Author: Joe

Appeal No. EAT/347/92
	I N T E R N A L  

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 19 October 1992

	Before

	THE HONOURABLE MR JUSTICE KNOX

	MS S R CORBY

	MR J H GALBRAITH CB

MISS J BUTTON (NOW MRS CHAPMAN) & OTHERS	APPELLANTS

(1) CARTWRIGHT BRICE CO LTD	RESPONDENTS
(2) LLOYDS BANK PLC

	Transcript of Proceedings

	JUDGMENT

	PRELIMINARY HEARING 

Revised

	APPEARANCES

For the Appellants	MR A JAMES
Citizens Advice Bureau
1 Walnut Tree Road
Erith
Kent DA8 1RA

	

	MR JUSTICE KNOX:  This is a Preliminary Hearing of an appeal brought by persons, with one exception, ladies, who were employed by Lloyds Bank Plc in their stationery centre at Erith.  The employees were print finishers, which involved doing such things as glueing, stapling and perforating cheque books and paying-in books, and other similar jobs.

	In early 1991 negotiations for the sale of Lloyds Bank's in-house stationery centre had reached an advanced stage with a prospective purchaser Cartwright Brice & Co Ltd, who did indeed eventually purchase.  The Transfer of Undertakings (Protection of Employment) Regulations 1981 ("the Regulations") would have operated in the ordinary course of events on such a sale by Lloyds Bank of that part of their undertaking so as to put Cartwright Brice in the shoes of Lloyds Bank as the employers of these Appellants and indeed the other employees.

	The Industrial Tribunal dealt with this matter at a hearing which was held on 3 and 4 March 1992 and sent their decision on 17 March, finding that in the case of each Applicant the employment was terminated by consent and the Applicant was therefore not dismissed by either of the two Respondents, Cartwright Brice and Lloyds Bank.  They also stated the conclusion that obviously follows from those two, namely that the Industrial Tribunal had no jurisdiction to consider the merits of the applications which were for unfair dismissal.  We have actually got the Originating Application of the first of the Appellants, a lady who is now Mrs Chapman but at the time was a Miss Jane Button, and the complaint that she had was of unfair dismissal.  The others were for the same relief.

	The Industrial Tribunal found as facts that while the matter was in negotiation it was at first thought that all the employees would be transferred to Cartwright Brice by virtue of the Regulations, that Lloyds Bank would make available to Cartwright Brice a sum of money sufficient to cover possible redundancy claims or perhaps inducement payments to the employees whom Cartwright Brice did not want to employ, in effect to compensate for their loss of security of employment.  However, the union of which all the Appellants before us were members, BIFU, and some senior members of staff at the stationery centre, pressed strongly for what the Industrial Tribunal described as:

"the very generous terms of the bank's severance scheme to be made available to all the bank's employees, and the bank agreed that such terms would be offered to all employees".

	It was of course necessary for the employees to fill in forms asking for their severance payments.  It is an essential feature of this case that, as the Industrial Tribunal found, no one disputed that the severance terms were generous.

	There was a meeting on 18 February 1991to which all the staff were called.  There was one of the Appellants before us who was in a slightly different position so far as the meetings and the preliminary negotiations were concerned, that is the one man in the list, a Mr Ware-Lane, but there is no significant difference so far as the result of the appeal is concerned.  His position was different in that he was recovering from illness and was not actually present in the early stages and indeed was slightly differently dealt with.  As I say, the differences are not material for our decision and no separate submissions regarding him were made to us and I propose to ignore those differences for most of the rest of this Judgment.

	To return to the general meeting on 18 February, there were questions and answers not surprisingly, and all the members of staff were aware as a result of this meeting and otherwise, that they would have the opportunity of applying for the bank's severance terms.  There was in fact in one of the speeches by a Mr Roy, Assistant General Manager of Lloyds Bank, a statement in the following terms:

"Anyone who does not seek severance terms from the bank will automatically become employees of Cartwright Brice on the date of transfer.  Mr Brice will explain more about their plans shortly."

Now to anyone who had a detailed and intimate knowledge of the Regulations, that might well have conveyed a message of what the result of such a transfer would be, namely that Cartwright Brice would be exposed to claims for redundancy payment and if they mishandled the situation, unfair dismissal claims, in respect of those persons whom they did not continue to employ who had been employees of Lloyds Bank in the stationery centre.  But there is no doubt that these Appellants were not familiar with the Regulations, which is scarcely surprising and the Industrial Tribunal found, as a fact, that it was common ground that at no time was it explained to members of staff that if they did not accept the severance terms and were automatically transferred to Cartwright Brice, and then Cartwright Brice said "we have no jobs for you" and made the individuals redundant, they would be able to claim a redundancy payment and/or compensation for unfair dismissal against Cartwright Brice.  That, the Industrial Tribunal says, was never made clear.  So the employees were not aware of the precise results of the operation of the Regulations.  

	The employees were all sent forms of application for employment with Cartwright Brice and they expected, because they had been told so, that Cartwright Brice would interview everyone before deciding whether or not to take them on and that again is a finding that the Industrial Tribunal made quoting an answer that was given by Mr O'Sullivan on behalf of Cartwright Brice at the meeting on 18 February. 	There were application forms sent out for employment with Cartwright Brice and all the Appellants with the exception of Mr Ware-Lane, filled those in, so those forms were all back with that exception by 21 February and there were some interviews with personnel officers of the bank.

	There then ensued an event which we feel has probably given rise to these proceedings and that was that the Appellants, with the exception of Mr Ware-Lane, were called in to see the Printing Manager, a Mr Ron Smart on - the Industrial Tribunal says 22 September - that is a very clear misprint for 22 February 1991, and that was a most unfortunate interview because Mr Smart behaved in a most unfortunate way in telling the persons who were called to the interview, which included all the Appellants before us, in an unnecessarily and, we cannot help feeling probably egregiously, cheerful way, that none of them ever had any future with Cartwright Brice and they could go home.  Not unnaturally the ladies to whom this was said were extremely upset and the Industrial Tribunal finds the details of that, particularly in relation to one of them who gave evidence and said that they all felt very humiliated.

	It is also fair to record that apologies were made on behalf of Lloyds Bank for the way in which that meeting was conducted, partly by a Mrs Trowbridge who was a senior officer on the personnel side, the Personnel Manager with responsibility for employee relations at the Head Office of Lloyds Bank, and indeed by Sir Jeremy Morse, the Chairman of the bank.  However, offence was not unnaturally taken at the way in which that interview was conducted but the message came across that the ladies were not going to be employed by Cartwright Brice.  That there were going to be some persons amongst those employed by Lloyds Bank who would not be taken on by Cartwright Brice was something which was appreciated by all those concerned because Cartwright Brice had made it clear that they would require 165 employees, plus perhaps a few more, whereas there were 240 people employed by Lloyds Bank at the stationery centre but it was the manner in which it was done rather than the fact that there were some prospective redundancies that rankled, not surprisingly, with these employees. 

	The second thing that went wrong was that Cartwright Brice fell down on their promise to interview all the employees at the stationery centre and these Applicants were not interviewed and that is a matter that has caused lasting resentment.  Again that is not surprising because an undertaking of that sort is something which, in commercial terms, should obviously be honoured.  

	The rest of the story can be told relatively shortly.  There were election forms sent out to the employees on 13 March which gave them the opportunity of saying whether they did or did not want the voluntary severance terms that were being offered to them by Lloyds Bank and there was in terms of English, a perfectly clear statement in the form which was sent to them to consider signing, in the following terms indicating that they did accept as a voluntary matter that their employment was coming to an end.  The terms are these:

"I accept the 1990 terms under the option selected in full and final settlement of all claims which I may have against the bank (whether under common law, statute or otherwise, including but without limitation a claim for unfair dismissal or redundancy payments), in respect of costs, rights and expenses of whatever nature arising out of my employment or its termination, and agree that my employment with the Bank will end on March 15, 1991."

	All these employees signed that letter and as a result it was found that their employment terminated on March 15 1991.  Needless to say none of them was employed by Cartwright Brice.

	The Industrial Tribunal, having stated the facts with very considerable care and having been referred to authorities both by Mr James who appeared before us and who has obviously carefully researched the subject, and by Mr Lynch who appeared on behalf of the Respondents, Lloyds Bank and Cartwright Brice, came to the conclusion already stated summarily at the outset, that there was indeed a voluntary termination by agreement between the employees and the Bank and that therefore the Regulations did not operate.  The specific findings by the Industrial Tribunal regarding those agreements were that they were:
"(1)	A genuine response by the bank to pressure from the unions and staff that the bank's voluntary severance terms, which were universally agreed to be generous, should be available to all the staff at the stationery centre.

(2)	That these severance terms had been drawn up with no regard to the situation arising from the sale of the stationery centre.  The terms were the result of proper negotiations between the bank and the unions.

(3)	The terms were not an attempt to evade the workings of the Transfer Regulations.

(4)	Having regard to the generosity of the terms; to the fact that advice was freely and extensively available to the applicants (although they do not seem to have sought it); to the fact that the situation and the options available had been repeatedly explained to the applicants in the staff meeting of 18 February, and in sectional and individual meetings; to the fact that all the applicants are grown up people who belong to a major independent union (BIFU) which had done an excellent negotiating job in persuading the bank to make these generous terms available; and lastly, to the fact that the agreements were in writing, we have no hesitation in finding that, although the agreements were entered into by the applicants because they were faced with a choice of circumstances with which they would rather not have been faced, the agreements were genuinely consensual agreements..."

	The case has been argued before us by Mr James, and this appears from the Notice of Appeal before us, on two alternative grounds.  The first ground is put on the basis that the Industrial Tribunal erred in law in deciding that the agreements signed by the Appellants were not void under Regulation 12 of the Regulations.  The other way in which the case is put is this:

In deciding that the respective agreements signed by the appellants constituted termination of their respective employments by consent, the Tribunal -
(a) failed to give sufficient reasons for their decision;
(b) in finding that the options available had been repeatedly explained to the appellants, decided contrary to the evidence;
(c) took into account irrelevant considerations, i.e. the advice available to the appellants, their membership of a trade union, and the agreements being in writing;
(d) failed to take into account a relevant consideration i.e. that the appellants did not understand the legal implications of the agreements.

That last is a reference to the results of the application of the Regulations.

	It will be convenient to deal with those two grounds separately.  First of all Regulation 12 of the Regulations.  This becomes significant if, but only if, the agreements for voluntary retirement were otherwise valid and effective and the way in which the case was put to us was, although the Industrial Tribunal found as a fact, as the extract we have read from their decision shows, that the terms were not an attempt to evade the workings of the Regulations, because the fact of the matter was that the Regulations did not apply if the agreements were effective, that this operated to prevent their taking effect and therefore necessarily was an attempt to avoid their operation and that this would bring Regulation 12 into play.  Regulation 12 provides as follows:

"Any provision of any agreement (whether a contract of employment or not) shall be void in so far as it purports to exclude or limit the operation of Regulation 5, 8 or 10 above or to preclude any person from presenting a complaint to an industrial tribunal under Regulattion 11 above."

	It seems to us impossible to ascribe such an intention to the draftsman of the Regulations because this argument, if successful, proves much too much and would establish that it was not possible for an employer who is transferring a part or the whole of his undertaking, to enter into generous severance terms with his employees without those terms being liable to be found invalid by the operation of that Regulation.  In our view there was no intention in the drafting of the Regulations to make it impossible for employers to enter into such a binding agreement, more especially if it was done with the assistance and by negotiations with the unions concerned because that would run counter to the whole object of the Regulations which we understand to be the protection of the economic rights of the workforce in circumstances where undertakings are transferred from one employer to another.  One of the best ways of protecting those economic interests is to make it possible for the employer who is transferring, to enter into a generous and binding agreement, preferably through the agency of a union where there is a recognised union, with the workforce for voluntary retirement and the argument that is advanced on the basis of Regulation 12 seems to us, if successful, to prevent that from being possible. 

	Accordingly it does not seem to us arguable that Regulation 12, in the context of a specific finding that there was no intention to evade the workings of the Regulations had exactly the undesired effect of making the agreement that was entered into void.  We do not therefore see an arguable case under that head.

	Turning now to the other head of argument namely that this was not a case where on a proper analysis there was a voluntary termination of employment but because the employees did not appreciate the legal consequences of one of the two alternatives that were put up to them, continued employment with Cartwright Brice, and for the other reasons in the Notice of Appeal that we have read extracts from, there was a dismissal rather than a voluntary resignation.

	This seems to us to fail on quite different grounds.  The claim on this basis can only be made against Lloyds Bank because if it is successful, what Lloyds Bank did was to dismiss these employees who, ex hypothesi on that view, did not resign.  In those circumstances there would be a claim for either unfair dismissal or a redundancy payment if it could be said that there was a redundancy situation vis-a-vis Lloyds Bank.  Assuming that there was a claim for unfair dismissal which is an assumption but only an assumption that we do make, there would be an award of both a basic and a compensatory award because no-one could suggest that there had been any question of contributory default as it is compendiously called which can operate to reduce both a basic and a contributory award.

	What however there would be, would be a need for the very significant sums that were paid by Lloyds Bank to all these Appellants before us, to be brought into account against the awards either of basic or compensatory awards.  The relevant provisions are in S.73(9), in relation to the basic award, of the Employment Protection (Consolidation) Act 1978 and S.74(7) of the same Act in relation to the compensatory award.  The critical factor which is not disputed and was not disputed before the Industrial Tribunal, was that these terms that Lloyds Bank offered and which were accepted, were very generous and when this was raised to Mr James during the hearing he made it very clear to us that there had not been any significant consideration of the financial repercussions of a successful claim against Lloyds Bank, but that the object of these Appellants was to vindicate their position and to establish that they had been badly and indeed he said "unjustly treated" by Cartwright Brice.  It should be mentioned in fairness to Lloyds Bank that neither Mr James nor indeed anyone else, has suggested that Lloyds Bank as opposed to Cartwright Brice, has in any way behaved badly in this matter but what has been said and what we accept because the Industrial Tribunal accepted it, was that particularly with regard to the interview conducted by Mr Smart, and in the failure by Cartwright Brice to interview people when they said they would interview them, there has been a shabby treatment of these employees by or on behalf of Cartwright Brice but these are not matters that sound against Lloyds Bank, which is the only Respondent that would be affected by a successful claim that this was a dismissal rather than a voluntary resignation case.

	When one couples that circumstance with the certainty as we see it in financial terms that the generous severance terms would lead to both the basic and compensatory awards being swamped and the fact that it was not suggested that this was a financial exercise in the sense that the Applicants were hoping to receive money rather than vindication, one reaches the position that assuming in favour of these employees, that this case is at the dismissal end of the spectrum of reported authorities rather than at the voluntary resignation end,  nevertheless, there is nothing that a successful appeal would give them.  It would not lead to any finding of financial relief as against Lloyds Bank, nor was that the way in which Mr James put their case.  It might lead to criticism as the Industrial Tribunal did, and as we re-echo, of the way in which Cartwright Brice behaved either at management level or through Mr Smart in dealing with these particular employees but in the context of a claim as this claim would be against the Bank, those criticisms against Cartwright Bright do not seem to us to be legitimate matters that would lead to our properly allowing this appeal to go forward on a claim against the Bank which has not, so far as we can see, behaved badly at any stage in this affair.

	Accordingly for those different reasons it seems to us that no useful purpose would be served by allowing this appeal to go forward to a full hearing, and in particular it would not be of practical utility to go through the very numerous authorities that undoubtedly do exist, on the question - when is, what on the face of it appears to be a voluntary resignation in fact a dismissal - and in those circumstances we dismiss this appeal at this stage.

© Copyright 1992

EAT/347/92

EAT/347/92

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