Kent County Council v Green

This is an appeal by Kent County Council (“the appellants”) against a decision of the Employment Appeal Tribunal, His Honour Judge Ansell, presiding, on 18 March 2003 whereby they allowed an appeal from an Employment Tribunal held at Ashford, Kent whose extended reasons were sent to the parties on 17 April 2002. Mrs. Diane Green (“the respondent”) had made a claim against the Governing Body of Victoria Road Primary School and the appellants for unfair dismissal. On the trial of a preliminary issue, as to whether they were appropriate respondents to the application, the Tribunal dismissed the appellants from the proceedings. The Employment Appeal Tribunal ordered that the appellants be reinstated as parties to the application before the Employment Tribunal.

The respondent was employed as Deputy Head Teacher at Victoria Road Primary School in Ashford from January 1994 until her resignation in 2001. She claims that she was constructively dismissed, her resignation arising from the fact that her professional status had been undermined.

The issue arises because the school is a community school within the meaning of that term in the School Standards and Framework Act 1988 (“the 1988 Act”) and the Education (Modification of Enactments Relating to Employment) Order 1999 (“the 1999 Order”). The 1999 Order has now been replaced by the Education (Modification of Enactments Relating to Employment) (England) Order 2003 but there is no material difference.

The legislation provides a scheme of financial delegation for community schools. By their governing bodies, they exercise budgetary powers. It was, however, the appellants, as local education authority, who were the employers of the respondent, a community school, unlike some of the other types of school contemplated by the 1988 Act, not having power to enter into contracts for the employment of teachers and other staff (paragraph 3(6) of Schedule 10 to the 1988 Act).

The respondent claims that she was unfairly dismissed. Section 95 (1) of the Employment Rights Act 1996 provides that an employee is dismissed by his employer if:

Section 81 (1) of the 1988 Act provides:

The Secretary of State may by order make such modifications in any enactment relating to employment, and in particular in any enactment –

The power conferred by Section 81 (1) of the 1988 Act was exercised in making the 1999 Order. The interpretation article in the Order provides, at Article 2 (2):

Under the heading “General modifications of employment enactments,” Article 3 (1) provides:

Chapter III of the 1988 Act provides for the government of maintained schools, a community school being a maintained school by virtue of Section 20(7) of the Act. In section 38, the functions of the governing body of such a school are stated broadly:

Section 54 of the 1988 Act provides that Schedule 16 of the Act has effect in relation to the staffing of community schools. The Schedule sets out in detail the procedures to be followed when a head teacher, a deputy head teacher, other teachers and non-teaching staff are to be appointed. Paragraph 22 is headed “Discipline” and provides:

The governing body shall establish -

In determining the capability of members of the staff the governing body shall have regard to any guidance given from time to time by the Secretary of State.

If the Secretary of State determines that any prescribed rules and procedures are to apply to the school or to any class or description of school to which the school belongs –

the governing body shall act in accordance with those rules and procedures in determining the capability of members of the staff; and

in the event of any inconsistency, those rule and procedures shall prevail over any rules and procedures established by the governing body under sub-paragraph (2)(a).

Where the implementation of any determination made by the governing body in the exercise of their control over the conduct and discipline of the staff requires any action which –

Under the heading “Dismissal, etc”, paragraphs 25 to 28 of the Schedule set out a procedure by which the governing body may require the local education authority to dismiss a person employed to work at the school and the procedure to be followed before and upon determining “that any person employed by the local education authority to work at the school should cease to work there” (paragraph 25 (1)). Paragraph 29 (1) provides that “the local education authority shall not dismiss a person employed by them to work solely at the school except as provided by paragraph 25.”

Article 6 of the 1999 Order provides, insofar as is material, that “this article applies in respect of any application to an Employment Tribunal, and any proceedings pursuant to such an application, in relation to which by virtue of Article 3 or 4 a governing body are to be treated as if they were an employer, a person by whom employment is offered, or a principal”. In those circumstances, paragraph 6(2) provides that “the application shall be made, and the proceedings shall be carried on, against that governing body”. Article 6(4) creates an entitlement in a local education authority in such circumstances “to be made an additional party to the proceedings and to take part in the proceedings accordingly”. What is in issue is whether the authority can be made a party against its will.

It is common ground that the local education authority would have to meet any successful claim against the Governing Body, subject to a possible right to recoup out of the school’s budget. That being so, it would appear that the present issue is of little practical importance and this was suggested to the parties at the hearing. Both parties seek a ruling, however; the local education authority because of the costs they may incur if they are routinely made parties to proceedings such as these and the claimant so that future claimants may be clear whether or not it is necessary to make the local education authority a party.

The Employment Tribunal held that Article 6(2), under the heading “Applications to Employment Tribunals”, is “perfectly clear” with the result that the Governing Body is the proper respondent to this claim.

In a carefully reasoned judgment, the Employment Appeal Tribunal came to a different conclusion. They stated, at paragraph 14:

Having drawn attention to the qualifying words “acting in the exercise of employment powers” in Article 3(1)(a) the 1999 Order, the EAT continued at paragraph 16:

For the respondent, Mr Bean QC supports the reasoning of the EAT. The expression “acting in the exercise of their employment powers” in Article 3 (1) (a) and (b) would be mere verbiage unless it contemplated a restriction upon the circumstances in which governing bodies shall be treated as employers for the purposes of Section 95 of the 1996 Act. In relation to dismissal, exercise of employment powers is confined to exercise of the powers conferred by paragraph 25 of Schedule 16, and these do not include constructive dismissal. This is not anomalous, submits Mr Bean, when it is borne in mind that claim for wrongful dismissal, as distinct from unfair dismissal, must be brought against the local education authority. The legislation contemplates a distinction, it is submitted, between claims under statute arising out of the governing body’s exercise of powers, where the 1999 Order applies, and other claims where the 1999 Order does not apply even if the Employment Tribunal has jurisdiction.

For the appellants, Mr Clarke QC submits that, by virtue of Article 6 (1) of the 1999 Order, the governing body is the appropriate, and only possible, respondent where a complaint to the Employment Tribunal falls within an enactment set out in the schedule to the 1999 Order and that includes a complaint of unfair dismissal under Section 95 (1) of the 1996 Act. An analysis of the particular complaint, whether it is a paragraph 25 of Schedule 16 dismissal or constructive dismissal is not required. Employment powers in Article 3 should be given a broad construction. In any event, the generality of the powers of the governing body appears from paragraph 22 of the Schedule, which places under the control of the governing body “the regulation of conduct and discipline in relation to the staff of the school” and includes, by virtue of paragraph 3, a power to determine “the capability of members of the staff”.

Reference was made, without objection, to facts not set out in the decision of either tribunal. A deputy head teacher had been seconded from another school to work alongside the respondent who believed that she was being “sidelined” as deputy head teacher. She expressed her unease and unhappiness at what she regarded as an “increasingly anomalous position”. She regarded the situation as untenable and decided to resign. The Governors contend that the staff were under extreme pressure and a deputy head from another school was brought in to provide assistance. Thus there are issues as to the circumstances which preceded the resignation and these fall to be resolved by the Employment Tribunal in due course.

I am not able to construe Article 6 as narrowly as did the Employment Appeal Tribunal. In Article 2 (2) of the 1999 Order, “employment powers” are stated to be references to “powers of appointment, suspension, discipline and dismissal of staff” as conferred by the legislation mentioned, including Schedule 16 to the 1988 Act. “Discipline”, in paragraph 22 of the Schedule, appears to me to be widely defined and to include exercises of power which will affect the interests of members of staff. Such exercises of power may lead to disputes and to claims that resignations amount to constructive dismissals.

The legal concept of constructive dismissal was explained by Lord Denning MR in Western Excavating (ECC) Limited v Sharpe [1978] ICR 221 at 226a:

The concept of constructive dismissal is so linked with that of dismissal that a jurisdictional difference which depended on a distinction between them would need the clearest basis. Both depend on the employer’s conduct as employer. I cannot accept that the intention of the legislation was to create a distinction between dismissal and constructive dismissal making it necessary to classify the circumstances of the departure from employment as between Section 95 (1)(a) and 95(1)(c) of the 1996 Act before it can be known whether the governing body or local education authority is the appropriate respondent.

It is clear from Article 2 (2) of the 1999 Order that “Employment Powers” are not confined to these in paragraph 25 of Schedule 16 to the 1988 Act. Moreover, the presence of the word “included” in Article 3(1) (d) of the 1999 Order does not suggest an exclusivity in the paragraph 25 procedure. Employment powers include at least “Discipline” as set out in paragraph 22. Paragraph 22 describes broad management functions in relation to staff including control over the conduct and discipline of the staff and disciplinary rules and procedures. The governing body is entitled to determine the capability of members of the staff and shall establish rules and procedures for dealing with lack of capability.

When these powers are exercised, situations are likely from time to time to arise in which resignations occur and constructive dismissal is claimed. To bring a claim for constructive dismissal under Section 95(1)(c ), the employee must be able to point to “conduct” of the employer. The conduct in relation to staffing of the school which created the circumstances in which the resignation in this case occurred was in my judgment conduct in the exercise of the employment powers of the governing body. The words conduct and discipline in paragraph 22 of the Schedule 16 should, in the statutory context, be given a broad construction.

In my view the actions of the governing body in this case were actions in the exercise of their employment powers and by virtue of Article 3(1)(a) and Article 6 they are to be treated as if they were the employer and any application to an Employment Tribunal claiming unfair dismissal shall be made against them.

I am pleased to have been able to reach that conclusion. On a contrary view, before it could be known whether the local education authority or the governing body is the appropriate respondent to a claim for unfair dismissal, there would have to be a detailed analysis, which in some cases would be complex, of the circumstances.

I would allow this appeal and accede to the appellants’ application to be dismissed from the action.

I agree that the appeal should be allowed. The appellant council should not have been joined as a party to Mrs Green’s proceedings for constructive unfair dismissal from her post as deputy head of Victoria Road Primary School. The governing body of the school should be the sole respondents.

The question whether the appellants can be joined in unfair dismissal proceedings against their will turns on the construction of article 6 of the 1999 Order, which relates to applications to Employment Tribunals. I need not repeat all the relevant articles of the 1999 Order, the relevant legislation or the salient facts set out in the judgments of Pill and May LJJ, which I have read in draft.

I have found this narrow procedural question more difficult to decide than my Lords have. For that reason alone I should attempt to state the legal position in my own words.

The starting point is that an employer is a necessary party to an application to an Employment Tribunal for ordinary or constructive unfair dismissal, unless primary or secondary legislation clearly provides otherwise. It is common ground that the appellants employed Mrs Green and that they are liable, by virtue of Article 6(3), as if an award by the Employment Tribunal against the governing body were made against the appellants, as the local education authority.

As stated in article 6 (2) of the 1999 Order, the general rule as to parties in the case of proceedings concerning community schools is that any application to an Employment Tribunal shall be made, and the proceedings shall be carried on, against the governing body, even though they are not the employer of the applicant. The appellants, as the local education authority, are entitled under article 6 (4)(b) to apply to be joined as an additional party to the proceedings, if they so wish, and to take part in them accordingly. In this case the appellants have made it clear that they do not wish to be a party to the proceedings or to take part in them. Can they be made a party against their will? That is the question.

The provisions in article 6 regarding applications to Employment Tribunals govern applications “in relation to which by virtue of article 3 or 4 a governing body are to be treated as if they were an employer...” The critical question is whether the governing body are to be treated as if they were the employer by virtue of article 3 in the case of a constructive unfair dismissal, as they clearly are in the case of an ordinary unfair dismissal. As a matter of general principle one would expect the tribunal procedure, including rules as to joinder of parties, to be the same in the case of ordinary and constructive dismissal, both of which can found applications for unfair dismissal.

It is, however, necessary to consider carefully the language of article 3, to which article 6(1) cross-refers. Article 3 makes general modifications to the employment enactments set out in the Schedule, including the unfair dismissal provisions in Part X of the Employment Rights Act 1996. The effect of the modifications made by article 3(1)(a) is that the scheduled enactments take effect as if any reference to an employer included a reference to the governing body ”acting in exercise of their employment powers and as if that governing body had at all material times been such an employer...” Article 3(1)(b) provides that the scheduled enactments have effect as if “in relation to the exercise of the governing body’s employment powers, employment by the local education authority at a school were employment by the governing body of that school,”

What is the effect of the expression “employment powers”? Assistance is available in article 2(2), which provides that references to “employment powers” are references to the powers of appointment, suspension, discipline and dismissal of staff conferred by or under sections 54 and 57(1) to (3), of and Schedule 16 and paragraph 27 of Schedule 17 to, the School Standards and Framework Act 1998.

The common law doctrine of constructive dismissal does not immediately connect with the concept of the “exercise of employment powers” for the dismissal of staff by an actual or deemed employer. Constructive dismissal is sometimes referred to as “self dismissal,” which would suggest that a claim for constructive unfair dismissal is not based on the exercise of a “power of dismissal” by the employer or the deemed employer. The doctrine focuses on the decision of the employee, as in the case of Mrs Green, to accept an alleged repudiatory breach of the contract of employment by the employer as terminating the employment. Schedule 16 to the 1998 Act, to which express reference is made in article 2(2) for powers of dismissal of staff, does not expressly refer to the case of constructive dismissal.

There is, to my mind, considerable force in the textual arguments advanced by Mr Bean QC on behalf of the appellants in support of the submission that the mandatory provisions of article 6(2) of the 1999 Order do not apply to all applications to the employment tribunal; that they are expressly confined to those applications arising out of the governing body’s exercise of “employment powers;” and that alleged constructive dismissal does not arise out of the governing body’s exercise of “employment powers”, as characterised in articles 2(2) and 3(1) of the 1999 Order.

The difficulty with Mr Bean’s submission is that it produces a procedural situation which does not make sense and is very unlikely to have been the intended effect of the 1999 Order. The evident purpose of the restriction on joinder of respondents in article 6(2) is to avoid, where possible, an unnecessary duplication of parties and to achieve a saving of costs and time of bodies engaged in the discharge of public functions. There is no discernible reason for treating a complaint for constructive dismissal presented to the employment tribunal under s 95(1)(c) of the Employment Rights Act 1996 in a procedurally different way from a complaint of ordinary dismissal under s 95 (1) (a) or (b). Indeed, as pointed out by my Lords, Mr Bean’s construction leads to a paradoxical situation in which, on a complaint of constructive dismissal, the Employment Tribunal would have to decide the substantive question whether there was in fact and in law a constructive dismissal of the applicant before it could rule on the procedural question whether the local education authority could be made a party to the Employment Tribunal proceedings against its will.

In my judgment, a broad, purposive approach to the construction of the procedural provisions in article 6 is appropriate. Such an approach leads to the conclusion that, in accordance with the mandatory terms of article 6(2), the application by Mrs Green in the Employment Tribunal for constructive unfair dismissal should be made and carried against the governing body and not against the appellants. By virtue of article 3 the governing body are treated as if they were her employer acting in the exercise of their employment powers. Although the references to “employment powers” in article 2(2) and the statutory provisions mentioned there, notably Schedule 16, do not expressly cover the case of constructive dismissal, it is, in my view, implicit in the scheme of the Order and related legislative provisions, read as a whole and with regard to their procedural context and objective, that the governing body are the proper respondent to all Employment Tribunal applications arising out of the dismissal of staff, whether the result of (a) invoking the procedure for the exercise of an express power of dismissal terminating a contract of employment or (b) other actions by a governing body in relation to the treatment of staff in the community school, which could lead to the termination of a contract of employment and to alleged unfair dismissal. No sensible purpose would be served by introducing the complication of distinguishing between two types of dismissal in the procedural context of joinder of parties to Employment Tribunal applications.

For these reasons, I agree that there was no error of law in the decision of the Employment Tribunal. The appeal should be allowed.

I agree that this appeal should be allowed for the reasons given by Pill LJ, whose account of the facts and circumstances I gratefully adopt. I shall not set out at length all the relevant statutory provisions to which he has referred.

Mrs Green alleges constructive dismissal. This is a claim to which section 95(1)(c) of the Employment Rights Act 1996 applies. Section 95 is in Part X of the 1996 Act.

Victoria Road Primary School is a community school with a scheme of financial delegation. There is no dispute but that Mrs Green was an employee of the appellants, the local education authority. However, speaking broadly, the governing body of a school such as Victoria Road Primary School has employment powers under the legislation.

The critical parts of the Education (Modification of Enactments Relating to Employment) Order 1999 are as follows:

The schedule to the 1999 Order includes various legislation relating to employment including Part X of the 1996 Act.

The effect of article 6 of the 1999 Order, if it applies, is that the governing body are to be respondent in an employment tribunal to proceedings such as these; and that the local education authority are not to be respondents unless they make a written application, at their option, to take part in the proceedings. This is entirely sensible economy. I am not able to identify any substantial advantage to an applicant in having both the governing body and the local education authority as separate respondents at the option of the applicant. But Mr Bean QC rightly pointed out that there could be single joint representation if they were both parties; that a single party might just as well be the local education authority as the governing body; and that it was important for potential applicants to know which body is the correct respondent. If the point is uncertain, an applicant might bring proceedings against the wrong respondent and then find themselves out of time to proceed against the correct respondent.

Mr Andrew Clarke QC submits that the modification order applies to claims to which section 95 of the 1996 Act applies. Proceedings in an employment tribunal against a governing body can only be brought if article 3(1) applies to effect that modification. Article 6 accordingly comes into play so that the application has to be made against the governing body alone. He submits that this is unquestionably so for a claim based on direct dismissal, and that by necessary and obvious extension a claim for constructive dismissal must also come within article 3(1).

Mr Bean’s main submission is that “employment powers” in article 3(1) is an expression defined in article 2(2). The definition refers to “powers of appointment, suspension, discipline and dismissal of staff” conferred by identified provisions of the 1998 Act. The main relevant provisions are those in Schedule 16. Although Schedule 16 confers powers relating to dismissal on the governing body, there is no power relating to constructive dismissal. Constructive dismissal equates to a breach of contract. Claims for breach of contract amounting to wrongful dismissal are brought in the High Court where the defendant is the true employer, that is the local education authority. Such claims are only brought in employment tribunals under Extension Regulations. These Regulations do not appear in the Schedule to the 1999 Order. This may on occasions be inconvenient, if there is an application to an employment tribunal which encompasses matters both within and without article 3(1). But the inconvenience is an intrinsic part of this convoluted legislation.

Mr Clarke submitted that the matters of which Mrs Green complains may be seen as coming within one or more of the powers in Schedule 16. He referred to paragraphs 22 and 10. I did not find this submission persuasive. In my view, it cannot have been the intention of this legislation that the question whether an application should be made against the governing body, the local education authority or both should turn on the uncertainties of a detailed inquisition into precisely what the application alleges.

I am, nevertheless, persuaded, in agreement with Pill LJ, that the employment powers of a governing body referred to in article 2(2) of the 1999 Order are sufficiently wide to embrace a claim for constructive dismissal in an employment tribunal. It cannot, I think, have been the parliamentary intention that the Modification Order should apply to section 95(1)(a) and (b), but not to (c). Nor can it have been the parliamentary intention that the question whether Article 6 applies might strictly have to wait until the employment tribunal had made its determination of the application. If a claim for constructive dismissal succeeds, Mr Bean’s submission puts it outside Article 6. But if the same claim is successfully defended, the matter may well be within Article 6. The respondents would have established that they were acting within their employment powers on Mr Bean’s submission. Of course there is no employment power written into Schedule 16 which empowers a governing body to bring about constructive dismissal. Legislation would never contain an express power to break a contract. But Schedule 16 does contain what appears to be a comprehensive collection of the governing body’s employment powers under this legislation. No doubt they have other powers to be found elsewhere. Further, the words “the powers of appointment, suspension, discipline and dismissal of staff” in article 2(2) are, in my view a legislative signpost, not a definition. The powers of appointment, suspension, discipline and dismissal of staff in fact embrace the entire content of Schedule 16 in the order in which they appear in the Schedule. The fact that the list in article 2(2) is a legislative signpost does not of course enlarge the express content of Schedule 16. But it does, in my view, enable the legislative purpose to be seen as embracing within article 2(2) the subject matters which Schedule 16 empowers.

For these reasons, I consider that an allegation of constructive dismissal is to be seen as an allegation based on dismissal and coming within article 3(1)(a) and (b). This does not exclude the local education authority as being the employer under article 3(1)(a) (by virtue of the word “included”). But it does mean that article 6 applies to a claim for constructive dismissal brought in an employment tribunal.