United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 641_93_0610

Appeal No. EAT/641/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 6 October 1994

Before

THE HONOURABLE MR JUSTICE PILL

MR E HAMMOND OBE

MR R H PHIPPS

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S JONES INDUSTRIAL HOLDINGS           APPELLANTS

(1) MR H JARVIS (2) MR K WEBB          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR A BRADLEY

(OF COUNSEL)

Messrs Ford & Warren

Westgate Point

Westgate

Leeds

LS1 2AX

For the Respondents MR K O'DONOVAN

(OF COUNSEL)

Messrs Haden Stretton

Slater Miller

Leicester Buildings

Bridge Street

Walsall

WS1 1EL


 


MR JUSTICE PILL: This is an appeal against the decision of the Industrial Tribunal held at Birmingham on 2 June 1993 whereby the Tribunal decided that both applicants, Mr H Jarvis and Mr K Webb were dismissed for redundancy and that the date of dismissal was 27 July 1992. The decision was unanimous.

The employers, S Jones Industrial Holdings Ltd are in the road haulage business. Both Applicants were lorry drivers in the contracts division and the principal source of business in that division was a contract with Norfolk Line. Concern arose as to the level of that business and discussions were held between the employers and the union convenor. It can be said at once that on the first issue in the case, namely the procedure which was followed by the employers, the claim in relation to the selection for redundancy, the Tribunal found in the employers' favour.

Following the discussions a letter was sent on 19 June 1992 to 14 members of staff in the contracts division including the two applicants. That letter read as follows:

"I regret to have to tell you that Norfolk Line have advised us that our Contract with them has been reduced by a further seven vehicles from 24th July 1992. Therefore your position as an H.G.V. Driver will become redundant from 24th July 1992.

I very much regret the necessity for this action, but unfortunately we have no alternative. This letter gives you five weeks Notice of Redundancy from 19th June 1992.

However, we hope to be able to offer you full time employment from Monday 27th July 1992 through to the first week in September 1992 and hopefully dependant upon the circumstances for a further period. This is due to the holiday situation across the fleet. From Monday 27th July you would be required to undertake driving duties on any Transport Division and Shift.

We do hope that by the end of the period, the Company's circumstances may have changed. Until then I do hope that you understand the necessity for this Notification of Redundancy."

There is no dispute about the effect of that letter. In unequivocal terms it amounted to a redundancy notice and specified the date of the 24 July 1992 as being the date of the termination of the contract. It is further accepted that what is said in the third and fourth paragraphs of the letter is by way of hope and aspiration only.

There was however further correspondence and the Appellant employers submit that the Tribunal have erred in law or alternatively have made a perverse finding having regard to the contents of that correspondence. The Tribunal heard evidence from both applicants. They reached this conclusion:

"8. The next issue we have to consider is whether the applicants were made redundant and whether or not they were entitled to a redundancy payment. We have concluded that the letter of 19 June was unequivocal in its nature and terminated the contracts of the applicants with effect from 24 July 1992. Subsequent correspondence and subsequent actions were not in our judgment sufficient to imply any agreement between the parties that this letter had been varied and therefore we have concluded that the people concerned, namely the applicants, became redundant with effect from 24 July 1992. We are satisfied that under the circumstances the fact that they worked for a few more weeks for the company in an entirely different capacity did not amount to an agreement in any way to vary the content of that letter of 19 June and that what they were doing was undertaking work of a short term nature after their original contract had been terminated."

Mr Webb had commenced employment with the Appellants in October 1987 and Mr Jarvis in January 1988.

We have the particulars of terms and conditions which were supplied to them pursuant to the Employment Protection (Consolidation) Act 1978 and they state that:

"You will be employed as an H.G.V.1 Driver"

The letter of 19 June was followed on 20 July by a further letter from the Appellants to each of the Respondents. It read as follows:

"Re: Notice of Redundancy:

I write with reference to our previous correspondence of 19th June 1992, and confirm that your employment is to be extended during the holiday period. Your redundancy termination date will therefore be projected forward to a date to be advised.

As advised in the previous letter you will be required to undertake driving duties on any Transport Division and Shift.

However, if in the meantime a suitable alternative position becomes available the redundancy notice will be withdrawn."

Under the same heading the Appellants wrote on 6 August 1992 as follows:

"Further to my letter of 20th July 1992 when I informed you that we were able to extend your employment during the Summer Holiday Period I am writing to advise the date when the redundancy will now become effective. The redundancy date will be 4th September 1992, this letter gives you four weeks notice.

It is necessary to write you these formal letters, but you must also be aware that we are hoping to be able to find you a suitable alternative position within the Company. If the employment situation should change before 4th September 1992, I will advise you accordingly."

A further letter was written on 27 August 1992:

"Further to my letters of 19th June, 20th July and 6th August. Although the Company has been obliged to give you formal Notice of Redundancy because of the reduction of vehicles on our Norfolk Line Contract, I have also said that we were hoping to be able to find you suitable alternative employment.

I am very pleased to advise you that we are able to continue your employment with us at least up to Christmas 1992. It is not possible to look beyond then because of the overall uncertainty of the economy. We will however advise you before Christmas if the situation should change.

As I have advised in previous letters you will be required to undertake driving duties on any Transport Division and Shift."

In each case the letter was signed by Mr M E Jones who is the managing director of the Appellant Company.

In a handwritten letter dated 27 August 1992 Mr Webb wrote to the Appellants as follows:

"I hereby notify you that I am accepting my redundancy which you notified me of on 6th August.

Could you please have my statement of redundancy pay prepared before the date on which you are making me redundant - 4th September."

In the event both Applicants left the company, Mr Webb on 1 September and Mr Jarvis on 30 August.

On behalf of the Appellants Mr Bradley submits that the Tribunal, in its conclusion at paragraph 8, made an error of law. That repeats, he submits, the error which had appeared in the summary of the evidence at paragraph 4 of the decision. Mr Bradley draws attention, and rightly so in our view, to the fact that the letters to which we have referred were not specifically mentioned let alone recited in the decision of the Tribunal. It would have been better in our view if they had been dealt with specifically by the Tribunal. However we have no doubt that not only were the letters before the Chairman and members of the Tribunal but they were considered by them. When the Tribunal referred at paragraph 8 to:

"Subsequent correspondence and subsequent actions"

we have no doubt that they had in mind the later correspondence as well as the letter of 19 June and the letter of 27 August to which they referred specifically in their decision.

Mr Bradley makes submissions upon the effect of the letters. He submits that in the letter of 20 July, first paragraph, there is a plain statement that the termination date will be projected forward to a date to be advised. He states that that date became firm in the letter of 6 August where it was stated plainly that the redundancy date would be 4 September 1992. In relation to Mr Webb he makes the further point that there is an acceptance by Mr Webb in the letter which he wrote that the redundancy date was 4 September 1992.

A further point is made that the Tribunal found when considering the third issue in the case, namely whether an offer of suitable alternative employment had been made, that the job offered was very similar to the one that was no longer available. Mr Bradley relies upon that in support of his submission that it was perverse of the Tribunal to find that the terms upon which the Respondents were working during the period after 24 July 1992, were significantly different from the terms under their written contract. The Respondents, he submits, agreed to the revised terms in any event. They did so by continuing to work and, in the case of Mr Webb, by writing the letter to which we have referred. That amounted to an unqualified acceptance that the redundancy date was 4 September. If there had been any doubt about the matter then the employees could have been expected to make clear that they were not accepting the continuation of the existing contract with a fresh termination date on 4 September.

The earlier redundancy notice was not withdrawn but was simply varied by consent as to the date when it would take effect. Mr Bradley referred us to the decision of this Tribunal in Mowlem Northern Ltd v Watson [1990] IRLR 500. That was a case where a notice to terminate an employment on the grounds of redundancy was given but the employee continued to work after that date and the same issue arose as it does in the present case. Sir John Latey, giving the judgment of the Tribunal stated:

"Once an employee has been given notice of redundancy to take effect on a specified date, there is nothing in the statute to preclude the employer and employee from postponing that date by mutual agreement until the happening of an agreed event. The effective date can be brought forward or put back by mutual agreement but the dismissal for redundancy remains."

Mr Bradley relies upon that general principle. By consent a fresh and later date can be substituted.

In that case the Tribunal was not prepared, on appeal, to decide that the employee had lost his right to a redundancy payment. The Tribunal construed what had happened in this way:

"Here was a valued employee whose services the employers were anxious to keep if they could. They were willing to keep him on a temporary basis in the hope that that would develop into something permanent or long-standing; and as a quid pro quo agreed that he could retain his redundancy payment if it did not develop as both he and they hoped. In our view, this was a thoroughly sensible arrangement. It would, we think, be unhappy if the law prevented such or similar arrangements."

Mr Bradley makes the point that in the present case there was no agreement by which the redundancy, to quote the submissions of Counsel in the Mowlem case:

"would lie on the table."

The right of the employee was not preserved in that way.

Mr O'Donovan, who appears for the Respondents in the present case first relies upon the Tribunal's reluctance in Mowlem to find that an employee had lost his right to a redundancy payment in a situation such as this and secondly he refers to the fact that unlike in Mowlem the employers did not make the matter clear and thirdly, that unlike in Mowlem, he says, there was a change in the terms of employment in the present case.

Mr Bradley asked us to consider the fairness of the procedure followed by the employers in the present case. They were acting, he says, not only in their best interests by keeping the Respondents on through the summer but in the interests of the Respondents too. This was a sensible and helpful arrangement and the fact that the effect of it could have been that the Respondents lost their right to a redundancy payment does not affect the fairness of the actions taken by the employers or the meaning which ought to be put upon the correspondence in this case.

Dealing with that point we approach the case on the basis that the employers have indeed acted in good faith. What they did was sensible in the circumstances and there is no suggestion that there was any hidden agenda or any devious drafting in an attempt to trap the Applicants. Mr Bradley accepts that the Respondents were at risk by virtue of the extension of the employment period of losing their right to a redundancy payment but, he says, that is not out of accord with the scheme of the Act because the Act does provide for suitable alternative offers and such an offer was in fact made in the present case. It was an offer which the Tribunal found to be a suitable one. Mr Bradley accepts that the employees were at risk of losing their right if during the extended period a suitable alternative offer was made which it was held they ought to have accepted.

We turn to the construction of the documents and do so against the background that the employers were acting in good faith. We have referred to the terms of the contracts which existed at least until July 1992. In their applications to the Tribunal both Applicants pointed out the difference in the terms of employment which would, they say, follow from the letters to which we have referred and to the fact that they might have to work in capacities other than as HGV 1 drivers.

In our judgment there was ample evidence upon which the Tribunal was entitled to conclude, as they did at paragraph 8, that the work of the Respondents from 24 July 1992 was:

"in an entirely different capacity".

Upon the evidence as to, for example, possible loss of bonus, that was a finding the Tribunal were entitled to make.

Mr Bradley submits that even if that is so the Respondents must be taken upon the correspondence and their continuing to work to have accepted fresh conditions and to have accepted the deferment of the relevant date for the purposes of redundancy. Naturally he lays weight upon the first paragraph of the letter of 20 July to which we have referred. That paragraph must, however, be read in the context of the letter as a whole. We note that both in the letter of 20 July 1992 and again in the letter of 27 August 1992 an expression to this effect appears:-

"you would be required to undertake driving duties on any Transport Division and Shift".

On behalf of the Respondents Mr O'Donovan submits that the findings at paragraph 8 of the Tribunal's decision were fully justified upon the evidence. He submits that once an unequivocal notice of redundancy is given as it was admittedly in the letter of 19 June 1992, an equally formal notice of withdrawal must be given if that notice is not to take effect. When read as a whole, the later letters in particular with their references to the altered terms of employment, did not have the affect of withdrawing and did not entitle the employers to withdraw the notice of redundancy or to extend the period before which the redundancy notice would take effect. As to the letter which Mr Webb wrote, on 27 August 1992, Mr O'Donovan submits that it has no relevance in a context in which the terms of employment have been changed.

Mr O'Donovan has submitted that it was not possible, even by consent, to have a continuing contract upon an indefinite basis. It would have been necessary to state in the letter of 20 July a fresh redundancy date if that letter was to have the effect suggested by the Appellant.

In our judgment ordinary contractual principles must govern the issues in the present case. We have already indicated that the finding of the Tribunal that the Respondents were working in an entirely different capacity between 24 July 1992 and their ending their work was amply justified upon the evidence before the Tribunal. Further we have come to the conclusion that the Tribunal were amply justified in stating in their conclusion in the concluding part of paragraph 8 that what the Respondents were doing after 24 July was:

"undertaking work of a short term nature after their original contract had been terminated."

We have considered Mr Webb's letter of 27 August and we agree with Mr O'Donovan's submission that the letter does not amount to an acceptance by Mr Webb that he was continuing to work on the same terms and was accepting that by agreement the date of redundancy had been deferred until 4 September. The Tribunal were entitled to find the proper construction of the contract under which the men were working during the period after 24 July was that it was a fresh contract and the employers' emphasis in the letters to which we have referred upon the greater flexibility which they were seeking upon the termination of the written contract supports that finding. There is no suggestion here that a fresh section 84 notice of particulars were prepared and given to the Respondents.

Even had there not been a change of terms we would have been most reluctant to hold that the letter of 27 August could have deprived Mr Webb of his redundancy payment. The purpose of the letter was to request the employers to prepare a statement of the pay due to him. He clearly thought that he was still entitled to redundancy pay and in our judgment it would be a misuse of that letter to hold it as depriving him of the very pay which he was asking to be quantified. When he stated in his opening words of the letter that:

"I am accepting my redundancy"

in our judgment he was no more than indicating an expression which has become common-place in the field of industrial relations that his employment was ending on 4 September at the direction of his employers. The Industrial Tribunal were entitled to make that the finding they did upon the work after 24 July.

We have been referred to the well-known decision in Piggot Brothers & Co Ltd v Jackson and others [1991] IRLR 309 where Lord Donaldson, Master of the Rolls, stated that this Tribunal should not hold a finding of an Industrial Tribunal to be perverse if it was a permissible option. We have come to the conclusion that not only was the conclusion of the Tribunal (paragraph 8) a permissible option, but it was the same conclusion which we would have reached upon the evidence which is before us.

Ordinary contractual principles must apply in a situation such as this but in our judgment it is important that employers who have issued a redundancy notice giving a date of termination and who later wish to extend the contract (a practice which may in certain industries and in certain circumstances perform a useful function from the point of view of both the employers and employees) should make it plain to the employees what is proposed. The importance is that, subject to issues of suitable alternative employment, the right of an employee to a redundancy payment may disappear if he continues to work after the specific date and it can be shown that he has agreed to the continuation of his exisiting contract.

In our judgment in this case the employers have not made it plain what they now say they were seeking to do. We impute no bad faith. We do not think this was an attempt at the time to lessen rights by way of redundancy payment. They now argue that that is the effect of what happened. If such an argument is to be successful in our view it must be made plain to the employee that the term of the contract is sought to be extended and it must be clear that he has agreed. That is all the more important in a case like the present where not only has the date changed but upon the Tribunal's finding the terms of the contract are claimed to have changed.

Unless employers make it very clear to employees that the contract is being extended and unless it is clear that the employees have agreed to that, employers may find it difficult to avoid a finding of an Industrial Tribunal such as the finding in the present case. However, we underline that we are in no way stating that anything other than ordinary contractual principles should govern a situation such as the present.

For the reasons we have given this appeal will be dismissed.