have been in existence.

     7.12   On balance, I am persuaded that in this case the use of successive
            seasonal contracts should be viewed as a yearly variation of terms and
            conditions and that there was an underlying and continuous contract of
            long-term mutual obligation. It was with this view in mind that I
            determined I could proceed to hear the case of alleged Constructive

8.   Evidence & Submissions related to the issue of alleged “Constructive

     Mr Welch took the witness stand and testified in response to a number of
     questions from Advocate Roland. Key points included the following:

     8.1    It was stated in each of the seasonal contracts that salary would be
            calculated as a percentage of “cleared Time Share Funds received
            during the sales cover period”; however, in each of the seasonal
      contracts there was an underlying guarantee that, should the seasonal
      target not be achieved through no fault of Mr Welch, he would have a
      guaranteed level of pay, in effect a guaranteed base salary. This base
      salary would offset against commission, i.e. he would only start to earn
      variable commission after the sum total of the weekly payments for the
      year had been exceeded.

      The effect of this arrangement was that for the years 1999, 2000, 2001
      and 2002 a guaranteed salary was paid that was not dependent on the
      level of sales attained by Mr Welch. This salary, which was paid on a
      weekly basis, rose from £600 per week for a 33-week period in 1999 to
      £743.58 per week for a 39-week period in 2002. It is significant that
      the weekly salary was never reduced during this period, only increased.

8.2   It is of significance that Mr Welch repeatedly emphasised that he
      would not have entered into a contract with Westward Investments if a
      base pay guarantee had not been offered. With a family and a
      mortgage to support he stated he could not risk the financial insecurity
      of a “commission only” arrangement.

8.3   In addition to the above arrangements, bonuses could also be earned by
      Mr Welch via three mechanisms:

      8.3.1 Selling low season weeks
      8.3.2 Achieving specified monthly targets
      8.3.3 Achieving overall levels of sales in any given year

8.4   These arrangements worked to the satisfaction of Mr Welch and Mr
      Vermeulen in the years 1999, 2000, and 2001, however due to a drop
      in sales in 2002 Mr Welch earned less in that year than in 2001. Mr
      Welch contended that the drop in 2002 sales was due to a diminution
      in the stock of “desirable prime time share weeks”, and possibly the
      effects of a post -September 11 2001 economic downturn.

8.5   It was during 2002, Mr Welch stated, that, as he became increasingly
      aware of the downturn in sales, he then suggested to his employers that
      they use a points system that would provide Grande Mare “time share
      clients” with the choice of a range of potential holiday locations. Mr
      Vermeulen accepted that Westward Investments should adopt this
      scheme as it had the potential to boost sales and make the Grande Mare
      scheme more competitive. Nevertheless, in the opinion of Mr Welch,
      the scheme was still premised on a good availability of Grande Mare
      “prime time share weeks” and Mr Welch had formed the view that
      there was only a limited availability of these weeks in 2003. It was in
      this context that Mr Welch entered salary / commission negotiations
      with Mr Vermeulen for the year 2003.

8.6   In a contract dated 13th November 2002 Mr Vermeulen used the same
      formula as in previous years, namely 12% of “Cleared Timeshare
      Funds”, as the basis of commission, however with a reduction of
      yearly sales target down to £250,000 from the £261,000 target set in
       2002. The draft contract committed a weekly £600 for 39 weeks but
       did not offer it as a guaranteed payment as in previous years.

8.7    Mr Welch was told that the decrease in weekly pay was due to 2002
       being a bad year and that some “tightening of belts” was required.

8.8    Mr Welch also noted that in the 2003 contract that he was no longer to
       be called Front of House Manager but was now “responsible for
       Timeshare sales”; he stated that he took this as an intended demotion
       as in previous years he had been asked to assist in various roles which
       he thought were in keeping with the Front of House Manager job title.

8.9    Mr Welch further noted that the discretion granted in previous seasonal
       contracts as to the hours he might work had been removed. The 2003
       contract stated that he should provide 6 day cover from 9 am to 5.30
       pm and “some late afternoons would be envisaged to close the

8.10   Mr Welch stated that he had been shocked and surprised by these
       variations to previous seasonal contracts.

8.11   Mr Welch was asked if he was given any indication by Mr Vermeulen
       that he was not performing his role to standard, that he was doing
       something wrong. Mr Welch stated no such criticism was offered by
       Mr Vermeulen.

8.12   Mr Welch then gave evidence that a second verbal contractual offer
       was made by Mr Vermeulen of £300 base pay per week for a 52-week
       permanent contract with increased sales targets. He noted that with
       this contract he would have received employee benefits such as holiday
       pay but that the reduction in potential pay was too much for him to

8.13   He stated that he had now lost all confidence in the management of
       Westward Investments, however, as he did not wish to lose his
       employment he made one last attempt to volunteer to work for the
       same base pay as in 2002; he stated that Mr Vermeulen refused “point
       blank” to accept this proposal.

8.14   Advocate Roland pressed her client on a number of additional issues.

       Mr Welch was asked if his state of health had affected his work in
       2002, and Mr Welch stated that in his opinion that he was still able to
       acquit all his professional duties. Mr Welch also testified that during
       2002 he had not taken any sick days off.

       Advocate Roland then asked if Mr Welch had been approached by Mr
       Vermeulen and had been told that his health was affecting his ability to
       carry out his duties. Mr Welch responded that Mr Vermeulen did not
       raise this as an issue; indeed there were no criticisms of the quality of
       his work until the final negotiations on pay in the second half of

8.15   Advocate Roland asked Mr Welch if he orally accepted the contract
       dated 13th November 2002, Mr Welch insisted he had not agreed to this
       contract. Advocate Roland then asked Mr Welch if following the
       rejection of the contract of 13th November he had then given up on
       negotiations with Westward? Mr Welch responded that he met again
       with Mr Vermeulen on the 29th November and asked if the reduced
       weekly pay was a decision of both Directors. He stated he did not
       wish to leave Westward Investments; he enjoyed his job and wished it
       to continue.

8.16   Mr Welch was asked how he saw the situation after the meeting of the
       29th November. Mr Welch responded that that with detrimental
       changes in his pay, his role and required hours of work he felt demoted
       and demoralised, he had lost all trust in his employers to deal with him
       in a fair an open manner.

Mr Vermeulen began his cross-examination of Mr Welch.

8.17   Mr Vermeulen established with Mr Welch that they had had a good
       working relationship over the period April 1999 till November 2002.

8.18   Mr Vermeulen pressed Mr Welch on his perception of his pay during
       his employment with Westward Investments, did not the commission
       far outweigh the weekly “allowance”? Mr Welch stated he did not see
       it this way; his view was that he received a basic wage plus

8.19   Mr Vermeulen asked Mr Welch if his pay had always been fairly
       calculated and paid as committed? Mr Welch responded that by and
       large the system had worked well, although he was still disputing a
       final payment from Westward Investments.

8.20   Mr Vermeulen posed some questions relating to marketing budgets.
       From the responses offered by Mr Welch it is clear that he would have
       liked responsibility for this budget and might have spent it differently
       from Mr Vermeulen, but when pressed Mr Welch accepted that Mr
       Vermeulen had every right to control this budget.

8.21   Mr Vermeulen suggested that Mr Welch had accepted the November
       13th contract orally and had changed his view of these events to suit his
       testimony? Mr Welch was firm in his response that he had never
       accepted the contract.

8.22   It was suggested to Mr Welch that he had confided in Mrs Keyho as to
       a serious illness during 2002 but had asked her to keep this secret? Mr
       Welch denied this.
Under further questioning by Advocate Roland.

8.23   Mr Welch was asked if he was given or made aware of a Grievance
       Procedure? Mr Welch responded that he had at no time been made
       aware of or given a Grievance Procedure by his employers.

Advocate Roland called Miss Bancroft to the witness stand.

8.24   Miss Bancroft confirmed that she was Mr Welch’s partner and that she
       often gave advice to him on financial matters. She told the hearing that
       Mr Welch did not want to leave Westward Investments. She
       confirmed that she was optimistic as to the potential of the new points
       system but shared the opinion that Mr Welch could not take this risk of
       continuing employment with a reduced base pay.

8.25   Miss Bancroft stated there had been concern over the health of Mr
       Welch in 2002 and there had been a “scare” over leukaemia; however,
       Mr Welch had continued with his duties at Westward and did not take
       time off work.

Mr Vermeulen had no questions for Miss Bancroft and no other witnesses
      were called by the plaintiff.

Mr Vermeulen called Mrs Keyho, an employee of La Grande Mare, to the
      witness stand.

8.26   It was established that she and Mr Welch had enjoyed a good working
       relationship and that in 2002 he had confided to her that “he was not
       feeling well but she should keep this to herself”.

8.27   Mr Vermeulen asked her if he was a “hard taskmaster” as her manager;
       Mrs Keyho stated he was not.

8.28   It was established that Mrs Keyho shared the view that the new points
       system was potentially better than the previous sales system.

8.29   Mrs Keyho was asked what was her reaction to Mr Welch claiming
       unfair dismissal. She responded that she was surprised and thought
       that Mr Vermeulen had made concessions to Mr Welch to enable him
       to stay.

Under cross-examination by Advocate Roland

8.30   Mrs Keyho was asked if her pay had been reduced due to economic
       necessities. Mrs Keyho stated that her pay had not been reduced.
8.31   Mrs Keyho was questioned on grievance procedures; she stated that
       she could always see the brother of Mr Vermeulen, a fellow director, if
       she had concerns.
Mr Vermeulen called Mr Radford, an employee of La Grande Mare.

8.32   Mr Radford, who is employed as an accountant by La Grande Mare
       Hotel, confirmed that the 12% commission scheme had exceeded the
       “weekly allowance” for Mr Welch in the years 2000, 2001 and 2002.

8.33   Mr Radford confirmed the decline in Time Share sales in 2002 was in
       contrast with the rest of the business, which either maintained or
       increased its turnover in this period.

8.34   Mr Radford reviewed various documents that confirmed that in his
       opinion Mr Welch and his partner Miss Bancroft had significantly
       underestimated potential “prime” sales for 2003 and onwards.

Under cross-examination by Advocate Roland

8.35   Mr Radford was asked if his pay had been reduced due to economic
       necessities. Mr Radford stated that his pay had not been reduced.

8.36   Mr Radford confirmed that he had not been made aware of any formal
       grievance procedures by his employer.

As Mr Vermeulen had no further witnesses he requested that he present some
      key issues to the hearing.

8.37   Mr Vermeulen referred to EE1 page 147 and stated that in contrast to
       the case of Pitts -v- Boyd Line in the UK, Mr Welch had the freedom
       to work for whomever he wanted and was not under an obligation to
       return the next year.

8.38   Mr Vermeulen pondered why Mr Welch continued to negotiate after
       the alleged breach of contract, possibly because it was not a breach?

8.39   Mr Welch owed his employer a duty of trust, why did he breach this by
       hiding his illness?

8.40   He stated that Mr Welch had been given time off for Doctor’s
       appointments, as any good employer should allow.

8.41   Mr Vermeulen stated that he had dropped sales targets in an attempt to
       help and to motivate Mr Welch and that Mr Welch had formed a
       totally incorrect view of sales potential from existing stocks of Time
       Shares, there was at least four times the potential that Mr Welch had

8.42   Mr Vermeulen drew the attention of the hearing to EE1 page 200, an
       extract from Halsbury’s Laws of England. He systematically read out
       clauses 1 to 9 on this page and then denied one by one that he might
       have breached the implied term of trust and respect.
Mr Vermeulen was invited to take the witness stand to allow cross-
      examination by Advocate Roland.

8.43   Mr Vermeulen confirmed previous testimony that his company did not
       have any formal grievance procedure.

8.44   Mr Vermeulen was asked if he had made any written representations of
       his concerns over 2002 sales performance to Mr Welch? He stated he
       had not and when pressed on the issue of any “Capability” procedure
       that might have been used with Mr Welch, he stated that no such
       procedure existed in his company. He thought it better to offer the
       incentive of more commission in 2003 rather than address any
       concerns he had over his continuing capability to perform his work.

8.45   Mr Vermeulen was repeatedly pressed on the fairness of the reduction
       of weekly pay from £743.58 to £600.00. Mr Vermeulen reaffirmed his
       conviction that this was an allowance against commission and that the
       potential to earn much more in commission was possible in 2003 and
       in future years. He agreed that the “Points System” was untried but
       stated that as it was Mr Welch’s idea he knew that there was
       significant potential for high earnings in 2003.

8.46   Mr Vermeulen testified that the periodic changes in Mr Welch’s job
       title had no significance, the formal title was there to satisfy licensing
       authorities, and Mr Welch knew his role was to sell Time Shares.

8.47   Mr Vermeulen had characterised himself in testimony as Mr Welch’s
       “tormentor” during negotiations however Mr Welch had continued to
       negotiate, why should that have been so? Mr Vermeulen stated that
       they just continued to seek a new agreement.

Adjudicator’s Intervention

8.48   The Adjudicator asked Mr Vermeulen if the opposing views on sales
       potential had been discussed during the negotiations, particularly as Mr
       Vermeulen had a significantly more optimistic view of this issue? Mr
       Vermeulen stated that there had been no such discussion.

Advocate Roland questioned Mr Vermeulen further

8.49   Advocate Roland put it to Mr Vermeulen that the reality of the
       situation was that Mr Welch was faced with a unilateral change in
       contract that was significantly to his detriment and that the second
       verbal offer of £300 per week for 52 weeks was even more detrimental
       even with a package of employee benefits.

8.50   Mr Vermeulen stated that he totally disagreed with this.

8.51   Advocate Roland put it to Mr Vermeulen that by attempting to vary the
       contract so substantially, especially with the reduction in weekly pay
            that he had breached the obligation of trust and Mr Welch had no
            alternative but to leave.

     8.52   Mr Vermeulen stated that he totally disagreed with this.

9.   Closing Arguments

     Firstly, the closing statement by Advocate Roland on behalf of the plaintiff:

     9.1    Advocate Roland stated that the primary issue was pay and that the
            Westward Investments commission plan for Mr Welch was
            complicated, nevertheless in the years 2001 and 2002 Mr Welch had
            received a guaranteed weekly payment of £743.58 per week. The
            variation in pay for 2003 was to offer only £600 per week and without
            a written guarantee.

     9.2    It was accepted that there was still 12% commission on sales and there
            may well have been the potential to earn more in 2003 than in 2002,
            however this reduction in base pay had the effect of changing his
            contract in two ways:

                •   It changed the amount of commission that he had to earn to
                    achieve the minimum guaranteed weekly pay attained in 2002.
                •   Westward Investments Ltd. was unilaterally trying to reduce
                    his salary.

     9.3    Advocate Roland turned to the UK case of Western Excavating-v-
            Sharp (EE1 page 158) for guidance. In this case it was held that Mr
            Sharp had been “squeezed out of his employment” by an employer
            who attempted to make the employees life so uncomfortable that he
            accepted revised terms or resigned. Such an employer having behaved
            in a totally unreasonable manner then claims that he has not repudiated
            the contract.

     9.4    Advocate Roland stated that the situation was further complicated by
            the lack of a job description and the frequent changing of job title.

     9.5    Complications also arose with the negotiations during November 2002
            when Mr Welch’s capability to perform his duties was considered an
            issue by Mr Vermeulen but not dealt with under any procedure.

     9.6    Advocate Roland held that it was not necessary under the law to prove
            that the behaviour of Mr Vermeulen was intentional; it is sufficient to
            show that conduct by the employer was unreasonable. Advocate
            Roland took for guidance the UK case Courtalds Northern Textiles Ltd
            -v- Andrew where the employers conduct as a whole was judged to
            have repudiated the contract of employment.

     9.7    In addition, without a grievance procedure Mr Welch had no formal
            avenue open to him to register his concerns and have a fair hearing of
            these concerns.
      9.8    Finally Advocate Roland turned to earlier testimony from Mr
             Vermeulen, where in quoting from Halsbury’s Laws of England (EE1
             page 200) Mr Vermeulen had claimed that he had breached none of the
             listed potential breaches of the implied term of trust and respect.
             Advocate Roland held that he had breached this term with the
             unwarranted reduction in base pay and persistent attempts to vary
             conditions of employment.

      Mr Vermeulen was invited to make a closing statement.

      9.9    Mr Vermeulen opened by stating he would be brief. He stated that the
             working relationship with Mr Welch had been good and the
             negotiations with Mr Welch open and fair over the 2003 contract.

      9.10   The 2003 contract was fair and equitable and should have realised a
             sum of £34,500 over the period 2003, more than in 2002.

      9.11   Targets were achievable and signed auditors statements had
             demonstrated sufficient prime stock was available for Mr Welch to

      9.12   He finished his closing statement by expressing the opinion that the
             claim of unfair dismissal by Mr Welch was unfair and unjust.

10.   Summary by Adjudicator

      10.1   There was closely argued and detailed testimony from both parties on
             the issue of continuing employment between 1999 and 2002. On
             balance, the Adjudicator found the arguments presented by the plaintiff
             to be persuasive in this particular case; it appeared that there was
             strong evidence of an underlying contract of employment and that the
             series of seasonal contracts could be viewed as periodic revisions of
             terms and conditions. These were the grounds upon which the
             Adjudicator decided that the case could be heard.

      10.2   I am persuaded that Mr Vermeulen genuinely believed that Mr Welch
             had the potential to increase his earnings in 2003 when compared to
             2002, the audited accounts add credibility to this argument, however
             there is no disagreement by the parties that “weekly pay” would have
             decreased from £743.58 in 2002 to £600.00 in 2003. Mr Vermeulen
             constantly referred to these sums as allowances against commission
             and would not concede that Mr Welch might have seen them as a basic
             wage. On the basis of written evidence and testimony, the Adjudicator
             is persuaded that it is reasonable to consider these sums as a basic
             wage. It is also significant that, in the 2002 “seasonal” contract, these
             payments were guaranteed, however for the year 2003 this was no
             longer the case.
           10.3       The nature of the negotiations was also a contributory element, in that
                      Mr Vermeulen persistently sought to vary terms and conditions
                      without the consent of Mr Welch.

           10.4       The lack of formal written Discipline, Grievance and Capability
                      procedures were conducive to a situation where natural justice was
                      compromised and the lack of due process left Mr Welch with very
                      limited options.

           10.5       On the balance of the evidence presented to me I have come to the
                      conclusion that Mr Vermeulen did breach the implied contractual term
                      of trust and respect and left Mr Welch with no other option but to
                      resign and I find for Mr Welch.

Signature of Adjudicator:   Mr P. Woodward                             Date:   2 June 2003

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