Olubodun v Total Stay Group Limited UKEAT/0204/09/DA

Appeal concerning whether damages should be paid for breach of contract

Appeal No.UKEAT/0204/09/DA

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 6 November 2009

Before

HIS HONOUR JUDGE BIRTLES

MR C EDWARDS

MRS A GALLICO

MISS A OLUBODUN (APPELLANT)

TOTAL STAY GROUP LTD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant MR SAMUEL NICHOLLS (of Counsel)

(Appearing under the Free Representation Unit Scheme)

For the Respondent MS C L GITTENS (Representative)

The AP Partnership Ltd Borough House Newark Road Peterborough PE1 5YJ

**SUMMARY**

RACE DISCRIMINATION

Inferring discrimination

CONTRACT OF EMPLOYMENT

Damages for breach of contract

There was a claim for breach of contract by failing to pay her notice pay. The ET encouraged the parties to settle this outside the hearing but then failed to incorporate the agreement in the final order as there was a dispute over the correct amount to be paid. This ground of appeal was agreed.

The remaining claim of perversity in failing to infer race discrimination was dismissed. The Appellant failed to satisfy Yeboah v Crofton [2002] IRLR 634.

**HIS HONOUR JUDGE BIRTLES****Introduction**
  1. This is an appeal from the judgment of an Employment Tribunal sitting at Watford on 18 to 21 August 2008 hearing and 17 November 2008 in chambers. The judgment was sent to the parties and entered in the Register on 17 November 2008. The unanimous judgment of the Employment Tribunal was that the Respondent did not discriminate directly against the Claimant on racial grounds. By a majority the Tribunal's judgment was that the Respondent did not discriminate against the Claimant by way of victimisation.
  1. According to the Employment Tribunal judgment at paragraphs 1 and 3.3 there was a third issue, namely, breach of contract by the failure to pay notice pay. However, that was not listed by the Employment Tribunal in its list of issues: see paragraph 7.3.
  1. Today the Claimant below, the Appellant here, Miss Olubodun, has been represented by Mr Samuel Nicholls of Counsel under the Free Representation Unit Scheme. Ms C L Gittens appeared below for the Respondent, and has appeared here this morning. We wish to make it clear that this Tribunal is always grateful for the assistance it gets from organisations such as the Free Representation Unit because it means that appellants or respondents who might otherwise not be represented by counsel are so represented.
  1. We also wish to make it clear that Mr Nicholls did not appear below. At the hearing before the Employment Tribunal Miss Olubodun was represented by a Mr M Johnson who is a consultant. It is clear from the judgment and from the way Mr Nicholls has put his appeal that Miss Olubodun did not get the service which she should have got from Mr Johnson at the hearing below.
**The Material Facts**
  1. Miss Olubodun is of black African ethnic origin. She was employed by the Respondent company as a Credit Control Manager. She was employed from 16 July 2007 to 25 September 2007, a total of ten weeks and one day. The Respondent is a small company providing an online hotel reservation service. The Tribunal found that the majority of the Respondent's international clients operate in English but a disproportionate percentage of credit control problems arose with clients from Spain. Up until May 2007 the credit control function was performed by a Mr Robert Duffy who was then the Customer Service Manager. From May 2007 that function was performed by a Ms Flutter.
  1. The Employment Tribunal found that the employers had concluded that the Claimant was not able to perform the functions of the Credit Control Manager. Her previous experience had been as a credit controller. The Tribunal set out in paragraph 19.11 of its judgment many examples of the Claimant's failings which the Tribunal found to be clear from the evidence of Ms Flutter supported by Mr Middleton, the Finance Director.
  1. The Tribunal recorded that Ms Flutter gave evidence of specific examples of a large number of matters which the company considered were failures on the part of the Claimant. The Employment Tribunal set out the counter complaints which Miss Olubodun gave in evidence. Allegations by the Claimant that she had been bullied were withdrawn in final submissions made on her behalf. Insofar as the lack of ability to read or write Spanish was a source of complaint about the Claimant's performance, the Tribunal found there was no evidence that this constituted or was connected in any way to her black African origins.
  1. Miss Olubodun went on leave between 13 and 23 September 2007. Shortly before 25 September 2007 Mr Clements, the Managing Director, decided that the Claimant should be dismissed for inability to perform her job. Mr Middleton, the Finance Director, met Miss Olubodun on 25 September 2007 and she was summarily dismissed. There were no notes of the meeting.
  1. Miss Olubodun wrote to Mrs Tania Clements, another director of the company, and asked what money she would receive: appeal bundle page 98. The Employment Tribunal found that Mr Middleton, who had conducted the interview on 25 September 2007, did not, as was later alleged by Mrs Clements, give the Claimant the options of either continuing to work while she looked and found other employment or receiving pay in lieu of notice. If she were given those options at the meeting the Tribunal found she certainly did not understand she was being given them.
  1. On 27 September 2007 Mrs Clements referred to the fact that Miss Olubodun was on a three month probationary period and she was entitled to two weeks' notice and that she did not have to work that notice. Mrs Clements drafted but did not send an email expressing regret for the way in which the dismissal was handled and she intimated that Mr Middleton might be disciplined.
  1. On 8 October 2007 Miss Olubodun raised a formal grievance. She made allegations of race discrimination alleging that her performance had been criticised because she was not Spanish and could not speak Spanish. She also alleged she had been bullied and harassed. She alleged she had been dismissed because she was not considered to be boardroom material whereas Mr Duffy, a white man, was so considered: appeal bundle pages 99 to 102.
  1. Her grievance hearing was conducted on 26 October 2007. Mr and Mrs Clements were there. No notes of the meeting were taken. Miss Olubodun said she was told that her notice monies and her P45 were withheld on legal advice. Mr Clements said he was taking advice from a payroll consultant. The Tribunal found on the balance of probabilities that Miss Olubodun was right in that she was told that her notice monies and P45 were being held back because of legal advice.
  1. The Employment Tribunal held that Mrs Clements had been untruthful in a couple of other respects, namely that she had said the P45 had been posted when it had not. Further she had said that Miss Olubodun had been given two options by Mr Middleton in the meeting on 25 September 2007 of continuing to work while she looked for other employment or of receiving pay in lieu of notice. The Employment Tribunal found that either those options were not given or the Claimant had not understood them.
  1. Miss Olubodun said Mr and Mrs Clements told her that she would not be paid her notice because she had raised a formal grievance and that any entitlement to the payment would be decided by an Employment Tribunal. The Employment Tribunal recorded that the Respondent company did not refute that allegation. The grievance was rejected.
  1. On 4 December 2007 Mrs Clements emailed the payroll consultant stating that the Claimant was entitled to two weeks' pay in lieu of notice. There was an exchange of emails and the company decided that the Claimant was entitled to four days' pay. Miss Olubodun appealed against the rejection of her grievance. Her grievance appeal hearing took place on 7 December 2007. Her appeal was rejected.
  1. Mrs Clements asked for four days' pay to be paid to Miss Olubodun. There was, it seems, a misunderstanding between Mrs Clements and the payroll consultant. But eventually the additional four days' pay was paid.
**The Employment Tribunal Judgment**
  1. Having set out its findings of fact the Employment Tribunal concluded unanimously that there was no direct race discrimination and it dismissed that claim. So far as the victimisation claim is concerned a majority decision was reached. The majority held at paragraph 38.6 that:

"two facts combine to show that the reason for the withholding of the payment [the payment in lieu of notice] was not an act of victimisation. When the allegations were first made the Respondent was still prepared to make a proper payment. Even though the allegations of discrimination were still live at the time of the Grievance appeal, at that time the Respondent set about making the payment and Mrs Clements wrote to Mr Thorogood that the company was 'advised to settle those 4 days'."

And concluded:

"In the judgment of the majority this shows that the reason for the retention was probably because the Respondent had in fact received legal advice to retain the money until advised to the contrary. The mere fact that the Claimant was entitled in law to the money at an earlier stage is insufficient to demonstrate that the reason for the retention was by reason of the protected act."

  1. The minority conclusion is to the opposite effect. The reasons of the minority are set out in paragraph 39 of the judgment of the Employment Tribunal. There is reference in the minority conclusion to finding that Mrs Clements had been untruthful in stating in a letter of 31 October that Mr Middleton had given two options to the Claimant in the dismissal interview: paragraph 39.1. The minority concluded that:

"Mrs Clements reply was laying a paper trail to disguise the reasons for withholding the notice pay and deducting 3 days' holiday pay."

  1. That is a reference to an allegation that an earlier stage Mrs Clements had told Miss Olubodun that three extra days' holiday taken would not be deducted from her entitlement to two weeks' notice. The minority held:

"39.2 The only stated reason given by the Respondent for the withholding of the money was that it was done 'on advice from payroll'. All the evidence pointed to payroll acting on advice from Mrs Clements and not acting on its own initiative. Therefore the reason stated by Mrs Clements cannot be accepted.

39.3 No reliance ought to be placed upon the Respondent having retained the money on legal advice in view of there being no evidence from the Respondent on this point."

  1. The minority concluded in 39.4:

"Given this, and the Respondent's repeated failure to refute the allegation made by the Claimant that the withholding of the money was because of the allegations of race discrimination and the prospective claim on that basis, on the balance of probabilities the Respondent's conduct was by reason of the protected act."

  1. Thus the direct discrimination claim was dismissed unanimously and the victimisation claim dismissed by the majority.
**The Notice of Appeal**
  1. Miss Olubodun appealed on various grounds. At a Rule 3(10) hearing on 6 May 2009 Slade J allowed two grounds of appeal to go forward to a full hearing. The other grounds of appeal were either withdrawn or dismissed. Those two grounds of appeal were (a) a challenge to a failure to deal with the breach of contract claim and (b) the rejection by the majority of the claim for victimisation on grounds of race. The EAT order is at appeal bundle pages 32 to 33. We take each ground of appeal in turn.
**Ground 1: Breach of Contract**
  1. What appears to have happened before the Employment Tribunal was that the representatives, together with their clients, were asked to discuss outside the Tribunal room the question as to whether or not the issue of failure to pay for notice could be settled. There clearly was discussion, that is confirmed both by Ms Giddens, who was present as the representative of the Respondent, and also by the notes of one of the two lay members, which appears at appeal bundle page 122.
  1. Some progress was made. Unfortunately the judgment of the Tribunal does not record that progress and, in fact, makes no findings as to whether or not the Respondent was in breach of contract by failing to pay the appropriate notice monies. What is clear from a supplementary bundle that is provided to us, is that subsequent to the hearing a cheque for £583.03 was sent by the Respondents to the organisation representing Miss Olubodun. That appears from the documents to be in accordance with paragraph 4 of the agreement she entered into with Employment Lawyers Limited, who represented her at the Employment Tribunal hearing.
  1. Both parties are agreed that we should allow the appeal to the extent that we should add to the judgment of the Tribunal a finding that the Respondent is in breach of contract by failing to pay the Appellant the appropriate notice pay at the date of the hearing. The EAT is unable to calculate the amount of notice pay owing to the Appellant because it does not have the material before it to do so. The parties are therefore to attempt to agree the amount of notice pay otherwise the Appellant must make application to the Employment Tribunal for the amount to be determined by that Tribunal.
**Ground 2: Victimisation**
  1. Mr Nicholls, on behalf of the Appellant, makes two submissions on this point. He first submits that there was a lack of evidence provided by the Respondent to the Employment Tribunal. The effect of that lack of evidence is that no reasonable Tribunal properly directing itself could find that the Respondent had discharged the burden upon it to satisfy the Tribunal that the action taken by it in failing to pay the notice money was not related to the protected act of Miss Olubodun presenting a grievance.
  1. His second submission is based upon the well-known authority of the Chief Constable of West Yorkshire Police v Khan [2001] IRLR 830. We take each point in turn.
  1. Mr Nicholls submits that the majority in paragraph 38 of its decision accepted the Respondent's explanation that it did not pay the Claimant's notice pay, "because the Respondent had in fact received legal advice to retain the money until advised to the contrary". Mr Nicholls submits that the Tribunal then went on to say that therefore the withholding of the notice pay was not an act of victimisation. He submits that the majority was perverse because it, having found that the Respondent failed to explain "precisely what sources of advice had been consulted or what advice was given to them" (paragraph 38.4), the Tribunal should have concluded that the Respondent had not discharged the burden on them and in accordance with the well-known principles in King v The Great Britain China Centre [1991] IRLR 513, at paragraph 38.4, the only proper inference it could have drawn was that the withholding of the notice pay was the direct result of the Claimant bringing a grievance against the Respondent.
  1. It seems to us necessary to look at the precise reasoning of the Employment Tribunal. In paragraph 38.6 the Tribunal says this:

"In the majority view two facts combine to show that the reason for the withholding of the payment was not an act of victimisation. When the allegations were first made the Respondent was still prepared to make a proper payment, even though the allegations of discrimination were still live at the time of the grievance appeal. At that time the Respondent set about making the payment and Mrs Clements wrote to Mr Thorogood that the company was 'advised to settle those 4 days'. In the judgment of the majority this shows that the reason for the retention was probably because the Respondent had in fact received legal advice to retain the money until advised to the contrary. The mere fact that the Claimant was entitled in law to the money at an early stage is insufficient to demonstrate that the reason for the retention was by reason of the protected act."

  1. The findings about the intention of the Respondent to pay the money despite the fact that the grievance was live are essentially contained in the following short chronology: 8 October 2008 the Claimant raises the grievance: judgment paragraph 19.23; 30 October 2009 Mrs Clements says that the Respondent will pay the two weeks' notice: judgment paragraph 19.29: 4 December 2006 Mrs Clements emails Payroll saying what is the correct calculation: judgment paragraph 19.36; 17 December 2006 Mrs Clements instructs Payroll to make the payment: judgment paragraph 19.41. The Tribunal found that that was not in fact done until January due to a misunderstanding on the part of Payroll.
  1. The material in relation to the legal advice is found in the findings of fact at paragraphs 19.26 through to 19.28:

19.26 According to the Claimant's evidence Mrs Clements said that the notice pay on the P45 had been withheld 'on legal advice'.

19.27 In evidence Mr Clements stated that he had said 'We were taking advice from our payroll consultant'.

19.28 The Claimant's recollection was noted much nearer to the time of the meeting in an email to Mrs Clements on 29 October 2007 (174) in which she said, 'During my meeting … you mentioned that you had legal advice before taking the decision to unlawfully hold my wages and P45'. On the balance of probabilities, the Tribunal considers that this version of events is the more likely to be correct. In that letter the Claimant specifically linked the decision to withhold the payment to her case for race discrimination.

  1. It seems to us that there was adequate material before the Tribunal in the evidence that I have recited to enable it to reach its conclusion in paragraph 38.6.
  1. The Tribunal quite clearly relied on two separate factual matters, one was the question of legal advice. It accepted the Claimant's evidence that that is what she had been told by Mrs Clements at the grievance meeting. They were entitled to accept that evidence. The second fact was the history, which I have recited, in paragraphs 19.23, 29, 36 and 41 of the judgment, which show that the Respondents were taking steps to pay the notice period despite the fact that the grievance had been raised and indeed through the grievance hearing period and the appeal.
  1. In our view it cannot be said that the decision of the Employment Tribunal was perverse. It is only necessary to refer to the well known decision in the Yeboah v Crofton [2002] IRLR 631, paragraphs 92 to 95. Mummery LJ in that judgment sets a very high hurdle for an appellant to cross before he or she can succeed on an allegation of perversity. In our judgment this ground of appeal does not reach the hurdle.
  1. The second point raised by Mr Nicholls is in relation to the case of Khan to which I have referred. Mr Nicholls points out quite rightly that three of the Law Lords deciding that case specifically referred to the fact that in that case, where the respondent relied upon legal advice as a justification for taking the alleged victimisation action, it had disclosed to the Tribunal the full legal advice which it had received. In this case Mr Nicholls says there had been no such disclosure, that the references to legal advice came from the Claimant and not from the Respondent and the evidence of the detail of that legal advice was scant, to say the least.
  1. Mr Nicholls accepts that one cannot draw a principle of law from Khan, that in order to justify taking action where legal advice is relied on in a claim of victimisation the Respondent must disclose the full legal advice. We agree with that submission, Khan does not say that.
  1. In our judgment, at the end of the day, it is a matter for the Employment Tribunal based upon the evidence that is put before it by both parties to decide whether or not the material enables it to draw an inference that the alleged victimisation was as a result of a Claimant taking a protected act or not. There is no doubt that the evidence in this case was not the best. Mrs Clements, for reasons which are not known to us, did not give evidence and did not apparently provide a witness statement to the Employment Tribunal. It would also appear that this particular aspect of the case, that is the quality of the legal advice, was not a point pursued by the Appellant's legal representative, Mr Johnson. We do not know why and it is not our function to investigate that.
  1. It is, at the end of the day, for the Tribunal to do the best it can with the material that was before it. It made in this case sufficient findings of primary fact and from those findings of primary fact it was entitled to draw the inference and reach the conclusion that it did, which was that in this particular case the failure or refusal to pay the notice period was not as a result of the Claimant taking a protected act, namely, taking out a grievance against her former employer.
  1. For those reasons the appeal on the second ground is dismissed. For the reasons already given in relation to the notice period point the appeal will be allowed to that limited extent.

Published: 08/01/2010 17:25

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