Appeal No. EAT/1121/94

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 20 November 1995

	Before

	HIS HONOUR JUDGE H J BYRT QC

	MR P M SMITH

	MR T C THOMAS CBE

MR D C STEENHOFF	APPELLANT

ROTHER DISTRICT COUNCIL	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR M FOSTER
(Solicitor)
Messrs Fynmores
10/12 Parkhurst Road
Bexhill-on-Sea
East Sussex TN40 1DF

For the Respondents	MR M RICHARDSON
Rother District Council
Town Hall
Bexhill-on-Sea
TN39 3JX

	JUDGE BYRT QC:  This is an appeal against a decision of the Industrial Tribunal sitting at Ashford in Kent on 4 November 1994 when it found that the Applicant, now the Appellant, had not been dismissed within the meaning of section 55 of the Employment Protection (Consolidation) Act 1978.

	The agreed facts in this case are as follows:  the Appellant commenced employment with the Respondents in 1987 and as from September 1990 had enjoyed the position of senior security attendant.  We were referred to the document which amounts to the full contract upon which he was appointed and it was drawn to our attention that there was no reservation of any right by the Respondents to vary that contract unilaterally.

	In June 1993 the Director of Tourism suggested a reorganization of the staffing structure of that part of the respondent Council for which he had responsibility.  A consequence of that restructuring was that the Appellant would lose his present position.  On 20 December 1993 the Respondents notified the Appellant, along with other employees, that this was the implication of the proposed restructuring,  They said that, as from 1 April 1994, the position of senior security attendant and also that of the other security attendants would disappear from the establishment and the Appellant was told that he might continue as either the senior operations assistant or one of four operations attendants.  The letter also set out certain proposed terms and conditions.

	On 22 December, following a meeting with the staff, the Respondents wrote a further letter which they referred to as "a formal notification".  In it they stated:

		"... your existing Contract of Employment will be replaced on 1st April, 1994.  Your new contractual terms applicable from 1st April, 1994, will generally be as specified in the proposed Terms and Conditions ... supplied ... on 20th December, 1993. ... these terms will be the subject of further discussion and consultation. ..."

	The significance of that letter is that in it, the Respondents were saying the contract would be replaced on 1st April though they did not specify, so far as the Appellant was concerned, what job he would secure nor did they specify the detailed and particular terms of his future employment.

	The Appellant thereafter was invited to apply to the Respondents for the senior operating assistant post.  Unhappily, he was unsuccessful in that application and he was notified to that effect on 14 March.  By a letter of that date, the Respondent told him that he had been unsuccessful and offered him the position of operations assistant, one of four new positions.  He was told that the terms would be as set out in the document of 11 March, modified in respect of the Appellant in certain respects.  The letter went on to set out his salary and one or two other details.  The important features of the new terms he was offered were that he would suffer a reduction in his gross salary and his status would change in that he would no longer have the supervisory role, as previously he had had. 

	On 31 March the Appellant replied to the Respondents stating that he accepted the terms  outlined in the Respondents letter of 14 March and in a separate paragraph he went on to state:

		"This is without prejudice to any legal action in regard to the termination of my previous contract."  

	Thereafter, there were more negotiations with the Appellant through his union.  Nothing was agreed and on 8 July 1994 the Appellant issued his originating application. 

	There were three issues which had to be determined by the Industrial Tribunal.  The first was, did the Respondent's letter dated 22 December amount to a termination of the Appellant's contract so as to make way for a new contract following 1 April 1994.  Before the Industrial Tribunal, the Respondents did not argue the point one way or the other.  They were content to rely upon the documentary evidence and the Tribunal's own interpretation of the meaning and purport of the letter of 22 December.  The Tribunal itself found that the letter did not amount to a notice of termination and went on to say that it was never the Respondent's intention to terminate but merely to change the Applicant's terms and conditions of employment and in so finding, of course, they were saved having to give their minds to the consequences of a termination.  They did not have to consider whether the dismissal had been fair or unfair.

	The second issue was whether there had been a repudiatory breach by the Respondents.  The Tribunal found that there may well have been so in that they were of a view that the terms of the new offer were appreciably different from those that had previously appertained in the Appellant's previous contract.

	The third issue was whether the Appellant had accepted the repudiatory breach.  They went on to make a finding that he had accepted the new terms contained in the letter of 14 March and did so, as they say, without objection.  In support, they relied upon the letter of 31 March and said that:

		"The terms of those letters leave us in no doubt that he agreed, without objection, to work under the new terms and conditions.  He did, however, preserve his right to say that he had been dismissed.  We have found against him on that point"

namely, the point of dismissal.  They accordingly therefore found that there had been an acceptance of the new terms and went on then to dismiss the claim under the Wages Act, saying that there were no deductions from the wages in contradiction of the Act because the wages he had been paid were the wages which were described by the new contract.

	In dealing with the first issue, the Appellant says the letter of 22 December was a letter terminating his contract, that it was clear and unambiguous in what it said and its purport.  It reads that the existing contract would be replaced on 1 April 1994 by another and, simply stated, he says that amounts to a termination of his contract of employment and so is a dismissal.  The Appellant acknowledges that if new terms of employment are agreed, there may be a variation of the contract or an amendment of the contract and in that way continuity of employment can be maintained but, he says, that can only take place by agreement between the parties and, in this particular case, he says that there was no such agreement.

	The Respondent contends that there had been a variation of the existing contract and that variation had been accepted and agreed to by the Appellant's letter dated 31 March 1994.  I will consider this question of acceptance in a minute.

	So far as this Tribunal is concerned, we are satisfied that the Appellant's submissions in this case are correct.  In our view there has been a dismissal.  The language of the letter dated 22 December is strongly suggestive of a dismissal.  The letter was couched in the form of a formal notification and indicates by use of the word "replace" that the old contract would fall as of 31 March and would be replaced by a new contract on 1 April.  We also think it is of significance that, at the stage when that formal notification was sent, the terms of any "replacement" contract had not yet been agreed, neither generally speaking nor with regard to this particular Appellant.  He had not yet applied for the senior position and had, as yet, not been rejected for that appointment.  In consequence, the letter of 22 December stands on its own and the sole message it puts over is one of termination.  In consequence we find that, in law, the letter is one of dismissal.  That being so, the Tribunal below erred in law and this matter will have to go back to a different Industrial Tribunal with a direction that the case be dealt with on the basis that the Appellant has been dismissed by the letter of 22 December.  The remaining issue will then be whether that dismissal had been fair or unfair.

	There remains over the second and third issues listed above  Since they were agreed before the Industrial Tribunal, we think it appropriate that we should give our findings about them too.

	The Appellant's case on repudiation is based upon the terms of the offer set out in the letter of 14 March.  They amount to a new set of terms which, as the Appellant says, were fundamentally different from those he was, at that time, enjoying.  The Respondent's case was that, whilst the differences were appreciable, they did not amount to a fundamental change and, accordingly, in proposing them the Respondent was not in fundamental breach of any contract.  The Industrial Tribunal says it might well be that the Respondents were in fundamental breach by their offer of the new proposals.  In our judgment, the new terms advanced on 14 March did amount to a substantial departure from the terms under which the Appellant had previously been employed.  There was an appreciable difference in salary.   Instead of being a supervisor, he was now to be supervised.  This fact reflected an alteration in his status.  He was called upon to fulfil different duties and the hours that he was to work were also different.  Our finding is that the new terms proposed amounted to a fundamental breach of his contract.  

	As to the third issue as to whether the Appellant accepted the new term in the sense that he signified his agreement to a variation of his contract:  the only step of acceptance or conduct which could so be interpreted before 1 April 1994 is the letter he wrote on 31 March.  The Appellant says that that letter did not amount to an acceptance of the varied terms of his existing contract, but only acceptance on the basis they amounted to a new contract.  It specifically refers to them as being a new contract and in the second paragraph he expressly reserved his legal rights in relation to what he calls:

		"the termination of my previous contract."

The Respondents say that that letter, taken at its face value, amounts to a plain acceptance of a variation, the "variation" being those terms set out in the letter of 14 March.  The Industrial Tribunal expressed their own unqualified view that it was an acceptance without objection.  

	This Tribunal has been assisted by the case of Hogg v Dover College [1990] ICR 39 which, in many ways, reflects a parallel situation.  The critical part of that judgment relates to the issue of constructive dismissal.  The Appellant's solicitors wrote a letter to the Respondents indicating that their client was prepared to return to the College to work on the new terms offered but that he did so "without prejudice" to his claim for wrongful and unfair dismissal from his post as head teacher.  The Court of Appeal found that the letter was a clear and unmistakable acceptance of the Respondent's repudiatory breach in that he preserved for himself all rights and remedies against the Respondents in respect of those breaches.  In this particular case, the Appellant uses the same phrase "without prejudice" and in a rather more shortened and succinct form makes plain that he reserves his rights in respect of the termination of his previous contract.  Had we not found he had been previously dismissed, we would have said unhesitatingly that the letter of 31 March amounted to an acceptance of the Respondent's repudiatory breach and a reservation of all legal rights in relation to that breach.

	In those circumstances we have already indicated, we return this case to a differently constituted Tribunal to consider whether the dismissal that we have found to have taken place was fair or unfair.  We would like to say that at no stage in our deliberations have we been considering whether the Respondent's conduct in this matter has been reasonable, fair or unfair.  These were not matters for our consideration.  On the point of law which has been appealed to us, the appeal must be allowed.