Sandhu v Jan De Rijk Transport Ltd

Whether an apparent resignation is in law a dismissal depends on what caused the termination. A resignation can be genuine where the employee makes a free and informed choice to leave on negotiated terms. But where the employer has already decided to dismiss and communicates that decision at the outset of the same meeting, later discussion of severance terms will not ordinarily convert the dismissal into a resignation. Warning, opportunity for advice, time to reflect, genuine negotiation and the relative advantage of the terms are relevant indicators. A tribunal must apply that causation-based approach correctly. If only one conclusion is permissible on the facts, an appellate court may intervene and substitute the legally correct conclusion rather than remit the matter.

Charles Sandhu, an operations manager, was summoned without notice to a meeting in the Netherlands with senior managers. The meeting opened with an indication that his contract would end. During the same meeting, he negotiated continued pay to 31 March 2003 and short-term use of company property, and signed a letter recording termination by agreement.

The Employment Tribunal held that he had resigned and dismissed claims for unfair dismissal, wrongful dismissal and breach of contract. The Employment Appeal Tribunal dismissed his appeal. The Court of Appeal considered whether the Tribunal had misdirected itself by treating the case as analogous to authorities on genuine negotiated resignation, whether its conclusion was perverse, and whether evidence had wrongly been excluded. The central issue was whether the appellant resigned or was dismissed at the meeting.

Wall LJ gave the leading judgment. Pill LJ and Maurice Kay LJ agreed. The appeal was allowed, the Tribunal’s findings were set aside, and the matter was remitted to a different tribunal on the basis that the appellant had been dismissed and that the dismissal was procedurally unfair.

1. Causation governs. The question is whether the employee left because of the employer’s threat or decision to dismiss, or because the employee freely chose to resign on satisfactory negotiated terms. The authorities include East Sussex County Council v Walker (1972) IITR 280, Sheffield v Oxford Controls Company Limited [1979] IRLR 133, Crowley v Ashland (UK) Chemicals Limited EAT 31/79 and Jones v Mid-Glamorgan County Council [1997] IRLR 685. Resignation ordinarily involves genuine choice, negotiation or discussion, and commonly an opportunity for advice and reflection.
2. Application to the meeting. The respondent had convened the meeting to dismiss the appellant and told him at the outset that his contract was ending. He had received no warning, advice or time to reflect. The subsequent negotiation concerned the terms of an inevitable departure and did not amount to free, unpressurised negotiation. The terms obtained were not especially advantageous. The signed letter, which recorded that both parties would terminate the contract, was consistent with dismissal. The Tribunal therefore erred in treating the case as on all fours with Sheffield and Crowley.
3. Effect of the dismissal. Once dismissal had occurred, later negotiation about severance could not undo it. The issues of procedural fairness, any Polkey question and the appellant’s contribution to dismissal remained for determination. The reference to Polkey v A.D. Dayton Services [1988] AC 344 identified the further issues to be considered on remittal.
4. Appellate intervention. A tribunal must direct itself correctly in law, and its conclusion must be open on the material before it. Here, proper application of the law permitted only the conclusion that the appellant had been dismissed. Remittal on the classification issue was therefore unnecessary.
5. Alternative perversity basis. The Tribunal’s conclusion was also one which was not open to it and which no reasonable tribunal, properly appreciating the evidence and law, could have reached. This did not involve substituting the Court’s assessment of the evidence.
6. The respondent’s limitation argument was rejected as too late because it had not been raised before the Tribunal or the Employment Appeal Tribunal. The evidential issue was not decided because it was unnecessary. The observations that employers should maintain proper disciplinary, dismissal and appeal procedures and should not exploit their dominant position were made as a point of principle and were not necessary to the disposition. The judgment noted that the claim was not brought under section 203 of the Employment Rights Act 1996.

1. Court of Appeal (Civil Division): In [2007] EWCA Civ 430, allowed the appeal, set aside the Employment Tribunal’s findings, and remitted the unfair-dismissal claim to a different tribunal on the basis that the appellant had been dismissed and the dismissal was procedurally unfair.
2. Employment Appeal Tribunal: By reserved judgment dated 7 April 2006, dismissed the appellant’s appeal and directed that any application for permission to appeal should be made to the Court of Appeal.
3. Employment Tribunal sitting at Reading: On 7 February 2005, with reasons given on 16 February 2005, held that the appellant had resigned and dismissed his claims for unfair dismissal, wrongful dismissal and breach of contract.