Woods v W M Car Services (Peterborough) Ltd

Mr. Todd built up a successful garage business at Deeping St. James near Peterborough. He was 63 and decided to retire. He arranged to sell it to an up-and-coming company in the same line. The price was £220,000. The new management said they would take over the staff on the same terms as with Mr. Todd. The price was fixed on that basis. But then Mr. Todd—without telling the purchasers—increased the pay of some of the staff. One of them was his personal secretary, Mrs. Woods. She had been with him for 28 years and was described as "Chief Secretary and Accounts Clerk". She earned £68.68 gross for a 35-hour week.

The takeover took place on the 14th January, 1980. The new management got on well with cost of the staff. They had no complaints. But they thought that Mrs. Woods was rated too highly and that she was being paid too much for the work she did. So they tried to persuade her to take less or to work longer hours. She resented this. She refused. They gave in. Much friction arose. She went to solicitors. They told her to keep a note of anything untoward that took place. She did so. Over the next four months there were several incidents. It would be tedeious to go through them. They seem trivial to an outsider but both parties magnified them out of all proportion. All trust and confidence was lost on both sides. Finally, only four months after,the takeover, on the 14th May, 1980, her solicitors advised her to leave. This is what they said in their letter of the 14th May, 1980:

"We have advised our client that she is entitled to treat her Contract of Employment as at an end having been constructively dismissed. Our client is unable to continue in her employment in view of the harassment that she has received and the meeting yesterday was the final straw. Kindly accept this letter as notice that our client will not therefore be attending at work again and we have immediately made an application to the Industrial Tribunal for compensation for unfair dismissal".

The statutory definition

So the case went before the industrial tribunal. The question was whether she had been "dismissed" by her employers. The statutory definition of dismissal includes constructive dismissal. It says in section 55(2)(c) of the Employment Protection (Consolidation) Act 1978 that an employee shall be deemed to be dismissed by his employer if, and only if,

"the employee terminates that contract, with or without notice, in circumstances such that he is entitled to terminate it without notice by reason of the employer's conduct".

The trial here

This case reminds me of the old days in the Divorce Division when one party accused the other of constructive desertion. Days and days were spent in investigating in great detail the minutest incidents of the married life—in order to see whether the wife was justified in leaving or not. And then on appeal we had to read many days of transcript because there was an appeal on fact and on law.

So in this case of constructive dismissal the industrial tribunal heard the case for four days. They took a most careful note of all the evidence. It covered many trifling incidents. It takes over 43 closely-typed pages. They gave a written judgment of seven closely-typed pages analysing the facts and the law admirably. Their unanimous conclusion was that Mrs. Woods terminated her employment herself. She was not dismissed by her employers.

The appeal

Mrs. Woods appealed to the employment appeal tribunal. The appeal lies only on a question of law, see section 136(1) of the 1978 Act. Again the incidents were canvassed in detail. Left to themselves, the employment appeal tribunal would have reversed the industrial tribunal. But they felt bound by a recent decision in this court to dismiss the appeal. They said they would like guidance. So they gave leave to appeal to this court.

A useful parallel

Over the weekend I have found a useful parallel. It is in the cases in the old days about wrongful dismissal. Often enough a servant was employed for a time and was dismissed by his employer at a moment's notice. He was given "the sack" (old parlance) meaning the bag in which he kept his tools. He brought an action for wrongful dismissal. The master pleaded in defence simply that "the plaintiff misconducted himself in the said service", giving particulars of the misconduct, see Bullen and Leake, 3rd edition (1868) page 650. This plea was based on the simple proposition that it was the duty of the servant to give good and faithful service: and that he had been guilty of misconduct of so serious a kind that it justified his dismissal. In modern terminology, he had been guilty of a repudiatory breach. The judges refused to lay down any general rule as to what causes would justify the dismissal of a servant. They left it to the jury: often with a hint as to what they thought the result should be, as Sir Frederick Pollock did in Horton v. McMurtry (1860) 5 H. & N. 667:

"Gentlemen, I believe it is for you to decide whether this was a proper ground of dismissal—but if it be a matter of law…my opinion is that it is a good ground of dismissal". The jury found for the defendant.

Once the jury had decided the matter, that was the end of it. It was for the jury to decide the nature and extent of the misconduct and whether it justified dismissal or not. Their decision would not be interfered with by the Court of Appeal, so long as there was evidence to support it. This is shown by a case which came to the Privy Council from New Zealand. The facts were not in dispute. It was argued that the trial judge and the Court of Appeal could decide for themselves whether those facts were such as to justify the dismissal or not. But the Privy Council would have none of it. In Clouston v. Corry(1906) Appeal Cases 122 Lord James of Hereford said (at page 129):

"In the present case the tribunal to try all issues of fact was a jury. Now the sufficiency of the justification depended upon the extent of misconduct. There is no fixed rule of law defining the degree of misconduct which will justify dismissal. Of course there may be misconduct in a servant which will not justify the determination of the contract of service by one of the parties to it against the will of the other. On the other hand, misconduct inconsistent with the fulfilment of the express or implied conditions of service will justify dismissal. Certainly when the alleged misconduct consists of drunkenness there must be considerable difficulty in determining the extent or conditions of intoxication which will establish a justification for dismissal. The intoxication may be habitual and gross, and directly interfere with the business of the employer or with the ability of the servant to render due service. But it may be an isolated act committed under circumstances of festivity and in no way connected with or affecting the employer's business. In such a case the question whether the misconduct proved establishes the right to dismiss the servant must depend upon facts—and is a question of fact. If this be so, the questions raised in the present case had to be tried by the jury".

After the Second World War, these cases were usually tried by judge alone without a jury. The judge's decision—whether the conduct was so serious as to justify dismissal—was regarded as a decision of fact with which the Court of Appeal should not interfere, see Laws v. London Chronicle(1959) 1 Weekly Law Reports 698: but this good ruling was overlooked by the Court of Appeal in Pepper v. Webb(1969) 1 Weekly Law Reports 514. A gardener had there told the lady of the house: "I could not care less about your bloddy greenhouse and your sodding garden". Thereupon the master dismissed him summarily at once. The county court judge held that was not sufficient to justify his instant dismissal without wages or notice. Yet the Court of Appeal reversed the judge. This was because they had none of the previous authorities cited to them. They earned the rebuke of Professor Goodhart in The Law Quarterly Review, July 1969, pages 325–327. His view was that the gardener's attitude did not amount to a repudiatory breach.

Our modern cases

Now under modern legislation we have the converse case. It is the duty of the employer to be good and considerate to his servants. Sometimes it is formulated as an implied term not to do anything likely to destroy the relationship of confidence between them, see Courtaulds Textiles v. Andrew(1979) Industrial Relations Law Reports 84. But I prefer to look at it in this way: the employer must be good and considerate to his servants. Just as a servant must be good and faithful, so an employer must be good and considerate. Just as in the old days an employee could be guilty of misconduct justifying his dismissal, so in modern times an employer can be guilty of misconduct justifying the employee in leaving at once without notice. In each case it depends on whether the misconduct amounted to...