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Cite as: [1993] UKEAT 164_92_1401

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BAILII case number: [1993] UKEAT 164_92_1401

Appeal No. EAT/164/92

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 14 January 1993

Judgment delivered on 11 February 1993

Before

HIS HONOUR JUDGE J HICKS QC

MR J P M BELL CBE

MRS T MARSLAND

MR B J GANT APPELLANT

MIDDLESBROUGH FOOTBALL & ATHLETIC CO (1986) LTD RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellant Mr P Stewart

(of Counsel)

Bates Wells & Braithwaite

61 Charterhouse Street

LONDON EC1M 6HA

For the Respondents Mr C Jeans

(of Counsel)

Punch Robson Gilchrist Smith

35 Albert Road

Middlesborough

Cleveland

TS1 1NU

HIS HONOUR JUDGE J HICKS QC Middlesbrough Football & Athletic Co (1986) Ltd owns the property and controls the activity of the Middlesbrough Professional Football Club. We shall call it "the Club". Mr Brian John Gant was the Club physiotherapist from 4th July 1989 until he was dismissed by the Club in the Summer of 1991. If the Effective Date of Termination as defined by the Employment Protection (Consolidation) Act 1978, of his employment was on or after 3rd July, so that he had been continuously employed for a period of two years, he had a right under section 54 of the Act not to be unfairly dismissed. If the effective date of termination was before 3rd July 1991, then by virtue of section64(1)(a) he had no such right. The Industrial Tribunal, on a preliminary hearing, held that the effective date of termination was 30th June 1991 and they accordingly dismissed his application complaining of unfair dismissal without going into the merits. Against that decision he appeals.

The following sections of Part V of the 1978 act are germane:

"54(1) In every employment to which this section applies every employee shall have the right not to be unfairly dismissed by his employer.

(2) This section applies to every employment except insofar as its application is excluded by or under any provision of this Part ..."

"64(1) Section 54 does not apply to the dismissal of an employee from any employment if the employee -

(a) was not continuously employed for a period of not less than two years ending with the effective date of termination ..."

"55(4) In this Part "the effective date of termination" -

(a) in relation to an employee whose contract of employment is terminated by notice, whether given by his employer or by the employee, means the date on which that notice expires;

(b) in relation to an employee whose contract of employment is terminated without notice, means the date on which the termination takes effect ..."

(5) Where the contract of employment is terminated by the employer under notice required by section 49 to be given by an employer would, if duly given on the material date, expire on a date later than the effective date of termination (as defined by subsection (4)) then, for the purposes of sections ...64(1) ... the later date shall be treated as the effective date of termination in relation to the dismissal".

(7) "material date" means -

(a) in subsection (5), the date when notice of termination was given by the employer or (where no notice was given) the date when the contract of employment was terminated by the employer; ..."

"49(1) The notice required to be given by an employer to terminate the contract of employment of a person who has been continuously employed for one month or more -

(a) shall be not less than one week's notice if his period of continuous employment is less than 2 years; ..."

The relevant facts, as found by the Industrial Tribunal, were as follows:

"4 ...

(b) On 6 June 1991 Mr Lamb [the employers' Chief Executive] sent a letter to the applicant in the following terms:

"Dear Brian

Further to your recent discussions with Colin Todd, I confirm that we are terminating your employment on 30 June 1991.

In accordance with your Contract of Employment, we will on that date pay you one month's salary in lieu of notice and all other benefits. All of your normal contractual benefits, including use of the company car, will continue until 30th June 1991.

May I take this opportunity personally to thank you for your efforts on behalf of the Football Club. I have enjoyed the period during which we have worked together and I wish you every success in the future.

Your sincerely

Keith Lamb FCA

Chief Executive"

(c) At the end of June, ie 30 June the applicant was paid his salary for June together with a further month's pay as an ex gratia payment for July.

(d) on 10 June the applicant faxed a reply to Mr Lamb expression deep shock at Mr Lamb's letter and requesting a list of the reasons for the applicant's dismissal.

5 Both parties accept that the intended and actual date of cessation of the applicant's employment was 30 June. ..."

The submissions to the Industrial Tribunal on Mr Gant's behalf are summarised by them as follows:

"7 For the applicant Mr Fleming made the following points.

(a) The terms of the applicant's employment entitled him to one month's notice to terminate his employment.

(b) The actual notice given to the applicant expired on 30 June and, in view of the provisions of section 55(5), the applicant was entitled to add on one week's statutory notice which would make the applicant's EDT 7 July and thus give him two years' qualifying service.

..."

The reasons given by the Tribunal for its decision were as follows:

"9 In our unanimous view the applicant's claim must fail for the following reasons:-

(a) Under section 49(1) as he had less than 2 years' service when dismissed, he was entitled to only one week's notice.

(b) He was in fact given about 3 weeks' notice which is longer than his statutory entitlement as above.

(c) Under his contract of employment he was entitled to one month's notice.

(d) Section 55(5) only extends an employee's service by this statutory minimum laid down in section 49 not by the contractual period of notice. Fox Maintenance Ltd v. Jackson [1978] ICR 110.

(e) In any event section [55(5)] applies only where the statutory notice would expire later than the EDT if given when notice of termination was given by the employer.

(f) Here a week's statutory notice given on 6 June would obviously not have expired later than the EDT of 30 June. Hence section 55(5) was not triggered.

(g) Furthermore, even if it could be argued that the EDT was 6 June and section 55(5) was triggered, this would only extend the applicant's employment to 13 June."

Before us Mr Stewart, for Mr Gant, submitted that the Industrial Tribunal erred in law in two alternative respects:

(1)(a)The letter of 6th June 1991 was not on its true construction a notice terminating the contract of employment within section 55(4)(a), but "warning" of an intention to terminate the employment summarily on 30th June 1991.

(b)Mr Gant's employment was in the event terminated summarily (ie without notice) on 30th June 1991 in accordance with that warning.

(c)30th June 1991 was therefore the "effective date of termination" under (b), not (a), of section 55(4), and the "material date" as defined by section 55(7).

(d)The notice required by section 49 would, if given on the material date (30th June 1991) have expired later than the effective date of termination as defined by section 55(5) (30th June 1991), namely on 7th July 1991, and that later date must therefore by virtue of section 55(5), be treated for the purposes of section 64(1)(a) as the effective date of termination in relation to the dismissal.

(e)Mr Gant had therefore, for the purposes of section 64(1)(a) not less than two years continuous employment ending with the effective date of termination.

(2)Alternatively, if the letter of 6th June 1991 was a notice terminating the contract of employment within section 55(4)(a), then on its true construction the date on which that notice expired was 31st July 1991, which was accordingly the effective date of termination.

It will be apparent that neither of these submissions is recorded in the Industrial Tribunal's Reasons as having been made to them, and that neither is addressed by the Tribunal's own reasoning. Mr Jeans, for the Club, therefore submitted that it was not open to the Appellant to advance them before us. He told us, however, very properly and fairly, that the note made by his instructing solicitors suggested that the issue whether the letter of 6th June 1991 was a notice was adverted to, albeit briefly and without much force, on Mr Gant's behalf when his case before the Industrial Tribunal was opened. Moreover, Mr Stewart points out that this is an issue going to jurisdiction and therefore, he submits, it is incumbent upon us to consider it in any event. Neither party referred us to any authorities on this point, and Mr Jeans made this submission very much as an unemphatic supplement to his main argument meeting Mr Stewart's case on its merits. We shall deal with the appeal on the footing that we have jurisdiction to reach a judgment on the substance of the case put forward on Mr Gant's behalf, and a duty to do so.

Dealing first with Mr Stewart's proposition (1), if (a) and (b) are correct then (c), (d) and (e) plainly follow from the statutory provisions, and Mr Jeans did not contend otherwise. Moreover, although Mr Jeans did contest this, it seems clear to us that if Mr Stewart is right in (a) as to the construction of the letter then it must be the case that there was a summary dismissal on 30th June 1991 as submitted in (b), in view of the Tribunal's findings that on that date Mr Gant received not only his June salary but "a further month's pay" and that both parties accepted that "the intended and actual date of cessation of the applicant's employment was 30 June".

It follows that proposition (1) stands or falls on (a): whether the letter of 6th June 1991 was on its true construction a notice terminating the contract of employment on 30th June 1991 or merely warning of an intention to terminate it summarily on that date.

In our view it was plainly a notice of termination, expiring on 30th June 1991. That is the ordinary and natural meaning of the first paragraph. Had a mere warning been intended one would have expected an expression such as, "We contemplate terminating" or "We intend to terminate", or perhaps "We shall terminate", although the second of these, and more strongly the third, might well amount to a notice in suitable contexts.

That construction is supported by the third paragraph. Although by its more informal nature it should not be given excessive weight it is nevertheless not entirely without significance, and it plainly treats the decision to terminate as final, whereas a mere warning would leave it open to the employers to change their mind, or at least to do so unless the employee was entitled to treat the letter as an anticipatory breach of contract and until he accepted it as terminating the contract.

Mr Stewart relies principally upon the second paragraph as pointing in the opposite direction. He submits that the promise of "one month's salary in lieu of notice and all other benefits" to be paid on 30th June 1991, when read in conjunction with the words "in accordance with your contract of employment", points to a summary dismissal on 30th June 1991, because only on a summary dismissal on that date would a full month's salary be payable in lieu of notice. In particular dismissal on 30th June 1991 by a short notice dated 6th June 1991 would have entitled Mr Gant only to salary in lieu of notice from 30th June 1991 to 6th July 1991, one month after the service of the notice.

We do not find that argument persuasive, for a number of reasons. In the first place the use of language in this paragraph of the letter is plainly not sufficiently precise to justify reliance on such subtle reasoning; money paid "in lieu of notice" is not strictly paid "in accordance with the contract" but in satisfaction of the employee's right to damages for breach of contract.

Secondly, had there been a wrongful summary dismissal on 30th June 1991 it is unlikely that the damages to which the employee would have been entitled would have been limited to his bare salary for the period of the notice to which he would have been entitled. There was also the value of any other lost benefits to which he would have been entitled, such as the use of the company car.

Thirdly, an employer is no more limited to paying the minimum sum recoverable as payment in lieu of notice than to giving the minimum period of notice itself.

Fourthly, there is a consistent line of authorities to the effect that where there is a conflict between a date of termination actually specified in a document and an earlier one to be inferred from a reference in the same document to payment in lieu of notice, or even a later one to be inferred from the use of the word "salary", the date specified prevails (Adams v. GKN Sankey Ltd [1980] IRLR 416, Chapman v. Letheby & Christopher [1981] IRLR 440, Dedman v. British Building and Engineering Appliances Ltd [1974] ICR 53. The present case is not on all fours in relation to this limb of the Appellant's submission, since Mr Stewart seeks at this stage to use the reference to payment in lieu of notice only negatively, to attack the apparent certainty of the letter as a notice of termination on a fixed date, not positively (as in the reported cases) to establish some other date, but we accept that those authorities show that it is unsafe to put much weight, for the purpose of construing a document of this kind, on references to payments "in lieu of notice", the more so as in the experience of the industrial members of this Tribunal the expression is not uncommonly used in industrial contexts in senses other than the strict one assumed in the authorities.

Mr Stewart referred us to Dixon v. Stenor Ltd [1973] ICR 157. In that case Sir John Donaldson, giving the judgment of the National Industrial Relations Court, summarised "four basic situations which we meet commonly", and said that the third "which has arisen in the present case, is where the employee is told without or without warning that he would be dismissed with money in lieu of notice". Mr Stewart says that the Industrial Tribunal here erred in not asking themselves whether this was such a "warning", rather than a notice. That submission fails for two reasons. The first is that since the true construction of the letter of 6th June 1991 is a matter of law the only question on appeal is whether the Industrial Tribunal's construction was correct, which we have held it was. It matters not that in the course of reaching that correct construction they did not expressly advert to other possible constructions, especially to one which was advanced, at best, in the faintest of terms. The second is that on the facts of Dixon v. Stenor as reported, it is quite impossible to deduce whether or not Sir John Donaldson intended to draw any distinction, of the kind argued for here, between a "warning" and a "notice", or to make any finding that the communication in that case was not a notice. In that case the employment had commenced on 25th June 1970, the employee was entitled to two weeks' contractual notice, and he had been told on 5th June 1972 that he was to be dismissed, that he would finish work on 8th June 1972 and that he would be given two weeks' pay from that date in lieu of notice. The statutory entitlement period was then 104 weeks, not two years, and would therefore have expired on 21st June 1972, more than one week after 8th June 1972. The present point would not therefore have arisen on the facts, even had the Industrial Relations Act 1971, as in force at the relevant time, contained the equivalent of section 55(5) of the Employment Protection (Consolidation) Act 1978, which so far as our researches go (we were not addressed on the point) it did not. In holding, as they did, that the effective date of termination was 8th June 1972, the National Industrial Relations Court therefore had no need to make, and did not express, any finding as to whether that was by short "notice" given on 5th June 1972 or by summary dismissal on 8th June 1972 after a mere "warning", in the sense argued for by Mr Stewart. Sir John Donaldson's use of the actual word "warning", in an unreserved judgment, may simply have arisen out of a desire to avoid using the same word ("notice") twice, with different referents, in the same sentence.

That is not to say that we exclude the possibility, in a suitable context, of an employer's evincing, by sufficiently clear words, a present intention to effect a future summary dismissal, rather than to give notice of dismissal, but we have already given our reasons for holding that the Industrial Tribunal did not err in law in construing the letter of 6th June 1991 as a notice rather than a statement of such an intention.

In support of his proposition (1) Mr Stewart finally submitted that the Industrial Tribunal's finding that the payment for July was an ex gratia payment was one of their reasons for construing the letter of 6th June 1991 in the way in which they did, and was insupportable. Even if he is right in both respects, which we do not decide (and it seems unlikely that the Tribunal were much concerned to find additional support for a construction which they did not understand to be seriously challenged), that does not assist him for the reason (already given in relation to the argument based on Dixon v. Stenor) that a correct construction is not to be reversed because it has been arrived at by a mistaken route.

Mr Stewart's alternative argument, proposition (2) above, proceeds on the basis that, contrary to his proposition (1) but as we have found to be the case, the letter of 6th June 1991 was a notice terminating the contract of employment. He is obliged too, to reverse his submissions as to the effect of the words "one month's salary in lieu of notice", since he now needs to argue that the words "in lieu of" should be ignored, and that this money was to be truly "salary" during a period of notice expiring on 31st July 1991.

Faced by the difficulty of this argument, Mr Stewart did not contend with any enthusiasm, if at all, that the construction of the letter was clear in this sense, but rather that there was an ambiguity which should be resolved against the employers, as the authors of the document.

We accept that the principle of construction that words are interpreted most strongly against the person who uses them applies to letters of dismissal, for the reasons given by Browne-Wilkinson J. in Chapman v. Letheby, but in relation to date of termination we find it quite impossible to say that there is any ambiguity in the letter of 6th June 1991. It plainly specifies that date as being 30th June 1991. The authorities cited above, as to the pre-eminence of a date clearly specified, apply even more directly than in relation to proposition (1), since there is now no inconsistency between it and the strict meaning of the words "in lieu of notice". On this point, too, the fact that what Mr Gant was to receive for July was not what he would have been entitled to had his employment continued (in particular because of the withdrawal of the company car) is again relevant, and reinforces the natural meaning of the first paragraph of the letter, as does the third paragraph.

We find the judgment of this Tribunal in Robert Cort & Son Ltd v. Charman [1981] ICR 816, delivered by Browne-Wilkinson J., a helpful summary of the relevance to the effective date of termination of a payment in lieu of notice. After referring to the case of Dedman (supra) he continued,

"...In our view it is a clear decision binding on us that where there is an immediate dismissal with salary in lieu of notice, the effective date of termination is the date of the dismissal, not the expiry of the period in respect of which the salary in lieu is paid ... Every day employees are dismissed summarily with salary in lieu. The uniform practice in such cases has been to follow the Dedman decision and treat the date of dismissal as the effective date of termination whether or not the employee was contractually entitled to notice" (p.819D)

He then went on to deal with the interaction between that "well-settled law" and the "long-standing difference of judicial opinion" as to whether the general rule that repudiation operates to determine a contract only if and when accepted applies to contracts of employment, and concluded that doubts as to the resolution of that difference in relation to the contractual aspects of employment law did not affect the ascertainment of the effective date of termination for the purposes of the relevant statutory remedies, which continued to be governed by the Dedman rule. We agree, and do not consider that that result, which is not vulnerable to direct assault, can be bypassed by resort to an argument advancing a strained construction of a not particularly unusual letter of dismissal.

For these reasons we are unanimously of the view that the appeal must be dismissed.