Rossiter v Pendragon Plc
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PETER GIBSON,LORD JUSTICE JONATHAN PARKER,SIR CHRISTOPHER SLADE |
| Judgment Date | 10 May 2002 |
| Neutral Citation | [2002] EWCA Civ 745 |
| Docket Number | A1/2001/0593 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 May 2002 |
[2002] EWCA Civ 745
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM AN EMPLOYMENT APPEAL TRIBUNAL
(His Honour Judge A Wilkie QC)
Royal Courts of Justice
Strand
London WC2
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM AN EMPLOYMENT APPEAL TRIBUNAL
(Her Honour Judge Anne Wakefield)
Royal Courts of Justice
Strand
London WC2
Lord Justice Peter Gibson
Lord Justice Jonathan Parker
Sir Christopher Slade
Lord Justice Peter Gibson
Lord Justice Jonathan Parker
Sir Christopher Slade
A1/2001/0593
A1/2001/2236
MR IAN WRIGHT (Instructed by Legal Department, Retail Motor Industry Federation, 201 Gt Portland Street, London W1W 5AB) appeared on behalf of Pendragon.
MR PAUL NICHOLLS (Instructed by Hewitson Becke & Shaw, Shakespeare House, Cambridge CB5 8EP) appeared on behalf of Air Foyle.
Mr Rossiter did not appear and was unrepresented.
MR RICHARD CLAYTON QC (Instructed by A J Hows & Associates, Heathrow Office, 81 New Road, Harlington, Middlesex UB3 5BG) appeared on behalf of Mr Crosby-Clarke.
Friday, 10th May 2002
These two appeals raise the question whether an employee who is to be employed on different terms on the transfer of an undertaking to a new employer can claim to have been constructively dismissed by reason of a substantial change in his working conditions to his detriment even if the employer's actions complained of do not constitute a breach of contract. In Rossiter v Pendragon Plc ("the Rossiter case") that is the main point in the appeal. In Crosby-Clarke v Air Foyle Ltd ("the Crosby-Clarke case") other questions turning on the particular circumstances of the case are also raised.
In the Rossiter case Norman Rossiter had been employed in Maidenhead as a car salesman from March 1992, first by Target Ford, and, when that company was taken over by Lex Service, later by Lex Ford. In January 1997 Mr Rossiter was promoted to New Car Sales Team Leader. His annual salary in April 1997 was £17,500 and he benefited from a commission scheme which his employer introduced that year, but the employer reserved the right to amend or withdraw the scheme at any time without notice. On 1st October 1997 Lex Ford was acquired by Pendragon Plc ("Pendragon") and it is not in dispute that the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE") applied to the acquisition.
After the transfer Mr Rossiter's title became New Car Sales Executive, but there was no material change in his role or responsibilities or his basic pay. In March 1998 Pendragon revised the commission scheme. The revised scheme was substantially less beneficial to employees like Mr Rossiter. Mr Rossiter refused to sign a new agreement incorporating revised terms of employment which it issued in March 1998 but, nevertheless, Pendragon implemented the terms of that agreement. Mr Rossiter complained that there were a number of changes in his working conditions of which the most significant was the loss of commission amounting to about £3,000 a year. After correspondence between his solicitors and Pendragon in January 1999 and a meeting between Mr Rossiter and a senior manager, on 15th February 1999 Mr Rossiter handed the senior manager a letter, saying that his position had become untenable and he was tendering his resignation.
Mr Rossiter applied to an Employment Tribunal ("ET") on 7th May 1999 complaining of unfair dismissal. In his originating application he alleged a fundamental breach of contract by Pendragon which repudiation he accepted. He said that the dismissal was connected with the transfer of Target Ford's undertaking and therefore automatically unfair. Pendragon opposed the application, saying that Mr Rossiter had resigned voluntarily.
The ET sitting at Reading, by a decision sent to the parties on 10th February 1999, agreed with Pendragon. They held that Mr Rossiter was not constructively dismissed under the Employment Rights Act 1996 ("the Act") or under TUPE but had resigned voluntarily. They held that the right to claim constructive dismissal could only arise if there had been a dismissal following upon breaches of contract and expressed the view that if there had been no breaches of contract, no cause of action could arise in respect of constructive dismissal under the Act, nor could there be an automatically unfair dismissal under Regulation 8(1) of TUPE. They said that in respect of unfair dismissal under the Act and dismissal under TUPE it must be a condition precedent that there should be a dismissal. They pointed out that 16 months had elapsed since the transfer and before the cessation of employment. They found that Pendragon had not committed any breach of contract and that nothing was done by Pendragon that could not have been done quite properly by Lex Ford. They also found that the changes made did not amount to substantial changes in Mr Rossiter's working conditions to his detriment. They further found that Mr Rossiter clearly affirmed the contract by continuing to work after 1st March 1998. They also considered whether Pendragon's actions cumulatively amounted to a breach of its implied obligation of trust and confidence, but they held that they did not. They concluded that there was no repudiation by Pendragon of the contract and no constructive dismissal.
Mr Rossiter appealed to the Employment Appeal Tribunal ("the EAT"). The EAT (His Honour Judge Wilkie QC presiding) in a judgment now reported at [2001] IRLR 256 disagreed with the ET on one point of law, holding that under TUPE in the context of a transfer of an undertaking there is no requirement that there be a breach of contract in order to give rise to an entitlement to resign and claim constructive dismissal. The EAT said that in the case of a transfer of an undertaking, an employee who suffers a substantial change in his working conditions to his detriment has a right to claim constructive dismissal, even if the employer's actions, the subject of complaint, do not constitute a breach of contract. But they dismissed Mr Rossiter's appeal against the findings of the ET that there had been no breaches of contract. The EAT remitted the case to a differently constituted ET to consider the matter on the test which they had indicated was the correct basis under TUPE. In so doing the EAT did not address the fact that the ET had expressly found that the changes did not amount to substantial changes in Mr Rossiter's working conditions to his detriment. Nor did they address the finding that Mr Rossiter had clearly affirmed the contract.
The EAT refused permission to appeal to this court, but Sir Philip Otton, considering the application on paper, granted permission. After skeleton arguments had been filed by both sides, Mr Rossiter indicated through his solicitors that he had reluctantly decided to abandon his defence of Pendragon's appeal, and so he has taken no part at the hearing of the appeal. We gave Mr Ian Wright, appearing for Pendragon, permission to amend his grounds of appeal to raise the points not addressed by the EAT to which I have already referred.
In the Crosby-Clarke case, David Crosby-Clarke was employed by Air Foyle Ltd ("Air Foyle") as an airline pilot on 21st November 1988 until his resignation on 30th April 2000. Air Foyle carried on business as an air operator and air cargo charter broker, operating first from Luton Airport and later from Stansted Airport. The vast majority of its business involved flying freight for TNT Express Worldwide (UK) Ltd ("TNT UK"), which in 1998 decided to move the hub of its European operations from Germany to Liege in Belgium and to set up a Belgian company, TNT Airways SA ("TNT SA"), which would operate from Liege and take over the operation run by Air Foyle. This involved TNT obtaining an air operator's certificate in Belgium and taking over the planes and those pilots who flew the planes and who wished their employment to be transferred.
Mr Crosby-Clarke was born on 5th June 1941. By the end of his employment he had been promoted to Captain and was earning approximately £69,000 per annum. He had a written contract of employment into which he entered on 5th November 1988 and which contained detailed provisions, governing, amongst other things, mobility, hours of duty and flight time limitations ("FTLs").
At the end of 1998 Air Foyle knew that TNT UK would not be renewing its contract expiring on 3rd May 2000 with Air Foyle. All pilots were sent a memorandum stating that there would be a transfer on 1st May 2000 of the TNT UK operation under TUPE. Thereafter, considerable information was passed to the pilots concerning the proposed transfer. There was also correspondence between Mr Crosby-Clarke and Air Foyle over a number of concerns of his. TNT SA intended to put transferring pilots under new contracts, and the final version of the draft contract was sent to Mr Crosby-Clarke on 22nd March 2000. This differed from Mr Crosby-Clarke's existing contract in a number of respects including the FTLs which accorded with the requirements of Belgian law. In particular, whereas under the FTLs applicable to Air Foyle, with its principal base of business in the UK, not more than three consecutive flight duties could be imposed by the employer of the employees, nor more than four such duties in any seven consecutive days, under the Belgian FTLs the maximum period of time without a day off was 11 days.
On 7th April 2000 Mr Crosby-Clarke wrote to Air Foyle stating that the proposed changes to his contract...
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