United Kingdom Employment Appeal Tribunal

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Cite as: [1992] UKEAT 295_90_0912, [1992] UKEAT 295_90_912

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BAILII case number: [1992] UKEAT 295_90_0912

Appeal No. EAT/295/90

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 9th December 1992

Before

THE HONOURABLE MR JUSTICE WOOD MC (PRESIDENT)

MISS A MACKIE OBE

MR P SMITH

DR HIU-MING PANG APPELLANT

GLAXO HOLDINGS PLC RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellant Mr Michael Supperstone QC

Y S Hon & Company

90-98 Shaftesbury Avenue

LONDON W1V 7DH

For the Respondents Mr Richard Nussey

(of Counsel)

Glaxo Holdings Plc

Legal Department

6-12 Clarges Street

LONDON W1Y 8DH

MR JUSTICE WOOD (PRESIDENT) By an Originating Application dated 22nd May 1988 the Appellant, Dr Hiu-Ming Pang, alleges unfair dismissal by the Respondents, Glaxo Holdings Plc (Holdings). He states that his employment started on 1st August 1982 and ended on 25th March 1988. In his particulars, he sets out a history of events to which we will need to refer in detail, and ends -

"...By their employee Mr Murray on 11th January 1988, and by their letter dated 14th January 1988, they gave me notice to terminate that employment. At the date of termination, I was employed under a contract where ordinarily I worked in Great Britain.

I accepted this breach of contract as the effective termination of my employment, and exercised my right to leave within the period of notice."

By its Notice of Appearance Holdings alleged that Dr Pang's employment started on 18th January 1988 and ended on 25th March 1988. This clearly indicates an insufficient qualification period of employment, but it also raises a defence under S.141(2) of the Employment Protection (Consolidation) Act 1978 which excludes jurisdiction of an Industrial Tribunal to consider a complaint where, "under his contract of employment the employee ordinarily works outside Great Britain".

Dr Pang's case first came on for hearing before an Industrial Tribunal sitting at Bedford on 14th July 1988. It decided in Dr Pang's favour as follows -

"The unanimous decision of the Tribunal is that it has jurisdiction to hear Dr Pang's complaint under S.54 of the Employment Protection (Consolidation) Act 1978, and Dr Pang is not excluded therefrom by either S.141(2) or S.64 (1)."

"Holdings" appealed. A division of this Appeal Tribunal presided over by Knox J. heard that appeal on 26th October 1989. The appeal was allowed and an order was made which included the following:-

"THE TRIBUNAL ORDERS that the appeal be allowed and the matter be remitted to a differently constituted Industrial Tribunal on the question of jurisdiction in the light of the judgment of the Employment Appeal Tribunal

THE TRIBUNAL FURTHER ORDERS that no other evidence need be before the Industrial Tribunal OTHER THAN those documents that were before the Employment Appeal Tribunal today

THE TRIBUNAL FURTHER ORDERS that leave be given to parties to make submissions to the Industrial Tribunal"

The case was reheard by another Tribunal sitting at Bedford on 10th March 1990 which decided that it did not have jurisdiction. Dr Pang now appeals.

The second Industrial Tribunal were acting in accordance with the order of 26th October 1989 and the guidance given by the judgment of that date.

The outline facts show that Dr Pang, who is a pharmacist, was employed by Glaxo Operations UK Ltd (Operations) from 9th October 1982. His initial location was at Castle Barnard but he moved and, although there was no mobility clause in that contract, there is no doubt that under it Dr Pang was ordinarily working in Great Britain. There were provisions for a pension scheme and there was a provision that his employment by the Company might be subject to medical review. Subsequently he received promotion and the two letters dealing with that were from Glaxo Pharmaceuticals Ltd (Pharmaceuticals). By a letter of 28th April 1987 written by "Holdings" Dr Pang was offered employment in Hong Kong and subsequently moved there with his family to take up that appointment.

By a letter from Glaxo Hong Kong Ltd (Hong Kong) of 20th November 1987, Dr Pang was suspended from duties with immediate effect and was directed to vacate his office immediately. This was followed by a letter of 4th December 1987, to which we will need to refer in detail, which purported to terminate both the "Hong Kong" contract of employment and the "Holdings" contract of employment. Towards the end of December 1987 Dr Pang returned to this country with his family and thereafter worked in Great Britain for a short period before 25th March 1988. Although this was the effective date of termination alleged in the originating application, it seems in fact to have been 8th April 1988 as indicated by Dr Pang in his letter of 14th March 1988. At this stage nothing turns on this.

Against this background and without examining the facts in greater detail, it is therefore important to look at the judgment. In broad terms this Appeal Tribunal took the view that the first Tribunal had concentrated over much on the issue of continuity of employment and had not sufficiently addressed its mind to the issue under S.141(2) - at least not in the correct sequence.

We have found this a difficult case and although it might seem rather illogical, it is in our view easier to analyse and understand the problems if we examine the judgment of this Tribunal before reciting and considering the facts in detail.

The first Industrial Tribunal decided that there were two contracts of employment which co-existed. It said -

"All these provisions are consistent with the continuance of Dr Pang's contract of employment with Glaxo Operations UK Ltd and inconsistent with its termination. Mrs Oliver (she was appearing for Glaxo Holdings at that stage) contends that it is not possible for an employee to have more than one contract of employment, with different parties. However we do not think that, in any event, anybody can go further than to say that this ought not to happen. We think that in this case it did happen. This may have created some anomalies, but there would be many more anomalies, in all the circumstances if the two contracts of employment, that with Glaxo Operations UK Ltd and with Glaxo Hong Kong Ltd, did not co-exist after April 1987."

In commenting on that this Tribunal say -

"As already indicated, we agree with that conclusion and we think that there are several factors that point in favour of this, including, of course, the one which has been identified by the Industrial Tribunal, namely, that the events in 1988 are scarcely explicable save on the footing that there was residual existence, to put it no higher, in the English Contract of Employment with Glaxo Operations UK Ltd. There are other reasons, too. It seems to us that Dr Pang must have continued to be under continuing obligations to Glaxo Operations UK Ltd, for example, the obligation to his employer not to divulge confidential information, on the footing that he remained employed by them rather than on the footing that he was an ex-employee of theirs. There are significant differences between the two.

The continued existence on the other side of obligations on the Glaxo United Kingdom companies, be it Glaxo Operations UK Ltd or Glaxo Holdings Plc, also is only really consistent with the continuation of a contractual relationship between Dr Pang, on the one hand, and a United Kingdom employer, on the other.

On that analysis, the question resolves itself, in our view, to one whether or not with regard to the Contract of Employment between Dr Pang and the Glaxo United Kingdom companies Section 141(2) applied.

That, in terms, is not a question to which the Industrial Tribunal has addressed its mind. The Industrial Tribunal, as I have indicated, regarded as a solution to the problem the submissions that were made to it regarding continuity of employment, coupled with what happened during 1988 and found a solution down that road. It, therefore, follows in our judgement, that the Industrial Tribunal was, unfortunately, not addressing its mind to the critical question, namely, the applicability or not of Section 141(2) to the contract between Dr Pang and the Glaxo United Kingdom company.

It is, however, important that it should be appreciated what that contract embraced and the critical factor on that score, in our view, is that the contract must be treated as accommodating the Hong Kong contract, which was entered into as a result of the acceptance of the letter of 28 April 1987.

We do not regard this as a case where the contract in the United Kingdom between Dr Pang and Glaxo Operations UK Ltd, in any realistic sense went into abeyance. In our view, the relationship between Dr Pang and the United Kingdom company has to accommodate the relationship between Dr Pang and the Hong Kong company. They were set in simultaneous motion by a consensual arrangement and there is, therefore, no difficulty in holding that by agreement between all relevant parties, both contracts were to subsist and, equally, that, in our view, connotes that the English contract embraces a term under which Dr Pang will comply with his obligations under the Glaxo Hong Kong Ltd contract."

The judgment then refers to a substantial passage from the judgment of Lord Justice Donaldson in Janata Bank v. Ahmed (Qutubuddin) ICR 791 and continues -

"... Moreover, the example that Lord Justice Donaldson gives is an example of a single contract, whereas the present case is, on the view that we have taken in line with the Industrial Tribunal, one of two contracts simultaneously in operation. The Hong Kong contract, of course, it is accepted, is caught by Section 141(2) and no problem arises under it. The English contract, to be construed, in our view, in the way in which I have indicated, as expanded to accommodate compliance with the Hong Kong contract, has to be viewed with a broad brush to determine whether or not Section 141(2) is applicable to it and the Industrial Tribunal will have, first of all, to take the provisions of that contract as its starting point but it will also, in our view, properly have to consider the events that occurred during the history of Dr Pang's employment by Glaxo in one manifestation or another and it will be, in our view, for the Industrial Tribunal, to whom we propose to remit this matter, to form its judgement whether this is or is not a contract of employment under which the employee ordinarily works outside Great Britain." (Our emphasis)

In referring to the phrase "in the way in which I have indicated" it seems clear that Knox J was referring to an earlier passage in his judgment where he says,

"That, in our judgment, inevitably focuses attention on the position that governed Dr Pang at that date when his contract or contracts were prospectively brought to an end by the notices that were served in that single letter of 4th December 1987. It is, in our view, to that contractual situation that one has to consider whether S.141(2) applies and it follows from that analysis, if it is correct, that it is an irrelevance to consider the place and terms of Dr Pang's subsequent activities pursuant to his discussions with Mr Murray and a letter that was written to him on 14th January 1988."

The essential finding therefore seems to us to be that there are two contracts of employment co-existing and that the relevant one for consideration is the "Holdings" contract in the UK. There was no appeal from that decision and we therefore approach the criticism of the decision of the second Industrial Tribunal on the basis of the guidance as we have understood it.

The guidance seems to us quite clear. The first function of the new Tribunal was to construe the UK contract as at 4th December 1987 and to decide what were its terms. Secondly, to apply a broad brush approach to determine the issues under S.141(2) and in order to do so "to consider the events that occurred during the history of Dr Pang's employment by Glaxo in one manifestation or another and to look at all the circumstances during the currency of that contract of employment". The relevant date for the decision on S.141(2) is the 8th April 1988. The date when the contract of employment is terminated.

We turn to the facts in greater detail. By a document dated 17th Februard 1987 "Hong Kong" sent a circular advertising the proposed appointment of a "Project Manager - China". It is a three page document setting out the qualifications, the scope of duties, responsibilities, performance criteria, and terms of employment including salary and commencement date. This was to be in May or June 1987. Dr Pang was interested and wrote on 2nd March seeking further information. By a letter of 21st April 1987 from the General Manager of "Hong Kong" detailed proposals were put forward and ultimately a letter of 28th April 1987 was sent to Dr Pang containing the terms and conditions of his employment in "Hong Kong". He signed a copy of this letter and returned it. The letter is on "Holdings" writing paper, but it undoubtedly refers to a contract with "Hong Kong". The first paragraph reads -

"Following your recent discussions with Mr Maidment, I set out below terms and conditions on which it is proposed to amend your existing Contract of Employment."

Paragraph 2.9 is drafted as follows -

"Glaxo Group Bonus and Self-financing Productivity Schemes

During the continuance of your overseas service the UK Contract of Employment will be varied to the extent that you will not be eligible to participate in these Schemes."

The last three paragraphs of that letter read -

"Except for the above amendments, the terms and conditions of the Contract of Employment will remain in full force and effect.

In proposing this appointment, the Company intends to maintain your future employment within the Glaxo Group of Companies and every efort will be made on your return to the United Kingdom at the expiry of this overseas appointment to provide you with suitable alternativce employment either in the United Kingdom or overseas.

If you are in agreement with the terms and conditions of appointment detailed in this letter, please sign and return the attached duplicate to me."

The letter is signed by Mr Murray, the Group Personnel Services Manager of "Holdings".

By a letter of 28th April 1987, also from Mr Murray to Dr Pang, he writes -

"Dear Dr Pang

UK Pension Scheme Benefits and Allowances

I write to confirm the arrangements that will be maintained and apply in the United Kingdom during the period of your relocation to Hong Kong on the terms set out in my letter of 28th April 1987.

1.Your membership of the Glaxo Group Pension Scheme will be maintained.

2.Your UK 'notional scheme salary' for purposes of the Glaxo Group Pension Scheme will be £17,250 per annum. This will be reviewed annually on 1st April.

3.Your pension benefit rights in the UK National Insurance Scheme under Class III Contributions will be maintained by Glaxo Holdings plc.

4.Upon taking up the appointment you will be entitled to a Kit Allowance of £350, your wife £250 and each child £70. Payment of the Allowance will be made against receipted bills submitted to the Group Personnel Department, Glaxo Holdings p,c.

If you are in agreement with the terms of this letter please sign and return the attached duplicate to me."

Subsequent to his suspension on 20th November 1987 Dr Pang received a letter of 4th December. That letter in its relevant parts reads as follows -

"Dear Dr Pang

1. I refer to my letter of 20th November 1987 and now give you notice that your employment with Glaxo Hong Kong Limited is hereby terminated.

2. I am further directed to give you notice by Glaxo Holdings plc acting for itself and on behalf of Glaxo Operations UK Limited and all other members of the Glaxo Group of Companies (the Group") that your employment with them is similarly hereby terminated.

3. These terminations have been made for reasons well known to you and take effect immediately.

4. However, without prejudice to this, your dismissal is on the following terms in full and final settlement of all claims you may consider you have against the Group.

(a)You will be paid 3 months' salary at HK$25,000.00 per month by Glaxo Hong Kong Limited and a further 3 months by the Group, at the same rate.

..."

In his original notice of application Dr Pang seemed to have been alleging constructive dismissal in that in paragraph 5 he said:

"I accepted this breach of contract as the effective termination of my employment, and exercised my right to leave within the period of notice."

His notice of application was subsequently amended substantially. It is extensive but we paraphrase its contents. Dr Pang says that after receiving the letter of 4th December he telephoned Dr Brian Tempest, the Regional Director for the Far East on 9th December 1987. He was told by Dr Tempest that he could not interfere with the decision made by Mr Maidment who had written the two letters, but that "Holdings" would find him work in the United Kingdom. This was confirmed by Mr Murray, the Group Personnel Services Manager in the United Kingdom on 14th December by telephone and subsequently a Mr Blythe, the Manager of the Development Division, telephoned him and discussed possible jobs in this country. Dr Pang was told that there were plenty of opportunities and that "Holdings" were under an obligation to take him back. On 21st December he returned to the United Kingdom for about 24 hours and had further discussions about employment here. Three permanent jobs were listed and he was asked to choose. He indicated that he would prefer that of Section Manager in charge of projects at Ware as it would last for 6 to 9 months, and he could then consider more suitable posts within the Group. On 22nd December he returned to "Hong Kong" and on 24th he was informed by Mr Blythe that the Manager at Ware had agreed to the job which had been offered. On 4th January Dr Pang said he was telephoned by Mr Murray and told that all was now agreed, and that he would be transferred back to the United Kingdom and to start work on 11th January 1988 at Ware. He also alleges that during a subsequent telephone conversation he was assured that there was no question of him being dismissed by the Group, and so in reliance of the offer of full time employment he returned with his family to this country on 10th January 1988. Until that date he was paid by "Hong Kong" and from 11th January he was paid by "Holdings" in sterling in England.

No doubt "Holdings" were having some problems finding a permanent employment at such short notice, and by a letter of 14th January Dr Pang was informed that he would be working at Ware from 18th January until 4th June 1988 but that the arrangement could be extended by agreement perhaps up to 30th September 1988.

The terms of the contract of 14th January are important. It was signed as being accepted by Dr Pang:

"Dear Dr Pang

At our meeting on Monday, 11th January, 1988 we discussed the situation arising from the letter to you from Glaxo Hong Kong Limited dated 4th December, 1987 and although some matters remain to be resolved, I set out the essential points in respect of the remaining period of your employment with Glaxo.

1.I understand that you have been paid by Glaxo Hong Kong Limited up to the 10th January 1988. You will be paid in UK at the same rate from the 11th January 1988. This arrangement will continue until 4th March, and from that date until 4th June 1988 you will be paid at the greater of that rate and the rate of your UK salary of £18,971 per annum plus bonus and the allowances appropriate to Ware. All these payments will, of course, be subject to UK tax.

2.You will work at Ware for Glaxo Operations UK Limited from the 18th January 1988 until 4th June 1988. However, the arrangement can be extended by agreement between yourself and Glaxo, perhaps up to 30th September 1988.

3.If you want to leave before 4th June, although we would normally expect you to give us three months notice of your intention, in present circumstances we are prepared to reduce this to one month.

4.During your period of work at Ware you will be an employee of Glaxo Holdings plc but your Conditions of Employment will be those which apply to the employees of Glaxo Operations UK Limited.

5.Arrangements are being made for you to be granted a shorthold tenancy of a furnished at Greenford for a term of not more than 12 months at a rental of £255.93 per month (inclusive of rates and some services).

Please sign and return the copy of this letter to Dr Proudlock at Greenford

Yours sincerely

Signed

P J Murray

Manager - Group Personnel Services

Signed by Dr Pang

15 January 1988"

The next document before us is a letter of 14th March 1988 from Dr Pang to "Holdings". It reads -

"Dear Mr Murray

I refer to your letter of 14 January 1988.

In view of the obvious lack of long term employment prospect with the company, it has become difficult to obtain job satisfaction from my present position in PDD. I will therefore be leaving the company's employ with effect from close of business on Friday 8, April 1988.

I hope you appreciate the fact that I am taking this step in mitigation of the loss that I have suffered as a result of the company's letters since November 1987.

I wish to take this opportunity to express my gratitude to Mr R Blythe and Dr B Tempest for their kind assistance given to me and my family over the last few months.

Best wishes.

Yours sincerely"

The letter of 4th December 1987 is not easy to construe, but on the submissions being made to us it seems that it is common ground that it gave three months' notice to terminate the "Hong Kong" contract of employment and a further 3 months' notice to terminate the "Holdings" contract. This would mean that the "Hong Kong" contract came to an end on 3rd March 1988 and the "Holdings" contract on 3rd June 1988. The latter was therefore brought to an end in April pursuant to the letter of 14th March 1988.

Glaxo's reason for terminating either or both contracts was misconduct. Dr Pang alleged constructive dismissal.

Pursuant to the terms of S.55(3) of the 1978 Act the effective date of termination therefore would seem to be Friday 8th April 1988, that is for the UK contract. The "Hong Kong" contract had been terminated on 3rd March.

Thus, to interpret and apply guidance from the previous decision of this Tribunal the issue before the Industrial Tribunal should have been, whether on 8th April 1988 Dr Pang was employed under contract of employment whereby he was ordinarily working outside Great Britain.

An alternative view is that the letter of 4th December 1987 amounted to an immediate dismissal which was waived so far as the UK contract was concerned by what happened thereafter. It therefore continued.

The conclusions reached by the Industrial Tribunal are to be found in paragraphs 27 and 28 of its Decision:

"27 Now looking at the history of the applicant's employment with the respondents, the reality of the matter is that he was changing fundamentally the basis of his employment with the respondents so that from working in fact inside Great Britain under a contract of employment which clearly involved working inside Great Britain he was taking the more adventuresome path going to Hong Kong to implement project China. His whole future with the respondents changed. His contract with the respondents was varied to take accord of this change. Things did not work out and unfortunately for the applicant his employment came to an end. However from when he went to Hong Kong up to his return after 4 December 1987 he had worked out there under his contract and his contract, that is his contract with the respondents and not just the Hong Kong contract had been varied to take account of implementation of acceptance of a post as Project Manager - China.

28 We accordingly find that he was ordinarily working outside Great Britain under his contract of employment and for that reason we have no jurisdiction to consider his complaint."

This Tribunal directed that a rehearing should take place before a differently constituted Tribunal but that no further evidence should be adduced. Thus the second Industrial Tribunal had to reconsider the issues on the documentation, the guidance from this Tribunal, the decision of the first Industrial Tribunal insofar as it contained findings of fact and they also had the notes of evidence of the learned Chairman of the first Tribunal, which had heard only Dr Pang, and in which Dr Pang supports the allegations made in his amended originating application.

This second Industrial Tribunal had two functions - first, to construe the UK contract of employment as at 4th December 1987; secondly having done so, to look at all the circumstances during the history of employment and up until its termination in April 1988 and decide whether S.141(2) had been satisfied or not.

No criticism is made of the second decision insofar as its first function was concerned. The approach is to be found at paragraph 17:

"17 We have then considered what is the contract of employment? As I have said from the judgment of the Employment Appeal Tribunal, it follows that the contract of employment we are considering is the one with the respondent company, or Glaxo Operations UK Limited; (UK Contract), it matters not, as amended to accommodate (which is the word used in the judgment) the contract with Glaxo Hong Kong Limited (Hong Kong contract)."

...

"22. What we have done is to look at the contract and what happened. If one considers that, the applicant was in a position working clearly inside Great Britain until the events of April 1987. Although the word in the judgment is "accommodation" it is a variation of this contract which occurred then. As a result of this variation he ceased working on a day to day basis inside Great Britain and moved to Hong Kong; thereafter there would be some uncertainty as to what would happen in the future. The immediate future would clearly be working in Hong Kong. What was envisaged as happening after that is uncertain.

23 From the letter of the 28 April ... there is the point in the applicant's favour that if and when that employment came to an end he would return to Great Britain for discussions as to the future. I would refer to the final page of the offer letter where this is clearly set out. However, it is not clear that he would be working thereafter in Great Britain; he might well be working abroad.

24 Furthermore, if one looks at the contract with the respondents, as varied, there is no right of recall to this country. It is not as though it is an overseas posting where at the discretion of the respondents he could be recalled here."

It is in its approach to the application of all the surrounding circumstances and of the history that the decision of the second Tribunal is criticised. The passage upon which it bases its decision is that which was set out above after the citation from Janata Bank. However the direction adopted by the Industrial Tribunal starts with the words "and the Industrial Tribunal will have first of all to take the provisions of that contract as its starting point ...". This second Tribunal omitted the guidance of viewing the situation with a broad brush. It in fact has had regard to the facts and surrounding circumstances up until 4th December 1987 but not that which happened thereafter. In so doing, in our judgment, it did not follow the guidance of this Tribunal. The relevant period must extend to the termination of the employment. In the decision of the first Tribunal two findings of fact had been made which are material. The first is at paragraph 7 where they say:

"Miss Downing submits that Dr Pang is entitled to rely on the period when he worked for the respondents at Ware from 18 January 1988 to 25 March 1988, as a period when he was employed in this country by a United Kingdom company and that, in respect of this period, he is not excluded from the benefit of the Act by section 141(2). ..."

A finding of this submission is contained in paragraph 10 where the first Tribunal says:

"Whatever else can be said about this case, Dr Pang was undoubtedly employed by Glaxo Operations UK Limited or Glaxo Holdings Plc (or both), working at Ware in the United Kingdom, from 18 January 1988 until 25 March 1988. That being so, we agree with Miss Downing that section 141(2) does not apply to this period of employment."

The implication from these findings is that the UK contract during its subsistence was such that under the terms which were found to exist in accommodating the "Hong Kong" contract, Dr Pang was asked to return and did return and was offered and did accept employment in this country.

Thus looking at his employment as a whole Dr Pang has worked pursuant to the terms of a UK contract of employment from 1982 until April 1988. For a period from 1987 until either the 10th January or 5th March 1988 he was working under a "Hong Kong" contract, for which he received accommodation under his UK contract, but on the termination of the "Hong Kong" contract, he once again worked in the United Kingdom under his UK contract which had continued to run.

We are satisfied that in failing to look at the overall history throughout the period, the second Industrial Tribunal erred. We are therefore left with a decision whether or not to remit the matter further for findings of fact. On the last occasion counsel for Glaxo urged this Tribunal not to remit the matter, but to decide it on the facts found. In the present case we feel that sufficient facts have now been found by the first or second Tribunals and are apparent on the documentation and from the notes of evidence, which have not been doubted, for us to be satisfied that the Applicant, Dr Pang, has satisfied S.141(2). That issue is now closed.

We therefore declare that the Industrial Tribunal has jurisdiction and that the matter should proceed on its merits. It occurs to us that the issues which arise could be complicated and now that there are experienced and competent lawyers on both sides, it may very well be advisable that the issues should be properly pleaded and raised in the alternative, as this would undoubtedly assist the Tribunal to apply its mind to each and every combination of fact and issue.

This appeal is allowed and the order made accordingly.