United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 311_93_2807

Appeal No. EAT/311/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 28 July 1994

Before

THE HONOURABLE MR JUSTICE MORISON

MR T S BATHO

MRS P TURNER OBE

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(1) MR B W RICHARDSON          APPELLANTS

(2) MR M HARVEY

APPLIED IMAGING INTERNATIONAL LTD          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR I LITTLE (of Counsel)

Jack Thornley & Partners

8 Warrington Street

Ashton-Under-Lyne

OL6 6XP

For the Respondents Mr N CHRONIAS

(Legal Officer)

Engineering Employers Federation

Broadway House

Tothill Street

London SW1H 9NQ


 


MR JUSTICE MORISON: By a unanimous decision of an Industrial Tribunal which was entered in the register on 12 March 1993 the applications brought by Mr Richardson and Mr Harvey for a redundancy payment relating to their dismissal from employment by their employers, Applied Imaging International Limited (who we will call either "the company" or "the employers") were dismissed.

The facts relating to the matter were not really in dispute. Both applicants had been employed by the company at their premises at Warrington. Mr Richardson had been so employed since January 1987 and Mr Harvey from the end of October 1988. Mr Richardson was a "materials controller", Mr Harvey was involved in all aspects of "inspection".

In early 1992 the company advised employees of their intention to close down their operation at Warrington and to open a new operation in the North-East. At that date there was no mobility clause in the contract of employment and the company had no right to require any of their employees to move, and all employees would have been entitled to receive a redundancy payment on termination of their employment even were they offered their old job at the new location, subject to arguments as to suitability and reasonableness of such an offer.

The company wrote to its employees and informed them of the prospective move, offering those who wished to move an opportunity to sign a - I will use the word "new" - contract without implying that that is what it was, or a variation to their existing contract, in which there would be a mobility clause, entitling the company to insist that they move to Sunderland. By doing this we infer that the company was best able to ensure that there would be no disruption to the services they were engaged in because they would know well in advance the numbers of their employees who were willing to move and the numbers of new recruits that would be called for.

The two applicants signed as accepting the new arrangements. It was made clear during discussions that anybody who signed the new contract but later changed his mind would risk losing his right to a redundancy payment. The new offer contained provisions relating to removal expenses, disturbance allowances and such like. Both applicants accepted the new offer and subsequently decided that they did not want to move and, consequently, their employment came to an end at the end of July 1992, which was the date when the company ceased its operations at Warrington.

Shortly before that date, on 7 July 1992, each was written to in the following terms:

"As described in my letter dated 23rd June 1992, your employment will be terminated on 31st July 1992 because of your confirmed intention not to comply with your contract. Your letter of 1st July incorrectly makes reference to redundancy, which does not arise in these circumstances."

The applicants say that the real reason for their dismissal was redundancy; that, in effect, the new arrangement was ineffective because it amounted to an attempt by the employers to contract out of the statutory provisions and that by reason of what had taken place they had been dismissed by reason of redundancy.

For the employers it is maintained that the reason for the dismissal was the employees' refusal to move to Sunderland after they had agreed to do so. There was work for them to do there and the dismissal was not by reason of redundancy but for refusal to comply with a contractual term to which they had expressly agreed not very many months before and it was said that these arrangements could not amount to an attempt to contract out of the provisions of the Employment Protection (Consolidation) Act 1978. Section 81(2) of the Act provides that:

"... an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to -

(a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased, or intends to cease, to carry on that business in the place where the employee was so employed,"

In this case there is no doubt that the employer has ceased to carry on the business for the purposes of which the applicants were employed at Warrington. There is some academic debate as to whether the place:

"where the employee was employed"

is to be decided by reference to his actual location, which one might call the geographical test, or by reference to the place or places where under his contract of employment the employee could be required to work, which one might call the contract test. In many cases it will not make any difference to the end result which of the two tests is to be preferred but if it had arisen for decision in this case, we would have favoured, I think, the geographical test, had such been open to us on the authorities which, it must be said, appear to favour the contract test. But it seems to us that in this case, as in many similar cases, it will make no difference to the result of the appeal which of the two tests is applied.

Subject to the argument that a dismissal had already been effected by the arrangements which took place in early 1992, if the geographical test applied, then the question would be whether the main reason for the dismissal was the closure of the works at Warrington or the employees' refusal to move to Sunderland in accordance with his contract. If the contract test applied, then whether or not the employer purported to invoke the mobility provision as the main reason for the dismissal, there would be no redundancy situation because the employer had not ceased to carry on business at the place where contractually the employee might be required to work. In neither event would the employee be entitled to a redundancy payment pace the argument to which we have already referred and shall now turn to, that the arrangements in 1992 amounted to an ineffective attempt to contract out of the Act.

Section 140(1) of the Act renders void any provision in an agreement, whether a contract of employment or not:

"... in so far as it purports -

(a) to exclude or limit the operation of any provision of this Act".

Wherever there is a "mobility clause" the employee will be at risk of losing the chance to be paid a redundancy payment when the actual place where he works is closed down. But it cannot be the case that every mobility clause is an attempt to or purports to exclude or limit the operation of the redundancy payments provisions in the Act. It is said that what distinguishes this case from the others is that when the agreement was entered into both parties had it in mind that the Warrington operation would move to Sunderland but that seems to us to be neither here nor there. The new contract did not purport - if it were a new contract - to exclude or limit the operation of the Act. On the geographical test, had the clause not been invoked there would have been an entitlement to a redundancy payment. What the contract purported to do was to provide for arrangements for those who had agreed to follow their work to Sunderland and, as a quid pro quo, it committed them to accept such a move whereas under their previous contractual arrangements they had not right to receive removal expenses but, equally, no obligation to move. Accordingly, as it seems to us, the agreement made at the beginning of the year did not fall within section 140(1) of the Act.

We therefore turn to the real argument, which was raised before us by Mr Little with conspicuous skill. What he says is this: that section 81(1) applies in this case because the employees had been dismissed by their employer by reason of redundancy as at 28 February 1992 and he says that the dismissal has come about if one looks at the various exchanges which had taken place between the parties at that time. He says that it was contemplated that there would be redundancies. It was contemplated that that would be the position as from the beginning of August 1992. Therefore, it would be appropriate for the Tribunal to treat what took place at that occasion as a dismissal, which was to take effect as at 31 July 1992.

For our part, we do not agree that that is a sustainable argument on the fact of this case, for the reasons which have been contended for largely by the Legal Officer, who has appeared on behalf of the respondents, Mr Nicholas Chronias, who has also presented his case succinctly and clearly.

The first reason why is because a dismissal to be such has to be reasonably certain in its terms. It has to purport, as it seems to us, to bring a contractual relationship to an end. We fail to see that the discussions which were taking place in 1992 had the necessary degree to certainty. Apart from anything else, it is to be noted, one has regard to E13, paragraph 4.1, that the matter was treated on a contingent basis and if one has regard to the position at E7 it was clear that the final location had not actually by that date been chosen. Now whilst neither of those matters is definitive of the question, it does seem to us that if one is to spell out of what took place at this time a dismissal, one needs firmer and clearer evidence of an objective intention to dismiss than we have here.

Secondly, it seems to us that the Tribunal themselves have effectively put an end to the argument as to whether this was a dismissal. They have said in their decision and we refer without reading it out to paragraph 4(a) and paragraph 7, that what took place in early 1992 was no more than a variation of an existing contract. It seems to us that that is inconsistent with the submission that what happened at this time was a termination of a contract with an offer, in effect, to renew or re-engage as from 1 August 1992.

The argument, therefore, in so far as it hinges on the proposition that there was a dismissal by reason of redundancy, does not get off the ground because in our view there was no dismissal by reason of redundancy as alleged.

The argument continued on the assumption that there was a dismissal at that time. Then it is said that the offer of alternative employment, whether it be treated on acceptance as a renewal or as a re-engagement, was non-compliant with the provisions of section 84 of the Act because the employees should have been, but were not, provided with a trial period and, therefore, they did not disentitle themselves to a redundancy payment by ultimately refusing to move to Sunderland. Had Mr Little persuaded us that the premise on which his argument was founded was correct, I think it likely that we would have followed him through to the conclusion which he invited us to adopt. He was right in our view to say that he can only get to section 84 of the Act in his argument if he has first persuaded us that there was a dismissal by reason of redundancy. In truth, there was no renewal or re-engagement to which section 84 could have applied because there was no dismissal, no termination of the existing contract at that time. The reason for the dismissal was the reason as stated in the letter to which we have referred, that was not by reason of redundancy and it seems to us, in those circumstances, that if the reason for the dismissal was not redundancy, then there was no entitlement to a redundancy payment and, as there was no claim for unfair dismissal, the Tribunal were not required to examine an argument which could have been made that it was unfair to dismiss the employees for refusing to move, despite their agreement to do so, because the agreement did not contain some kind of trial period. That was not an argument which arose for determination and we express no view as to its prospects of success. Accordingly, we, after an entertaining argument, would wish to dismiss this appeal on the grounds that we do not think that the arguments are sustainable in favour of the appellants and we agree with the decision of the Industrial Tribunal.