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					TSB Bank Plc v. Miss L M Harris

Employment Appeal Tribunal (EAT)
Before: His Honour Judge John Altman Mr P Dawson OBE Mr J C Shrigley

Judgment

JUDGE JOHN ALTMAN:
1 This is an Appeal from two decisions of the Employment Tribunal sitting in
Liverpool. The first followed a Hearing over 5 days between December 1996 and
April 1997 and resulted in a finding that the Respondent had been unfairly dismissed.
2 The second was a decision on an application for a review on 29th September 1997.
The application was granted and the result of the Review was a finding that the
Appellants were in breach of the Respondent's Contract of Employment arising out of
the same circumstances as the first decision.
3 The Employment Tribunal found that the Respondent was constructively and
unfairly dismissed. We have considered the Notice of Appeal in detail, but in general
terms it is alleged that the Employment Tribunal failed to listen to the case, failed to
make appropriate findings of fact on the face of the decision, and, instead, appear to
have relied on general impression. It is alleged that they reached conclusions on the
issues of fact and on the general findings that no reasonable Tribunal, properly
directing itself, could have reached. Inevitably, proper consideration of such grounds
of appeal require us to examine the evidence before and the findings of the Tribunal
in some detail.
4 The Respondent began employment in March 1993 as a Savings and Investment
Adviser. A number of episodes during her employment were referred to by the
Tribunal. (a) Between 1993 and July 1996 the Respondent performed well at her job.
The Respondent underwent a "Personal Improvement Plan" which appears to have
been in about March 1996. The Employment Tribunal found that
"It is rather doubtful if she needed such a plan, but she co-operated with it and
performed capably."
(b) On 3rd April 1995, the Respondent was given a final written warning, for 6
months, for an act of forgery. She corrected an entry on a form and herself initialled it
with the customer's initials so as to save time.
(c) The Employment Tribunal found that at times during her employment, including
her period of previous employment, the Appellants received complaints from
customers about the Respondent.
(d) During 1995 and 1996, the Employment Tribunal found that the Respondent went
through what the Chairman described as "a rough patch" due to the holding up of her
promotion and the death of her mother.
(e) In 1966 a new Branch Manager, Mrs Smith, began. The Employment Tribunal
found this was a source of pressure for the Respondent.
(f) In April 1996, the Respondent applied for a job with the Prudential Assurance
Company. At her interview she explained the forgery and the Employment Tribunal
found this was accepted by the Prudential. However, they also sought references from
the Appellants. The references were in evidence before the Employment Tribunal.
They summarised them by finding:
"Those revealed that 17 complaints had been made against her of which 4 were
upheld and 8 were outstanding."
(g) The Respondent had only ever been informed about 2 of these. She had had no
opportunity to give an explanation either to the Appellants, from time to time when
the complaints arose, so as to contribute to their evaluation, or to the Prudential, when
they told her they had received details of them.
5 The Employment Tribunal considered whether the Respondent was dismissed as
provided for in Section 95(i)(c) of the Employment Rights Act 1996, that is where
"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."
6 In paragraph 5 of their decision the Employment Tribunal sets out the questions to
ask in applying what they called "the contract test"; were the Appellants in breach,
was the breach fundamental, did the breach cause the resignation, and was there an
affirmation. The Employment Tribunal then continued:
"5 (b) We decided that the (Appellants) were in breach of the implied term in the
(Respondent's) contract of employment that they would not so conduct themselves as,
on a reasonable analysis, to forfeit her trust and confidence in them. That term as to
trust and confidence is fundamental to the contract of employment, to the entire
relationship of employer and employee."
7 In the following sentence the Employment Tribunal encapsulated their application
of the facts, which they had found earlier in the decision, to the principles of law
which they had set out:
"5 (c) The management of the Applicant by attacking her confidence and in particular,
Mrs Smith's treatment of her, and the Respondents' radical use of unrevealed
complaints to block her progress comprised the conduct that together amounted to the
breach."
The Tribunal found that this breach caused the Respondent to leave her employment
when she did. They held that the Respondent did not affirm the contract in its breach.
They found that there was a constructive dismissal.
8 The grounds of appeal are set out in paragraph 6. In 6.1 it is alleged that the
Employment Tribunal failed to listen to and pay proper attention to the case presented
to them. This is a serious and sweeping allegation. In paragraph 2(b) of their decision
the Tribunal erroneously stated that the Respondent had abandoned her complaints
other than of unfair dismissal. However there was also a claim in contract. It seems to
us that is just the sort of mistake or oversight which the most experienced of Tribunals
will commit from time to time without its providing any basis for any generalised
conclusions. The only other example, cited by Mr Lemon in his skeleton argument on
behalf of the Appellants, relates to the evidence of Sally Day, which we deal with
below. We find this ground of appeal is unsupported.
9 Paragraph 6.4 of the grounds of appeal refers to paragraph 5 (c) of the decision of
the Employment Tribunal, quoted above, in which the 3 elements constituting the
breach of contract by the Appellants are set out. Mr Lemon has analysed that finding
in support of the submission that it is impossible for the Appellants to know why they
have lost on those points, and impossible to know what findings of fact related to
those conclusions. Furthermore, in considering the facts that could have given rise to
such a conclusion, he submits that they were not capable of such construction by a
reasonable Tribunal directing itself in accordance with the law. The grounds of appeal
in relation to these submissions are amplified in paragraphs 6.5 to 6.12, to which I
turn.
10 The Employment Tribunal is criticised first for its finding 'an attack on the
confidence of the Respondent', secondly in its findings about Mrs Smith's treatment of
the Respondent and thirdly in its findings as to the Appellants treatment of
complaints.

The "attack on her confidence, other than that relating to Mrs Smith"

11 Mr Lemon alleged that it was not clear to which findings of fact this related. He
said it was necessary to guess; it may have related to the ' personal improvement plan',
and/or delay in the Respondent's promotion and/or a letter of the 25th June 1996.
Paragraph 5(c) of the decision appears to have been a summary of what went before.
It is necessary, in considering this criticism, to examine the structure of the decision.
12 Having summarised the issues in paragraph 2 and having set out the names of the
representatives and witnesses in paragraph 3, the Tribunal made findings of fact in
paragraph 4. To identify the facts referred to in paragraph 5, therefore, it is only
necessary to look back to paragraph 4. There are findings of fact in paragraphs 4(a) to
(f). In paragraph 4(g) there is then a summary of such of those facts which the
Tribunal are carrying forward as part of their findings on the issues they have set out:
"Between everything, the delay in her promotion, the oppressive treatment by Mrs
Smith, the treating her as thought she were not competent, she began to feel
disillusioned with the respondents. She had much reason for complaint. Some things
she exaggerated: she felt too keenly the deprivation of a superior model of car. But on
the whole, she was managed ruthlessly and too severely. It was to be expected that
she began thinking of employment with another firm."
In the rest of paragraph 4 the Employment Tribunal considered the use of ' unrevealed
complaints' in the reference for prospective new employers. Accordingly the findings
of fact upon which the conclusion in paragraph 5(c) is based are clearly set out in
paragraph 4, and the 'attack on her confidence' are those set out in paragraph 4 (a) to
(f), to the extent carried forward in paragraph 4(g). Paragraph 4 (a) refers to the
personal improvement plan, and it appears that Mr Lemon is correct in identifying it
as part of the 'attack', though we find that this is clear on the face of the decision.
Paragraph (b) relates to the forgery allegation. The Tribunal do not appear to criticise
the way this matter was dealt with at the time as a disciplinary matter, although they
refer to it later in the context of the way it was described in the reference to
prospective employers. Mr Lemon did not refer to it as part of the 'attack' and it does
not appear to have been included in the summary in paragraph 4(g). Paragraphs (c)
and (d) related to the complaints, which were not disclosed at that stage and were not
summarised as part of the 'attack' in paragraph 4 (g) and were dealt with later.
Paragraph 4(e) related to the delayed promotion, was referred to in paragraph 4(g) and
was part of the ' attack'. Paragraph 4(f) related to the treatment by Mrs Smith, also
dealt with separately. Accordingly on the face of their decision the tribunal found that
the facts which led to their conclusions as to the 'attack on her confidence other than
by Mrs Smith', were the placing on the 'Personal Improvement Plan' and the delayed
promotion. Accordingly it does not appear necessary to guess what the Tribunal were
referring to. Mr Lemon criticises the approach of the Employment Tribunal to the
personal improvement plan and the delayed promotion and we consider each in turn.
13 First, the Tribunal found that the Respondent performed well at her job but
"the Respondent wanted to improve performance at her branch and she was one of
those put on the Personal Improvement Plan. It is rather doubtful if she needed such a
plan, but she co-operated with it and performed capably..."
This was, so it appears, what is referred to when in paragraph 4(g) the Employment
Tribunal described it as
"the treating her as though she were not competent".
Mr Lemon complains that this was not an "attack" on her confidence, but that is, in
our judgment an over-literal interpretation of the word. The Tribunal were clearly
using the word "attack" loosely in the sense of something which caused damage to the
Respondent's confidence. It may be that the use of the word "attack" could have been
better expressed because, on one reading it seems to imply a degree of deliberateness
on the part of the Appellants, but looking at the decision overall it is clear, as it seems
to us, that the Employment Tribunal were not using the word in that sense and they
did not make any finding of deliberateness in that connection. They were referring to
the effect of the actions rather than the purpose behind them, as is clear from the
whole context of the word 'attack'. Indeed later in that decision, the Tribunal referred
to "a steady erosion of confidence", which may be a more felicitous means of
expression. We find no basis for a substantial and valid criticism of the Employment
Tribunal's use of the word 'attack'.
14 Additionally, Mr Lemon, points out that the Tribunal did not find that the
Respondent had no need of such a plan, and he argued that in any event the tribunal
erred in forming their own view as to whether she needed a plan rather than whether
the employer could properly and did so conclude. He also points out that her putting
on the plan was not a disciplinary step nor a breach of contract. He also asserts that no
reasonable Tribunal, properly directing itself, could conclude that the employer could
not properly form the view that the Respondent should be put on such a plan, bearing
in mind the record of the Respondent's actual performance.
15 However, it does seem important to consider what the tribunal actually found
about the personal improvement plan. It is true that in her original evidence, the
Respondent complained that she was treated more harshly in the target which formed
the benchmark for admission to this plan, than others who were performing below
her, and that, therefore, she was unfairly treated. However, it is clear that this was
explored in some considerable detail in the evidence, for we have the Chairman's
Notes of Evidence. I digress to record that we are enormously indebted for the very
full notes of evidence with which we have been supplied. At the end of hearing the
evidence, the Employment Tribunal found in paragraph 4(a) only that;
"It is rather doubtful if she needed such a plan, but she co-operated with it and
performed capably."
16 That appears the highest that this aspect of the Respondent's complaints about the
performance improvement plan were put by the Employment Tribunal itself. It does
not appear that the Employment Tribunal adopted the Respondent's claim that she was
unfairly treated and as appears from their findings in paragraph 4(a) they themselves
did not place a lot of weight on this particular aspect of the Respondent's complaints.
Indeed in paragraph 5 (c) this is echoed by the words of the Tribunal which record the
eroding of confidence, but go on to emphasise the other matters as being of greater
importance with the words 'and in particular ...'. Furthermore it seems to be
overstating the position to say that the Employment Tribunal substituted their own
view by using the words 'it is rather doubtful if she needed such a plan'. The effect of
the words used by the tribunal is that they recorded that this was one matter raised by
the Respondent but that their view was rather inconclusive, and they were not
endorsing it wholeheartedly as a matter of complaint. Although there are the findings
of fact in paragraph 4(a) as to the personal improvement plan, having dealt with that,
and other features in subsequent sub-paragraphs, the Employment Tribunal made a
secondary finding of fact based upon them in paragraph 4(g):
"Between everything ... she began to feel disillusioned with the Respondents. She had
much reason for complaint. Some things she exaggerated ... But on the whole she was
managed ruthlessly and too severely..."
Looking at the way the primary findings are expressed in relation to the personal
improvement plan and then seeing how the overall position is then expressed it is
clear that the plan formed a small part of any finding of breach of contract, if any. We
accept that technically there does not appear to have been the factual basis contained
in the decision for criticising the Appellants' decision to place the Respondent on the
personal improvement plan, but Mr Benson has pointed out that there was material in
the evidence before the Tribunal to support a finding of singling out in relation to the
performance of others. We also accept that in the form of words used by the Tribunal
they did not ask themselves if the Appellants were reasonable in placing the
Respondent on the personal improvement plan. Nonetheless we find that any such
error was marginal and that there was no error of law in this connection which formed
any significant part of the findings of the Tribunal.
17 As to the delay in the promotion of the Respondent, in paragraph 6.7 of the notice
of appeal it is contended that there was no 'attack' and that it is not clear that what the
Employment Tribunal was referring to was the delay in promotion. We reject those
points for the same reason as we rejected the equivalent arguments in relation to the
personal improvement plan. It is clear to us that the words "attacking her confidence"
in paragraph 5(c) referred back in part to the finding in paragraph 4(g) that "the delay
in her promotion" contributed to her disillusion and that this in turn referred back to
paragraph 4(e) which contained the finding that "a promotion she had been promised
was held up".
18 It is further argued on behalf of the appellant that the finding of delay in promotion
as a contribution to the constructive dismissal was a conclusion that no reasonable
tribunal properly directing itself on the facts and the law could have reached. This is
because, first, part of the reason for the delay was the final warning for forgery, which
being an extremely serious matter was good reason to hold up promotion, and,
secondly and in any case, the promotion had been implemented in early 1996 "long
before termination". However, these two features do not represent all the issues which
related to the delay in the promotion. There was clear evidence, about which there
appears to have been no dispute in that it was unchallenged, to which we were
referred by Mr Benson.
19 We were referred first to a letter from the Union Representative. In it he wrote that
he was interceding on behalf of the Respondent because, although she had been
promised her promotion when her disciplinary warning ran out at the end of October
1995, and although a public announcement of the promotion had been made, by early
1996 this had still not been implemented. Secondly, the Respondent was then being
told, apparently, that the post was no longer available for her. Thirdly, in her
evidence, she referred to the fact that she had to keep dealing with the personnel
section about it. The Respondent stated the delay in implementing her promotion as
her first complaint in her Originating Application which stood as part of her evidence
in chief.
20 Additionally, it appears that the delay in promotion caused by the disciplinary
process resulting from the 'forgery' does not appear to have been relevant because it is
the period after the running out of the warning that is referred to. Further, the fact that
the promotion was implemented before the end of employment does not prevent its
contributing to the cumulative actions of the Appellants which the Employment
Tribunal found to constitute the operative breach of contract. It seems to us there was
ample material for the Employment Tribunal to conclude that a promised promotion
was held up, that the delay in her promotion made her feel disillusioned, and to lead
her to have what they described as "much reason for complaint". It was clearly being
referred to by the Employment Tribunal as part of the "erosion of confidence." It
seems to us there was evidence upon which the Employment Tribunal were entitled to
conclude as they did and that they clearly based their findings upon such evidence.
The fact that the Respondent continued in employment after the delay in promotion
had ended may be evidence of waiver of this matter, so far as it may be a single
breach of contract. However, this delay does not, it seems to us, prevent the
Employment Tribunal's relying on it as part of the factual material which combined to
contribute to the final cumulative breach which they found.
21 The next matter which Mr Lemon suggests may have been part of the Tribunal's
decision is a letter of 25th June 1996. However, it appears to have formed no part of
the Employment Tribunal's decision.
22 The next group of complaints which the Employment Tribunal found related to the
treatment of the Respondent by Mrs Smith who became her Branch Manager in
March 1996. They found as follows:
"4
(f) ...Mrs Smith wanted urgently to effect a profound improvement in the performance
of the branch. She is a strong personality and adopted strong measures. We accepted
what the Applicant said about their relationship. The Applicant, with some reason, felt
bullied. She was unsympathetically treated over her mother's death. She was put
under pressure during her sick leave.
(g) Between everything ... the oppressive treatment by Mrs Smith ... she began to feel
disillusioned with the Respondents. She had much reason for complaint. Some things
she exaggerated ... but on the whole, she was managed ruthlessly and too severely."
23 Mr Lemon takes issue with the word "felt" bullied and said that a feeling cannot be
a breach of contract. That submission, it seems to us, overlooks the finding of fact of
the Tribunal that that feeling was "with some reason". The complaint is that the
Tribunal did not identify the events alleged to have caused the feeling of being bullied
and that the parties cannot determine from the decision whether the events were
simply part and parcel of legitimate management pressure or a breach of contract.
However, The facts relied on by the Tribunal are referred to in the preceding and
succeeding sentences, namely their acceptance of the evidence of the Respondent in
the preceding sentence and the unsympathetic treatment over the Respondent's
mother's death and the pressure the Respondent was put under during her sick leave in
the succeeding sentence. We find that the Employment Tribunal made clear on what
findings of fact this conclusion was based. It is then said that it is not possible to
discern whether these actions were anything other than proper pressure and we refer
to each in turn.
24 The acceptance by the Tribunal in paragraph 4(f) of their decision of the evidence
of the Respondent about the relationship between her and Mrs Smith refers back to
paragraph 3 of the Originating Application and the extensive exploration of this in the
evidence. It is true, in general terms, that where a Tribunal simply says "We prefer the
evidence of X to the evidence of Y" without more, parties, and indeed the
Employment Appeal Tribunal, frequently will be left wondering what was the real
factual basis for coming to that conclusion and what parts did the Tribunal accept and
what parts reject.
25 However, in this case, evidence was taken over a number of days. The essential
issue was a clash of personality together with what appears to have been an allegedly
overbearing attitude by Mrs Smith.
26 In her Originating Application the Respondent spoke of the changing atmosphere
when Mrs Smith arrived. She spoke of the hostile attitude towards the Respondent
which made "my working life intolerable". She specified criticisms of the way in
which the Respondent carried out her duties, her performance levels even when she
achieved targets, that Mrs Smith suggested on a number of occasions that the
Respondent should resign and that Mrs Smith subjected her to constant harassment.
Bearing in mind the dicta in the case of Meek to which we refer later, we are satisfied
that there were clear facts and evidence upon which the Employment Tribunal were
entitled to accept the evidence of the Respondent on these matters.
27 So far as the unsympathetic treatment over the death of the Respondent's mother is
concerned, the evidence does show that Mrs Smith asked the Respondent whether she
had not come back to work too soon. That in itself may, as Mr Lemon submitted, be
consistent only with an expression of sympathy. However, on behalf of the
Respondent our attention is drawn to the context in which the evidence dealt with this.
It was towards the end of the Respondent's cross-examination. The Respondent had
been given a test for which she had not prepared and which she delayed in
completing. Consequent upon the test, Mrs Smith said "Are you coming back too
soon?" That comment may have been sympathetic but it also permits of a wholly
different construction. We find that the Employment Tribunal were entitled to
construe that reply as they did and in accordance with the complaint of the
Respondent.
28 So far as pressure during sick leave is concerned, the Respondent had given
evidence that she was harassed on the telephone whilst she was away sick and the
Respondent complained in her Originating Application that that happened to such an
extent that the Respondent's solicitor had to write a letter of complaint about it. We
find that the Employment Tribunal did not view this as consistent with appropriate
management pressure, and that they were entitled, on the facts and on this matter, to
come to the conclusion which they did.
29 The fact that the events surrounding the death of the Respondent's mother and her
sick leave were some time before termination of the contract is advanced by Mr
Lemon in support of his allegation that the Tribunal were ' perverse' in relying on
them. The delay was apparent to be weighed in the balance and it does not in our
judgment disentitle the Employment Tribunal from taking these factors into account
in the way they did.
30 The conclusion of the Tribunal was that "On the whole, she was managed
ruthlessly and too severely." On the face of it, that does appear fairly strong language.
However, we remind ourselves that the material is presented to us only in written
form and the Employment Tribunal had the opportunity of observing and hearing the
witnesses. Where a hearing has gone on for so very long, where there has been the
sort of clash of personality that is referred to here and where, at the very heart of the
decision of the Employment Tribunal, is the need to assess the personalities and the
conduct of individuals, we would be very slow to interfere with the conclusions of the
Tribunal as expressed in this case. The narrowness of the evidence as to the
unsympathetic treatment over the Respondent's mother's death makes it clear as to
what was included in the Tribunal's decision and the same is true of the interruptions
of sick leave.
31 Mr Lemon further contends that in relation to the feelings of being bullied, an
Employment Tribunal properly directing itself could not have come to that conclusion
when only a month after Mrs Smith became the Respondent's manager, the
Respondent had written saying "I will continue to support you in all your
endeavours". However, we have looked at the document from which that statement is
drawn and it does seem that it is a document designed to get Mrs Smith's co-operation
for the Respondent to be transferred. It seems to us that the expression of support is
consistent with its being designed to obtain Mrs Smith's co-operation and to avoid
arousing her suspicion and hostility. Certainly, it does not seem to us that that
statement can be relied upon to displace the entitlement of the Tribunal to accept the
evidence of the Respondent on these matters.
32 We accept the submission of Mr Lemon that at the centre of this case was the
question as to whether any conduct on the part of the Appellants which may be open
to criticism was sufficiently serious to constitute a fundamental breach and that it is
important for parties to be able to see the extent of the seriousness of conduct found
by the Tribunal. It seems to us that is what has happened here.
33 The remaining finding in paragraph 5(c) of the decision of the Tribunal relates to
"the Respondents' radical use of the unrevealed complaints to block her progress. That
referred back to the findings of fact in paragraphs 4 (c) and (d), and (h) to (k) of the
decision. The Employment Tribunal then went on:
"(d) ...it might be expedient for the Respondents to order refunds or to take other
action in response to a complaint without telling the Applicant about it; that might
amount to sensible customer relations. But as a matter of discipline, before the
complaints count against an employee potentially to the destruction of her career
prospects in the financial sector, she should be told of the complaint and her defence
should be considered. The general principle is obvious and simply. An employee does
not need to be excessively sensitive or vulnerable to lose trust and confidence if an
employer breaches it."
34 Mr Lemon argues on a number of grounds that there was here no breach of
contract, let alone a fundamental breach or a breach of fundamental terms. I refer to
the factual background. As members of, and answerable to, their regulatory body,
formerly LAUTRO, now termed PIA, the Appellants' practices are governed by rules,
Rule 2.3 of which deals with references. Sub-rule 3 was quoted in the course of
argument but does not apply to the circumstances, as we understand it, in this
particular case. More important is what is described as "Enforcement Bulletin number
11" from LAUTRO. The introduction section provides:
"The purpose of this bulletin is to give members information about conclusions
reached by LAUTRO in the context of its enforcement work which may be of interest
to the Membership as a whole ... The bulletin does not form part of the rules ...

Section 2 -- The Seeking and Provision of References between Members...

2.01 LAUTRO is often asked about references in situations where Member A is
considering appointing a company representative currently or formerly with Member
B. What information should A request of B in order to comply with the requirements
of Rule 3.5(1)?...
2.03 These are ultimately decisions for Members themselves to make in the context of
the requirement in Rule 3.5(1) to satisfy themselves as to the good character and
competence of an applicant and, in Rule 3.5(2), to make known all relevant matters."
There then follows a list which is described in the following way:
"2.04 ...the following is a list of what LAUTRO would regard as the types of question
which need to be addressed in order to provide the minimum information of a factual
nature which is necessary to satisfy either Rule...
(f) Complaints

(i) How many over what time period?
(ii) How many have resulted in compensation being paid to investors?...

(h) Discipline

(i) Has the CR ever been formally reprimanded or disciplined for breach of the
LAUTRO rules?..."
35 The Respondent applied for a job with the Prudential Assurance Company. She
told them about the forgery. She asked the Appellants to provide a reference. That
reference contained no assessment, as that term is normally understood, of the
character or ability of the Respondent. It provided the minimum information under the
LAUTRO rules. It appears that the Employment Tribunal was very much alive to the
difference between information required to provide the minimum detail that
regulatory provisions require on the one hand and information which constitutes a
balanced reference on the other. They found as follows as to the reference:
"4
(i) Those revealed that 17 complaints have been made against (the respondent) of
which 4 were upheld and 8 were outstanding. This was too much for the Prudential
who declined to employ her. She was amazed. She only knew of 2 complaints and she
was happy that she had answered those.
(j) The Applicant had performed well and capably. But here were the Respondents
producing a record that looked bad and included matters she did not know had
occasioned any comment or action. Several were outstanding. She did not realise that
there were any complaints pending against her. She did not understand how untried
complaints should be held against her.
(k) The Respondents do not make "subjective" statements in references. They confine
themselves to factual statements that may be justified from their files. Thus, there was
no question of telling the Prudential what the precise nature of the Applicant's offence
of forgery was; the recipients of the reference were only told that the Applicant was
guilty of "forging a customer's signature on a financial appraisal form". The
avoidance of a "subjective" statement here led to a more misleading reference than
would have been given if it had been included. The Respondents do not support the
self-recommendation of employees for whom they provide references by offering
estimates of their skills or qualities. They provide only what regulations require them
to provide, without considering whether the regulations barely observed are not, in
particular cases, misleading. This restrictiveness certainly mislead the Prudential
about the (Respondent's) worth. Indeed, about the nature and extent of their guilt
when accusations against them were upheld."
36 In paragraph 4(c), the Employment Tribunal pointed out that the complaints were
usually that information to a customer was misleading or inadequate, that some
complaints were upheld and others rejected, but that they were not necessarily
referred to the employee for comments. A discretion was retained whether to refer the
matter to the employee.
37 On a number of occasions in his submissions Mr Lemon complained that the
Tribunal did not identify the evidence upon which they relied in coming to their
findings of fact. Mr Benson has reminded us of the approach to the decisions of the
Employment Tribunals as exemplified in the case of Meek v City of Birmingham
District Council [1987] IRLR. Bingham LJ as he then was said that the decision is not
intended to be an elaborate formalistic product of refined legal draftsmanship, but that
it must contain an outline of the story, a summary of the basic factual conclusions and
a statement of the reasons which have led to their conclusion on those facts. The
parties should be able to see why they have won or lost and there should be sufficient
account of the facts and reasoning to see if there has been any error of law. The
learned Lord Justice expressly stated that this was consistent with the words of
Donaldson LJ, as he then was, in UCATT v Brain [1981] IRLR 225 to the effect that
the purpose of the decision was to "tell the parties in broad terms why they lose or, as
the case may be, win".
38 The Employment Tribunal is first criticised for finding that there was an implied
term that the employer would not record complaints without giving an employee an
opportunity to answer them. However, we accept Mr Benson's submission that the
Tribunal did not find such a term. They found an implied term for the employer to
maintain trust and confidence; the failure to give an opportunity to answer complaints
was no more than a factual description of one of the ways which may lead to a breach
of that term. The distinction seems important. Mr Lemon's formulation of the implied
term is the foundation of many of his arguments, including impracticability and lack
of a legal duty. The Tribunal did say
"before the complaints count against an employee ... she should be told of the
complaint and her defence should be heard",
They were only instancing a step that they believed should be taken. This was
illustrative, and was not central to their defining of the implied term. They gave
another such example in paragraph 4(k):
"The respondents do not ... provide references by offering estimates of [employees']
skills or qualities. They provide only what regulations require them to provide,
without considering whether the regulations barely observed are not in particular
cases misleading. This restrictiveness certainly misled the Prudential..."
39 Accordingly the argument for the Appellants takes one method of avoiding the
breach, namely consulting the employee over complaints, and turns that round into the
contractual obligation that the Employment Tribunal then found.
40 The consequence of what we find to be a mis-statement in the grounds of appeal of
the implied term found by the Employment Tribunal is that it places in the category of
'law' what is in reality more properly categorised as 'fact' and therefore not subject to
challenge in the same way. The findings of the Employment Tribunal as to giving the
employee an opportunity to answer complaints is, therefore, a finding of fact, and of
course still subject to scrutiny as such. Nonetheless, we find that the Employment
Tribunal cannot be criticised for the actual terms of the contract which they construed,
for there is no criticism of their finding an implied term as to trust and confidence.
41 The grounds of appeal contend that in finding a breach of the term as to trust and
confidence, the Employment Tribunal failed to heed certain matters and erred in their
approach to some issues. Reference is made, first, to the Regulations and, secondly, to
industry-wide practice. Thirdly it is contended that the Employment Tribunal erred in
failing either to find, or at least to consider, that it would impose an intolerable
practical burden on the Appellants to do what the Employment Tribunal found in
order to remedy such breach. Fourthly, it is alleged that in making their findings the
Employment Tribunal failed to consider the actions in practice of the Appellants at
the two stages at which they acted, namely when the complaints were investigated and
when the reference was furnished. Fifthly, it is then alleged that the Employment
Tribunal erred in failing to relate the unrevealed complaints to the other matters
alleged to constitute a breach so as to show how this amounted to a fundamental
breach of contract. Sixthly, it is alleged that the Employment Tribunal erred in law in
finding that the breach of contract was causative of the Respondent's leaving her
employment so as to constitute a dismissal, seventhly, that any undermining of trust
and confidence in this case did not amount to breach of a fundamental term, and
eighthly in that the Employment Tribunal 'casually extended' the law so as to find that
the breach of duty in relation to giving a reference is a matter of contract rather than
tort. Finally we were referred to the principles in the case of Malik.

The PIA and LAUTRO regulations

42 It is said that the Appellants were only acting in accordance with regulations and
general practice and that they could not do less than the regulations required. It is
alleged that the Tribunal erred in concluding that this led to a breach of contract, and
that the Appellants were acting capriciously and deliberately. Mr Benson argues that
the role of the regulatory body is not to define the limits of the obligations as between
employer and employee and that the regulations were not relevant to the issues before
the Tribunal.
43 In paragraphs 2 (b) and 4(k) the Employment Tribunal summarised the stance of
the Appellants in relation to the regulations and the practice of the industry in the
words
"The reference was correct and in accordance with established procedures of the
business"...
The Respondents "provide only what regulations require them to provide"
However, the Tribunal's findings seem consistent with the regulations themselves, for
even on its own terms the LAUTRO requirements refer to the ' minimum' of provision
and the need to be satisfied as to the competence and character of an applicant. The
bulletin quoted above seems to provide LAUTRO support for the proposition that
mere compliance with the regulations may not be an adequate reference. In particular,
there is nothing in the LAUTRO provisions to prohibit disclosure of complaints so
that employees may be forewarned at the time of a reference, even if they were not
given an opportunity to answer them at an earlier stage.
44 It seems to us that the Employment Tribunal found that the error on the part of the
Appellants was to treat the minimum requirements for regulatory purposes as the
maximum requirements to discharge the obligation which arises once an employer has
undertaken to give a reference to ensure that it is fair and reasonable. We agree with
Mr Benson's submissions that the provisions of the regulations are in reality not to the
point when considering what is a fair and reasonable reference. The argument of the
Appellants seems to use the obligation of the Appellants to their regulators as the
measure of their obligations to their employees. The Employment Tribunal rejected
this proposition. There was material entitling them to do so and we see no error in law
in this approach. Had the Appellants argued that compliance with regulations affected
their capacity to provide a fuller reference, then the argument may have been stronger.
This does not seem to have been argued, and we return to matters of practicality
below.
45 Next, it is contended that the words 'used' complaints, as a matter of discipline 'to'
block progress import a finding of deliberateness or capriciousness on the part of the
Appellants of which there is no evidence, and which is inconsistent with their
observation of regulations. This involves, it seems to us, reading those words as if
they meant 'with the purpose of blocking'. However, the words 'used' and 'to block' are
equally consistent with a straightforward description, not of the purpose, but of the
objective effect of the Appellants actions. The rest of the decision supports this latter
construction. It seems to us that the Employment Tribunal were simply describing the
effect of using the complaints in the way they were so used. Furthermore, the highest
the evidence was put seems to have been by the Respondent herself who said it was
'negligent'. The evidence before the Tribunal showed that references were prepared by
strangers at a remote location and we reject the contention that the Tribunal were
finding that the actions of the Appellants were deliberate or capricious.
46 Further, it is contended that it is reasonable for an employer to stick to the limits of
the requirements of regulations or at least not to be in fundamental breach of contract
if failing to do so. It is pointed out that the law does not oblige an employer to help an
employee obtain other work and that a reference does not have to be complete but
only reasonable and fair. However, in assessing whether the Appellants were in
breach of contract, the Tribunal were entitled to, and we find, did, consider not only
the quality of the act of sticking to the regulations in isolation, but also in relation to
its effect on the employee. They found that the Appellants approach, because of its
misleading effect, was damaging. In a similar way the phrase "being economical with
the truth" has become part of our language. Referring to unrevealed complaints may
be nothing more than the truth, and completely accurate, but simply to be accurate in
what is said may not lead to a 'reasonable and fair' reference. The Tribunal found that
to give half the story is to take a positive step, the result of which risks creating a
misleading impression that is liable to damage an employee permanently. Arguments
that limiting a reference to the minimum requirements of regulations is not a positive
act seem to us to fall away. We find that the Employment Tribunal were entitled to
treat the approach of the Appellants to the regulations in the way they did.

Industry-wide practice

47 It is alleged that the Employment Tribunal failed, in considering whether there had
been a breach of contract, to heed the evidence that the practice as to handling
complaints and giving of references is industry-wide and that the Respondent was
dealt with no differently from any other employee. It is also alleged that the
Employment Tribunal erred in concluding that to follow industry-wide practice could
amount to a breach of contract. It is argued that the Employment Tribunal erred in
calling the practice of the Appellants ' radical' and in failing to consider and make
specific findings as to the evidence of Sally Day.
48 It does appear that the Employment Tribunal did heed, in their reference to
"established procedures in their business" in paragraph 2(b), the argument that what
the Appellants did was industry wide.
49 Further, even if the Tribunal intended the meaning ascribed to 'radical' by the
Appellants, a general practice in a particular sector may yet not be a reasonable and
fair practice and may be extraordinary or 'radical' in relation to generally accepted
standards of behaviour by a reasonable employer. It does not seem to us that where
the effect of a practice is as the Employment Tribunal found, that they erred in finding
a procedure to be radical or extraordinary even though widespread in a particular
industry. We find that there was evidence upon which the Employment Tribunal were
entitled to find that the use of unrevealed complaints was 'radical'. In any event, we
consider that it would be an over-literal and narrow interpretation of the words of the
decision to conclude that the use of the word 'radical' must have meant exceptional
with regard to practice within the industry so that a breach of contract can be
disproved by evidence from elsewhere.
50 It does not seem to us that in using the word 'radical' the Employment Tribunal are
thereby to be read as overlooking the argument that what the Appellants did was
industry-wide. It seems to us that the word "radical" is being used in the sense of
"extraordinary". Clearly, the extraordinary feature of this procedure, so far as the
Employment Tribunal was concerned, was that it uses the minimum requirements for
regulatory purposes as a model for a balanced and fair reference on behalf of an
existing employee.
51 Complaint is made that in deciding that the use was "radical", and in any event, the
Employment Tribunal failed to consider and to make specific findings about the
evidence of Sally Day. She gave evidence of the need to comply with regulations, to
keep the records of complaints and to include them in a reference. We bear in mind
that an Employment Tribunal is not required to set out the evidence upon which it
makes its findings, but Mr Lemon says that this was so central that the Tribunal erred
in failing to deal with it specifically.
52 We have therefore considered the statements and oral evidence of this witness. She
asserts the practice of the Appellants in this connection and maintains that it is
industry-wide. In her first statement she says that the procedures are standardised
because employees are working in the financial services industry. She states, in
paragraph 2, that the Appellants use a standard form reference in order to comply with
their interpretation of regulatory requirements. She explains the requirement for a full
and frank disclosure of all complaints including those that are rejected, accepted and
outstanding. In paragraphs 10 and 11 she gives the reasons for this practice -- in the
first she says that
"What the reference format does not produce are personal details [and] comments on
the development of an individual's career. The Bank take the view that the individual
will have promoted relevant personal aspects (herself) and would not have got a job
offer subject to references if the individual employee concerned failed to get across
specifically those aspects"
In the second paragraph the reason for a standard format is so
"references in regulatory detail can be provided and be given in a consistent and
uniform way. This has the advantage of avoiding subjective comments from Line
Management who will not have the full picture available to them."
53 The reasons for this procedure, therefore, given by Sally Day, seem to be that, first,
giving personal information about career development is a matter for the individual
employee and secondly that line management should not be relied on to provide
subjective information because they may not 'have the full picture'. There is no
evidence on the face of it that the reason for not having the 'traditional' form of
reference or for not consulting employees over complaints when investigating them, is
the onerous nature of the exercise or the difficulty in contacting ex-employees.
54 Indeed, in paragraph 3 of her supplemental statement Sally Day seems to be a
sliding away from the first statement when she stated;
"I mentioned previously that there is no standard form of reference laid down by PIA,
but the fact that the rules as they have evolved have laid down certain minimum
requirements that the reference should contain".
In fact, this does not appear to have been part of her evidence in her first statement. It
concedes that there is no standard form laid down and that the PIA standards are
'minimum'. The introduction of this evidence by way of supplementary statement does
seem at least to indicate the Appellants' recognition of its importance.
55 Whilst it is true that the decision of the Employment Tribunal makes no specific
reference to Sally Day it appears that, in their reference to the practice of the
Appellants not giving 'subjective' references, they had in mind that particular evidence
of Sally Day. We can find no error of law in the Tribunal's approach to their findings
of fact in relation to the matters of which she gave evidence. That the Appellants were
following their standard procedure is acknowledged by the Tribunal, and that others
in the industry may have followed the same procedure does not, it seems to us,
prevent the Employment Tribunal from being entitled to conclude that this practice
amounted to the breach of contract which they found.
56 In connection with the practice of the industry it is alleged that the Employment
Tribunal erred in concluding that the practice of the Appellants was
'potentially to the destruction of her career prospects in the financial sector'.
Mr Lemon contends that it is the number of complaints, that these could not be
diminished and that a prospective employer in the financial service industry knows
what is at work and would not react unfavourably. The finding of the Employment
Tribunal was to the contrary and was consistent with evidence from the Respondent,
that the discovery of these complaints by the Prudential was fatal to her job
application.
57 Furthermore, we ourselves would only observe that we doubt the proposition that
the evidence proved conclusively that the practice of the Appellants was industry-
wide. There is a similar reference, completed by the Prudential Assurance Company,
at page 254 of our bundle, that is not only much fuller, but where the section on
complaints is dealt with they include an evaluation of the complaint and express the
view that one such is groundless. Further we note that there was evidence from Mr
James Steven Smith, a former fairly senior employee of the Appellants, who was
noted to say
"The TSB always give references that cause people problems"
and his statement was not wholly consistent with the suggestion that the Appellants
were following industry-wide practice.
58 Further, notwithstanding any industry-wide practice, the Tribunal were concerned
with the effect of this Appellant's actions on this Respondent. Apart from practicality,
referred to later, it seems to us that even if a practice is widespread, if its effect is to
act "potentially to the destruction of her career", as the Tribunal found, they were
entitled to find in the way they did that this was a breach of the term of trust and
confidence. We find there was evidence upon which they could reach their decision
and the failure to mention the evidence of Sally Day was not an error of law.

Practicality and approach to the evidence

59 The Employment Tribunal found:
"...before the complaints count against an employee ... she should be told of the
complaint and her defence should be considered"
It is argued on behalf of the Appellant that in making this finding the Employment
Tribunal do not appear to have considered that this process would be impractical to
the extent of its not being a breach of contract to fail to follow it. It is also said that
this is an example of the Tribunal's substituting their own view. Complaints may be
received after an employee has left employment and references are sought about ex-
employees. Further, even in respect of current employment, it is asserted that the
practicality of discussing every complaint where it is not intended to take any
disciplinary action would be an 'intolerable burden' and would create a term that
would not be understood by the industry. It is said that the Appellants have the
opportunity of acting at two stages, when the complaint is received and when the
request for a reference is received. Regulations oblige them to deal with and record
every complaint at the first stage and to give details of them when a reference is
sought at the second. When the complaint is received there can be no obligation to
discuss it with an employee because there is no disciplinary action contemplated, so
there is nothing to prejudice the employee in his or her employment. Later, when the
request for a reference is received, the person may no longer be an employee
protected by implied terms of trust and confidence, there may be no contractual duty
to provide a particular reference, there is no obligation on an employer to help an
employee obtain other work and a reference does not have to be complete but only
reasonable and fair. In these circumstances it is contended that it is an error of law to
find a breach of contract let alone a fundamental breach. We refer in the next section
to the complaint that the Employment Tribunal did not examine properly the two
stages at which the Appellants could have acted.
60 The arguments of impracticality appear to have been based on the incorrect
statement that the implied term was restricted to an obligation to give the employee
the opportunity to answer all complaints. However, as Mr Benson points out, there
does not seem to have been evidence to prove such impracticality. There is no
evidence, for example, that it would be impractical for the Appellants to have as part
of their procedure the sending of a memo to the current employee concerned asking
for comments whenever they receive a complaint. Indeed, the Employment Tribunal
recognised in paragraph 5 the expediency of just paying compensation to the customer
without the trouble of an internal inquiry, but they nonetheless found a breach when
looking at the whole process. The tribunal clearly also had in mind other possible
steps such as giving a full reference or telling the employee of the complaints at the
reference stage. The latter of these can be seen from paragraph 4 (k) of the decision:
She "did not know (there were complaints which had) occasioned any comment or
action ... She did not realise any ... were pending against her"
The Tribunal seem to have been alive to these other possible steps and not only to the
fact that the Appellants did not give the Respondent the opportunity to answer
complaints, and it has not been argued by the Appellants that these steps in the case of
an existing employee are also impractical. We consider that such evidence as we have
seen did not demonstrate the impracticality of avoiding what occurred to the extent of
justifying a conclusion that the Employment Tribunal erred in failing to conclude that
there was impracticability or in failing to consider such evidence in their conclusions.
We do not find that the Employment Tribunal erred in failing to find that the
obligations that the avoidance of the breach of the implied term would have placed an
intolerable burden on the employer.
61 The Employment Tribunal were dealing with an employee in post and whilst the
position may be different for an ex-employee, there was no requirement for the
Tribunal to judge the position of the Respondent in terms of how the Appellants
should deal with an ex-employee. We deal with this also in the next section.

Failing when considering the actions of the Appellants to judge them in the light
of the point in time when they occurred, namely when a complaint was received
and when the reference was furnished

62 It is contended that an examination of the actions of the Appellants at those two
stages would have led to a conclusion that they were not in breach of contract. It is
contended that at the first stage there was no legal obligation to refer complaints to
employees unless they formed part of a disciplinary procedure, which in this case they
did not, and that at the second stage and if the employee was no longer employed by
the Appellants there would be no legal obligation to give an opportunity to answer
complaints.
63 At the Employment Tribunal there was much analysis of the complaints
themselves, and Mr Lemon rehearsed them before us. The Employment Tribunal were
entitled to conclude on the evidence that their disclosure lost the Respondent the
opportunity of the new job. It seems unnecessary to examine them further and
inappropriate for us to analyse the extent of justifiable criticism of the Respondent in
them.
64 Mr Lemon argues that the tribunal erred in finding that the Respondent
accumulated a 'disciplinary record' because the 'unrevealed complaints' were not used
as part of the disciplinary procedure and no disciplinary action is taken against the
employee in respect of them. The Tribunal held:
"Thus an employee might accumulate a disciplinary record without realising it. The
record might become irrevocably fatal to her prospects of employment in the financial
industry (as it did in the Applicant's case)."
First, whilst it is strictly correct that the complaints were not part of the disciplinary
record, the Tribunal were apparently referring to the use of the complaints in the
procedure for giving references, as the above extract demonstrates. In this context it
seems to us that the Tribunal were entitled to conclude that the complaints, in the
context of giving a reference to prospective employers, were in effect used as a record
of misdemeanours, or ' blots' as the Tribunal described them. Secondly, the Tribunal
did not find any unfair disciplinary procedure as part of the finding of breach of
contract. Accordingly, even if the words 'disciplinary record' were not strictly
accurate, they did not impinge on the essential findings of the Tribunal in relation to
the breach of contract flowing from the reference given to a prospective employer.
Again in paragraph 5(d) the Employment Tribunal described what should have
happened 'as a matter of discipline', but from the context of the words it appears to us
they were using the term loosely to describe ' procedures which affected the
employee'. It is implicit in the decision that the Employment Tribunal were aware that
the complaints did not lead to disciplinary action. Indeed, that would be consistent
with the lack of questioning of the employee about the complaints which lies at the
heart of the whole case.
65 Mr Lemon has referred to the tribunal's treatment of the forgery, which was a
disciplinary matter, and which, it is argued, the tribunal referred to because they were
in error in treating the complaints as if they were disciplinary matters. It is rightly
pointed out that this was not an ' unrevealed' complaint. It is true that in paragraph 4
(k) the Employment Tribunal found
"The respondents do not make 'subjective' statements in references. They confine
themselves to factual statements that may be justified from their files. Thus, there was
no question of telling the Prudential what the precise nature of the [Respondent's]
offence of forgery was; the recipients of the reference were only told that the
[Respondent] was guilty of "forging a customer's signature on a financial appraisal
form"
and stated that this led to a more misleading reference than if it had included a
description of the precise nature of the act of forgery in this instance. It is also true
that this appears in the section which deals with unrevealed complaints. However, in
this paragraph the first part appears to use the offence of forgery as an example of the
way in which the Appellants do not give 'subjective' references which detail skills and
qualities. In this way the Employment Tribunal used the word 'thus' to preface an
example of what went before. It is later in the paragraph that 'unrevealed' complaints
are referred to;
"They provide only what regulations require them to provide".
They conclude the paragraph,
"This restrictiveness certainly misled the Prudential about the Respondent's worth,
indeed about the nature and extent of her guilt when accusation against her were
upheld",
The restrictiveness refers back to the unrevealed complaints and to the failure to give
details of the forgery. Both are examples of not giving full ' subjective' references but
a careful reading of the paragraph leads us to conclude that the Tribunal did not treat
the forgery as an 'unrevealed' complaint, or the unrevealed complaints as true matters
of discipline.
66 Mr Lemon postulates the question as to what time does the duty arise to consult the
employee so as to avoid being in breach of contract in the way found by the
Employment Tribunal? Is it, he says, when the complaint is received? He says there is
no breach of contract at that time within the employment situation. By the time the job
reference is made the employer is doing no more than obliged to do by the
regulations, and the employee may no longer be an employee so the capacity for the
Appellants to be in fundamental breach of contract will be past.
67 We accept that there is no legal duty on the Appellants to refer complaints to
employees at the point of time when no disciplinary action is contemplated and when
confined to the management task of dealing with the complaint in isolation. The
Employment Tribunal were also alive to this when they dealt with the expediency of
paying compensation in paragraph 5(d).
68 As to ex-employees, complaints are sometimes received after an employee has left
employment, and any contractual duty to furnish references in a particular form may
not apply to an ex-employee. Nonetheless, the Employment Tribunal was dealing
with a current employee and we find they did not err in failing to view the obligations
to an existing employee in the light of the effectiveness or lack of binding obligation
in relation to ex-employees. It appears to us that the position of ex-employees is not a
relevant analogy. The whole nature of the employment contract is that it gives rise to
implied obligations over and above those outside the employment contract. There is
also an important practical difference in terms of degree. The reference from a current
employer is likely to be a much more significant factor in a job application than one
from a former employer.
69 It seems to us the answer to the question as to when the duty arises lies in the
findings of the Employment Tribunal in paragraph 5(d). The point in time is
"before the complaints count against an employee potentially to the destruction of her
career prospects".
Mr Lemon complains that by the use of the word 'use' of complaints, the Employment
Tribunal erred in failing to identify the point in time when this ' use' occurred.
However, the approach of the Employment Tribunal was to consider the actions of the
Appellants over a period of time, not in relation to two stages. It seems to us that the
Tribunal were clear in referring to a process, rather than to a point in time, as
paragraph 5(d) demonstrates. Again, the Employment Tribunal focus on the effect of
the Appellants procedures on the Respondent.
70 The Appellants argument is presented by looking at the two stages independently,
as if they were compartmentalised. It can be argued, on the one hand, that it is not a
breach of contract to fail to discuss with an employee complaints which do not form
part of the disciplinary record and which can be dealt with administratively. It can
also be argued that when it comes to furnishing a reference, an employer is entitled to
do the minimum should he or she elect, by sending the references under the
regulations. However, it is when the two processes are combined over a period of time
that the mischief which the Employment Tribunal identified in paragraph 5(d) occurs.
71 Implicit in the decision of the tribunal is the finding of a breach of contract in
having a process of unrevealed complaints knowing they may be used for a reference
and then using them as a reference so as, in this case, to terminate the career in the
financial services sector of an able employee. It is not so much that it was argued that
the Appellants did something wrong at the stage of complaint or reference, but that at
either stage, or in between, they could have ensured that harm was not done. There
were facts which, we find, entitled the Employment Tribunal to reach their
judgement. The findings of the Tribunal dealt not only with the effect of the
Appellants actions, but also with steps that could have been taken, including
informing the employee of complaints at the complaint or reference stage, and
providing a fuller reference.

The relationship of unrevealed complaints to the 'attack' on confidence and Mrs
Smith's treatment in the finding of a fundamental breach of contract

72 Mr Lemon made submissions questioning the part played by the use of unrevealed
complaints in the overall decision of the Tribunal that there was a breach of a
fundamental term. Having set out the questions to be asked in paragraph 5(a), in
paragraph 5(b) the Tribunal found:
"We decided that the Respondents were in breach of the implied term ... that term as
to trust and confidence is fundamental to the contract of employment."
They then went on to identify the conduct which together amounted to the breach in
paragraph 5(c), but went on in paragraph 5(d) to say:
"The use of unrevealed complaints alone would have amounted to conduct in breach
of the terms as to trust and confidence." Later on, in paragraphs 5(e) and (f) they said:
"The Respondents' breach of the implied term as to trust and confidence as described
above caused the Applicant to leave when she did so. It was a process that had for
some time persisted. The revelation of the references was the last straw. It induced her
to leave precisely when she did, though she was actively considering leaving in any
case. Here was a steady erosion of confidence culminating in a final disintegration."
73 The use of the phrase "last straw" does not appear to fit what the Employment
Tribunal appear to have been saying because the use of unrevealed complaints was
not regarded by them as being as insubstantial as a piece of straw. It seems that the
phrase "final disintegration" more accurately reflects the situation. Nonetheless, it is
clear, it seems to us, that the Employment Tribunal found that the use of unrevealed
complaints alone would have amounted to conduct in breach of the term as to trust
and confidence. That must refer back to the breach of what they describe as a
fundamental term.

'Any breach was not causative'

74 It is pointed out that the Employment Tribunal found that the effect of the
reference caused the Respondent to leave when she did "although she was considering
leaving in any case" and that the evidence demonstrated that she had verbally
accepted the offer of another job before she was aware of the effect of the reference.
Accordingly it is said that the reference itself as a cause of leaving was a conclusion
no reasonable tribunal properly directing itself could have come to or, alternatively,
that the Employment Tribunal failed to take account of her acceptance of another job.
However, the evidence was that the Respondent left without a job to go to, which is a
different act from leaving to go to another job, and the Tribunal found that it was the
former that was caused by the breach of contract of the Appellants. Further, as Mr
Benson points out, the Employment Tribunal had regard to the fact that, although
before the matters in relation to the reference were disclosed, the Respondent was
actively considering leaving in any case, and she had not, at that stage, resigned. It
seems to us this was a conclusion to which the Tribunal were entitled to come and the
evidence was not such as to drive a reasonable tribunal to be bound to conclude that
the Respondent would have left in any event.

Was any undermining of trust and confidence sufficient, in this case, to amount
to a fundamental breach of contract?

75 Whilst in the past there have been interesting legal arguments as to the difference
between fundamental breach and a breach of a fundamental term, one if not the first
case to identify the implied term of trust and confidence, Courtaulds Northern
Textiles Ltd -v- Andrew [1979] IRLR P.84 puts the matter beyond doubt. This was
not referred to in argument but is well-established and uncontroversial authority;
"One has to consider whether the conduct complained of constitutes either a
fundamental breach of the contract or a breach of a fundamental term of a contract ...
but there is not much room, as we think, for that enquiry in a case in which the test,
within the terms of the contractual obligation, is one which involves considering
whether the consequences, or the likely consequences, are to destroy or seriously
damage the relationship of confidence and trust between employer and employee;
because it does seem to us that any conduct which is likely to destroy or seriously to
damage that relationship must be something which goes to the root of the contract,
which is really fundamental in its effect upon the contractual relationship."
76 The Employment Tribunal found that it did have the consequence of jeopardising
the Respondent's employment prospects. We find that the Employment Tribunal were
entitled to find that the actions of the Appellants constituted a breach of the term as to
trust and confidence and that consequently there was a fundamental breach of
contract.

Was there a casual extension of the law?

77 We were referred to Spring - v - Guardian Assurance at its different levels in the
courts, and in particular in the House of Lords, reported at [1994] IRLR 460 Lord
Gough at paragraph 33 says:
"Where the relationship between the parties is that of employer and employee, the
duty of care could be expressed as arising from an implied term of a contract of
employment, ie that if a reference is supplied by the employer for the employee, due
care and skill will be exercised by him in its preparation. Such a term may be implied
despite the absence of any legal obligation from the employer to provide a reference."
78 The Spring case involved an ex-employee and the House of Lords held that there
was a duty of care in tort. Mr Lemon suggests that it was not essential to the decision
in that case that the duty of care in relation to a reference be attributed to a breach of
contract rather than in tort and that the speeches do not all conclude that it is the
former. He claims that the Employment Tribunal 'casually extended' the law without
sufficient analysis. However, the speeches, particularly of Lord Woolf, in the Spring
case, do generally seem to support such a duty. Further, in this case the term was not
as to the giving of a reference, but as to maintaining trust and confidence. The facts
relating to the giving of the reference were therefore part of the facts which gave rise
to the finding of a breach of contract. The Tribunal did not find a breach of a specific
term in relation to the giving of a reference. It seems to us in any event that the
commission of a tort against an employee is available factual evidence of a breach of
the implied term as to trust and confidence. Further, the above authority appears to be
ample ground for entitling the Employment Tribunal to regard themselves as having
jurisdiction and categorising the matter as an allegation of a breach of contract such as
to give rise to constructive dismissal. Further, we are not satisfied that this matter was
canvassed before the Employment Tribunal in any event. We do not find that the
Tribunal erred in exercising jurisdiction in this matter, or in the way in which they
dealt with the matter.
79 We were also referred to the case of Malik -v- Bank of Credit & Commerce
International SA [1997] IRLR 462. That decision makes it clear that the breach of
trust and confidence takes place when the act is performed, not necessarily when it is
communicated to the employee. That gives a legal framework for the Employment
Tribunal's finding of when the breach occurred in paragraph 5(d) of their Decision.
Furthermore, that Decision gave House of Lords authority for the first time to the
implication, as a matter of law, of an obligation on the part of an employer to maintain
trust and confidence
80 In their decision, the Employment Tribunal set out the issues which each party had
raised. They then set out their findings of fact in relation to those issues. We have
been helpfully reminded of the case of Meek -v- Birmingham City Council. We are
also satisfied that there was evidence upon which a Tribunal, properly directing itself,
could come to those findings of fact. Having set out the initial matters relating to
delay in promotion, requirement to be on the Personal Improvement Plan and
treatment from Mrs Smith, they went on to consider the use of the references. They
then identified the principles of law to apply and came to a conclusion to which they
were entitled to come in applying their findings of fact to those principles of law. We
are satisfied that the Appellants are able to know from the decision why they lost. Our
only reservation would be as to the way in which the Tribunal approached the
Personal Improvement Plan. However, their finding, in any event, that the unrevealed
complaints were a breach of the term of trust and confidence and the other matters
which preceded that lead us to find that there was no error of law which, if corrected,
could affect their final decision. It is always possible to criticise words used and there
is no doubt that this decision was fairly brief in its analysis of the facts. Nonetheless
there was no error of law. The appeal is dismissed.
81 The decision on review was also subject to Appeal. The effect of that decision was
that, once the main decision identified the breach of the implied term of trust and
confidence leading to unfair dismissal, it must follow that there was a common law
breach of contract. Mr Lemon queried whether a Tribunal should have embraced such
a complex matter. However, Tribunals cannot pick and choose what cases, properly
brought before them, they can hear. Mr Lemon says that careful findings of fact
should have been made as to the exact breach of contract. It seems to us that there
were findings of fact within the decision. The consequences of that breach would be a
matter for consideration when the Remedies Hearing takes place. We do not accept
that the failure to mention the evidence of Sally Day was of any significance. The job
of the Tribunal is to make findings of fact not to reiterate evidence heard over many
days. A breach of contract is actionable per se. Furthermore, at the outset of the
review the parties were given an opportunity to make representations; they chose to
make none. The Employment Tribunal had already given its decision on the claim for
unfair dismissal. Were the parties concerned to have findings as to the scope of the
breaches for the purpose of breach of contract, and particularly if the Appellants were
concerned to narrow those findings, that, it seems to us, was the time to have made
representations. We can see no error in law in the decision on the review.
82 Accordingly, these two appeals are dismissed and the application of the
Respondent will be remitted to the Employment Tribunal, constituted as before, to
deal with the Remedies Hearing as expeditiously as possible.

				
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