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Appeal No. UKEAT/0469/09/DM

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 22 April 2010

Before

THE HONOURABLE MRS JUSTICE SLADE

MS P TATLOW

MR S YEBOAH

BLOXWICH FENCING LTD (APPELLANT)

MR L P BANKS (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant MR MARTIN COPELAND

(Representative) For the Respondent No appearance or representation by or on behalf of the Respondent

STATUTORY DISCIPLINE AND GRIEVANCE PROCEDURES – Whether applicable

UNFAIR DISMISSAL – Mitigation of loss

The Respondent withdrew its objection that the Claimant had not raised a grievance in accordance with Section 32 of the Employment Act 2002 [repealed as from 6 April 2009] when the Employment Judge drew its representative's attention to the judgment of the Employment Appeal Tribunal in Arnold Clark Automobiles v Stewart and others UKEATS/0052/RM. Accordingly the Employment Tribunal did not err in not considering whether a statutory grievance could be raised in without prejudice correspondence or in not considering whether the subject matter of the Claimant's complaint to the Employment Tribunal had been raised in such correspondence. Further the Employment Tribunal did not err in law or come to a perverse conclusion on the facts in deciding that the Claimant had not failed to mitigate his loss when he refused an offer of re-employment made almost immediately after he had been constructively dismissed. The Respondent's appeal from the finding of unfair dismissal and the quantum of compensation was dismissed.

1. This is an appeal by the Respondent, Bloxwich Fencing Ltd, from the Judgement of an Employment Tribunal entered in the register on 5 August 2009, which held that the Claimant, Mr Banks, was constructively and unfairly dismissed on 10 October 2008. We will refer to the parties as Claimant and Respondent, their titles before the Employment Tribunal. Two grounds of appeal are before us at this full hearing.

1. The first ground of appeal is that the Employment Tribunal erred in various respects regarding the compliance of the Claimant with the grievance procedure requirements in Section 32 of the Employment Act 2002. It is said by Mr Copeland on behalf of the Respondent, who is the Appellant before us, first that the Tribunal erred in failing to consider the argument that there was non-compliance with the grievance requirements necessary to give the Tribunal jurisdiction before the hearing of the substantive case of unfair dismissal. The argument which was raised on the day of the hearing on behalf of the Respondent was that Section 32 of the Employment Act 2002 had not been complied with because the Claimant had raised his grievance in without prejudice correspondence.

1. Secondly, it is said that the Employment Tribunal erred in failing to satisfy themselves that the subject matter of the grievance had been raised by the Claimant.

1. Thirdly, Mr Copeland submits that notwithstanding that he was conceded before the Employment Tribunal, that it was bound by the Judgment of the Employment Appeal Tribunal in Scotland in the case of Arnold Clark Automobiles v Stewart & Others UKEATS/0052/05/RM to hold that a grievance, in accordance with the statutory requirements, can be raised in without prejudice correspondence that decision was wrong. Mr Copeland said that he conceded before the Employment Tribunal that it was bound by Arnold Clark Automobiles although he commented that that decision went contrary to a long line of authority as to the effect of without prejudice on correspondence.

1. The second ground of appeal is a challenge to the failure of the Employment Tribunal to hold that the Claimant had failed to mitigate his loss by not taking up the Respondent's offer of continued employment once his employment had come to an end.

1. The brief facts of this case are these. The Claimant was employed as a fencer. His employment terminated on 10 October 2008. The Tribunal had found that relationships had deteriorated between himself and his employer towards the end of his employment. This was a very small organisation. On 3 October 2008 Mr Smith, the Principal of the Respondent, handed the Claimant a letter stating that the Claimant was laid off from 10 October 2008. The letter stated that:

"If however the work does pick back up I will notify you in due course and you can return to work."

The Claimant was not to be paid for the period of the lay off.

1. The Employment Tribunal found as a fact that there was no contractual provision entitling the Respondent to lay off the Claimant without pay. It found that the Respondent conceded that it sought to take advantage of the economic conditions to use the lay off provisions. The Employment Tribunal held that the Respondent was in fundamental breach of their duty of good faith and that the Claimant had been constructively dismissed.

1. In making an award of compensation, the Employment Tribunal made an uplift of 40 per cent for non-compliance with the statutory dismissal procedure. A compensatory award was made in the full amount sought by the Claimant. The Employment Tribunal held in paragraph 17:

"In circumstances such as these where there is a mutual breakdown in trust and confidence we have taken judicial notice of Schindler v Northern Raincoat Co. Ltd [1960] 2 AER 239 and we find in this instance it is not reasonable to expect the Claimant to have gone back to work for the Respondent."

1. We deal first with the challenge to the Employment Tribunal's approach to the alleged non-compliance by the Claimant with the grievance requirements of Section 32 of the Employment Act 2002. No doubt very interesting arguments arise regarding the effect of setting out a grievance in without prejudice correspondence. However in this case there is a logically prior issue. The Employment Tribunal recorded in paragraph 7.4 of its judgment as follows:

"Mr Banks subsequently raised a grievance and it is accepted by the Respondent that for the purposes of the statutory procedures and the Employment Act 2002 that that was an adequate grievance. The Respondent did as we say initially raise an issue with regards to it being "without prejudice" but that that was subsequently withdrawn."

1. The Tribunal also recorded at paragraph 2 of its judgment:

"Also conceded was an issue raised by the Respondent in relation to the Claimant's grievance in that the letter of grievance was marked "without prejudice" and whether this allowed the Tribunal to treat the same as a grievance. By virtue of the Arnold Clark case that we will refer to later, that issue, was ultimately as we say, conceded by the Respondent."

1. The relevant documentation prior to the hearing before the Employment Tribunal does not indicate that any point was to be taken by the Respondent that the Claimant had not complied with the statutory grievance requirements prior to issuing his Employment Tribunal claim, such as to preclude the Tribunal from having jurisdiction to hear the claim. Indeed the ET3 lodged on behalf of the Respondent by the same representative who appeared in the Employment Tribunal and before us refers in terms to a reply to the Claimant's letter of grievance asking for further information and clarification. Further, the Respondent in their ET3 ticked the relevant box to indicate that they accepted that a grievance in compliance with the statutory requirements had been raised by the Claimant.

1. In their detailed response to the claims, the Respondent takes no point that the unfair dismissal claim had not been the subject of a grievance. This is to be contrasted with a point taken in relation to other claims. It was said at paragraph 10 of the detailed response that these claims were outside the jurisdiction of the Tribunal as they had not been "grieved".

1. The hearing was set down for one day and certain standard directions given. No issue was raised by the Respondent as to the jurisdiction of the Tribunal to hear the claim for unfair dismissal because of an alleged lack of grievance by the Claimant. To the contrary, all the communications from the Respondent were consistent with a grievance complying with the statutory requirement having been raised.

1. The first time that the issue of alleged non-compliance with the grievance requirements was raised by the representative of the Respondent was on the day of the hearing at the Employment Tribunal. It appears from the Employment Tribunal's Judgment and from what we have heard from the representative, Mr Copeland, that the Employment Judge drew the representative's attention to the Judgment of the Employment Appeal Tribunal in the case of Arnold Clark and in particular to paragraph 29 in that Judgment. In that case, the details of which it is not necessary for us to outline, Lady Smith in the Employment Appeal Tribunal held at paragraph 29:

"We have given careful consideration to the question of whether or not the inclusion of the phrase without prejudice ought to lead to a different conclusion, that is as to whether there had been a grievance made in compliance with Section 32. The argument seems at first blush to be persuasive. How could it be said that a Claimant was intimating a statement of grievance if, at the same time, he was reserving his right to say something different at a later date? However, the message did not change. The claim put before the Tribunal was in respect of the matter complained of in his solicitor's letter. Given that the statement of grievance requires to relate to the subject matter of any subsequent claim, he would have been in difficulty if the claim presented to the Tribunal was different in substance, but it was not. On reflection it seems to us that the use of the without prejudice formula did not prevent the letter being viewed as a statement of grievance for the purpose of Section 32 of the 2002 Act."

1. Mr Copeland, in his skeleton argument for the purpose of this appeal, said of paragraph 29 of Arnold Clark:

"The argument [on] without prejudice seemed persuasive but on reflection it was not. With great respect to Lady Smith this is not a ratio from which a reader could be said to understand why the common law principle of without prejudice privilege should, and to all intents and purposes, uniquely be ineffectual."

At paragraph 24 of the Skeleton he says:

"In accepting the judge's ruling on Arnold Clark Mr Copeland opined that it was wrongly decided and dispensed with over 100 years of precedent in a single paragraph."

1. In submissions to us Mr Copeland told us that he recognised that he was bound by the Arnold Clark decision but said that it was wrong. Very frankly and quite properly he said that in the Employment Tribunal he did not reserve the point for argument in a higher court.

1. We, in the Employment Appeal Tribunal, cannot go behind what the Employment Tribunal recorded at paragraph 7.4 of its Judgment. The Respondent did not seek a review of the Judgment to correct the record to that the challenge by the Respondent to compliance by the Complainant with the requirements of the grievance procedure had been withdrawn. No agreement was sought to be reached with the Claimant or his solicitors as to the terms in which the Respondent's representative dealt with the point before the Employment Tribunal. No notes of evidence have been sought or obtained from the Employment Tribunal.

1. In these circumstances, and with some regret as the question whether a grievance complying with Section 32 can be raised in a without prejudice letter is of some interest, we cannot go behind the record of the Employment Tribunal that this point was withdrawn by the Respondent. Accordingly, the grounds of appeal, challenging the Tribunal's approach to the issue of whether a grievance can be raised in without prejudice correspondence and whether or not it was something that the Tribunal had to deal with in this case, are academic and are dismissed.

1. If we had proceeded to hear substantive arguments on this part of the appeal there would have been many further points to consider: for example, whether there had been compliance with the requirements of the Employment Act 2002 Section 32(6)(b) and whether the issue had been raised by the Respondent in compliance with the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004. There would no doubt have been more detailed argument and consideration of relevant authorities on the point. However, the question of whether a grievance can be raised in without prejudice correspondence must be for another case.

1. We then come to the second point in this appeal: the challenge to the decision of the Employment Tribunal that the Claimant had not failed to mitigate his loss. It is said by Mr Copeland on behalf of the Respondent that the Employment Tribunal erred in failing to distinguish the circumstances of Shindler v Northern Raincoats [1960] 1 WLR 1038, of which the Tribunal took judicial notice in reaching its decision, and the facts of this case.

1. Mr Copeland said that in Shindler there was a gap of four months between the termination of employment and the offer of renewed employment whereas in this case the offer of employment made by the Respondent to the constructively dismissed Claimant was made almost immediately. He submitted that the Employment Tribunal failed to give reasons for its conclusion that it was not reasonable to expect the Claimant to have gone back to work for the Respondent. We disagree. The Tribunal made a clear finding in paragraph 17:

"In circumstances such as these where there is a mutual breakdown in trust and confidence, we have taken judicial notice of Shindler v Northern Raincoat Co. Ltd [1960] 2 AER 239 and we find in this instance it is not reasonable to expect the Claimant to have gone back to work for the Respondent."

1. It must be borne in mind that the Employment Tribunal had made a finding of constructive dismissal. They made a finding that the Respondent had been in fundamental breach of its contract with the Claimant and its duty of good faith to him, which went to the root of his contract of employment. This finding was made in the context of a concession by the Respondent that it had sought to deliberately use the lay off provisions to take advantage of the economic conditions. The Tribunal had further held at paragraph 7.2 that there had been "a deterioration in relations between the parties over some time prior to" the constructive dismissal.

1. In our judgment the Tribunal made an assessment on the facts which was plainly open to it that it was not reasonable to expect the Claimant to have gone back to work for the Respondent. We dismiss this ground of appeal also. Accordingly, the entire appeal stands dismissed.