Feltham Management Ltd & Ors v. Feltham & Ors

A contract of employment is terminated only where clear and unambiguous words or conduct, assessed objectively, notify the employee that termination is being exercised. An unaccepted repudiatory breach does not itself end the contract. For the statutory effective date of termination under Employment Rights Act 1996, words or conduct must likewise convey unequivocally that the employer is terminating employment. Withholding pay does not necessarily do so.

When considering a Polkey reduction, a tribunal may decline to speculate where reliable evidence cannot support a sensible prediction. In direct sex discrimination claims, an unreasonable treatment does not itself establish treatment because of sex. The tribunal must evaluate the employer's explanation and the relevance of any comparator evidence.

The Employment Tribunal sitting in Manchester held that the claimant, a director and employee of a family company, had been unfairly dismissed. It found that her employment and effective date of termination were on 15 December 2014, not 30 October 2014. It also rejected proposed Polkey and contributory-conduct deductions, upheld claims for wages and holiday pay, and made findings of direct sex discrimination.

The company and certain family-member respondents appealed. The central issues were whether the claims were in time, whether compensation should be reduced, and whether the Tribunal had adequately reasoned its finding that withholding the claimant's salary was direct sex discrimination.

1. Appeal allowed in part. The appeal failed on the date of termination, effective date of termination, Polkey, contributory conduct, unlawful deduction from wages and holiday-pay issues.

2. As a matter of contract, the 30 October letter did not purport to terminate employment. It wrongly asserted that the claimant had resigned the previous year. Objectively, a reasonable recipient would not understand it as the exercise of a contractual right to terminate. It was at most a repudiatory breach, which the claimant did not accept.

3. For Part X of the Employment Rights Act 1996, the effective date of termination is a statutory concept. An employer's words or conduct must, in context, plainly and unambiguously convey termination. The mere statement that salary will not be paid does not necessarily have that effect. The Tribunal was entitled to find that the 30 October letter left the claimant in reasonable doubt and that the effective date was 15 December 2014. The unfair-dismissal and Part II pay claims were therefore in time.

4. The Tribunal correctly applied Software 2000. Given the absence of an established true reason for dismissal, the lack of any fair procedure, and the uncertainty surrounding an independent investigation, it was entitled to conclude that no sensible prediction could support a Polkey reduction. Its reasons, read as a whole, also adequately explained why the claimant's conduct was not culpable or blameworthy.

5. The finding that salary withholding was direct sex discrimination could not stand. The Tribunal had to evaluate the respondents' explanation for non-payment and the significance of the treatment of the claimant's husband as an evidential comparator. Unreasonableness alone did not establish treatment because of sex.

6. The sex-discrimination issues were remitted to the same Tribunal to reconsider the withholding-of-pay claim, limitation, and any just-and-equitable extension. If it again treated the earlier remarks and later non-payment as a continuing discriminatory state of affairs, it had to give fuller reasons.

• Employment Appeal Tribunal: Allowed the appeal only in relation to the direct sex-discrimination findings and remitted those issues to the same Employment Tribunal.
• Employment Tribunal, Manchester: Judgment dated 25 February 2016. It upheld the claimant's unfair dismissal, wages and holiday-pay claims, rejected deductions, and found direct sex discrimination.