The claimant was dismissed during her probationary period and she claimed that she had been dismissed because she wrote a letter to the respondent, which criticised the lack of consultation, shortcomings in the respondent's practices and identified non-compliance issues. The claimant claimed that this letter constituted a protected disclosure and she claimed automatic unfair dismissal, not having the requisite continuity of employment to claim ordinary unfair dismissal. The ET refused to strike out the claim, nor did it make a deposit order against the claimant. The respondent appealed.

The EAT dismissed the appeal against the strike out decision, saying that the letter contained 'information' and it was a matter for a full hearing whether the information, in the reasonable belief of the claimant, tended to show that her employer had failed, was failing or was likely to fail to comply with any legal obligation - in particular to comply with its contractual obligations to her. However, they allowed the appeal against the deposit order; the EJ had given no reasons at all for concluding that a deposit order ought not to be made.

Appeal No. UKEAT/0290/13/SM

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

At the Tribunal

On 20 September 2013

Before

HIS HONOUR JUDGE DAVID RICHARDSON (SITTING ALONE)

MILLBANK FINANCIAL SERVICES LTD (APPELLANT)

CRAWFORD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant
MR DAVID READE (One of Her Majesty's Counsel)

Instructed by:
Messrs Doyle Clayton Solicitors Ltd
1 Crown Court
Cheapside
London
EC2V 6LR

For the Respondent
MR HARRY BREACH (Representative)

**SUMMARY**

VICTIMISATION DISCRIMINATION – Protected disclosure

PRACTICE AND PROCEDURE

Striking-out/dismissal

Imposition of deposit

The Employment Judge did not err in law in deciding that the claim should not be struck out: the letter dated 15 October contained "information"; and it was a matter for a full hearing whether the information, in the reasonable belief of the Claimant, tended to show that her employer had failed, was failing or was likely to fail to comply with any legal obligation - in particular to comply with its contractual obligations to her.

The Employment Judge had, however, given no reasons at all for concluding that a deposit order ought not to be made. Matter remitted to be considered again - preferably with another outstanding application which required a hearing.

**HIS HONOUR JUDGE DAVID RICHARDSON**

1. This is an appeal by Millbank Financial Services Limited ("MFS") against a judgment of Employment Judge Welch dated 2 May 2013 following a hearing on 29 April 2013. The Employment Judge declined to strike out a claim of automatic unfair dismissal brought by Miss Victoria Crawford. She also decline to order the payment of a deposit as a condition of the claim proceeding.

1. Miss Crawford's claim was that the principal reason for her dismissal was the making of protected disclosures under what are commonly known as the whistle-blowing provisions of the Employment Rights Act 1996. It is helpful to have in mind at the outset the relevant provisions of the legislation.

1. S.43B(1) (in the form applicable at the time) defines a qualifying disclosure in terms which include the following:

"In this Part a 'qualifying disclosure' means any disclosure of information which, in the reasonable belief of the worker making the disclosure, tends to show […]

(b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject,

[…]"

1. By s.43L(3):

"Any reference in this Part to the disclosure of information shall have effect, in relation to any case where the person receiving the information is already aware of it, as a reference to bringing the information to his attention."

1. The qualifying disclosure is protected if it is made in good faith to the worker's employer (see s.43A and s.43C(1)).

**The background facts**

1. MFS is a company providing tax, financial management and advisory services. The Claimant, a qualified chartered accountant, was employed with effect from 11 April 2012 as Financial Director Designate at a salary of £60,800 per annum. Her employment was expressed to be subject to a probationary period of six months. During this probationary period she was entitled to one month's notice; after the probationary period she was entitled to three months' notice during the following year. Thereafter, she was entitled to six months' notice.

1. On 9 October 2012 a probation review meeting was held. Miss Crawford was told that her probationary period was being extended and that MFS had concerns about some aspect of her performance. There was no suggestion at that meeting that she would be dismissed. On 15 October, in preparation for a further meeting to be held the following day, Miss Crawford sent a letter by email to senior management of MFS; it is this letter which is central to the appeal. After receiving the letter, the Respondent cancelled the meeting arranged for the following day. On 22 October, Miss Crawford was dismissed. It is her case that she was expressly told that her letter on 15 October was the cause of her dismissal. Her case, in this respect, derives some support from a letter of the Respondent to her solicitors dated 10 December 2012 and from the ET3 lodged by the Respondent.

1. It is necessary to quote selectively from the letter dated 15 October, which ran to three A4 pages. The letter expressed deep disappointment at the way in which the probation review was carried out. It continued to set out some of the background history:

"Julien and Mark explained in the meeting in April that they were unclear as to what Lynn did and wanted to understand the Finance function. As they have been longstanding directors of MIML and MFS and they have approved Accounts in the past, I am surprised that this was not previously discussed with Lynn given their Directors' Responsibilities."

1. It dealt with an issue raised on 9 October, which concerned projects and support:

"Julien instructed Smith & Williamson to prepare a report concerning the restructuring of the companies. Julien and I had a conversation about this in June during which he aired his thoughts but he did not ask me to do any specific work and he explained that he would reveal his thoughts more fully in future. I therefore find it incredible that S&W were instructed and Julien did not ask me, the Finance Director, to prepare a preliminary report for him. If this had been done I could have saved the company £3,000 in professional costs and perhaps I could have steered him on a different course to the one which was taken and presented to the family directors."

1. It criticised the lack of consultation with the person carrying out the HR function and the manner in which the probation review and extension process was carried out:

"Sally was recruited to carry out the HR function, which she does brilliantly, and her role is to provide support services. I find it very strange that she was not consulted beforehand on the issue of my probation review and probation extension. She has experience in this area and could have enabled to process to be carried out smoothly and effectively rather than the, quite frankly, shambolic way it was conducted (please see point 3).

[…]

The probation period is supposed to be one of continual review but I have rarely had any feedback and certainly no more than an initial meeting when I started. I have diligently and competently executed the role as specified to me by my predecessor and I have gone beyond that in identifying serious issues relating to the retirees medical healthcare, errors in filing corporate tax returns, the pension scheme and life assurance (in collaboration with Sally) moving forward with RDR compliance (which should have been addressed at least in 2011 (if not before)). In the absence of any complaints or feedback I assumed that you were satisfied with my performance."

1. It mentioned work which she had done, identifying shortcomings in the Respondent's practices and continued:

"There seemed to be no plan of action and no idea as to how long the extension of my probation would last. I was also surprised that Elizabeth was not consulted on this matter, being a director of MFS."

1. Miss Crawford finished her letter by asking for a "clear and concise schedule" of what more is required of her and the structure as to how long the probationary period was to last, and how it was to be monitored.

**The Tribunal proceedings and reasons**

1. Miss Crawford brought proceedings for unfair dismissal on the basis that the principal reason for her dismissal was the making of protected disclosures (see s.103A of the Employment Rights Act 1996). She did not have qualifying service for an ordinary claim of unfair dismissal. MFS, in its response, accepted that it dismissed her because on receiving her letter dated 15 October it became concerned about what it described as her "combative attitude and inability to accept constructive criticism". It argued, however, that the letter contained no "information" for the purposes of s.43B; her allegations, therefore, did not amount to a protected disclosure; and the claim should be struck out because there was no cause of action.

1. A pre-hearing review was listed to determine this question. It took place on 29 April 2013. MFS was represented by a solicitor; Miss Crawford was represented by her partner. In its written and oral submissions MFS also asked the ET to consider the ordering of a deposit.

1. Miss Crawford's case was that her letter contained information which, in her reasonable belief, tended to show failure by MFS to comply with legal obligations in the following respects: breach of the implied term of trust and confidence; breach of director's statutory duties under the Companies Act 2006; and breach of director's duties under the FSA Code of Conduct. MFS's case was that the letter did not make any protected disclosures and was motivated by a wish on Miss Crawford's behalf to position herself in respect of the negative probationary review meeting and, therefore, was not made in good faith.

1. The Employment Judge referred to the legislation and to Cavendish Munro Professional Risk Management Limited v Geduld [2010] ICR 325. She referred appositely to the power to strike out then contained in rule 18(7)(b) of the 2004 Rules of Procedure and said correctly that the test was a high one - no reasonable prospect of success.

1. The Employment Judge expressed her conclusions quite briefly:

"32. The Tribunal considers that whilst further information of the specific protected disclosures were required, it was satisfied that the Claimant's letter dated 15 October 2012 might amount to a protected disclosure and that this will be a matter of fact for the Tribunal to determine at a full merits hearing.

33. It was not possible for the Tribunal to confirm that the high burden required for strike out was satisfied in this case. The judge could not safely say that there were no reasonable prospects of success in the Claimant's complaint.

34. The Respondent had requested that the Tribunal consider whether a deposit order should be made by virtue of rule 20. The Tribunal was not satisfied that this was a case which merited a deposit order on the basis of little reasonable prospects of success. Whilst the Tribunal acknowledged that this is not such a high burden and gives the Tribunal wider leeway, the Tribunal was not prepared to order a deposit in this case. This case should continue to a full merits hearing where evidence can be heard and the merits of the respective cases established."

1. I should note that there is outstanding before the Employment Tribunal an application on Miss Crawford's behalf to amend the claim form to allege additional protected disclosures. I am not concerned with that today. It is a question for the Employment Tribunal and it is likely that it will require at least a short hearing to determine it.

**Submissions**

1. Mr David Reade QC, representing MFS on appeal, puts forward two submissions. His first submission is that the letter dated 15 October does not contain any information. An allegation is not sufficient, nor is mere expression of grievance or unhappiness. He relies on Cavendish and on [Smith v London Metropolitan University]() [2011] IRLR 884 (see paragraph 88) and [Goode v Marks and Spencer Plc]() [2010] UKEAT/0442/09 (see paragraphs 36 to 38 and 46 as to "information"). Therefore, he submits, the claim should have been struck out. If the meaning to be attached to the letter was a question of law then the Employment Judge erred in law. If the meaning was a mixed question of fact and law or a pure question of fact the Tribunal's conclusion was perverse.

1. In the course of oral submissions, Mr Reade developed his argument by saying that the facts in the letter had to be facts which were capable of satisfying the test that they tended to show a breach of an obligation. It would not suffice merely to convey facts in the letter, unless they met this test. He further submitted that the information on its own would not be sufficient. It had to carry with it explicitly or implicitly an allegation of breach.

1. Mr Breach, representing Miss Crawford today, in his skeleton argument submits that the letter indeed contains information as opposed to mere allegation, containing the degree of specificity required for the Cavendish test. He says the information in particular was in support of her central point that she received no adverse input prior to the last days of her probation service and was then unfairly subjected to serious criticisms, which were unfair or without foundation at a meeting which was poorly planned and executed.

1. Mr Reade's second submission is that the Employment Judge erred in failing to order a deposit and, in particular, that she did not give any or any sufficient reasons for her decision, or reached a perverse decision. Mr Breach accepts that the Employment Judge has effectively not given reasons relating to the deposit order. He points out that there could have been a request to the Employment Tribunal for further reasons, if these were required (see Bansi v Alpha Flight Services.

**Discussion and conclusions**

1. In Cavendish the Appeal Tribunal was concerned with a letter before action written by the Claimant's solicitors which did not descend to any level of detail at all. The Appeal Tribunal said:

"20. That the Employment Rights Act recognises a distinction between "information" and an "allegation" is illustrated by the reference to both of these terms in section 43F. Although that section does not apply directly in the context of this case, nonetheless it is included in the section of the Act with which we are concerned. It is instructive that those two terms are treated differently and can therefore be regarded as having been intended to have different meanings. Further, that "information" and "an allegation" are different is clear from the victimisation provisions in the Sex Discrimination Act 1975 and in the Race Relations Act 1976.

[…]

24. Further, the ordinary meaning of giving "information" is conveying facts. In the course of the hearing before us, a hypothetical was advanced regarding communicating information about the state of a hospital. Communicating "information" would be "The wards have not been cleaned for the past two weeks. Yesterday, sharps were left lying around". Contrasted with that would be a statement that "you are not complying with Health and Safety requirements". In our view this would be an allegation not information.

25. In the employment context, an employee may be dissatisfied, as here, with the way he is being treated. He or his solicitor may complain to the employer that if they are not going to be treated better, they will resign and claim constructive dismissal. Assume that the employer, having received that outline of the employee's position from him or from his solicitor, then dismisses the employee. In our judgment, that dismissal does not follow from any disclosure of information. It follows a statement of the employee's position. In our judgment, that situation would not fall within the scope of the Employment Rights Act section 43.

26. The Tribunal based its conclusion that Mr Geduld was dismissed because, through his solicitor's letter of 4 February 2008, he made a protected disclosure. In our judgment the letter sets out a statement of the position of Mr Geduld. In order to fall within the statutory definition of protected disclosure there must be disclosure of information. In our judgment, the letter of 4 February 2008 does not convey information as contemplated by the legislation let alone disclose information. It is a statement of position quite naturally and properly communicated in the course of negotiations between the parties.

**Disclosure**

27. Even if we are wrong in our conclusion that the Employment Tribunal erred in holding that the letter of 4 February 2008 disclosed information within the meaning of the ERA, we consider whether the Employment Tribunal erred in considering whether the letter of 4 February 2008 amounted to or contained a disclosure within the meaning of the section. The natural meaning of the word "disclose" is to reveal something to someone who does not know it already. However section 43L(3) provides that "disclosure" for the purpose of section 43 has effect so that "bringing information to a person's attention" albeit that he is already aware of it is a disclosure of that information. There would no need for the extended definition of "disclosure" if it were intended by the legislature that "disclosure" should mean no more than "communication".

[…]

29. It is not unusual that solicitors are asked to write on behalf of employees. If an employee is feeling badly treated, the solicitor may write to say that the employer is in breach of contract. There may be allegations over allocation of work or that the employee has been overlooked for a promotion. The solicitor may say, "If the situation does not improve, we have advised our client that he can resign and claim constructive dismissal". In those circumstances, in our judgment, no protected disclosure is made in such a letter. Similarly, if the individual met the employer without the intervention of the solicitor and made the same points, there would be no protected disclosure by that employee to the employer."

1. The distinction drawn in Cavendish is between mere allegation or assertion or statement of position on the one hand and the conveying of facts on the other. It is, however, clear from Cavendish, and in my judgment in any event plain, that the facts conveyed may relate to an omission ("the wards have not been cleaned for the last two weeks") just as they may relate to a positive action ("sharps were left lying around").

1. In my judgment the Employment Judge was plainly entitled to conclude that the letter date 15 October conveyed facts. It is, I think, sufficient if I deal with the question of the probationary period. The letter states that there had been no feedback during the probationary period; no consultation with the person recruited to carry out the HR function; no consultation with the director, just a single meeting at the end of the probation period with no plan of action and no idea how long the probation period would last. The letter backs up the lack of communication with facts about a failure to ask her to prepare a preliminary report on a matter within her remit and by giving details of the only email which was ever sent to her about changes to her role.

1. The letter goes far beyond simply making an allegation or stating a position. It sets out the factual basis of her complaint in considerable detail. It is true that to a significant extent the letter asserts omissions, taking for granted the known fact that MFS has extended her probationary period when it had no contractual right to do so; but as I have said conveying facts for the purposes of the whistle-blowing provisions plainly includes conveying facts about what has not been done as well as about what has been done.

1. Once granted that the letter contains information the question then becomes whether the information is such that in the reasonable belief of the worker making the disclosure it tends to show that MFS has failed, is failing or is likely to fail to comply with any legal obligation to which MFS subject. That is the statutory test and Tribunals are wise to follow the statutory wording.

1. In my judgment the Employment Judge was right not to strike out the claim. Once granted that the letter conveyed "information" the remaining elements of the test required the Tribunal to consider what Miss Crawford believed; why she believed it; and whether it was reasonable for her to believe it. These are matters which require evidence. There could be no sensible striking out on those questions. Her case is that she believed MFS to have committed a serious breach of contract. Whether she believed that and whether she had reasonable grounds for thinking that the facts which she disclosed tended to show it are matters which must be decided at a hearing. I, therefore, conclude that the Employment Judge was plainly correct not to strike out the claim.

1. The Employment Judge has, however, given no significant reason at all for not ordering a deposit. It is true that the solicitor for MFS might have asked for reasons at the time (see Bansi). It is also true that the reasons need not have been at any great length, but some reasons setting out the Employment Judge's conclusion as to why, in her judgment, the case had or had not satisfied the "little prospect of success" test was required. Granted then that the Employment Judge's reasons were deficient in this respect, the question becomes: What should the Employment Appeal Tribunal do?

1. Mr Reade urges me that it is plain beyond argument that the claim had little prospect of success. I reject that submission. It seems to me that the letter sets out material which is capable of supporting a belief that her employers had treated her in a way in which amounted to a breach of contract. On established principles where a point can be decided either way it is not for the Employment Appeal Tribunal to take upon itself the task which Parliament has entrusted to the first instance Employment Tribunal. The matter should therefore be remitted – and that is also a convenient course because, as I have said, there will, in any event, have to be a hearing before the Employment Tribunal to determine the application for permission to amend.

1. As I leave the appeal, I would observe that underlying it is a feature of whistle-blowing law known to both sides. It is the decision of the Appeal Tribunal in Parkins v Sodexho Limited [2002] IRLR 109 to the effect that a complaint by an employee conveying information tending to show a breach of his/her own contract of employment is sufficient to fall within s.43B. This decision followed from the wording of s.43B itself. There is no basis for excluding such a breach from the provision. Until recently, however, it did mean that many cases which ordinary members of the public might not intuitively describe as whistle-blowing would, subject to the controls of reasonable belief, good faith and causation, fall within the grasp of the legislation. Parliament has not repealed Parkins but it has introduced into the legislation an overriding requirement that the worker must have a reasonable belief that the disclosure is made in the public interest: see section 43B(1) as amended by the Enterprise and Regulatory Reform Act 2013, s 17, as from 25 June 2013. That requirement, however, was not in the legislation in October last year and is not applicable to this case.

1. I have a choice as to whether to remit this matter to the same Employment Judge or not. I will not make an order remitting it to the same Employment Judge simply for pragmatic reasons. I do not consider that it requires to be heard by the same judge. There is very little practical advantage in doing so since the Employment Judge on the next occasion will have a significant number of further matters to address. It will, therefore, be remitted on the basis that it may be heard by any Employment Judge. There is no embargo on the same Employment Judge hearing it, nor is there any requirement to do so.