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Cite as: [1992] UKEAT 396_92_1210

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BAILII case number: [1992] UKEAT 396_92_1210

Appeal No. EAT/396/92

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 12 October 1992

Before

HIS HONOUR JUDGE J HULL QC

MRS M L BOYLE

MISS A P VALE

AVERY LABEL SYSTEMS LTD APPELLANTS

MRS E BANNISTER & OTHERS RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellants MR N YELL

(OF COUNSEL)

Messrs. Wrights

25 The Broadway

Maidenhead

Berks SL6 1LJ

For the Respondents MRS P CHARTERIS

Free Representation Unit

13 Gray's Inn Square

London WC1R 5JP

JUDGE J HULL QC: This is an appeal by Avery Label Systems Ltd, who were the respondents to the application below, against the decision of the Industrial Tribunal sitting at Reading, the hearing being on 9 April 1992, when the four applicants - the respondents to this appeal, Mrs Bannister, Mrs Gibbons, Miss Howard and Mrs James - applied to the Tribunal for compensation on the basis that they had been unfairly dismissed.

The facts are set out in the decision and I will go to those in a moment. The applicants to the Tribunal were all ladies in middle age and had all been employed for substantial periods by the employers who were engaged in producing self-adhesive labels amongst other things, and the four ladies were all employed in the finishing and packaging of those articles produced by the company. As I say, they were all ladies in middle age and, indeed, approaching retirement age and a year before these events arose the company had begun to think in terms of re-organisation, as of course they are fully entitled to do. They had apparently employed Management Consultants with a view to going around the works and they no doubt considered many aspects of the undertaking of the employers with a view to improving its efficiency and whether that was for reducing losses or increasing profits or for other sensible purposes we have not been told. The Tribunal heard something about those matters I think, but not very much.

It was not until a good deal later that these matters began to bear fruit so far as actual results were concerned. There were, apparently, consultations - in the sense of group consultations or lectures - with the management in 1990 and the employees were seen. Apparently, it is said, these four employees did not know about those matters but they must, it is quite clear, in the months which followed on, with the presence of Management Consultants, have known that a new organisation was on the way or that it might be on the way.

It was not until a great deal later that these ladies became aware of what exactly was proposed as far as they were concerned. It was decided in the summer of 1991 that what was wanted so far as the employers was concerned was to abandon the system of working - I will not go into the details. There had been a night shift and a day shift and as part of the re-organisation it was proposed to end the night shift and to alter the arrangements of the day shift on which these ladies had hitherto been employed, working normal hours in the morning through to the afternoon in the usual way. There was a letter sent by the employers to the employees on 30 August 1991, which was referred to at page 10, concerning the changes. It was written by Mr Course, the Plant Manager, who did not give evidence to the Tribunal and it says:

"During previous meetings you have been advised that the company would be reorganising its business in the interests of improving efficiency. You are already aware that we have commenced cellular manufacturing in the factory. This involves a team of operators/packers working together to run three presses. In addition, the team would take responsibility for planning and quality assurance.

As all our operators work rotating shifts, the only possibility for our teams to be effective are for our packers - that, of course, included these four ladies - to be on the same shift pattern as our operators. I know this affects your personal circumstances but in recognition of the shift working, the company pays a 20% premium on basic rates.

I have enclosed a new contract of employment for you to read and sign. Please return this by Friday 13 September 1991. You should also be aware that your continued employment with the company will not be possible if you are unable to be redeployed to the new working hours."

The new working hours were quite different. There were to be two day shifts and the double day shift pattern, as it was called, was that one shift was to be in the morning from 6.30 am to 1.50 pm and then the second shift was to be from 1.45 pm to 9.30 pm. Clearly, on any view, a substantial change as was recognised by the suggestion that there would be a 20% increase in pay. I am informed by the members who sit with me that a figure of the order of 20% would be a normal payment for the inconvenience or hardship of shift working.

The four ladies were not happy. They wrote to Mr Course, who as I have said did not give evidence before the Tribunal, claiming redundancy pay. It was explained to them that there was no question of their being made redundant and they were informed that if they did not attend for work at the hours stated in their new contract the respondent would treat the contract as having been terminated by the applicants. On 19 September another letter was sent to these applicants, this time by Mr Cooper, who is the Manufacturing Manager, and he did give evidence at the Tribunal in due course. He wrote:

"I am writing to confirm my understanding of your position regarding the change to your working hours. You have indicated to us in writing and/or verbally that you are not prepared to accept the change to your times of working. This being the case, I have no alternative but to accept your resignation from the company's employment.

Your last day of working will be Friday 11 October 1991. However, as you have given me one month's notice, your October payment will be calculated to October 13 1991. .........."

They replied:

"...that they had not brought their contracts to an end, that the contract changes were not acceptable" - again there seems to be some confusion - "and that these changes were so significant that their existing jobs had became redundant so that they should receive redundancy pay."

That was the situation and they were, in fact, dismissed about which there is really no dispute.

Concerning other matters there was, as I say, a dearth of evidence concerning exactly who had been present at the earlier meetings the year before and what had passed at those meetings. The employees applied to the Industrial Tribunal on the basis that they had been unfairly dismissed and each of them (except for one of their number, Mrs Bannister, who was taking a holiday) gave evidence and also another lady, Mrs Sutton, who had been working what was called the "twilight shift" in the evenings which was rather shorter than the other shifts and not a full working week. Of the respondents to the application there were Mr Gilmore - the Financial Director, Mr Cooper - the Manufacturing Manager and Mr May - the General Manager.

The main thrust, if not the only thrust, of the respondents' case in answer to the applicants' case was that they were fully entitled, on the basis of the contracts of employment which they had with these ladies, to alter their terms of working so that they must work either the morning shift (the first day shift, which I have mentioned) or the second day shift. They pointed to the contents of those contracts of employment for that contention. We were shown today, in addition to the papers we already had, the contracts of employment which applied, apparently, to each of these ladies. The one I have in my hand is a copy which relates to Mrs Bannister and two clauses in particular were relied on, clause 3 which says:

"Your current hours of employment for day shift working are Monday to Thursday 8.00 am to 4.00 pm, half hour lunch break, and Friday 8.00 am to 1.30 pm, no lunch break."

Mr Yell, who has said all that can be said on behalf of the employers to us, points out very forcefully, as was pointed out to the Tribunal, that this refers to current hours of employment and anybody sensible reading that would say, quite apart from common sense, that that is surely envisaging that the hours may alter from time to time. No sensible person reading that would say that these hours are contractual terms which cannot be varied either by agreement or, if necessary, by the employer unilaterally if he says "I will alter it to 9.00 am until 5.00 pm" or "10.00 am until 6.00 pm".

That was the first matter and then the employers also referred, before the Tribunal, particularly to clause 14.

"All members of staff are expected to be flexible in their working arrangements and you will be expected to carry out duties reasonably requested by your supervisor or manager."

That clearly refers, in our view, primarily to duties in the sense of duties which were actually required but it could also be said, and Mr Yell does say, that that refers to hours as well. He says, repeating the thrust of his submission which was made to the Tribunal, taking it in the round, those contractual provisions entitled the employers to propose, and if necessary to insist on, new hours of work without any breach of contract. He referred us to several cases, one where a night shift was changed to a day shift (Simmonds v Dowty Seals Ltd [1978] IRLR 211) and another case Dal v Orr [1980] IRLR 413, and reminded us about the greater remuneration which was to be paid.

It is quite plain that in any case it will be for the Tribunal to consider the terms of the contract, to consider all the surrounding circumstances and to consider whether, when the employer wishes to introduce changes or, indeed, it may be the other way around and the employees may wish to introduce changes, that was a matter which either party was entitled if necessary to insist on in accordance with the terms of the contract. Or whether what was being suggested, proposed or insisted on - as in this case it plainly was - was something which amounted to a breach of the contract and whether if so it was a breach which went to the root of the contract. That is to say, that it was not some fairly trivial matter but something of which the other party was entitled to say "I simply will not accept this; this goes to the root of the contract; it shows an intention no longer to be bound by the terms of the contract".

That was the issue that was put to the Industrial Tribunal as being the main matter on which the employers relied. They were represented before the Tribunal by a solicitor and that is what he put forward on their behalf. What the Tribunal found in para 19 was that:

"The contracts of employment did not empower the respondent to change the hours in the manner proposed and we find that the proposals represented a breach of the contracts of employment and indeed a fundamental breach entitling the applicants to terminate their contracts without notice."

The way in which Mr Yell put it was this: "If you look at the contracts and construe them fairly this was not such a change, bearing in mind the terms I have referred to, as could be said to be outside the contract at all. The employer was entitled to make these changes. We accept that it is a question of degree, a degree of common sense must be imported into considering this question".

Well, questions of degree are questions of fact. Of course the construction of the contract itself being in writing is a matter of law for the Tribunal but having done that the Tribunal has to consider all the surrounding circumstances, what the parties must be taken to have intended and to apply, of course, their common sense, the industrial members particularly, to consider whether as a matter of degree, as Mr Yell puts it, this goes altogether outside the terms of the contract.

The Tribunal did that. We can find no fault with their reasoning. They found that to change these ladies' hours of work from an ordinary day shift on to one of the two shifts which were proposed was proposing something that represented a breach of contract, that is to say, could not be achieved without a different contract from the one here. It went to the root of the contract; it showed the employers intending no longer to be bound by it and the passages which I have read show quite clearly that it was not a case of the employers putting these matters forward for discussion or intelligent negotiation, or anything of that sort, it was in the nature of an ultimatum - you will not be able to work for the company unless you comply with our demands in this respect.

We can find no fault as a matter of law with what the Tribunal found. We certainly cannot say that it was an unreasonable decision: we think that the Tribunal approached the task of construing these contracts in the correct way and drawing on their knowledge of ordinary good industrial practice, were fully entitled to say that the change was something that was a complete departure from the contracts as they stood. Therefore, we dismiss what was the main, if not the only, thrust of the employers' case in front of the Industrial Tribunal.

Then Mr Yell advanced a point which was not put before the Tribunal at all - it was a completely new point. He said that even if the employers were putting forward and endeavouring to insist on something which they were not entitled to under the contract, nonetheless since it showed, on that way of looking at it, that the employers were mistaken as to the true meaning of the contract, the employees - the four ladies - were wrong to treat it as terminating the contract. They should have said, "Well, we must agree to differ about this and we will seek our remedies but we are not going to treat this as ending our employment."

Now, this as I say is a new point and it might well, had it been raised in front of the Tribunal, have involved a good deal of argument and indeed some evidence which for all we know was not adduced in front of the Tribunal. Certainly, the question of the exact effect of taking that line - exactly what would have happened? - would have had to have been investigated. Were the ladies to continue, so to speak, under protest on the basis of the new hours whilst saying "so far as we are concerned we are perhaps applying to a court for a declaration, perhaps we shall seek damages, at any rate, in one way or another we will test the question but we will not end our employment"?

As far as we can see, the point not having been taken in front of the Tribunal was not considered by the Tribunal and if it had been, on such material as we have before us, we think that it is a point that is ill founded in the circumstances of this case. The employers were not saying that this is what we want to do; we appreciate that you think that we are not entitled to do it; we must reach some sort of way of living together over this until the matter can be decided - perhaps by an arbitrator, perhaps by a court - please do not take this as the final position but can we not agree on some way of going on in the meantime.

One of the cases which was cited by Mr Yell related to a man who was not being paid the amounts which he should have been, or said he was not. Well, he could have perfectly well have gone on and done his work and sued for his pay, perhaps arbitrated for it or sought some other method of resolving that question. We certainly do not accept Mr Yell's proposition that, if there is a genuine dispute as to the construction of a contract, for one party to insist on its own view is not a repudiation. We think that is putting it far too wide and in the circumstances here it is, to us, perfectly obvious that these ladies were being ordered to knuckle under or depart. There was to be no place for them in the company if they would not comply with something which the employers saw as being essential to their employment and in those circumstances we reject that contention which, as we say, was not put forward in the Industrial Tribunal.

Then Mr Yell went to another point which was not taken before the Industrial Tribunal. He said as a point of law, which we entirely accept, that a constructive dismissal is not necessarily unfair. He quoted various authorities to us on that point which we accept. What that led up to was this: Mr Yell said that there was here a substantial reason - I think to do justice to this point we must refer to Section 57 which relates to complaints of unfair dismissal.

"(1)In determining for the purposes of this Part [of the Act] whether the dismissal of an employee was fair or unfair, it shall be for the employer to show-

(a)what was the reason (or, if there was more than one, the principal reason) for the dismissal, and

(b)that it was a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held.

(2)In subsection (1)(b) the reference to a reason falling within this subsection is a reference to a reason which-

(a)related to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do, or

(b)related to the conduct of the employee, or

(c)was that the employee was redundant, or

(d) ..."

Mr Yell said that the facts of this case showed some other substantial reason of a kind which would justify the dismissal of the employees and that other substantial reason, the reason of a substantial kind, was the need of the employers to reorganise their business. It is, as he said, the prerogative of an employer, indeed, it is his duty to organise his business in the way that he thinks best and unless something quite irrational is done the courts must respect that and if that is something that requires eventually, because it cannot be put through without, the dismissal of an employee then that is some other substantial reason justifying the dismissal of the employee.

That was dealt with by the Tribunal itself in the following way. As I say, this was not a point which was taken before them by the solicitor who was appearing for the employers. At para 23 of their decision the Tribunal say:

"The respondent's reasons for wishing to change the contracts were in relation to the reorganisation of the business. In his submission the respondent's solicitor pointed out the need for the respondent to reestablish its competitiveness within the market and that at the end of the day, the management simply had to manage the units in the way in which it was advised by the management consultants. He wondered what more the respondent company could have done. These were the reasons given by the respondent and the respondent did not plead or submit that they constituted "some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held" within the meaning of Section 57 [(1)] (b) of the Employment Protection (Consolidation) Act 1978. Indeed in the notice of appearance, the respondent contended that the dismissal was fair because of the refusal of each of the applicants and/or reluctance of them to change their hours in accordance with their contracts. Having found that the respondent had no right to change the hours in accordance with the contracts, the dismissal could not be fair on that basis. Even if the reason given did fall within the provisions of Section 57 [(1)] (b) nevertheless the Tribunal finds the dismissals to be unfair within the meaning of Section 57 (3) whatever the position under Section 57 (1). We find the dismissals unfair for the following reasons:-

(a) The respondent was in fundamental breach of the contracts of employment and was insisting on its right to vary those contracts. The respondent argued that the case of Mrs Sutton was quite different from the applicants' in that it would have been a fundamental breach of contract for them to have attempted to vary her hours to a higher number by putting her on to the double day shift. However, the respondents did attempt to do that and ended up paying Mrs Sutton compensation. Because of the fundamental breaches of contract which the Tribunal has found, then really the position of the applicants is no different from that of Mrs Sutton. She has received compensation and the applicants have not.

(b) The individual consultation of the applicants was inadequate, particularly in view of their periods of service to the respondent. It was conceded by the respondents that Mr Course's conduct of the matter may have been regrettable and that, with hindsight, things might have been dealt with slightly differently. In this respect, the Tribunal took note of the fact that Mr Course was not at the Tribunal to give evidence. In the Tribunal's view, this inadequate consultation on a one to one basis meant that the interests of the employees were not fully or fairly considered and they were entitled to that. Consultation could have made a difference to what happened. The letters written by the respondent to the applicants on 30 August, 13 September and 19 September were in no way helpful to achieve a proper consultation process. This, together with the very short time given in the letter of 30 August until 13 September, did not fall within the bands of a reasonable response from a reasonable employer particularly where such long service was involved. A reasonable employer would have adopted a fairer and more sympathetic procedure for these applicants.

(c) The respondent's solicitor asked the Tribunal to consider also the cases of Muggeridge & Slade -v- East Anglia Plastics Ltd [1973] IRLR 163 and also that of Simmons -v- Doughty Seals (1978) IRLR 211. Neither of these cases really assisted the Tribunal in their decision which was considered very much on its own facts and in the light of the decision in Western Excavating ECC Ltd -v- Sharpe."

The Act provides that it is for the employer to show what was the reason for the dismissal and if, indeed, it was the case of the employers here that in the alternative to their being entitled to alter the hours of these ladies under their contracts (so that the misconduct of the ladies in refusing to obey the lawful requirement of the employers was justification for dismissal and made such dismissal fair) - if the alternative was put forward, that the need to reorganise was a substantial reason which, in the circumstances, entitled the employers to insist on breaking their contracts - then that was something which it was for the employers to put forward and to establish before the Industrial Tribunal by evidence and argument.

It appears to us to make a nonsense of the idea of adversarial conduct of proceedings in front of the Industrial Tribunal that an employer who has employed a solicitor to represent him and who does not choose to put forward a case should be entitled to come on appeal with different solicitors and with Counsel and say that the Tribunal never considered that matter adequately. We have no doubt that if that matter had been put forward the Tribunal would have considered it, probably in greater detail than they did. Again, Mr Yell very helpfully cited to us authorities including Richmond Precision Engineering v Pearce [1985] IRLR 179 where the EAT held:

"......... The task of weighing the advantages to the employer against the disadvantages to the employee is merely one factor which the Tribunal have to take into account in determining the question in accordance with equity and the substantial merits of the case. It does not follow that because there are disadvantages to the employee, the employer acted unreasonably in treating his refusal to accept the changes as a reason for dismissing him. The test is whether the terms offered are, from the employer's point of view, ones which a reasonable employer could offer in the circumstances."

The Act itself provides in Section 57 (3):

"Where the employer has fulfilled the requirements of subsection (1), then, subject to sections 58 to 62, the determination of the question whether dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether [in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case.]"

Now here the evidence which was considered by the Tribunal was, of course, considered by them in the light of the submissions which were made to them. Three of these ladies had to make substantial journeys by bicycle to their place of work - one of them, I think, had to go as far as three miles there and three miles back. There was clearly the risk of very substantial hardship, indeed, it might be wholly unreasonable to expect these ladies to accept the new hours starting their return journey at 9.30 pm - one of them had to travel through a tunnel to get to her home. The fourth lady had pressing reasons of a social sort relating to her home circumstances for saying that these hours would be very inconvenient to her.

Looking at it from the other point of view the employers, of course, were entitled to make plans for reorganisation and attempt to implement then. The benefit to the employers, which they envisaged, and the arrangements which they could make perhaps for compromising about the demands on these ladies, perhaps for easing the demands and perhaps for having a trial period - all these matters would have been investigated properly if the issues had been raised. We are told (we have not looked at the evidence although the evidence has been obtained at the last moment) that some of these matters were looked at to some extent and that certain suggestions made by at least one of these ladies were rejected out of hand. That may be so: we do not go into that. The fact is that the contention that this was a reason for dismissal was not put forward and accordingly the question of whether the employers acted reasonably in all the circumstances was not investigated either.

Mr Yell says that it is extremely unfortunate that this point was not argued as one would wish and we agree that it was. If it had been properly argued, says Mr Yell, we would have had a formidably strong hand in dealing with it and he says the crux, of course, is whether the employers, in the circumstances, come within Section 57 (3).

The Tribunal dealt with it, it appears to us, impeccably having regard to the way it was left with them. Without the assistance of the employers they considered the matter: and they considered the case of Mrs Sutton. We do not think that it was in any way inappropriate for them to consider the case of Mrs Sutton, it was true that she worked shorter hours but the change for her too would have been a very drastic matter. She was paid compensation - she was offered it and settled for it - these ladies were not. The Tribunal, in considering whether the employers acted fairly in all the circumstances and reasonably, commented on the absence of Mr Course, noted that the employers had conceded that Mr Course's conduct in the matter might have been regrettable and that things might have been dealt with slightly differently and said that the letters written by the employers were in no way helpful.

Now it may very well be, as Mr Yell says, that if the case had been differently conducted the Tribunal would have heard other evidence and might have reached a different conclusion - it might very well be that they might have heard other evidence and that would have reinforced their conclusion in this case. We are not entitled to hear appeals on the basis that the case might have been conducted differently: that other evidence might have been adduced and that the Tribunal might have reached a different conclusion on that evidence. Nor are we entitled to say that if we had been sitting and heard this case, we would perhaps have reached a different conclusion on all the evidence. Those are all matters from which we are excluded. It is our duty to hear appeals on matters of law.

Mr Yell says that justice requires that the parties should have the opportunity to put their cases as they should have been put and not as they were put. That I think, with great respect for we are very much indebted to Mr Yell for his careful argument, does put it as Mr Yell would have it in a nutshell. The failure to put the case as it ought to have been put was the failure of the employers: it was not the failure of any other party. We think that it is contrary to all the ideas of the conduct of proceedings in our Tribunals that a case having been conducted in one way before the Industrial Tribunal should be put in a quite different way before us and it should be said then that if it had been put like that to the Tribunal it seems likely that a different result would have been reached. In any event, it is offensive to one's idea of justice that the case should have been decided on a basis which is no longer persisted in as the principal basis, those matters having been overlooked or perhaps, for excellent reasons, not put before the Tribunal.

Whether it happened through an oversight on the part of the solicitor or whether it was a very sound tactical decision on the part of the solicitor for the employers to concentrate on the point on which he thought that he would be successful, or had his best chance of succeeding, and to leave other matters aside, is not a matter for us. That is the course that was in fact taken and it is not suggested that the employers were in any way misled, whether by the Tribunal or by the applicants; that was the course that they took on advice. It is suggested that the solicitor might have been negligent: we are quite unable to say whether that is so or not but he was a legally qualified gentleman who undertook the burden of advocacy and put the case in the way that it was.

In those circumstances we do not think that it is open to the employers, now the appellants, to say that the case could have been put otherwise and that if it had been put otherwise, and the correct cases had been cited, the Tribunal might have approached or would have approached their task in a different way. A Tribunal or a Court always approaches its task in the light of the submissions made to it and on the evidence which is adduced before it and to say that there is a ground of appeal if it does that properly and impeccably and then the party wishes to raise a quite different case is, in our view, mistaken.

Finally, we turn to the question of quantum. It is pointed out that in three cases the statutory maximum amount was awarded and in the other case very substantial compensation was awarded. It is pointed out that that involves a contention on behalf of the appellants that they would be unemployed for well over a year after the actual hearing.

What happened at the quantum hearing was that the ladies attended and gave evidence to the Tribunal. The employers were represented by a Mr Chatterjee who was not an admitted solicitor but was the legal trainee of the solicitor who had appeared at the first hearing in front of the Industrial Tribunal. The four ladies gave evidence and they were represented by Mr Taylor a representative of the CAB. What resulted was that the Tribunal reached the conclusions, which I have referred to, about the likely period of unemployment and the other factors after having heard the evidence of the ladies.

It is said by Mr Yell that the employers should have been represented by a competent solicitor or Counsel, should have called evidence and if they had done so the Industrial Tribunal would not have been put in the position that it was of relying on its common sense or the experience of the Industrial Members (the non lawyer members). But they, of course, were there for that very purpose of contributing their knowledge and experience to the Tribunal. This is a period of great pressure economically and it is notorious that persons who are in late middle age have the greatest difficulty in obtaining employment; and we think that the Tribunal, fortified as it was by the experience of the industrial members, was entitled to take the view that it did.

Again, we think that it is quite idle to say that had the employers been represented in a particular way, advanced particular arguments, called particular evidence, cross-examined in a particular manner a different result might have followed. That is hypothetically true and can be said after any case where one comes to the conclusion that it might have been handled otherwise. In our view, having the read the decision on that part of the case, we are unable to fault the findings of the Industrial Tribunal on the matter of quantum in the circumstances which the Tribunal itself sets out. So for those reasons we are obliged to dismiss this appeal.