Employee Reshuffle Notice

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					Lewis v. Motorworld Garages Ltd.

Court of Appeal CA (Civ Div)
Ackner, Neill and Glidewell L.JJ.

ACKNER L.J.
    1 August. This is an appeal from the decision of the Employment Appeal
Tribunal presided over by Balcombe J., given on 23 March 1984, dismissing an
appeal from the industrial tribunal's decision given on 13 June 1983.
    Mr. Lewis, the appellant employee, has spent all his life in the motor car
business. From September 1979 until September 1981 he was employed as an after-
sales manager of Motorworld Garages Ltd., the respondent to this appeal. He carried
out his duties satisfactorily, but in the late autumn of 1981 there was a reshuffle of
managerial and director posts, with the result that the employee, without any
warning, was demoted to the position of service manager. He thus lost the use of an
office to himself, he was given a smaller car for business use, his responsibilities
were reduced, his salary structure was changed and he did not receive the increase in
salary which other people received at the beginning of 1982. The industrial tribunal
held, and the Employment Appeal Tribunal accepted, that this unilateral demotion
was a breach by the employer of a fundamental term of the employee's contract of
employment which would have entitled him, had he so desired, to accept that
wrongful repudiation, and treat his contract as at an end. That he did not do so and
thereby elected to affirm his altered contract of employment is not disputed on his
behalf by Mr. Barnes.
    On 22 December 1981, that is the month following the demotion, Mr. Nochar, a
director of the employer, who had himself been, prior to the employee's
appointment, the after-sales manager, wrote a four page memorandum setting out a
number of criticisms of the employee, concluding with a paragraph which read:
        "The complaints I have listed show major failings in your ability to
        perform as a service manager. I must now ask you to give me your
        assurance that you will correct the matter immediately as I cannot
        permit this unsatisfactory situation to continue."
    On 30 December Mr. Vickers, the general manager and a director of the
employer, signed a memorandum that the employee's salary from 1 January 1982
would be £ 7,224 per annum plus 2 1/2 per cent. On the service and self-drive
departments. This represented a reduction, because he had previously had
commission on the sales of parts as well. As a result of this being explained, a
further memorandum was issued that the employee's salary would be £8,051 plus 2
1/2 per cent. on service and self-drive departments. At that time, as I previously
indicated, almost all the staff received a rise, but the employee did not. The
employee replied by return of post, in considerable detail.
    On 16 April 1982 Mr. Nochar again wrote to the employee, in general
complaining about his paperwork, and concluded with the words:
        "These problems are serious and immediate action by you must take
        place and unless this happens your continued employment with the
        company must be questioned."
    On 30 June 1982 Mr. Nochar wrote yet another memorandum, referring to his
previous memoranda of 16 April 1982 and 22 December 1981 referred to above, and
saying: "I have to record my further dissatisfaction with your management of the
service department." He recognised an improvement in the warranty claims, but
complained about the employee's handling of the case of Mrs. White's Porsche. He
said that there had been misleading information about Mr. Mayhew's Audi, and that
there had been a failure to progress the paper work for servicing Mr. Muir's car.
There were four other complaints, and Mr. Nochar ended:
        "Whilst you have endeavoured to correct some of the previous
        problems and you personally work hard, you are not managing your
        department as a professional service manager described in your job
        description. I must advise you that unless an immediate improvement
        is shown in your work then your employment will be terminated."
    The employee replied on 6 July, saying that he was puzzled that none of the
occurrences referred to by Mr. Nochar had been the subject of discussion
beforehand. He gave detailed explanations of the matters which Mr. Nochar had
complained about, and concluded:
        "As I am now working under some form of duress, I must ask that
        you let me have in writing exactly what improvements you wish to
        see and over what time span and, if possible, interim reports so that I
        know whether I am improving and approaching the standard you set.
        I shall regard this as a challenge with serious consequences in the
        event of failure."
    Mr. Nochar wrote another memorandum on 2 August, commenting on the
employee's memorandum of 6 July. He went on to say that there were several
instances which had given him further doubts about the employee's capability. There
were four instances as to which Mr. Nochar was dissatisfied, and he ended his letter
with the words:
        "I now regret to inform you that having discussed your various
        failures as a service manager with my fellow directors, they have
        instructed me to give you a final warning and unless you can show in
        the next few weeks that you are capable of controlling your staff and
        looking after the company's customers in a proper manner befitting a
        service manager we shall have no alternative than to terminate your
        employment."
    On 3 August the employee wrote to the directors:
        "Further to your memorandum of 2 August, I would like to record
        that I entirely refute all the allegations contained in it. I very much
        regret that since your memorandum in February this year, I have been
        obliged to consider my position with the company very carefully, and
        I am forced to the conclusion that in view of your lack of confidence
        in me that my future must lie elsewhere. I am, therefore, tendering
        my resignation, which should bring my termination of employment
        on Tuesday 31 August. The demotion and exclusion from wage
        consideration imposed upon me at the beginning of this year were
        matters of great significance, which I consider entirely unjustified,
        and I would point to the decision regarding the promotion of others
        whose quality of management has subsequently proved to be less
        than desirable. The demotion was dictated to me and presented
        without opportunity for discussion. I have since discovered that it
         was finalised and confirmed with other members of staff, some of
         them my subordinates, before I was informed.
         "It seems to me that for reasons unknown the company is bent on
         victimising me and I obviously do not enjoy the force and support of
         senior management of the company. I do not accept the validity or
         truth of the criticisms in your recent memoranda, upon which I have
         frequently sought clarification and guidance. I am particularly
         concerned that the memoranda do not record the facts accurately. In
         the circumstances, I have no alternative but to resign and to seek such
         action as my solicitors advise. I thank the directors of Motorworld
         Garages for the experience, if not the opportunity to further my
         career in the motor trade."
    The employee subsequently applied to the industrial tribunal alleging that he had
been constructively dismissed by the employer. It is common ground that the
relevant section is section 55(2) of the Employment Protection (Consolidation) Act
1978, the material parts of which read:
         "an employee shall be treated as dismissed by his employer if, but
         only if ...
              (c) the employee terminates that contract, with or without
              notice, in circumstances such that he is entitled to terminate it
              without notice by reason of the employer's conduct."
    It is further common ground that the onus was on the employee to establish that
the conduct of the employer was sufficiently serious to entitle him to leave.
    The employee's case, both before the industrial tribunal and the appeal tribunal,
was that the employer had breached the implied term of his contract of employment
that it should not undermine the relationship of trust and confidence which ought to
subsist between employer and employee, and because of that breach he resigned.
The reason for his leaving was the conduct of the employer between November
1981 and 2 August 1982, the letter of 2 August 1982 being "the last straw." The
demotion, the loss of the use of an office, the reduction in pay, the absence of proper
consultation all showed loss of confidence. The criticisms of the employee were not
justified: they were nitpicking. The employee should have had the support of the
employer in his different job and he did not get that support. The criticisms made of
the employee were not sufficient to justify the threat of dismissal.
    In the first 43 paragraphs of their detailed reasons for dismissing the application,
the industrial tribunal most helpfully sets out all the relevant facts, the case for the
employer and the employer's arguments, and then the employee's case and
arguments, all with great clarity. The tribunal's conclusions begin at paragraph 44, in
which paragraph they record what is now accepted, that the demotion in November
1981 was a breach of contract entitling the employee then and there to resign, and
his subsequent election to continue his employment. In paragraph 45 the tribunal
refers to the change in the wage structure in 1982, which was also a breach of
contract, but which did not cause him to resign. The next matter that fell to be
considered was whether the criticisms made after January 1982 were or were not
justified. Paragraph 46 deals with the criticisms in these terms:
         "There were a number of subsequent criticisms. We do not think that
         many of them were of great substance. The manner of the criticisms
         was unsatisfactory because there was no proper discussion before the
         criticisms were put into writing. In particular the criticisms
          concerning Mr. Lewis' handling of a customer, Mr. Dawes, is not
          wholly justified; the conduct of Mr. Dawes himself left much to be
          desired. There was no evidence that the employers did not believe in
          the validity of their criticisms. It is curious that Mr. Lewis does not
          appear at any time to have said in effect, 'Get off my back."'
     Mr. Foskett for the employer contended that this paragraph does not contain the
findings of fact which the employee needs, namely, that the criticisms were not
justified. The very statement, "We do not think that many of them were of great
substance," by implication suggests that some of the criticisms may well have been.
The manner of the criticisms would not, in itself, make the criticisms unjustified,
and the particular example which the employer relies upon as highlighting the lack
of justification is contained in a communication to him of 22 December 1981, which
is in the period before he had elected to remain in the employer's employment
despite the change in the wage structure, and is therefore irrelevant. The finding that
there was no evidence that the employer did not believe in the validity of its
criticism nullifies any suggestion of bad faith on its part. Mr. Foskett therefore
submits that there is no finding of any breaches of the implied term of trust and
confidence and therefore no wrongful course of conduct after the employee's
election to remain in the employer's employment, which the employee must be able
to set up to justify his resignation in August.
     This, at first sight, appeared to be a formidable submission, but in paragraph 51
the industrial tribunal states: "It is the question of delay which we have found so
difficult in the present case." Further, in the final paragraph, paragraph 55, they
state:
          "We have had great difficulty in deciding this case, but in the final
          analysis, the burden of proof of dismissal rests upon the [employee].
          We are not satisfied that he had discharged the burden of proving that
          he was constructively dismissed."
     If, in paragraph 46, referred to above, the industrial tribunal were making the
finding that the criticisms were justified, then, contends Mr. Barnes, such a finding
would simply dispose of the application. There would be no need for the subsequent
paragraphs, the subject matter of delay would not have caused the tribunal the
concern which it so obviously did, and the final paragraph which I have quoted
would be wholly inapplicable. I am bound to say that in the light of these subsequent
paragraphs, I find great difficulty in reaching any firm conclusion as to whether or
not the tribunal reach any firm decision as to whether the criticisms contained in the
memoranda of June and August were or were not justifiable.
     There are, however, further difficulties to be encountered in ascertaining what
the tribunal did in fact decide. In paragraph 51 the letters of 16 April and 30 June are
referred to, and this is followed by the sentences, "He might have resigned after each
of those letters, but he did not do so," and, "There were at least four occasions when
Mr. Lewis might have resigned but did not do so."
     Mr. Barnes urges that in making these statements the tribunal were holding that
the employee would have been legally justified in leaving after each of those letters,
because each constituted a repudiatory breach. But in the very next paragraph,
paragraph 52, the tribunal poses to themselves for subsequent resolution the
question, "Can they [the subsequent complaints], separately ..., amount to breaches
of the implied term -- the trust and confidence term?" To my mind this would seem
to indicate that in paragraph 52 it had made no such finding. The appeal tribunal did
not read paragraph 51 in the manner submitted by Mr. Barnes. It said:
         "In our judgment, what the industrial tribunal was there saying was,
         'We are looking at the question of delay which we find difficult.' The
         employee's case is that he was entitled to resign on each of these
         occasions. Assuming that to be true, he did not do so and, as they
         found eventually, the delay was such that he had not accepted the
         repudiation but had elected, effectively, to affirm the contract."
    That was not the employee's case, and this is apparent by the following
statement in paragraph 51 of the industrial tribunal's reasons:
         "Mr. Barnes has argued that the final warning of 2 August was the
         last straw, which made it clear to him that the relationship of trust
         and confidence no longer existed."
    Mr. Barnes was accordingly not contending that each of the memoranda or
letters of criticism in 1982 constituted repudiatory breaches. On the contrary, he was
seeking to accumulate the breaches to found the submission that the totality of the
wrongful course of conduct entitled the employee to claim that the employer had
evinced an intention no longer to be found by the contract of employment. Again, I
can find no clear finding of fact.
    There are, however, yet further difficulties and these raise questions of law. In
paragraph 52 the industrial tribunal states:
         "There were two breaches of an express term of the contract -- the
         demotion and the threat of loss of pay. These were in November 1981
         and January 1982. We think that his delay in resigning precludes Mr.
         Lewis from relying on these."
    Mr. Barnes submits that this discloses an error of law. At the very least the
employee was entitled to have the industrial tribunal consider those breaches as part
of the background material to assist in the proper evaluation of the employer's
subsequent conduct. This is accepted by Mr. Foskett. Moreover, in my judgment, if
the industrial tribunal had found, and again there is an absence of any clear finding,
that the two breaches or either of them were also breaches of the implied term -- the
trust and confidence term -- then although they had not been relied upon
asrepudiatory breaches they could still be added to any other breaches of the implied
term in order to support an allegation that there had been a course of conduct which
amounted to a wrongful repudiation by the employer. However, Mr. Foskett submits
that the industrial tribunal did not exclude from their consideration, when evaluating
the employer's subsequent conduct, the two breaches of the express terms of the
contract, because in paragraph 54 they state: "Looking at Mr. Lewis's case as a
whole, we do not think the conduct of the [employer] was such as to amount to
repudiatory breach." Again, I fear that the position is far from clear. Finally, having
stated in the penultimate sentence of paragraph 54 their view that the conduct of the
employer was not such as to amount to a repudiatory breach, they concluded that
paragraph by stating:
         "Their style was unpleasant but they neither intended to repudiate the
         contract nor could they reasonably believe that their conduct would
         be accepted as repudiatory."
    I take that final sentence to be the justification for their conclusion that the
employer's conduct was not repudiatory. In so doing, however, the industrial
tribunal was clearly applying the wrong test. The employer's conduct was
repudiatory if, viewed objectively, it evinced an intention no longer to be bound by
the contract. Its intentions and its reasonable belief could not determine that issue.
    Despite the obvious and praiseworthy care which the industrial tribunal took in
giving its reasons I cannot avoid concluding that (1) there is no clear finding that the
complaints made after January 1982 were unjustified; (2) there are grounds for
inferring that the tribunal did not fully appreciate that it was the employee's
submission that while the particular incident which caused him to leave might in
itself be insufficient to justify his taking that action, it was the last straw in a course
of conduct which, when viewed in its totality, amounted to a wrongful repudiation
of the contract which entitled the employee to leave and claim that he had been
constructively dismissed; (3) the tribunal appears to have excluded, when
considering the alleged course of wrongful conduct, the two breaches of the express
terms of the contract and failed to decide whether such breaches, as might well be
the case, amounted themselves to breaches of the implied term as to trust and
confidence; and (4) the tribunal had, in paragraph 54, applied the wrong test when
deciding that the conduct of the employer was not such as to amount to a
repudiatory breach.
    In these circumstances I am unable to agree with the appeal tribunal that there is
no error of law manifest on the findings of the industrial tribunal, nor am I able to
agree with its holding that the industrial tribunal decided in favour of the employer
on the simple factual basis:
         "that by not leaving the employment of the employer at an earlier
         stage the employee had not accepted any repudiatory breach there
         may have been."
    Such a finding was not an answer to the employee's case, namely that there had
been a course of conduct involving breaches of the implied term which when
aggregated amounted to a repudiatory breach of the contract.
    I wouldtherefore allow this appeal and order that the employee's application be
remitted to a fresh industrial tribunal for a full re-hearing.

NEILL L.J.

    The employer, Motorworld Garages Ltd., is a subsidiary company in the Oxford
Garage Group. In September 1979 the employee, Mr. Barry Lewis, joined the
company as the after-sales manager. In August 1982, nearly three years later, he
resigned, giving a month's notice. He claimed that he had been constructively
dismissed. He applied to an industrial tribunal in Reading for a finding that his
dismissal was unfair. The case was heard over a period of three days in March and
April 1983. By a reserved decision dated 13 June 1983 the industrial tribunal held
unanimously that the employee's application failed. The reasons for the decision
were set out in 55 paragraphs. The last paragraph was in these terms:
        "We have had great difficulty in deciding this case, but in the final analysis,
    the burden of proof of dismissal rests upon the [employee]. We are not satisfied
    that he was discharged the burden of proving that he was constructively
    dismissed. The application fails."
    The employee appealed to the appeal tribunal. In a judgment delivered by
Balcombe J. on 23 March 1984 the appeal tribunal dismissed his appeal. He now
appeals to this court.
     It is right that at the outset I should remind myself of the heavy burden which
rests on an appellant who seeks to upset a finding of an industrial tribunal in a case
such as the present. An appeal from an industrial tribunal lies only on a question of
law: see section 136(1) of the Employment Protection (Consolidation) Act 1978.
Moreover where an employee complains that he has been constructively dismissed,
it is necessary for him to prove that he terminated the contract in circumstances such
that he was entitled to terminate it without notice by reason of the employer's
conduct: see section 55(2) of the Act of 1978. The conduct must therefore be
repudiatory and sufficiently serious to enable the employee to leave at once. On the
other hand it is now established that the repudiatory conduct may consist of a series
of acts or incidents, some of them perhaps quite trivial, which cumulatively amount
to a repudiatory breach of the implied term of the contract of employment that the
employer will not, without reasonable and proper cause, conduct himself in a
manner calculated or likely to destroy or seriously damage the relationship of
confidence and trust between employer and employee: see Woods v. W. M. Car
Services (Peterborough) Ltd. [1981] I.C.R. 666 in the Employment Appeal Tribunal.
     A history of the main events which took place between November 1981 when
the employee was demoted and the letter of 2 August 1982 has already been given
by Ackner L.J. I need not repeat it. I would, however, again underline, as did Ackner
L.J. that both before the industrial tribunal and before the appeal tribunal the thrust
of the employee's complaint was that there had been cumulative breaches of the
implied term to which I have just made reference. The matter is set out clearly in
paragraph 43 of the industrial tribunal's reasons under the heading "The applicant's
arguments":
          "The [employer] breached the implied term that they should not undermine
     the relationship of trust and confidence which ought to subsist between employer
     and employee. Mr. Lewis resigned because the employers had breached that
     obligation. The reason for his leaving was the conduct of the employers between
     November 1981 and 2 August 1982. The letter of 2 August 1982, containing
     criticisms and a final warning, amounted to a last straw. The demotion, the loss
     of the use of an office, the reduction in pay, the absence of proper consultation,
     all showed loss of confidence. The criticisms of Mr. Lewis were not justified:
     they were nit-picking. Mr. Lewis should have had the support of the [employer]
     in his different job, and he did not get that support. The criticisms made of Mr.
     Lewis were not sufficient to justify the threat of dismissal."
     With this introduction I turn to the final 12 paragraphs of the industrial tribunal's
reasons, which come under the heading "Conclusions."
     In paragraph 44 the tribunal referred to the demotion. In so far as this paragraph
and the later reference to demotion in paragraph 52 dealt with the breach of an
express term of the contract, no criticism can be made. By electing to continue to
work the employee lost the right to complain of that demotion as constituting by
itself a repudiatory breach. In paragraph 45 they referred to the change in the wage
structure in January 1982. Again no criticism can be made of this paragraph or of
the later reference to the same matter in paragraph 52 in so far as the change was a
breach of an express term. But it will be remembered that in paragraph 43 both the
demotion and the reduction in pay were relied on as instances of breaches of the
implied term.
     I come next to paragraph 46. In this paragraph the tribunal referred to what they
called "a number of subsequent criticisms." I understand this phrase as a
compendious description of, inter alia, the letters of 22 December 1981 and 16
April, 30 June and 2 August 1982. Counsel for the employer placed great reliance
on paragraph 46. He submitted that it either amounted to a finding that much of the
criticism of the employee was justified or, failing that, that it did not amount to a
finding, which was critical for the employee if he were to succeed, that the criticism
was unjustified. Accordingly, said counsel for the employer, the case for the
employee could not get off the ground because neither of the breaches of the express
terms could be relied on as the contract had been subsequently affirmed and there
was no finding of any breach, yet alone any repudiatory breach, after January 1982.
     At one stage in the course of the hearing I was attracted by this argument based
on paragraph 46, just as I also saw very considerable force in Mr. Foskett's further
argument based on the following sentence in paragraph 54, where the tribunal said:
"Looking at Mr. Lewis's case as a whole, we do not think the conduct of the
[employer] was such as to amount to repudiatory breach." But having read and re-
read the closing paragraphs of the reasons, I have come to the conclusion that it is
quite impossible to accept the simple solutions attractively proffered by Mr. Foskett.
     The opening sentences of paragraphs 51 and 55 show that the tribunal had
difficulty in reaching a decision and the reference to "the question of delay" in
paragraph 51 suggests that in the absence of any delay the tribunal might have
reached a different conclusion.
     It is therefore necessary to try to determine the meaning and effect of paragraphs
51 to 54, though bearing in mind the important admonition that one must resist any
temptation to construe the reasons strictly or to search for a point of law with a fine-
tooth comb.
     Like Ackner and Glidewell L.JJ. I have found these paragraphs a source of
difficulty and I remain uncertain as to what parts contain conclusions of the tribunal
and what parts contain references to the case for the employee. But three matters
appear to me to stand out. (1) In paragraph 52, I am unable to find any recognition
of the fact that the employee was relying on, and was entitled to rely on, the
demotion and the loss of pay as part of a series of events which cumulatively
destroyed the relationship of confidence and trust. (2) In paragraph 53 the industrial
tribunal seem to have treated the relationship of confidence and trust as having
broken down completely by April 1982 so that no later acts could be relied on as
further breaches of the implied term. With respect this approach seems to me to
involve a misapprehension of the scope and importance of the implied term which
continues to protect the employee throughout the period of the contract. (3) In
paragraph 54 the tribunal said: "Looking at Mr. Lewis's case as a whole, we do not
think the conduct of the [employer] was such as to amount to repudiatory breach."
They then gave what appears to be their explanation for this statement, which was as
follows:
          "Their style was unpleasant but they neither intended to repudiate the
     contract nor could they reasonably believe that their conduct would be accepted
     as repudiatory."
     But, in my view, this is an inadequate test by which to decide whether the
employer's conduct amounted to a repudiatory breach. I refer again to section 55(2).
The question is: did the employee terminate the contract in circumstances such that
he was entitled to terminate it without notice by reason of the employer's conduct?
In answering this question it is not sufficient to consider merely the intention of the
employer and its reasonable belief as to the effect of its conduct. In these
circumstances I am unable to escape the conclusion that the industrial tribunal
misdirected themselves to a material extent.
    Accordingly I agree that this appeal should be allowed and I concur in the order
which Ackner L.J. has proposed.

GLIDEWELL L.J.

    The principles to be found in the relevant authorities can, I believe, be
summarised as follows.
         (1) In order to prove that he has suffered constructive dismissal, an employee
    who leaves his employment must prove that he did so as the result of a breach of
    contract by his employer, which shows that the employer no longer intends to be
    bound by an essential term of the contract: see Western Excavating (E.C.C.) Ltd.
    v. Sharp [1978] I.C.R. 221.
         (2) However, there are normally implied in a contract of employment mutual
    rights and obligations of trust and confidence. A breach of this implied term may
    justify the employee in leaving and claiming he has been constructively
    dismissed: see Post Office v. Roberts [1980] I.R.L.R. 347 and Woods v. W. M.
    Car Services (Peterborough) Ltd. [1981] I.C.R. 666, 670, per Browne-Wilkinson
    J.
         (3) The breach of this implied obligation of trust and confidence may consist
    of a series of actions on the part of the employer which cumulatively amount to a
    breach of the term, though each individual incident may not do so. In particular
    in such a case the last action of the employer which leads to the employee
    leaving need not itself be a breach of contract; the question is, does the
    cumulative series of acts taken together amount to a breach of the implied term?
    (See Woods v. W. M. Car Services (Peterborough) Ltd. [1981] I.C.R. 666.) This
    is the "last straw" situation.
         (4) The decision whether there has been a breach of contract by the employer
    so as to constitute constructive dismissal of the employee is one of mixed law
    and fact for the industrial tribunal. An appellate court, whether the Employment
    Appeal Tribunal or the Court of Appeal, may only overrule that decision if the
    industrial tribunal have misdirected themselves as to the relevant law or have
    made a finding of fact for which there is no supporting evidence or which no
    reasonable tribunal could make: see Pedersen v. Camden London Borough
    Council (Note) [1981] I.C.R. 674 and Woods v. W. M. Car Services
    (Peterborough) Ltd. [1982] I.C.R. 693 both in the Court of Appeal, applying the
    test laid down in Edwards v. Bairstow [1956] A.C. 14.
    This case raises another issue of principle which, so far as I can ascertain, has
not yet been considered by this court. If the employer is in breach of an express term
of a contract of employment, of such seriousness that the employee would be
justified in leaving and claiming constructive dismissal, but the employee does not
leave and accepts the altered terms of employment; and if subsequently a series of
actions by the employer might constitute together a breach of the implied obligation
of trust and confidence; is the employee then entitled to treat the original action by
the employer which was a breach of the express terms of the contract as a part -- the
start -- of the series of actions which, taken together with the employer's other
actions, might cumulatively amount to a breach of the implied terms? In my
judgment the answer to this question is clearly "yes."
    It follows, in my judgment, that in the present case the industrial tribunal should
have asked themselves the question whether the employer's treatment of the
employee starting with the demotion in November 1981 and including the reduction
in pay, the loss of the use of an office and the various memoranda of complaint in
1982, culminating in that of 2 August 1982, cumulatively constituted a breach of the
implied obligation of trust and confidence of sufficient gravity to justify the
employee in leaving his employment in August 1982 and claiming that he had been
dismissed. Did the tribunal ask themselves this question, and if so how did they
answer it? In so posing the question, I realise that I am, with respect, disagreeing
with the approach of the appeal tribunal.
    At the beginning of their conclusions, in paragraphs 44 and 45 of their decision,
the industrial tribunal found that the demotion in November 1981 and the change in
wage structure were breaches of contract, and that the demotion would have entitled
the employee to resign at once and claim constructive dismissal. Paragraph 46 starts:
"There were a number of subsequent criticisms. We do not think that many of them
were of great substance." Mr. Foskett submits that this is a finding of fact that the
memoranda containing criticisms were not "of great substance" as breaches of
contract, and thus could not justify the employee leaving his employment. I do not
so interpret these two sentences. I believe they mean that not many of the criticisms
were directed to matters of great consequence. If that is correct, it is another finding
in favour of the employee.
    Paragraph 51 starts: "It is the question of delay which we have found so difficult
in the present case," and the remainder of this paragraph and paragraphs 52 to 54 are
apparently the reasoning which leads the tribunal to resolve their difficulty and
conclude in paragraph 55 that they were not satisfied that the employee was
constructively dismissed. In paragraph 51, the tribunal records Mr. Barnes'
submission that the memorandum of 2 August 1982 was "the last straw." They
decided that it was not sufficient to break the camel's back in words which, to my
mind, makes it clear that they were not treating the effect of the various incidents as
cumulative, but weighing each separately. In my view they were in error in this way.
    It is, however, paragraph 52 of the decision which, to my mind, shows that the
industrial tribunal's approach was wrong. It reads:
         "There were two breaches of an express term of the contract -- the demotion
    and the threat of loss of pay. These were in November 1981 and January 1982.
    We think that his delay in resigning precludes Mr. Lewis from relying on these.
    The subsequent complaints against him did not constitute breaches of an express
    term. Can they, separately or cumulatively, amount to breaches of the implied
    term -- the trust and confidence term?"
    I read this as saying that when the employee did not resign following the
demotion and the alteration in his pay structure, the effect of those breaches of
contract was spent. They were not relevant to the question whether the employer
was in breach of the obligation of trust and confidence. Only the subsequent
complaints are to be considered as breaches of the implied term. In this the industrial
tribunal to my mind was in error.
    Of course, as Mr. Foskett reminds us, the industrial tribunal said in paragraph
54: "Looking at Mr. Lewis's case as a whole, we do not think the conduct of the
[employer] was such as to amount to repudiatory breach." This could be read as a
clear answer to the question which I have said the tribunal should have asked
themselves. But I do not think it was. I think it was a finding that the matters of
which the employee complains after January 1982, not taking any account of the
demotion and change in wages structure, were, looked at as a whole, not sufficient
to amount to repudiatory breach. I say this for three reasons. First, to interpret it
otherwise is to make this paragraph inconsistent with paragraph 52. Secondly, I read
paragraph 54 as answering the second question posed at the end of paragraph 52 --
can "the subsequent complaints ... cumulatively amount to breaches of the implied
term ...?" And thirdly, if the sentence in paragraph 54 is a clear finding in relation to
the whole case, it is surprising that paragraph 55 starts: "We have had great
difficulty in deciding this case ..."
    I therefore conclude that, in considering whether the implied term of trust and
confidence had been breached, the industrial tribunal excluded consideration of
material matters, namely, the continuing effect of the demotion and change in wage
structure. This was an error of law within the principles of Edwards v. Bairstow
[1956] A.C. 14, such that this court can properly interfere with their decision. The
task of deciding whether the employee had been constructively dismissed was not
easy, and I have every sympathy with the industrial tribunal, but in the end the
question which they asked themselves was, in my judgment, not the correct
question, because it was too restricted. Since they have not asked the correct
question, we do not know how they would have answered it.
    For these reasons I also agree that the appeal should be allowed and the case
remitted to a new industrial tribunal.

Appeal allowed with costs of appeal and interlocutory applications. Legal did
taxation.

				
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Description: Employee Reshuffle Notice document sample