United Kingdom Employment Appeal Tribunal

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Cite as: [1994] UKEAT 655_91_2402

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BAILII case number: [1994] UKEAT 655_91_2402

Appeal No. EAT/655/91

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 24th February 1994

Judgment delivered on 27th May 1994

Before

HIS HONOUR JUDGE B HARGROVE OBE QC

MR W MORRIS

MISS D WHITTINGHAM

ANGLIA REGIONAL CO-OPERATIVE SOCIETY APPELLANTS

MRS W O'DONNELL RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellants MR P SALES

(of Counsel)

Mesrs Croftons

Television House

Mount Street

MANCHESTER M2 5FA

For the Respondent MR B CARR

(of Counsel)

Messrs Rowley Ashworth

247 The Broadway

Wimbledon

LONDON SW17 1SE

HIS HONOUR JUDGE HARGROVE QC On 21st August 1991 the Industrial Tribunal found that the Respondent had been unfairly dismissed. Full Reasons were promulgated on 13th September 1991. The Tribunal found the following facts:

"5.2 Mrs Wendy O'Donnell was born on 22nd March 1947 and was employed as a clerk/cashier at the respondent's non-food store in Beccles from 26th March 1972 until her summary dismissal for misconduct on 23rd January 1992.

5.3 The reason for her dismissal was her refusal to obey a lawful order - namely her refusal to transfer from Beccles to a new store in Lowestoft.

5.4 When the applicant commenced work in 1972 she was employed by the Beccles Working Men's Co-operative Society. There was a mobility clause in her contract of employment; Lowestoft was not included.

5.5 The Beccles Society merged with the Lowestoft Co-operative Society and later with the Diss Co-operative Society. It became the Waveney Co-operative Society. In turn the Waveney Society merged with the Peterborough Society to become the Anglian Society covering what is colloquially called East Anglia.

5.6 Towards the end of 1987 new terms and conditions of employment were sent to all employees. A mobility clause required Mrs O'Donnell to work anywhere within the Waveney area, which was in fact the old Beccles, Lowestoft and Diss area. The employers in evidence, and by submission, contend that the new mobility clause was not a new term of the contract but effectively repeated the old mobility clause covering Beccles, Lowestoft and Diss.

5.7 No discussions were held with employees in general or Mrs O'Donnell in particular. Some employees signed the new terms, others did not. We accept the applicant's evidence that the new terms lay on her desk, that she read them, did not know what to do with them, or indeed why she had received them.

5.8 We find as a fact that the mobility clause relied on by the respondents was not part of the contract of employment of the applicant and that therefore refusal to move to Lowestoft was not and could not be a refusal to obey a lawful order.

5.9 There was a redundancy situation at Beccles; 2 employees were required to do the work of 3. Mrs O'Donnell was chosen by the respondents to move to Lowestoft on the `Last in, first out' principle."

The decision that the employers had failed to show that the order to go to Lowestoft as lawful was set out in the following manner -

"13. But, if one looks at the evidence in this case, it is quite clear that Mrs O'Donnell worked for 18 years in one store in Beccles and that at no stage in her employment had she overtly, or by necessary implication, consented to a widening of her mobility clause from the old Beccles area to include any other area. The employer, it seems to us, fell into the trap of assuming that the mobility clause widened to cover the area of the new employer every time there was an amalgamation. In the absence of express agreement to such a change, or conduct by the employee from which it can reasonably be implied that she has consented, the employer has a difficulty. At the absolute minimum any reasonable employer should ensure that a new mobility clause is brought directly and promptly to the attention of the employee, who is then invited to agree to it.

14. In this case a document was indeed sent to Mrs O'Donnell towards the end of 1987. The reason for issuing the document was the laudable attempt to sort out the contracts of employment of the various employees because of the amalgamations over the years and the lack of proper records. However, the employers either did not take legal advice, or were given the wrong advice and at no stage did they step back from the dispute and ask themselves whether or not the mobility clause applied in her case.

...

17. We then go on to consider whether, in all the circumstances of the case, it was reasonable for the employer to hold that belief. For the reasons indicated above we find that it was not reasonable. The respondents are a large organisation and Mrs O'Donnell was a relatively lowly employee who had worked for 18 years in one store. There had been a number of amalgamations, no proper attempt had been made to keep detailed records of changes, if any, in the employees' conditions of service, and no proper system was introduced for drawing attention to any changes of terms and conditions of employment upon the final amalgamation. It follows therefore that the employers have failed the statutory test under S.57(3) of the Act and that this dismissal was unfair."

On the issue of compensation the Tribunal held that there had been a redundancy situation and she was entitled to 12 weeks' pay by way of compensation. The Tribunal did not take the date (which is now contended for by the Appellants) of 3rd December as the starting date for such calculation. A conclusion was reached however, that the Respondent had unreasonably refused to move to Lowestoft and that the employment there was suitable for her. In those circumstances S.82(5) (incorrectly recorded as S.82(6) in the Reasons) would have applied and this would have exonerated the employers from making any payment. Accordingly, the Tribunal reduced the basic award to Nil. That is the subject of a cross-appeal.

Incorporation of the Mobility Clause

The Appellants contend that the Tribunal was in error in accepting that Mrs O'Donnell's contract had not been varied. It is said that after the 1987 Statement of Terms of Employment she continued working and receiving pay, with the result that such conduct was ample evidence that the contract employment was governed by the terms of the document of 1987. Moreover, the only sensible conclusion which could be drawn was that if either party had been asked what constituted the contract of service, both would have pointed to the 1987 statement. This, so it is contended, is illustrated by the fact that, until the hearing before the Tribunal, it had never been contended that a mobility clause did not form part of her contract. The contention at first assumed was that it was unreasonable for the mobility clause to be operated in the circumstances. Moreover, the Respondents had taken the benefit of a collective agreement and had signed in respect of the receipt of a Staff Handbook which refers to terms and conditions of service.

The Appellants made the further point that the employee had been paid upon the basis of the 1987 contract. Unfortunately, there was no evidence before us or before the Tribunal to indicate that such payments differed from those under the original contract and it would not have been just to admit further evidence on the point at this stage.

We are satisfied that the Tribunal reached the correct decision upon the issue. The correspondence discloses that the Appellants were unsure as to the extent of the clause for which they were contending. This has led them into the position, as the Tribunal found, of assuming that every alteration in the Society's structure resulted in an alteration of the extent of the mobility clause. It seems to have been assumed that because there was no dissent from the 1987 terms therefore there was assent. The danger of such reasoning in contracts of employment as indicated, obiter, in Jones v. Associated Tunnelling Ltd [1981] IRLR 477.

In November 1987 the Respondents signed a receipt for the Staff Handbook. Contained in it was a passage which reads -

"In an organisation with as wide a range of activities as the Society, there are clearly many types of occupations with many variations of the terms and conditions of service. Your personal terms and conditions of service are set out in detail in your statement of terms of employment and where relevant reference may be made to the Wages Agreement."

The Appellants rely on the receipt signed by the Respondent in relation to the Handbook as acceptance of the 1987 document. It is further pointed out that there is no reference to this aspect of the argument in the Tribunal's decision. Bearing in mind that not even actual signature of a document may be enough to indicate assent to a unilateral variation of an existing contract (see Hawker Sidley Power Engineering Ltd v. Rump [1979] IRLR 425), we do not consider that the signature of one document (the receipt) referring to a second document (the Handbook) in order to indicate assent to a third unsigned document is, without more, a sound process of reasoning. Further, although the date of the receipt is close in time to the 1987 document, it is not clear which statement of terms and conditions of service is referred to in the Handbook.

Finally, we reject the contention that the Tribunal reached a perverse view; on the contrary, there was ample evidence upon which they could reach the decision.

The reasonableness of the Appellants' reaction

The second area of objection for the Appellants is that even if there was a dismissal, the reasonableness of the Appellants' conduct has not been properly considered. As set forth above, paragraph 17 of the Reasons contains the expression, "For the reasons indicated above we find that it was not reasonable". Those reasons preceding paragraph 17 refer to a consideration of whether the mobility clause was included in the contract of service by operation of law. The contention is that the Tribunal failed to consider the impact of events and that a consideration of the reasonableness of the behaviour of the Appellants must have included a consideration of all grounds on which a person in the Appellant's situation could reasonably have thought that the mobility clause was incorporated in the contract (see Scottish Midland Co-operative Society v. Cullion [1991] IRLR 261). It is also contended that by referring to "the reasons indicated above", the Tribunal has placed a burden of proof upon the Appellants which in law they do not bear. In short, it said that the Tribunal did not apply the `band of reasonableness test' set forth in British Leyland v. Swift [1981] IRLR 91.

It will be seen that the Tribunal makes specific reference to the statute and we do not read their approach as imposing a burden of proof on the employers in the context of the decision. The reasonableness of the Appellants' reaction was correctly gauged by asking whether or not the employer acted reasonably in treating the reason given as sufficient reason to dismiss. Having asked the right question the Tribunal is entitled to take the view that it was unreasonable for an employer to rely upon a right to transfer which they did not have. The contention that the inefficiency of the Appellants caused them to deceive themselves in addition to placing a false contention before the employee does not appear to us to assist the Appellants in relation to the reasonableness of the employer's response in industrial terms. Again, there is no element of perversity in this aspect of the case.

Calculation of compensation

In relation to the calculation of compensation the Respondent maintains that the contention that such compensation should be calculated for 3rd December 1990 raises a new point which was not taken before the Industrial Tribunal and should not be permitted to be taken before the EAT. We consider that this approach is correct. Moreover, there is no mention of the point in the Notice of Appeal. It would be necessary to consider new evidence in relation to the manner in which the Appellants would have dealt with such a compulsory redundancy. We are guided by the decision in Kumchyk v. Derby City Council [1979] ICR 1116. Even if the point came to be considered it is in our view bound to fail as it is based upon the fallacy that there should be assumption that the Appellants would have operated in a manner which with the benefit of hindsight, would have produced the result which is most advantageous to them.

The cross-appeal - reduction of basic award to zero

The Tribunal held that there had been an unreasonable refusal to accept suitable alternative employment. The statutory test is set forth in S.82(5) which reads as follows -

"(5) If an employer makes an employee such an offer as is referred to in subsection (3) and either

(a) the provision of the contract as renewed, or of the new contract, as to the capacity and place in which he would be employed, and as to the other terms and conditions of his employment, would not differ from the corresponding provisions of the previous contract; or

(b) the first mentioned provision would differ (wholly or in part) from those corresponding provisions, but the offer constitutes an offer of suitable employment in relation to the employee;

and in either case the employee unreasonably refuses that offer, he shall not be entitled to a redundancy payment by reason of his dismissal."

The cross-appeal contends that there are a number of features which made the draconian step taken by the Tribunal inappropriate. The Respondent takes the starting point of the argument the decision in Hindes v. Supersine Ltd [1979] ICR 517 at 522.

"From that dictum, therefore, which we would desire to follow, Mrs Gill derives these requirements: first that when considering 'suitability' one must look at it in an objective way; secondly, when considering the question of reasonableness of a refusal then one must look at the personal reasons that relate to the employee. Her criticism of the way that the industrial tribunal directed their minds to the matters which we have read out and which can be seen in paragraph 7 of their reasons, is that they confused the two issues, and confused, on the question of, suitability when dealing with the matter of pay, the employee's personal feelings about his being prepared to accept the differential of £10 had the job been otherwise suitable to him and had he liked the new job."

Talbot J. continues at p.523 -

"Therefore, there is stated there a clear way of looking at this: is the employment offered substantially equivalent to the employment which has ceased? It is plain that so far as pay is concerned the new job offered to the employee was not substantially equivalent to the job that had come to an end. ..."

It was pointed out that in the instant case the new job would have required a change of location, an increase in the time of going to and from work and that the cost of travel would have extracted £11.70 from the net weekly wage of £94.30.

The Appellants contend that what is being cross-appealed here is really perversity and that in any event on the proper reading of S.82(5)(b) the Tribunal should be looking at the terms of the contract itself and not at peripheral matters, and that on the basis of that the contract was the same as that already in operation save regarding the place of work. However, the Hindes approach is obviously correct that with a two-stage consideration, matters relating to a particular employee are relevant at the second stage. We are not persuaded that the Tribunal failed to apply that second stage to their decision. In spite of valiant attempts by the Respondent's Counsel to extract a point of law, in essence his case must rest on perversity and there is nothing remotely approaching that concept displayed in the decision.

Both the appeal and cross-appeal fail and are therefore dismissed.