Appeal No. EAT/0401/03 TM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 22 July 2003

Before
THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)
MR I EZEKIEL
MR S M SPRINGER MBE

MR W R MARSHALL	APPELLANT

BCM GROUP PLC	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR M THOROWGOOD
(of Counsel)
Instructed by:
Messrs Arkins Wilson & Bell Solicitors
York House
Chertsey Street
Guildford
Surrey GU1 4HD	
For the Respondent	MR C NUGENT
(of Counsel)
Instructed by:
Messrs Pritchard Joyce & Hinds Solicitors
St Brides House
32 High Street
Beckenham
Kent BR3 1AY	

THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)

1	This has been the hearing of an appeal and a cross-appeal arising out of the unanimous decision of the Employment Tribunal sitting at London (South), after a hearing on 10 February 2003, in a Decision handed down on 17 March 2003, that the Applicant, Mr Marshall, was unfairly dismissed and that the Respondent, BCM Group Plc, should, as a result, pay him, as a compensatory award, the sum of £2,290.

2	The appeal by the Applicant is in respect of the quantum of that compensatory award and the cross-appeal by BCM Group, the Respondent, is in respect of the finding of unfair dismissal.  For obvious reasons we dealt at the hearing, and we now deal in this judgment, with the cross-appeal first.

3	The background to this case is that the company by which the Applicant was employed as a Sales Representative selling photocopiers and other office equipment, called Copytec Ltd, was taken over by the Respondent Company on 31 May 2002.  The Applicant had worked for Copytec Ltd for some thirteen years.  There were inevitable problems arising as a result of the takeover, and what would appear to be a new and commercial approach taken by the Respondent Company to the business which they had taken over.

4	The Applicant had a number of grievances arising out of the takeover.  The Tribunal records in the course of its Decision some of them.  In relation to the geographical sales areas allocated to the Sales Representatives including the Applicant there were suggestions that his areas be changed and the Tribunal records, in paragraph 11 of the Decision, that the Respondent was unable to give precise details of the areas that were to be taken from him and/or reallocated to him and such information was not ready until the end of August 2002, by which time he had resigned.

5	He, and no doubt other former Copytec representatives, were unhappy about the new commission scheme of the Respondents.  In paragraph 13 the Tribunal records that the solution suggested by the Respondent was that they would run both commission schemes (Copytec’s and their own) in tandem for a period of at least six months, and the salesmen were able to take commission from whichever scheme was more favourable to them during that period.

6	There was a dispute about petrol allowance.  Whilst under Copytec the Applicant’s average petrol consumption on the fuel card which he had been given was £250 per calendar month, the Respondent, in the light of a proposed smaller geographical area of the Applicant’s sales territory, was to pay £150 per month and the Tribunal records, without comment, in paragraph 14 that in the Respondent’s experience the £150 was adequate.

7	Other than by reference to those three matters, in relation to none of which did the Tribunal reach a conclusion hostile to either party, there is no consideration in the course of the decision of other grievances which the Applicant felt he had.  Although we have been shown a letter that he wrote on 13 July, and a response to it of 23 July, to which we will come, in the course of which the grievances were set out.  We have not read the contents of the letter because it is apparent that the Employment Tribunal itself in the course of the Decision did not think it necessary to go into the nature of those grievances and the question as to who, if either of them, were taking unreasonable positions.

8	Against that background, there, however, became some specific flashpoints.  The first was that the Applicant had pre-booked a day’s holiday for 4 July (very shortly after the takeover) which he could not change, as he wished to meet his daughter from the airport.  That date, 4 July, was the last day of a training course for salesmen which had been mentioned by the Respondent at the initial meeting with the salesmen on 5 June, and was regarded by them as important.

9	The Respondents made various suggestions as to how they could accommodate the Applicant, none of which were acceptable to the Applicant; and in the event, no doubt to their discontent, he took his pre-booked holiday, and did not attend the last day of the course.

10	The second flashpoint related to a telephone blitz, as it was called, on 30 July 2002 at the Respondent’s Isleworth office.  This is recounted by the Tribunal in paragraph 20 of the Decision:

20	“The background to this letter was that on 29 July 2002 Mr Beresford spoke to the Applicant and asked him to attend a “telephone blitz” on 30 July 2002 at their Isleworth office.  This was a weekly session when all sales staff telephoned their contacts to meet with them to sell equipment and better services.  At that time, the Applicant had been absent from work on the four-day training course, and had also taken a two-week holiday.  Therefore he had not been in his sales territory and he did not have any leads to telephone.  He suggested that he should visit his clients in order to get leads to telephone the next Tuesday rather than attend the telephone blitz.  Initially Mr Beresford appeared to agree with the suggestion.  However later that day he telephoned the Applicant and told him that he had to attend the Isleworth office at 8.30am the next morning which the Applicant did.”

11	Before we turn to the third flashpoint we should recount what happened as a result of that meeting on 30 July.  The Respondent wrote by Mr Woodward a warning letter to the Applicant dated 31 July 2002.  That letter recounted the fact that there had been a group telephone sales meeting at Isleworth fixed on 30 July so that the whole of the sales team could contact their existing and prospective customers on the telephone with the intention of selling to those customers more and better services and equipment.  It records as follows:
“Initially you declined to attend at the telephone sales promotion and gave reasons that I have considered.  Only under pressure did you eventually agree to take part and then with reluctance having expressed the view that it would not be worth your while and a waste of your time and money.
BCM is a sales organisation and sales can be achieved only by adopting a positive attitude and working in a targeted and enthusiastic manner.  Unfortunately, your reluctance to attend the telephone sales meeting is symptomatic of your attitude since BCM took over Copytec and I must now formally warn you that there is no place in BCM for such negative attitudes.
I hope that you will work hard to improve your attitude to the company and its projects in the future, but in particular and, for the avoidance of doubt, you must comply with the reasonable requests made of you during the course of your employment including attending sales meetings and that you must carry out those instructions in a positive frame of mind and with enthusiasm.
If you would like to make any representations with regard to this warning, then please let me know.  A copy of this letter will be placed on your employee file and I shall, of course, place with it a copy of any representations that you make in response.  This letter will count as your first disciplinary warning.”

12	So far as correspondence is concerned, we have mentioned that the Applicant had written a letter dated 13 July in which he had set out the grievances, some of which as recorded by the Tribunal were in the course of being addressed by the Respondent, but some of which he regarded as still outstanding.

13	The response by the Respondent was in a letter dated 23 July 2002.  Unfortunately, and as the Tribunal found as a fact, that letter was never delivered to the Applicant.  He wrote a letter of 1 August 2002 in response to the warning letter of 31 July.  As far as he was concerned at that stage he had still not received a response to his letter of 13 July and now he had received a warning letter which he regarded as inappropriate.  He wrote as follows, to Mr Woodward in that letter:

“It was with surprise and disappointment that I received your letter of 31st July 2002.
The issues that you raised therein need to be addressed.”

He then gave a response to the complaints that had been made in the letter of 31 July which includes the following passage:

“Frankly I view these allegations as little short of outrageous, especially given that my previous letter to you of 13th July 2002 remains unanswered.  I have worked for Copytec for 14 years and during none of those years has my commitment ever been called into question.  I regard your suggestion that I am reluctant or that this alleged reluctance is in any way symptomatic of my attitude in respect of BCM, as utterly unfounded.
I have always complied with all reasonable requests made to me in the course of my employment.  There are issues which I have raised with you in my letter of 13th July 2002.  These concerns are raised in a respectful and entirely proper manner.
I further have objections to the way in which this written warning has been issued.  I was not given advanced warning that my conduct was being called into question.  I was not informed of the ways in which my conduct was being brought into question. I was not given adequate or indeed any chance to make my own representations to you prior to the issue of this written warning.  Indeed there does not seem to have been any investigation of the facts or a chance for me to put my side of the story.  I was not informed of my right to be accompanied to any disciplinary or grievance procedure.  All the safeguards imposed by the ACAS model code on disciplinary procedures have been utterly ignored by you.  I shall be grateful, in passing, for a copy of the company’s disciplinary procedures.”

14	The letter thereafter then refers to what we have earlier called the third flashpoint.  He then presses for a reply to the letter of 13 July, which of course he did not appreciate there had been because it had never arrived; and pending that reply he restated some objections that he had arising out of the grievances he had previously articulated.  He concluded as follows:

“If I have received no response to these two letters by Friday 9th August 2002, then I will be left with no alternative other than to assume that you no longer wish to continue the employment relationship between us.”

15	That letter, sent on 1 August, did not, as the Tribunal found, arrive (or at any rate was not received by Mr Woodward) until Monday 5 August 2002.  By that time the third flashpoint had arisen, to which the Tribunal refers in paragraph 21 of its decision.

21	“During one of his telephone calls to a client [and this we assume is a reference to what happened during the telephone blitz on 30 July] the Applicant was told by his client that a BCM salesman had visited her and had upset her and the Managing Director.  The Applicant therefore immediately left the Isleworth office and visited the client.  The client had already contacted other suppliers and informed the Applicant that unless the Respondent sold them their copier (which was at the end of its lease) for £400 they would take their business elsewhere.  The Applicant wishing to retain this customer advised the customer that he could sell the machine to her for £400 but that he would have to refer the matter to senior management.  What the Applicant had suggested was in accordance with normal Copytec practice.  The Applicant spoke to Mr Beresford about this and Mr Beresford informed him that the Respondent did not conduct this type of business and that the Applicant would only sell what was on the price list.  He told that Applicant to tell his client that they were unable to sell this equipment, which the Applicant did.”

16	This resulted in a second written warning from the Respondent to Mr Marshall, sent on 2 August 2002 (that is, the Friday) and, we emphasise and remind ourselves, before the Respondent had received the Applicant’s angry letter of 1 August 2002 both in response to the first warning letter and pointing out the non-receipt of any response to his original letter of 13 July 2002, although unknown to him there had been such a response.  The letter of 2 August reads as follows:

“Dear William,
It is unfortunate indeed that I must write to you so soon after giving you a written warning as a consequence of your attitude to the telephone sales meeting on 30th July.
On 31st July I discovered that you had made an offer to a customer that, on the expiry of their lease, BCM will sell to them the equipment they are renting for a price of approximately £400.
As you are aware, that offer was:
(a)	completely unauthorised; and
(b)	directly contrary to the instructions that you have been given thus far.
As a consequence of your actions BCM will inevitably lost that customer’s future business.
You may not, under any circumstances, offer to sell equipment to a customer, other than in accordance with the standard terms and conditions of business of BCM Group Plc, or with the express prior authority of a Director.
This is your second disciplinary warning, again a copy of this letter will be placed on your employee file.  If you wish to make any representations then the details of those representations will be similarly recorded.”

17	On receipt on 5 August of the Applicant’s letter of 1 August, to which we have referred, which made clear for the first time that the Applicant had not received the Respondents’ letter of 23 July, it is plain that the Respondents decided to take steps to have a meeting with the Applicant.  They knew that he would be in the Isleworth office the next day, 6 August, for the weekly telephone blitz, and Mr Woodward resolved to speak to the Applicant then.

18	The Tribunal records what happened thereafter as follows:

24	“During the morning of 6 August 2002 the Applicant was asked to enter Mr Woodward’s office where Mr Beresford was as well.  Mr Woodward started the conversation by saying words to the effect of “you don’t appear to be very happy here” to which the Applicant responded that he wanted to have a friend present.  Mr Woodward agreed to this or alternatively suggested that Mr Beresford should leave and he would see him on his own.  The Applicant wished to have a friend and Mr Woodward suggested that he should telephone him that afternoon.  He pointed out that he was going on holiday on the Thursday so he could only see him that afternoon or the next day before his holiday.  Despite appearing to be helpful Mr Woodward’s attitude was dismissive.
25	The Applicant telephoned Mr Woodward in the afternoon to explain that he had been unable to find a friend to accompany him and Mr Woodward advised him that he was in the office all the next day and that he would arrange his diary around the Applicant’s availability to attend for a meeting.  The Applicant did not telephone Mr Woodward again as he felt that Mr Woodward’s attitude was dismissive and that given the lack of response to his grievance despite reminders, that nothing would come of further meeting.  On 7 August the Applicant sent by fax and recorded delivery a letter resigning his position with immediate effect.”

19	The Applicant’s case, therefore, was that he had been constructively dismissed, that the Respondent to that end was in repudiatory breach of contract, in effect in breach of the implied term of trust and confidence, as it is in shorthand called, and unfairly so, of course there being no reason put forward for any such dismissal, because the Respondent denied that there had been a dismissal and asserted that there had been simply a resignation.

20	The Originating Application put before the Employment Tribunal set out the Appellant’s case, basing it on a substantial number of alleged breaches of the contract of employment.  Those breaches included the Respondent’s failure to address his letters of 13 July and 1 August, the fact that rather than dealing with those grievances two disciplinary warnings were issued, the fact that the disciplinary warnings were issued without regard to the applicable ACAS model code without any investigation being carried out in relation to the alleged misconduct, without informing the Applicant that any issue in relation to his conduct had arisen, without affording him the opportunity to make any representations in relation to the alleged misconduct prior to the issue, without reference to Copytec’s disciplinary or any disciplinary procedure and without regard to the basic principles of fairness and natural justice.
21	Further breaches were also alleged, or further matters which were said to amount to the breach of the implied term of trust and confidence; and we list them:

(d)	the fact that the warnings were wholly unjustified;

(e)	the fact that the Respondent altered the Applicant’s commission structure without first informing and consulting with him;

(f)	the fact that the date of payment of the Applicant’s commission was changed without notice to him, either in accordance with the terms of his contract or at all;

(g)	the fact that the Respondent imposed an effective pay cut with the introduction of the £150 taxable petrol allowance in place of the previously existing scheme, without notice to him in accordance with the terms of his contract and without regard to the peculiar nature of the Applicant’s client base;

(h)	the fact that the Respondent breached the assurances given to him on 20 and 26 June 2002 that BCM staff would not approach his customers with the intention of soliciting business until the postcode issue had been resolved;

(i)	the unacceptable pressure placed upon the Applicant that he attend the course on 4 July when he had annual leave booked on that day and in the face of long-standing family commitments.

22	The Tribunal did not find in the Applicant’s favour in relation to any of those latter six alleged breaches by the Respondent.  As can be seen from our analysis of the decision, they did not find that the Respondent’s conduct was justified, nor did they find that the position of the Applicant was unjustified.  They did not make any findings in relation to who was right and who was wrong in relation to the grievance questions including the commission structure and the petrol allowance, or indeed in relation to the first flashpoint, namely the sales conference.

23	The Tribunal set out the history in the way that we have described; and then its conclusions were in paragraph 29 which we now set out:

29	“The Tribunal having heard the evidence and considered the documents have concluded that the Applicant was entitled to resign on 7 August 2002 following a breakdown in trust and confidence between the parties.  The Tribunal come to this conclusion for the following reasons:
(a)	Following the transfer of undertakings on 31 [May] the Applicant had various meetings and discussions with the Respondent concerning a number of matters.
(b)	First there was the matter of the training course from 1-4 July.  The Applicant was subjected to great pressure from the Respondent to attend the last day of the training course even though he had already booked a holiday prior to the transfer.  Additionally, the Respondents were proposing dramatically to change the Applicant’s geographical sales area and also to change the commission structure further, the proposed changing the Applicant’s car.  The Applicant was not happy about this and accordingly on 13 July wrote a letter of grievance.  This letter was comprehensive, and raised 9 points which the Applicant was addressing his grievance to.”

We interpose to say that that further repetition of the facts on that neutral (or more or less neutral) basis emphasises that the Tribunal were not taking part in any adjudication on whether the grievances were or were not justified, and in particular, as we have indicated, did not find that any of the positions taken by the Respondent, in relation to those grievances, were repudiatory.

(c)	“Although the Respondent (and the Tribunal accept the Respondent’s evidence in this regard) did send a letter via their solicitors on 23 July this letter was not received by the Applicant and as far as the Applicant was concerned, the Respondents had done nothing whatsoever in response to his letter.  Even though the Applicant had told the Respondent in his letter of 1 August 2002 that he had not received a response, the Respondent did not tell the Applicant that their solicitor had responded or offered to give him a copy of this letter.
(d)	This coupled with the two disciplinary warning letters, the first of which was issued in relation to his attitude followed by a second disciplinary warning letter dated 2 August in relation to the sale of an end of lease machine for £400 led the Applicant to reasonably believe that the Respondent’s actions had a cumulative effect of undermining the trust and confidence between the parties.  This is especially so as there was no warning of any disciplinary hearing and no disciplinary hearing in relation to the two written warnings and no procedures or investigations whatsoever.  Consequently, the Applicant was entitled to resign and claim constructive dismissal.”

24	It would appear that the proper analysis of the structure of that paragraph is that sub-paragraphs (a) and (b) are the background and (c) and (d) together are the grounds upon which the Tribunal conclude against that background that the conduct of the Respondent was repudiatory.

25	So far as the content of sub-paragraph (c) is concerned, we find it difficult to see how the Tribunal, or any reasonable Tribunal, could have found that the conduct there described by the Respondent was repudiatory.  It is right to say that the Respondent learned from the letter of 1 August that the Applicant had not received a response to his letter of 13 July.  But the criticism that the Respondent did not tell the Applicant that their solicitor had responded or offered to give him a copy of this letter seems difficult to understand.  The Tribunal itself had found that the Respondent did not receive the letter of 1 August, indicating that he had not previously received the letter of 23 July, until 5 August; and the Respondent’s immediate response on 5 August was to fix up a meeting which then took place the following day, albeit that for reasons, for which the Tribunal criticised neither side, it was aborted.

26	We cannot see that there is any criticism whatever of the Respondent that can arise out of 29 (c), certainly none which would amount to a breach of contract or form part of a case of repudiatory conduct.

27	Paragraph 29 (d) begins with the words, as we have cited “This coupled with…”  It is apparent that the Tribunal were seeing the alleged failure of the Respondent to respond in relation to the letter of 1 August with the matters they set out in paragraph 29 (d) as together forming the repudiatory conduct.

28	Given the view that we have taken of the contents of paragraph 29 (c) we are left to address the contents of 29 (d) only to assess the validity in law of the conclusion of the Tribunal that there was here a repudiatory breach.

29	We turn to the law so far as repudiatory breach is concerned, and this is now helpfully contained in the summary by Lord Steyn in Malik v Bank of Credit and Commerce International Sa [1997] ICR 606 of the law in this regard.  He cites, which citation requires the correction of one typographical error in it, the words of Browne-Wilkinson P (as he then was) in Woods v W M Car Services (Peterborough) Ltd [1981] ICR 666 at 670, as subsequently approved, at page 621 at C as follows:

“For convenience I will set out the term again.  It is expressed to impose an obligation that the employer shall not:
“…without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee…””

At page 628 at G he emphasises two important parts of that implied mutual obligation of trust and confidence, namely that it applies only where there is “no reasonable and proper cause” for the employer’s conduct and, secondly, only “if the conduct is calculated to destroy or seriously damage the relationship of trust and confidence”.

30	In a recent decision of this Tribunal Lindsay P called Croft v Consignia Plc [2002] IRLR 851 at 859 this point was emphasised further by Lindsay P at paragraph 69 where he says:

69	“It is an unusual term in that it is only breached by acts or omissions which seriously damage or destroy the necessary trust and confidence.  Both sides are expected to absorb lesser blows.”

31	Mr Nugent submits the following in relation to the conclusion of the Employment Tribunal:

(1)	He emphasises what we have already found, namely that none of the other breaches which were sought to be relied upon, none of the other conduct which was sought to be shown to be repudiatory by the Applicant in the end featured in the conclusion of the Employment Tribunal; and that that which did appear in paragraph 29 (c), for the reasons we have given, was not available as an additional or auxiliary for the conclusion, so that paragraph 29 (d) must stand for itself.

(2)	He submitted that the Respondent was entitled in law to send the two disciplinary warning letters there referred to and he referred to the authority of Spafax Ltd v Harrison [1980] IRLR 442 for the proposition that there could be no repudiatory breach without a breach, and that an employer could not be found to be in repudiatory breach of contract unless the conduct said to found the repudiatory breach was itself a breach of contract.  No such finding was made, he submits, in relation to the sending of the warning letters.

(3)	In any event, there was no finding that the content of the warning letters was unjustified.  No adjudication was made by the Tribunal that the conduct of which the employers complained was not worthy of discipline or that the conclusion by the employer that such conduct merited discipline was unreasonable.  He submitted that there was no authority which could be relied upon or which was referred to which could establish that the course which the Respondent took was in breach of contract, or that the sending of the warning letters in the circumstances in which they were sent could amount to a repudiatory breach without an adjudication of the kind which we have summarised.

(4)	He pointed out, although this was not a matter which was raised by him either in his Notice of Appeal or in his Skeleton Argument, that the first part of the test in the Malik case, to which we have referred, namely that any breach of the implied term of trust and confidence could only be one even where there had been conduct which was calculated or likely to destroy or seriously damage trust and confidence, must be shown to be without reasonable cause; and the onus, she submitted, was on the Applicant in relation to that also, given that a constructive dismissal had to be proved.  As he submitted, without a finding that there was no justification for the disciplinary action by the Respondent, there could be no finding that there was not reasonable and proper cause for the Respondent in taking the action they did.

32	Mr Thorowgood, on behalf of the Appellant, has submitted, first, that the Tribunal did make findings unfavourable to the Respondent which would justify the Appellant in the position that he took and which would cast, at any rate, doubt or scepticism upon the reasonableness of the conduct of the employer.  He points to certain passages in the Tribunal decision which appear to suggest, at any rate, implicit agreement by the Tribunal with either the position taken by the Applicant or, at any rate, with any suggestion that the employer was acting reasonably.

33	We are not persuaded by that proposition.  It appears to us plain, from paragraph 29 itself, that the Tribunal was in no way reaching any conclusion as to the reasonableness or otherwise of the employer’s conduct forming a part of the repudiatory breach alleged, save in relation to the matters set out in paragraphs 29 (c) and (d).

34	If driven, as he was in the end, to justify the case of repudiatory breach only by reference to the contents of paragraph 29 (d), he relied upon the ACAS Code of Practice, to which of course reference was made by the Appellant himself in the letter which we earlier quoted.  That Code of Practice of course is not mandatory and is simply advisory and breach of the Code of Practice can be referred to where it is suggested that an employer did not act reasonably.  It reads, in material part, as follows:

14	“Before a decision is reached or any disciplinary action taken [and it is plain that disciplinary action can include the sending of written warnings] there should be a disciplinary hearing at which workers have the opportunity to state their case and to answer the allegations that have been made.  Wherever possible the hearing should be arranged at a mutually convenient time and in advance of the hearing the worker should be advised of any rights under the disciplinary procedure including the statutory right to be accompanied...
Prior to this stage, where matters remain informal, the statutory right of accompaniment does not arise.
15	Where the facts of a case appear to call for formal disciplinary action a formal procedure should be followed.  The type of procedure will vary according to the circumstances of the organisation.  Depending on the outcome of the procedure some form of disciplinary action may be taken as follows…”

and then a written warning was one of the options.

35	The Tribunal did not conclude that the ACAS Code of Practice was either relevant or breached; and we certainly are in no way persuaded that the ACAS Code, either in its full panoply or at all, is relevant to the circumstances of this case.

36	But the context of considering the ACAS Code of Practice takes us back to the conclusion of this Tribunal; and it can be described as follows.  There was an unresolved grievance procedure.  The Respondent believed that it had answered those grievances by its solicitor’s letter of 23 July.  Unknown to the Respondent it had not arrived; but they had not yet had any response, which they must have expected to receive, and certainly had no reason to believe that their letter of 23 July would have put an end to the outstanding grievances.

37	Thus, against the background of an unresolved grievance procedure and a sales meeting at which the Applicant, albeit reluctantly, had attended, they sent not one but two warning letters in the terms which we have described.  Those letters were not, on the face of them, subject to appeal.  They were to remain on the file of the Respondents, irrespective of what thereafter might occur, albeit that there was the undertaking to include any representations from the Appellant as well.

38	The terms of the first written warning were extremely strong, after such a short period of acquaintance with their new employee, and his anger in his letter of 1 August was not therefore surprising.  It is unfortunate that they had not received his letter of 1 August before they sent their letter of 2 August and it can certainly not be said, in any way, that they sent their letter of 2 August notwithstanding receipt of 1 August, because they had not received it.  But within a period of days, while there was still an outstanding grievance procedure, they sent a second written warning letter with the same consequence, namely remaining on the file with any representations as the first.
39	It is apparent from the Applicant’s response to the first letter that he regarded the first warning letter very seriously, so much so that he said that unless he had a response by 9 August he would be left with no alternative other than to assume that they no longer wished to continue the employment relationship.  He did not receive a response to that letter but he received instead a further warning letter.

40	The Tribunal took the view that the conduct of the Respondent in sending those two warning letters without speaking to the Appellant before doing so and seeking to analyse whether warnings were required, or to see whether there were any satisfactory responses to their complaints, particularly against the background of the outstanding grievance procedure, led to a breakdown in trust and confidence between the parties.

41	In paragraph 29 (d) there is a reference to “undermining” the trust and confidence, but Mr Nugent fairly did not formulate any case that that was in some way a suggestion of something less than serious damage or destruction, or some lesser blow, given that the word ‘breakdown’ has already appeared at the outcome of paragraph 29 in what was in fact the conclusory part of the paragraph, unusually the conclusion being put before the reasons, rather than the other way round.

42	It is right that the Tribunal did not in terms recite the necessary question as to whether, having found that there was a breakdown of trust and confidence, having found that the conduct of the Respondents in sending the two warning letters, against that background, was conduct which was calculated or likely to destroy or seriously damage the trust and confidence between the parties, there was reasonable and proper cause for such conduct.

43	But it is totally apparent from the findings of fact that the Tribunal make that there was no reasonable and proper cause, because the complaint that the Tribunal made, and concluded was appropriate, was not relating to the quality of the Applicant’s conduct which may well have justified criticism, but to the fact that, against the background of the unresolved grievance procedures the two disciplinary written warnings, hot on each others heels, were sent, without taking any opportunity of speaking to the Applicant before doing so.

44	For that reason, it is plain, the Tribunal concluded that there was no reasonable or proper cause and that is plainly the thrust of the last two sentences in paragraph 29 (d).

45	In those circumstances, we are satisfied that this cross-appeal should be dismissed.

46	We turn to the appeal which relates to the quantum of the compensatory award to which we have referred.  This was dealt with in a few short paragraphs at the end of the Tribunal’s decision, which we shall read in material part:

30	“The Tribunal find that the Applicant is unable to claim for the first two weeks following the termination of his employment as he chose to take a holiday despite having recently returned from a holiday.  The Applicant obtained alternative employment virtually immediately and started that employment on 2 September…”

and then there is a calculation of the sum of £546, after deducting the two weeks that he was on holiday, in respect of the period prior to his starting his new alternative employment as a Sales Representative with a company called ABS Technologies.

31	“The Applicant suffered a loss of earnings of £443 per calendar month in his new employment and his new employment lasted for 20 weeks.  This equates to a loss of £2,044.”

47	That was the totality of the compensatory loss that he was awarded, i.e. having discounted the two weeks holiday he was given the loss, which meant in fact partial loss, by virtue of the salary differential, until he lost his employment with ABS Technologies.

48	The Tribunal continued as follows in the two central paragraphs which have been the subject matter of this appeal:

32	“Since leaving ABS Technologies the Applicant has made no attempt whatsoever to seek alternative employment despite being able to secure alternative employment very quickly after leaving the Respondent.
33	The Applicant stated in evidence that he was dismissed due to performance because he was unable to contact customers which were customers of the Respondent because of restrictive covenants contained in his contract of employment.  However, as the Applicant believed that he had been constructively dismissed, the Respondent was in breach of contract and would not have been able to rely on their restrictive covenants.  The Tribunal do not consider that any future award should be made because of this and also because the Applicant has made no attempt to mitigate his loss.”

49	Mr Thorowgood’s attack on those paragraphs revolve around the fact that, as is clear, the Applicant has been denied any loss after losing his job with ABS Technologies.  The following complaints are made by him:

(1)	At any rate without a careful analysis of the facts, it would not be right for a Tribunal to stop the clock once an Applicant receives new employment.  In the case of Whelan v Richardson [1998] IRLR 114, His Honour Judge Clark in the Employment Appeal Tribunal, suggested that that might be appropriate in the ordinary case.  But in a decision which was not, it seems, cited to the Employment Tribunal, called Dench v Flynn & Partners [1998] IRLR 653, that was disapproved and it was to be a question of fact in each case, whether the gaining and, as appropriate, losing of a new job was to break the chain of causation so that an employee should not be able to recover any loss thereafter said to arise pursuant to section 123 of the Employment Rights Act 1996 out of the original unfair dismissal.
50	It is unclear whether the Tribunal did stop the clock at ABS Technologies.  They appear to leave open the possibility of recovery thereafter in paragraph 32.  On the other hand, in the last sentence of paragraph 33, the conclusion is that “The Tribunal do not consider that any future award should be made because of this”; that is, the loss of his job for reasons to which we will return, and also because the Applicant has made no attempt to mitigate his loss.

51	If the Tribunal “stopped the clock”, as we have put it, then it erred in law by reference to Dench v Flynn.  But it may be that the Tribunal did not so stop the clock, but rather cut off any loss after his dismissal by ABS Technologies because of a view (indeed perhaps a conclusion at paragraph 33) that the Applicant failed to mitigate his loss.

52	The evidence which we have recited from paragraph 33 of the decision was that he was dismissed by ABS Technologies due to performance, but that performance was caused by the fact that he was unable to contact customers which were customers of the Respondent because of the restrictive covenants contained in his contract of employment.

53	That evidence was, it seems, unchallenged, and Mr Nugent has confirmed to us that he did not seek to cross-examine by reference to putting any suggestion that there was any other reason for his alleged poor performance which led to his dismissal.

54	The Tribunal did not, therefore, have any suggestion of any other matter that could break the chain of causation, such as actual poor performance by the Applicant, but were faced plainly with the fact that that poor performance, on the unchallenged basis, was due to the existence of the restrictive covenants, and without more the restrictive covenants would go straight back to the employment with the Respondent.

55	The finding that the Tribunal made was that the Applicant not only ought to have disregarded those covenants but was failing to mitigate his loss by not disregarding them.  There is no evidence mentioned in the decision, and we do not understand there to have been any evidence that the Tribunal heard that the Applicant had legal advice that if he had been constructively dismissed he was able to disregard a restrictive covenant.

56	It is not common or garden knowledge that someone is entitled to disregard a restrictive covenant and/or that such restrictive covenants are unenforceable, if the employer who imposed them has acted in repudiatory breach of contract.  In any event, even if the Applicant had known of that fact, he would not have been able, necessarily, to be confident that he would succeed in a case of constructive dismissal; one in fact which it has taken him not only the Employment Tribunal but now an appeal to put beyond a periventa.

57	But in any event, before the Employment Tribunal was able, in our judgment, to come to the conclusion that it was a failure to mitigate not to disregard covenants and act in breach of them, it appears clear to us that the Tribunal would have needed to have had or considered any evidence there was available as to what would likely have occurred had he sought to disregard them.

58	One can foresee many cases in which it would be the case that an employee before suffering loss as a result of complying with restrictive covenants would be advised to be in contact with his old employer, to see whether they would release him from the covenants or confirm that they would not enforce them; and it might be a matter of criticism in relation to the duty to mitigate if an employee had not taken that course, or, if he was not going to take that course, at least put his toe in the water.  But in this case, it is apparent that had the Applicant sought to act in breach of his covenants the Respondent would indeed have enforced them, or at any rate that that was a matter which would have required investigation by this Tribunal.  

59	Very frankly before us Mr Nugent on behalf of his clients has confirmed that as far as his clients were concerned, because they denied constructive dismissal, they would have wished to have stood by and enforced restrictive covenants into which, as far as they were concerned, the Applicant had voluntarily entered.

60	We have been told that the Respondent itself sought to adduce in evidence opposed, ironically, by Mr Thorowgood on behalf of the Applicant at the Tribunal, a letter which its solicitors had written to the Appellant, in which inter alia they had asked him for undertakings that he would not solicit customers.

61	In those circumstances, if the duty to mitigate does not, in our judgment, include, at any rate it requires consideration before it is held to include, walking eyes open into an injunction in the High Court.

62	Mr Thorowgood has drawn our attention to cases at common law, and of course by section 123 (4) of the 1996 Act the Employment Tribunal operates its laws of mitigation by reference to the common law, whereby a mitigator is not obliged to take difficult or expensive steps such as bringing proceedings.  He refers us inter alia to Pilkington v Wood [1953] Ch 770 and Walker v Geo H Medlicott & Son [1999] 1 WLR 727.

63	It appears to us that the Tribunal erred in law, at any rate without making the necessary findings of fact as to whether such a course as disregarding the injunction would have been a heavy burden or not, in imposing too high an obligation to mitigate upon the Applicant.
64	Finally, the attack which Mr Thorowgood makes on the conclusions by the Tribunal, were based upon the fact that it found in paragraph 32 that “Since leaving ABS Technologies the Applicant has made no attempt whatsoever to seek alternative employment.”  That was a further ground in paragraph 33 for the Tribunal not considering that any future award should be made.

65	That was based upon a conclusion which the Tribunal formed in relation to a three and a half week period between the expiry of the Applicant’s employment with ABS Technologies and the hearing.  It may well be that it would have been appropriate to make a finding that the Applicant could and should have taken further steps to find alternative employment even prior to the hearing, absent any special explanation as to that period.  But in our judgment it was not a permissible step, at any rate without further evidence or conclusions, to jump from disallowing any loss in relation to that period from a conclusion that he was not entitled to any future loss at all.  That would have required at least a conclusion that, although he had not obtained employment before now that was because he had not taken sufficient steps to find work, and that the Tribunal was satisfied that tomorrow he would be back in employment with exactly the same salary as he had previously had with the Respondent.

66	There is no sign of the availability of that conclusion.  It may be that on further hearing something along those lines might be an available finding of fact.  But what in our judgment is not an available finding is that the Applicant should be disallowed from any future loss, in those circumstances.

67	The Tribunal accordingly allows the appeal and remits it for further consideration.  We shall hear argument as to whether that should be in front of the same Tribunal or a different one.