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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Ostilly v Meridian Global Vat Services (UK) Ltd (CONTRACT OF EMPLOYMENT –- Implied term/variation/construction of term) [2020] UKEAT 0017_20_1505 (15 May 2020) URL: https://www.bailii.org/uk/cases/UKEAT/2020/0017_20_1505.html Cite as: [2020] UKEAT 17_20_1505, [2020] UKEAT 0017_20_1505 |
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At the Tribunal | |
On 30 April 2020 | |
Before
THE HONOURABLE MR JUSTICE KERR
(SITTING ALONE)
APPELLANT (Claimant Below) |
|
RESPONDENT (Respondent below) |
For the Appellant | MR ALEXANDER ROBSON (of Counsel) Instructed by: OGR Stock Denton 2nd Floor, Winston House, 2 Dollis Park, London N3 1HF |
For the Respondent | MR MARK THOMAS (of Counsel) Instructed by: Machins Solicitors LLP 28 Dunstable Road, Luton LU1 1DY |
SUMMARY
CONTRACT OF EMPLOYMENT – Implied term/variation/construction of term
CONTRACT OF EMPLOYMENT – Damages for breach of contract
UNFAIR DISMISSAL – Constructive dismissal
The claimant brought a claim for breach of contract relying on non-payment of a bonus he said was due to him; and for unfair (constructive) dismissal, relying on his resignation in response to a repudiatory breach of his contract of employment. The respondent denied any breach and asserted that the claimant had affirmed his contract and had resigned, but not in response to any breach.
The employment judge had not erred in construing the bonus clause conferring a discretion to pay up to 20 per cent of salary each year. The clause did not, on its true construction, exclude the financial position and performance of the employer from the scope of permissible considerations relevant to the exercise of the employer's discretion. The judge correctly so decided.
The judge (as the respondent accepted) erred when assessing how close the claimant came to achieving the level of profit he had forecast for the year 2017, in respect of the part of the respondent's business for which he was responsible. She mistook the turnover figure the claimant had forecast (€3.25 million) for the profit figure (€1.79 million).
The actual profit in 2017 was €1.68 million. The claimant had therefore fallen €110,000 short of his profit target, i.e. he had achieved about 94.5 per cent of his target, not 51.6 per cent as the judge found. Although the respondent did not make the same error when considering whether to pay bonus, the judge's error was material to her conclusion that the respondent's exercise of its discretion not to pay any bonus in 2018 was rational and lawful, not perverse.
The judge found that if, contrary to her primary decision, the decision not to pay bonus was a breach of contract, the claimant was entitled to a maximum of £19,500 (20 per cent of salary) but would have resigned unless paid a sum close to £55,000, which he was demanding and believed he was entitled to. She reasoned that his unfair dismissal claim must therefore fail anyway because he would not have resigned in response to a breach of contract.
That finding was not justified on the pleadings and the evidence and (applying the principles in Chen v. Ng [2017] UKPC 27) was procedurally unfair. The respondent had not relied on the judge's proposition; it was contrary to the claimant's case and was not properly put to the claimant during his evidence, either by the respondent or the judge. Nor was it an obvious and permissible inference from the documents and evidence as a whole.
The claims for breach of contract and unfair dismissal would therefore be remitted for redetermination in the light of the EAT's judgment. It was appropriate to remit the issues to a different employment judge in view of the finding of procedural unfairness, but it was not necessary for all the evidence to be heard again.
THE HONOURABLE MR JUSTICE KERR
Introduction
The Facts
"As from 1st January 2001 you will be entitled to a maximum annual bonus of 20% of your salary which will be tied to your own performance and that of your market region. Further details on the bonus system will be forwarded to you shortly."
"one of the decisions that we have made is not to award a bonus. I realize that this may be highly disappointing to you. We want to stress that this is a corporate decision and does not in any way reflect dissatisfaction with the contribution that you or your team have made."
"I consider the non-payment of my bonus to be a repudiatory breach of my contract and accordingly resign with immediate effect."
The Decision
"The Claimant's view was that he was contractually entitled to a bonus of £55,000. Under clause 8 of his contract, he was not. Even if I had found there to be a breach of the contract because the Respondent took into account an irrelevant factor, the claim for constructive dismissal would not have succeeded for the following reasons. The Claimant would have resigned even if the Respondent had exercised its discretion rationally and awarded him a sum less than £19,500. He would have resigned because the Respondent had not paid him a bonus of £55,000 or a sum close to that. The failure to pay that sum would not have been a breach of contract."
Grounds of Appeal
First ground: the meaning of clause 8
"In most, possibly all, disputes about whether a term should be implied into a contract, it is only after the process of construing the express words is complete that the issue of an implied term falls to be considered. Until one has decided what the parties have expressly agreed, it is difficult to see how one can set about deciding whether a term should be implied and if so what term."
Second and third grounds: whether the judge erred in addressing breach of contract
Fourth ground: the finding that claimant would have resigned unless offered close to £55,000
"… the importance of the relevant issue both absolutely and in the context of the case; the closeness of the grounds to the points which were put to the witness; the reasonableness of the grounds not having been put, including the amount of time available for cross-examination and the amount of material to be put to the witness; whether the ground had been raised or touched on in speeches to the court, witness statements or other relevant places; and, in some cases, the plausibility of the notion that the witness might have satisfactorily answered the grounds."
"If I may quote what I said in Biogen Inc v Medeva Plc [1997] RPC 1, 45:
'... [S]pecific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance ... of which time and language do not permit exact expression, but which may play an important part in the judge's overall evaluation.'
'... The exigencies of daily court room life are such that reasons for judgment will always be capable of having been better expressed.'"
Remedy