Appeal No. UKEAT/0201/15/BA

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE

	At the Tribunal
	On 11 February 2016

Before
HIS HONOUR JUDGE SHANKS
(SITTING ALONE)

MR R WELLS	APPELLANT

COUNTRYWIDE ESTATE AGENTS T/A HETHERINGTONS	RESPONDENT

Transcript of Proceedings

JUDGMENT

APPEAL & CROSS-APPEAL

APPEARANCES

For the Appellant	MR PETER O’BRIEN
(of Counsel)	
For the Respondent	MR THOMAS CORDREY
(of Counsel)

SUMMARY
UNFAIR DISMISSAL - Constructive dismissal
CONTRACT OF EMPLOYMENT - Wrongful dismissal

The Claimant committed gross misconduct and, following a fair investigation, was dismissed, the Employment Tribunal finding that dismissal was within the range of reasonable responses.

The Claimant brought an internal appeal and the Respondent allowed the appeal on the basis that the sanction was in the view of the appeal officer too harsh, and a sanction of demotion was substituted.  After consideration the Claimant decided that he would not accept demotion, and he resigned.

He claimed in the Employment Tribunal that he had been constructively dismissed and that such dismissal was wrongful and unfair.  His case was that (1) the original dismissal fell away because of the successful appeal; (2) that there was no contractual right to demote; (3) the demotion amounted to a fundamental breach of contract; (4) by resigning he accepted that breach and was constructively dismissed; and (5) that the constructive dismissal was wrongful and also unfair because the terms of the demotion were so harsh.  There were interesting points raised by the appeal particularly in relation to (1) and (3), but the appeal was dismissed without further consideration of those points because, in the light of the findings relating to the original (direct) dismissal, the claim that the putative constructive dismissal was unfair was hopeless, and, given that the Employment Tribunal had found that the Claimant had indeed committed an act of gross misconduct, the Respondent was entitled to dismiss him, and he could not claim wrongful dismissal.

HIS HONOUR JUDGE SHANKS

1.	This is an appeal by the Claimant against a Judgment of Employment Judge Bedeau sent out on 26 February 2015 dismissing his claims for unfair dismissal and wrongful dismissal.

Background Facts
2.	The Respondent employer is the largest estate agent in the United Kingdom.  The Claimant worked for it and for its predecessors at the Broxbourne branch, latterly as Branch Manager, for many years.  

3.	His original contract of employment with Bairstowe Eves plc dated 10 October 1983 had a specific contractual section headed “Disciplinary Procedure”, and at (vii) there was a provision that:
“the only disciplinary actions which the company will use are oral warnings, written warnings and dismissal.  However, in cases where the company believes that there is evidence of serious misconduct, an employee may be suspended on full pay for up to seven days whilst the matter is being investigated.”

Much later, after the Respondent had taken over the Broxbourne branch (as recorded at paragraph 11.1.41 of the Tribunal’s Reasons), the Claimant was sent a copy of a Countrywide Group staff handbook, which was dated October 2004.  He was asked to sign some paperwork in March 2006 in respect of the handbook, and he responded by saying:
“… please note that I have not signed the form accepting the restrictive covenants for the last two years as I do not consider the clauses relating to competition fair or reasonable … I don’t have any other issues with both documents …”

The staff handbook was divided into sections A and B: A comprised terms and conditions of employment; B was headed “General Information” and, the parties appear to agree, was non-contractual.  Within B was a section dealing with disciplinary procedure, and within that section was a heading that said “Other sanctions”:
“At the company’s discretion, other sanctions may be considered such as demotion, or transfer, or loss of seniority, or suspension without pay, instead of or in conjunction with any of the above sanctions [which I take to include warnings and dismissal].”

So much for the relevant terms of the employment contract.  

4.	From 15 December 2007 there were new money laundering regulations brought in that imposed obligations on estate agents to take steps to combat money laundering, and those steps included the need to verify the names and addresses of the estate agents’ vendor clients.  This was a serious matter, and the Employment Tribunal found that the Claimant was well aware of the regulations, of the Respondent’s policies and of the requirement to obtain written verification of his clients’ names and addresses.  

5.	In the course of an interview with the Operations Director on 28 January 2014 to discuss his branch’s poor performance, the Claimant was ill-advised enough to express the view that compliance with the regulations and policy was not important.  An investigation followed and it emerged that the branch had a very poor compliance record, and disciplinary proceedings were started against the Claimant and two of his colleagues.

6.	The Claimant accepted that he had failed to complete documents properly and that he was also responsible for the branch’s poor performance in this respect.  Mr Bennett, who conducted the disciplinary hearing, concluded that this was a very serious matter amounting to gross misconduct and that he should dismiss the Claimant without notice, as he did on 25 March 2014.  The Employment Tribunal found - although whether they needed to is perhaps a moot point - in particular at paragraphs 14.9 and 14.12 that a reasonable investigation and hearing were carried out in relation to these allegations and at least implicitly that dismissal was within the range of reasonable responses for what the Claimant had done.  They also for their own part found that he had committed the acts of gross misconduct that had been alleged against him (paragraph 14.15, dealing with the wrongful dismissal claim).

7.	The Claimant appealed against Mr Bennett’s decision, and Mr Taylor heard the appeal.  During the hearing, rather curiously, the Claimant was asked what he thought the outcome should be so far as sanction was concerned, and he said (quoted from the Reasons, at paragraph 11.1.55):
“I think that I would have expected at least a written warning, in the letter from [Mr Bennett] he is questioning his trust in me as [Branch Manager] and if someone decided that this responsibility was no longer mine, I’m not sure what the term is, a demotion?  I would have understood that.  But to be summarily dismissed is not proportionate for the reasons I have stated.”

Mr Taylor on the appeal took a more lenient view than Mr Bennett, and he said the following at the conclusion of the appeal on 24 April 2014 (quoted from the Reasons, at paragraph 11.1.63):
“I agree with [Mr Bennett’s] view that you were negligent in your duties by failing to obtain ID and follow Money Laundering Procedures and in some cases completion of fact finds.  I find that you did have sufficient experience and training to know what you needed to do, and you also admit that you were well aware of the procedures, but at some point this slipped.  Given the seriousness of the issue, the volume of files that were non-compliant and period of time that you had failed to follow the money laundering procedures, I believe that it was right to consider you’re [sic] actions/the allegations of gross misconduct, with a potential sanction of dismissal.
However, I do partially uphold point 2 (the sanction was disproportionate and inconsistent) and although I understand the rationale for [Mr Bennett’s] decision, I conclude that the decision taken to dismiss you was a harsh one, and that taking into account your length of service and previous record, that an alternative sanction could have been issued.  Therefore, it is my decision to issue you with a final written warning which will remain on your file for 12 months, and reinstate your employment on the following basis/terms:
A. Return to work on Monday, 28 April at Broxbourne branch with a demotion to a senior negotiator role, and a reduced basic salary of £18,000 per annum commensurate for an experienced senior negotiator. …
B. That your work will be supervised and monitored closely on a weekly/monthly basis, with particular attention being placed on compliance, Money Laundering Procedures, [etc.] …
C. Salary and commission that you have been paid had you not been dismissed will be reimbursed on your return to work, and paid in the next pay run in May.  The new pay terms will apply with effect from 28 April 2014.”

8.	The Claimant’s response to that was an email letter on 1 May 2014, where he said this (quoted from the Reasons, at paragraph 11.1.67):
“Quite apart from the fact that I do not accept you are entitled to demote me, it is quite impossible for me to return to working for an organisation that still regards me as guilty of gross misconduct and which saw fit to summarily dismiss me despite my very many years [sic] long service to the company and a good disciplinary record in all those years.  Even now the company has not apologised to me for dismissing me.”

He then mentioned proceedings in the Employment Tribunal.  

9.	The Respondent gave him some time to consider his position, and on 28 June 2014 he wrote to Mr Taylor stating this (quoted from the Reasons, at paragraph 11.1.70):
“I apologise for not responding sooner, but I have found recent events extremely upsetting and stressful.  I have taken further legal advice and wish to make it clear that I have resigned with immediate effect because of my employer’s treatment of me.  There has been a fundamental breach of trust and confidence in my employer.  The sanctions imposed are oppressive and a breach of my contract.  I may write further to you about this.”

10.	In due course, within three months of 28 June 2014, the Claimant brought proceedings in the Employment Tribunal based on what he said was a constructive dismissal, and he claimed both unfair and wrongful dismissal.

11.	The Employment Judge found that although the demotion and the other terms proposed by Mr Taylor on 24 April 2014 may have involved a breach of contract, that breach was not fundamental so that it could not give rise to a constructive dismissal.  He also found in a short paragraph at paragraph 14.7 that in any event that constructive dismissal was not unfair.  Further, although he did not have to, he found and recorded that the dismissal on 25 March 2014 was a fair dismissal and that he would have extended time for a claim to be brought in respect of that dismissal.  Since there is no challenge by the Claimant to the finding that the putative dismissal on 25 March 2014 was fair, I have not considered the cross-appeal by the Respondent that it was wrong to extend time notionally for it to be the subject of a claim.
The Appeal
12.	Mr O’Brien, who has argued the appeal for the Claimant in a way that to his credit has caused me to hesitate, notwithstanding the views I expressed at the outset, basically says the following: (1) the effect of the successful appeal was to negate the original dismissal on 25 March 2014; (2) there was no contractual right to impose a demotion or the other terms suggested on 24 April 2014; (3) the demotion and the other terms amounted to fundamental breach of the contract of employment; (4) the Claimant resigned in response to that fundamental breach and so was constructively dismissed; and (5) that dismissal was wrongful and unfair because the terms proposed by Mr Taylor were so humiliating and brutal a sanction.  As I understand the position of the Respondent, represented ably by Mr Cordrey, it agrees with proposition (2) but fundamentally disagree with propositions (1) and (3).

13.	In my view, the points that have been argued about as to whether the original dismissal still applied or had somehow evaporated and whether what Mr Taylor was doing was a fundamental breach were extremely interesting but on the facts of this case of academic interest only.  In my clear view, the Claimant’s case that he was unfairly or wrongfully constructively dismissed was on any analysis doomed to fail once it was found that he had committed an act of gross misconduct, that the Respondent had carried out a reasonable investigation into that matter and that dismissal was a reasonable response to what he had done and therefore fair.

14.	Looking at the unfair dismissal claim, assuming that Mr O’Brien is right that there was a constructive dismissal that took place on 28 June 2014, one nevertheless has to look to the terms of section 98 of the Employment Rights Act 1996.  When one looks to those terms it is the reason for the dismissal that one must look at, and one must consider whether it was a sufficient reason for dismissing the employee.  The reason for the dismissal in this case, albeit a constructive dismissal, was clearly the gross misconduct of the Claimant.  The matter had been properly investigated, and dismissal was within the range of reasonable responses.  In my view, that was the end of the case.  The notion that the idea of demoting the Claimant was so brutal that the previous events, including his own behaviour, somehow evaporated and were put to one side in considering fairness is just fanciful, as is the notion, if it is one that is seriously being advanced, that demotion was somehow a harsher penalty than dismissal.  The Employment Judge was therefore clearly right to find, as he did at paragraph 14.7, that the constructive dismissal (if it was such) was fair.

15.	Turning to wrongful dismissal, the Employment Judge found and clearly had the material to find that the Claimant had committed an act of gross misconduct and that meant that the Respondent was entitled to dismiss him without notice.  To dismiss him in that way, even constructively, was not a breach of contract by the employer.  That is the end of the wrongful dismissal claim.

Disposal
16.	On those grounds, which do not require a consideration of many of the detailed arguments put to me, it seems to me that this case and this appeal are hopeless, and I therefore dismiss the appeal.