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Appeal No. UKEAT/0195/10/ZT

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 16 September 2010

Before

HIS HONOUR JUDGE McMULLEN QC

MR P GAMMON MBE

DR K MOHANTY JP

CHRIS DICKINS T/A CHRIS DICKINS SOLICITORS (APPELLANT)

MISS D K VIRDEE (RESPONDENT)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant
No appearance or representation by or on behalf of the Appellant

For the Respondent MR SIMON CHEETHAM  (of Counsel)

**SUMMARY**

UNFAIR DISMISSAL – Constructive dismissal

PRACTICE AND PROCEDURE - Costs

The Employment Tribunal did not err in finding the conduct of the Respondent breached the implied term of trust and the Claimant resigned for that reason.

The employment status of the Claimant was not an issue at the Employment Tribunal and could not be raised now.

The Respondent, a solicitor, conducted himself unreasonably in failing to take steps in preparation for the hearing, in not attending and threatening costs against the Claimant. If the Claimant, a solicitor, had known he would not attend she need not have instructed counsel. Subject to submissions of the Respondent and a schedule, costs of counsel attending the hearing (but not conference and skeleton) would be awarded.

**HIS HONOUR JUDGE McMULLEN QC**

1. This case is about constructive unfair dismissal. It is the judgment of the court to which all members appointed by statute for their diverse specialist experience have contributed. We will refer to the parties as the Claimant and the Respondent.

**Introduction**

1. It is an appeal by the Respondent in those proceedings against a judgment of an Employment Tribunal sitting at London South under the chairmanship of Employment Judge Spencer, sitting over a total of five days which included time for private deliberations. The Claimant and the Respondent appeared as litigants in person. They are both solicitors.

1. The Claimant made claims for unlawful deduction of wages, which was dismissed and is not pursued, and for constructive unfair dismissal, which succeeded and which is the subject of the Respondent's appeal today.

**The issues**

1. The issues were set out by the Employment Tribunal in a structured judgment. It indicated who had provided evidence, the correct direction on law relating to constructive unfair dismissal (see paragraphs 5 to 9), the facts, the submissions in sequence of the parties and its conclusions (see paragraph 68 to 81). The matter was then sent for a remedy hearing which is not the subject of an appeal before us.

1. The Claimant has the advantage to be represented on appeal by Mr Simon Cheetham of counsel. Mr Dickins was due to represent himself. Two days ago he indicated, in response to chivvying by the case manager, that his Notice of Appeal would stand as his skeleton, for he had not provided one, and he also indicated that because he was prioritising his business affairs he would not attend the hearing today. This was news to Mr Cheetham. Mr Dickins also made, yesterday, a criticism of the fact that Miss Virdee had decided to be represented by counsel and wished this to be raised as an issue should costs arise.

1. We say at once that it is the Claimant's right to represent herself at an Employment Tribunal and to have professional representation at the EAT to raise points of law. We see it as good sense that even a competent lawyer has independent representation and we are astonished that that view was not shared by Mr Dickins, criticising Miss Virdee's conduct in instructing counsel. We reject that.

**The appeal**

1. I considered the papers on the sift and without forming a firm view that this case had reasonable prospects of success decided to send this matter to a hearing. I expressly discounted the utility of a preliminary hearing which would have been my intention as my notes at the time show, for the parties were both litigants in person and solicitors and real disputes appeared to have been set out in the Notice of Appeal dealing with contract and repudiation. However, in the light of the Respondent's answer and Mr Cheetham's written skeleton, my impression has changed in particular because one issue, that is the employment status, was not raised below. The sequence of input into this case is a Notice of Appeal, a Respondent's answer by Miss Virdee, a skeleton argument by her and nothing further from Mr Dickins. So we will take it that it is not in dispute that the Claimant was, as the Tribunal found, an employee of Mr Dickins on 1 April 2005.

**The legislation**

1. Given that that is not an issue before us and indeed we would not allow it to be raised without substantial argument in support of it, for it would require further findings to be made by an Employment Tribunal, the directions given by the Tribunal as to constructive unfair dismissal are neatly set out. Section 91(5)(c) of the Employment Rights Act 1996 provides that an employee is dismissed if the employee terminates the contract with or without notice in circumstances in which she is entitled to terminate it without notice by reason of the employer's conduct.

1. The Employment Tribunal gave what we hold to be a correct self direction as follows:

"6. It is established law that such conduct must amount to a significant breach going to the root of the contract of employment.

7. Terms of contract relating to an employee's pay are central to the employment relationship. Deliberate breaches of such terms are usually fundamental. The duty of trust and confidence has been defined as a duty that 'the employer should not, without reasonable and proper cause, conduct himself in a way that is calculated or likely to destroy or seriously damage the relationship of mutual trust and confidence that exists between an employee and her employer.' (Courtaulds Northern Textiles Ltd v Andrews 1979 IRLR 84.) It is irrelevant that the employer does not intend to damage his relationship provided the effect of the employer's conduct, judged sensibly and reasonably, is such that the employee cannot be expected to put up with it. It is the impact of the employer's behaviour on the employee that is significant - not the intention of the employer. (Malik v Bank of Credit and Commerce International 1979 IRLR 462). The impact on the employee must be assessed objectively.

8. If the Tribunal finds that there is a dismissal within the terms of Section 95(1)(c) the Tribunal should go on to consider whether the dismissal is fair or unfair within the terms of Section 98 of the Employment Rights Act 1996. In these circumstances it is for the employer to show what was the reason for the dismissal and whether that reason was a potentially fair reason for dismissal falling within Section 98(1) or (2). In the case of constructive dismissal the reason for the dismissal is the reason for the breach of contract that caused the employee to resign (Berriman v Delabole Slate Ltd 1985 ICR 546). If there is a potentially fair reason for dismissal the question is whether in the circumstances the employer acted reasonably or unreasonably in treating that reason as a sufficient reason for dismissing the employee.

9. If the employee can establish that there has been a fundamental breach of contract on the part of the employer he or she must also show that she has resigned in response to the breach. (The employee must also act promptly in resigning following the breach or she may have accepted the breach.) If the employee has resigned for some other reason then it is not the fundamental breach that has caused the dismissal."

**The facts**

1. The Claimant and the Respondent had a most unusual professional relationship. The Respondent operated in north Lincolnshire, practising as a sole practitioner, principally doing criminal work and conveyancing; the Claimant specialised in commercial litigation and was located in London. They arranged various splits of the fees she brought in. Unarguably on 1 April 2005 new terms were agreed as to the remuneration by the Claimant by way of salary and bonus. In particular, clause 6 excited a good deal of attention at the Employment Tribunal - it is this:

"From 1 April 2005 your basic annual salary will be £25,000 per annum payable monthly in arrears by BACS payment to your bank account by the last working day of each month. In addition, from 1 April 2005 you will be paid a bonus dependant on the level of fee income you produce. You will be paid a further sum of 50% of any excess over £60,000 per annum earned by you in gross fees, such fees to be calculated and paid quarterly from 1 April 2005 and with a final reconciliation taking place at the end of each year. The payment of the bonus will be reviewable depending on the employee's income, practice's needs and staffing levels."

1. The Tribunal came to this conclusion:

"Although this Clause is not clear it is the Claimant's case and accepted by Mr Dickins (see para 4 of his witness statement) that this meant that profit share was to be calculated quarterly (ie earnings over £15,000) subject to overall annual earnings of £60,000."

1. The Tribunal was somewhat dismayed that these two lawyers did not reduce their professional relationship into clear terms. There arose an issue about what this clause meant. A legitimate dispute about the meaning of a clause is something with which lawyers may frequently be engaged. What happened in this case, as the Tribunal found, was that Mr Dickins failed to deal properly and fairly with issues raised by the Claimant as to her bonus, not simply about the interpretation of that clause but about her raising issues about it, to such an extent that the Claimant decided she would no longer stay. She contended that the essential implied term of trust and confidence had been breached in five ways, which the Employment Tribunal upheld.

1. This is a fact sensitive issue and the Tribunal found that numerous attempts by the Claimant to try to clarify her remuneration were rebuffed by the Respondent. The Respondent had a deliberate policy of leaving things vague and that, of course, created very substantial and justified dissatisfaction in the mind of the Claimant.

1. The Claimant left. A chronology of her leaving shows that she was engaged in negotiations with another firm and so an issue to decide was what triggered the resignation. Was it anything to do with the breach of contract which the Tribunal upheld or was it entirely separate? The Tribunal directed itself that the effective cause of the Claimant's resignation was the repudiation. That was a matter for it to determine.

1. In those circumstances, the factual issue as to whether she resigned for that or a different reason was resolved in the Claimant's favour.

**The submissions**

1. Doing the best we can with the submission consisting solely of the Notice of Appeal, we hold that this raises issues of fact and degree which were matters of appreciation for the Employment Tribunal. First, it is contended that the Tribunal did not analyse the relationship correctly for it was not a relationship of employment. Secondly, the judgment is perverse in that no reasonable Tribunal could come to this material. Contentions continue to be raised against the Claimant as to her untruthfulness and as to the weight the Tribunal placed upon the evidence which she gave. The issue of bad faith had not been addressed correctly. The Tribunal did not properly balance its finding in relation to the Respondent's conduct as against the Claimant's. As Mr Dickins put it, in fact and in law it was the conduct of the Claimant which was likely to destroy the implied term. A number of issues are raised about compensation but these matters were not before me when I sent this matter to a full hearing and are not part of this judgment.

1. On behalf of the Claimant the material before us is the Respondent's answer and a detailed skeleton argument prepared by Mr Cheetham. In the absence of Mr Dickins, we have been able to take Mr Cheetham's skeleton and did not call upon him to advance the points any further than he had so succinctly done in his written argument. In short, this is a detailed point by point rebuttal of the issues set out in the Notice of Appeal.

**Discussions and conclusion**

1. We prefer the arguments of the Claimant. First, we accept that the employment status issue was a new issue not raised before and may not be raised here (see, for example, my judgment in Leicestershire v Unison upheld specifically in Celtec v Astley .

1. We accept in full the submission of Mr Cheetham in his skeleton argument. The Employment Tribunal correctly analysed the nature of the implied term and the steps required for establishing constructive dismissal. There is no error of law. In our judgment, the Employment Tribunal has squarely before it the dispute between the parties and it made decisions which are clearly explicable from its reasons. The Employment Tribunal made a decision which was open to it and indeed, in the circumstances facing us to date, we hold it to be correct. The perversity attack has no substance.

1. On the Claimant's application for costs, the Respondent, a solicitor, conducted himself unreasonably in failing to take steps in preparation for the appeal, in not attending and threatening costs against the Claimant. If the Claimant, a solicitor, had known he would not attend she need not have instructed counsel. Subject to submissions of the Respondent and a schedule, costs of counsel attending the hearing (but not conference and skeleton) would be awarded.