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IN THE SUPREME COURT OF JUDICATURE EATRF 96/1649/B

IN THE COURT OF APPEAL (CIVIL DIVISION )

Royal Courts of Justice

Strand

London W2A 2LL

Wednesday, 15th October 1997

B e f o r e

LORD JUSTICE SIMON BROWN

LORD JUSTICE SCHIEMANN

LORD JUSTICE ROBERT WALKER

ALBONI

Respondent

v.

IND COOPE RETAIL LTD

Appellant

(Computer Aided Transcription of the Stenograph Notes of

Smith Bernal Reporting Limited, 180 Fleet Street

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

MR S GORTON (instructed by Messrs Weightman, DX 14201 Liverpool) appeared on behalf of the Appellant.

MR T COTTLE (instructed by Messrs Turberville Woodbridge, Uxbridge UB18 1JT) appeared on behalf of the Respondent.

J U D G M E N T

(As approved by the Court )

©Crown Copyright

LORD JUSTICE SIMON BROWN: This is an employer's appeal by leave of Mummery LJ from the decision of the Employment Appeal Tribunal, presided over by Mrs Justice Smith, on 28th June 1996 allowing the employee's appeal from the decision of an Industrial Tribunal sitting at London North dated 24th July 1995. The Industrial Tribunal dismissed the employee's complaints both of unfair dismissal and sex discrimination. The employee appealed to the EAT only in respect of the former. In allowing the appeal the EAT remitted the case for a complete rehearing before a fresh Tribunal.

The primary facts can be summarised as follows. The respondent (whom I shall call simply "the employee") and her former partner, Alan White, worked together as manager and manageress of The One Bell at Watford, a public house owned and operated by the appellants (whom I shall call "the employers"). That employment began in May 1993 when the couple were appointed under a joint contract of employment. A joint salary was fixed, with the couple being free to decide between themselves how much each should receive, subject only to each partner receiving a specified minimum amount. The contract provided as to notice:

"As you have been employed over thirteen weeks, you will be required to give not less than eight weeks joint written notice if you decide to leave. Should the Company terminate your employment for reasons other than gross misconduct offences, you will be entitled to not less than eight weeks written notice from the Company.

It is an express term of this contract that your employment is inextricably bound to that of your partner, therefore if the employment of either of you terminates, the other person will terminate (sic) automatically."

On 5th May 1994 Mr White wrote a letter of resignation to the employers, emphasising that it was he alone who was resigning. The couple had had personal disagreements and their personal relationship had broken down so that it had become impossible for them to work together. On 16th May 1994 Mr Cole, the employers' Retail Area Manager, wrote to both of them in these terms:

"Dear Alan & Christina, I write to confirm my receipt and acceptance of your resignation dated 5th May 1994.

I will communicate with you personally to finalise your leaving date and take this opportunity to thank you for your hard work at The One Bell. Yours sincerely".

Both partners' leaving date was eventually agreed at 6th July 1994. Meantime, on 24th May 1994 the employee met Mr Cole and asked if she could remain as the sole manager at The One Bell. He told her that if she were to apply for the position her application would be considered; indeed, he encouraged her to apply. The vacancy created by the notice of resignation had already been advertised on the company network, the closing date for applications being 6th June 1994. Mr Cole told the employee that if she wanted to apply she must submit a business plan in support by 6th June 1994. The employee duly prepared a business plan, with the assistance of a friend named Mr Dooley, and Mr Dooley posted it to the employers. Mr Cole, however, never received it. It was, so the Industrial Tribunal found, probably lost in the post; certainly the employee never checked that it had arrived. In the result Mr Cole did nothing further about the employee's intimated application for the post. On 4th October 1994 the employee complained that she had been unfairly dismissed.

On the basis of those facts the Industrial Tribunal came to these essential conclusions:

(1) That the employee had been dismissed, the dismissal consisting of the employers' purported acceptance of her "deemed" resignation. Although initially the employers believed and contended that the employee's contract of employment automatically terminated on her partner's resignation so that there was in fact here no dismissal at all, that contention was not persisted in before the Industrial Tribunal.

(2) The reason for the dismissal was "some other substantial reason", as provided for by section 57(1) of the Employment Protection Consolidation Act 1978. I do not propose to set out that provision or indeed any of the other relevant provisions of the Act: they will be well-known to anyone interested in this judgment. As to precisely what that other substantial reason was, this was a matter of some debate before the EAT. I merely quote the relevant part of the Industrial Tribunal's decision, which, to my mind, makes it clear:

"... we are entirely satisfied that consequent upon the resignation from his employment of the Applicant's partner Alan White, the Respondent was entitled to dismiss the Applicant which was the effect of its letter of 16 May 1994. It is quite clear that it was entirely impracticable for the Applicants employment to be continued in the light of the resignation of Alan White, and that is why we are satisfied the Respondent can rely on Section 57(1)(a) and some other substantial reason as potentially fair."

In short, the employers plainly regarded this as a two person job so that it was impracticable for the employee to undertake it alone.

(3) It was reasonable for the employers to treat that reason as sufficient to dismiss the employee and the dismissal was accordingly fair. In reaching this conclusion the Industrial Tribunal plainly had regard to what occurred between 16th May, when the employers gave notice of dismissal, and 6th July, when that dismissal took effect. In particular, the Tribunal placed obvious importance on the events of 24th May, ie the employers' readiness to consider any application that the employee herself might make to manage the public house single-handed. The relevant part of their decision on this issue, the section 57(3) issue, reads:

"We are mindful of the pressure upon the Respondent as to time, following the resignation by Mr White and in our consideration of the fairness of that dismissal, pursuant to the requirement on us, prescribed by Section 57(3) we are entirely satisfied the Respondent did all it could in limited circumstances, and that there had been considerable discussion between the Applicant and Mr Cole on behalf of the Respondent by which Mr Cole had been apprised fully of the Applicants difficulties and that at that time she too had expressed a readiness to vacate and a willingness to do so in the light of the treatment she was receiving from Mr White. Accordingly, we are entirely satisfied that the dismissal was fair within the meaning prescribed by Section 57(3) and that the Applicants dismissal fell within what amounted to the only available response to it at that time."

The employees' principal ground of the appeal to the EAT, and indeed the essential ground upon which that appeal succeeded, was that the Industrial Tribunal took account of what had happened after 16th May. In so doing the employee argued and the EAT held:

"... the tribunal has misdirected itself by considering irrelevant and impermissible matters relating to events which had post-dated the dismissal."

In so holding, the EAT believed that they were applying the principles established by a series of authorities, including, in particular, the House of Lords' decisions in Devis v Atkins [1977] ICR 192 and West Midlands Cooperative v Tipton [1986] ICR 192.

For my part, I think that the EAT were mistaken in their view of these authorities and certainly their decision cannot live with the subsequent judgment of this court in Parkinson v March Consulting Ltd [1997] IRLI 308. The first point to make is that the dismissal here was on 6th July 1994, not 16th May 1994. The dismissal, as both the legislation and the authorities make plain, means determination of the employee's actual employment, which here clearly occurred on 6th July, the employee continuing to work and to be paid up to that date. The 16th May was merely the date on which the employee was notified of the fact that her employment would be brought to an end at some future date to be agreed. I have, incidentally, great difficulty in understanding what the EAT meant at page 8 of their determination when they say:

"... the date of notification of dismissal ... must be the same date as the dismissal. At any rate the date of notification must be later than or contemporaneous with the dismissal; certainly it cannot be earlier than the dismissal."

As it seems to me, the date of notification must, by definition, be, if not contemporaneous with dismissal (as in the case of a summary dismissal), then earlier, rather than later. What then of Devis v Atkins and West Midlands Cooperative v Tipton ? Without attempting any exegesis of these cases, their effect can, I believe for present purposes, be summarised thus. If during an internal review or appeal process following an employee's dismissal (after, that is, his employment has actually terminated), a reason appears which, had it been known to the employers when they dismissed him, would have justified dismissal, that cannot retrospectively be used to justify a dismissal which in fact was based on an insufficient reason. On the other hand, material helpful to an employee coming to light during the review or appeal process can properly be brought into account to determine whether the employer's reason for dismissal is to be regarded as sufficient for the purpose of section 57(3). It does not, however, follow that, for the purposes of section 57(3), the actual reason for dismissal cannot be found sufficient by reference in part to what happened after notification but before the dismissal actually took effect. Those cases were simply not concerned with the period between notification and dismissal. Stacey v Babcock Power [1986] ICR 221, however, was and there it was held (I content myself with a quotation from the head note):

"... when considering whether an employee had been unfairly dismissed within the meaning of section 57(3) ... it was necessary to take account of the whole process of dismissal initiated by the giving of notice and completed by its expiry rather than regarding the giving of the notice of dismissal as fixing the moment of dismissal and precluding consideration of events which occurred during the notice period ..."

It seems to me impossible to regard that case, as Mr Cottle for the employee urges us to do, as confined either to redundancy dismissals or to changes in circumstances redounding to the benefit of the employee. The matter seems to me, moreover, put beyond doubt by Parkinson v March Consulting Limited . There it was held that the employers' reason for the dismissal for the purposes of section 57(1) has to be determined both by reference to the reason for giving the notice to terminate and by reference to the reason when the dismissal occurs; that as a matter of evidence that involves considering the reasons throughout the notice period; and that although "dismissal" means determination of the employee's actual employment, a dismissal cannot be for a justified reason without reference to the notice itself. I do not pretend to find the majority decision in that case altogether easy to follow, and it occurs to me that it may in future give rise to difficulties of application. For present purposes, however, it seems to make it entirely clear that the Industrial Tribunal in the present case were not merely entitled, but were bound to have regard to events between notice and dismissal, both for section 57(1) purposes and also, indeed to my mind a fortiori , for section 57(3) purposes. Mr Cottle sought to submit that Parkinson too was confined to redundancy dismissals. As Lord Justice Robert Walker pointed out, however, Evans LJ's leading judgment there makes plain that he was not in fact regarding that dismissal as one based on redundancy.

When asked what the employers here should have done, given their clear view, exemplified by the employee's terms of contract, that this particular public house needed the engagement of a two person management team, Mr Cottle answered that to benefit from the events of 24th May (ie from Mr Cole's readiness to consider in the light of any application and business plan submitted by the employee whether after all she could do the job singlehanded), they should not before that date have notified their acceptance of her resignation, ie that they were going to dismiss her. With the best will in the world, however, that seems to me to involve a wholly artificial complaint. Had the employers here said to the employee after Mr White's resignation, "We do not think that you or any other individual can do this job single-handed, but by all means apply. If then, having considered your application, we remain of our present view, we shall of course dismiss you", the employee would in truth have been no better off and yet, on Mr Cottle's inevitable concession, she would have had no complaint. There appears an air of unreality about her whole case.

Mr Gorton, for the employers, makes the additional point that it was in fact at the express invitation of the employee herself that the Industrial Tribunal here looked at matters arising after 16th May. The employee was attempting to persuade them that the employers had acted unreasonably in rejecting her application for the vacant post, it being of course a factual issue before the Tribunal whether her business plan had arrived.

For all these reasons, I have no hesitation in concluding that the EAT erred in holding that the Industrial Tribunal should have closed their mind to all that happened after 16th May.

I add only this: in the course of their judgment the EAT, in addition, expressed some doubt as to whether the Industrial Tribunal had been entitled on the evidence before it to find that it was indeed impracticable for the employers to have continued to employ the employee. In the event the EAT hesitated about this and, as I understand it, ultimately declined to set aside the Industrial Tribunal's decision as perverse on that ground. I think they were right in that conclusion. Indeed, there is no respondent's notice before us today suggesting the contrary.

In the result, I would allow this appeal and restore the Industrial Tribunal's decision dismissing the employee's claim for unfair dismissal.

LORD JUSTICE SCHIEMANN: I agree that this appeal should be allowed and that the decision of the Industrial Tribunal should be affirmed. By virtue of section 57(1) it was for the employer to show the reason for the dismissal and that it was a substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held. The position in the present case was that of joint manageress of a pub. Before the Employment Appeal Tribunal, as appears from page 6B of the judgment, it was not disputed that to dismiss in reliance upon the express terms of the contract which my Lord has cited is potentially a fair reason which would fall within section 57(1) of the Act. So the dispute in substance below was about section 57(3), and there the Tribunal was faced with the Parliamentary guidance that the determination of the question whether the dismissal was fair or unfair, having regard to the reasons shown by the employer, shall depend on whether the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee.

As I read the Industrial Tribunal's decision, they came to the conclusion that the employers acted reasonably in treating the departure of Mr White as a sufficient reason for informing the appellant that her employment would end in July. One of the factors which made that action by the employers reasonable was, as the Industrial Tribunal pointed out in the passage which my Lord has read, that there was pressure of time upon the respondent employers, because Mr White was going and it was important for them to secure the future. What the employers did in this case was to keep an open mind, as is demonstrated by the facts, as to any further representations that might be made by the appellant. That, the Industrial Tribunal found, was an action which could be regarded and should be regarded as reasonable by the employers.

There has been much discussion as to whether the word "dismissal", which is used both in section 57(1) and 57(3), refers to (1) the sending of the letter notifying the employee that his employment will cease in the future; or (2) the ceasing of the employment of the employee on the expiry of the time specified in the letter. This was a matter which was discussed in the case of Parkinson referred to by my Lord. In the judgment of Evans LJ attention is drawn to section 67(4) of the Act, which includes the phrase:

"the provisions of this Act, so far as they relate to unfair dismissal, shall have effect -

(a) as if reference is to a complaint by a person that he was unfairly dismissed by his employer included references to a complaint by a person that his employer has given him notice in such circumstances that he will be [and I emphasise the words 'will be'] unfairly dismissed when the notice expires ..."

Evans LJ, after having gone through various authorities, concludes in paragraph 28

"... Mr Grundy was correct in submitting that 'dismissal' means the termination of the employee's actual employment ..."

In my judgment the attitude adopted by the Industrial Tribunal is consonant with this approach; that adopted by the Employment Appeal Tribunal, which did not have the advantage of the decision in Parkinson being quoted to it (the case had not been decided), is not consonant with the approach in Parkinson.

I therefore agree that this appeal should be allowed.

LORD JUSTICE ROBERT WALKER: I agree that this appeal should be allowed for the reasons stated by my Lords.

ORDER: Appeal allowed; decision of the Industrial Tribunal restored; section 18 order as to costs.

(Order not part of the approved judgment)