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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Nestle UK Ltd v Burke [1994] UKEAT 743_94_1511 (15 November 1994)
URL: http://www.bailii.org/uk/cases/UKEAT/1994/743_94_1511.html
Cite as: [1994] UKEAT 743_94_1511
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At the Tribunal
Judgment delivered on 12 January 1995
HIS HONOUR JUDGE J HULL QC
MR D A C LAMBERT
MR A D SCOTT
JUDGMENT
Revised
APPEARANCES
For the Appellants MR T PITT-PAYNE
(OF COUNSEL)
Messrs Dibb Lutton
Broomhead
117 The Headrow
Leeds LS1 5JX
For the Respondent MR TOM LINDEN
(OF COUNSEL)
Messrs Pattinson & Brewer
30 St James Street
London WC1N 3HA
JUDGE HULL QC: This is an appeal to us by Nestles from a decision of the Industrial Tribunal sitting at Leeds on 24 May 1994 under the Chairmanship of Mr Gould, with two Industrial Members.
Mrs Burke, the Respondent to the appeal, made an Originating Application to the Industrial Tribunal on 1 October 1993. In Box 1, in answer to the request "say what type of complaint you want the Tribunal to decide" she wrote "Redundancy Payment" and in Box 10 she gave a short description of the dispute between herself and Nestles, of which we give an account below. She had been employed by Nestles for nearly 20 years, beginning on 29 August 1973 and ending on 9 July 1993, when she accepted voluntary redundancy. She was employed for 25 hours a week as a confectionery wrapping machinist.
Nestles have an exceptionally favourable agreement for redundancy severance payments, which is part of a collective agreement between them and three recognised trade unions dated 24 March 1983, as amended. The relevant provisions are at pages 9 and 10 of the Exhibits Bundle. For the purposes of calculating the severance payment, service under 40 years of age entitles the employee to 3 weeks pay per year of service; service between 40 and 49 years of age to 41/2 weeks pay per year of service; and service from 50 years of age upwards to 5 weeks pay per year of service. There is a maximum number of weeks pay (156) which can be accumulated by this calculation. "A week's pay" is as defined by Schedule 14 to the Employment Protection (Consolidation) Act 1978 except that there shall be no top limit to the amount. When these provisions are compared with those in Schedule 4 to the Act (a maximum of 30 weeks pay) and to Schedule 14, Part II, paragraph 8(1) (A week's pay is not to exceed £205 for the purpose of calculating a redundancy payment) it can be seen that they are indeed very beneficial to Nestles' employees. Paragraph 4(b)(i) of the agreement provides (unnecessarily no doubt in the great majority of cases) that severance payments are in no case to be less than the statutory minimum and that they are inclusive of the statutory payment.
Mrs Burke said that her week's pay at the time of her leaving the Company on 9 July 1993 was £140.65 per week. Nestles said that it was £133.45 per week. This difference arose from matters which are clearly rehearsed in the decision of the Industrial Tribunal. In about 1991, Nestles and the Trade Union negotiated a reduction in working hours for full-time workers from 39 hours to 37 hours per week. It was then arranged that the workers should in fact continue (for operational reasons) to work for 39 hours every week, and that the extra 2 hours per week should be recouped by each worker taking 12 unpaid rest days per year. The underlying concept of the agreement was that workers should be paid as much for working a 37 hour week as they had been for working a 39 hour week. Accordingly, there was an appropriate increase in the hourly rate, by a factor obtained by dividing 39 by 37. The net effect was that full-time workers continued to work for 39 hours per week, earned about 5.3% per hour more while actually working, and in addition enjoyed 12 unpaid rest days. There were arrangements by which a part of the extra pay could be "banked" and drawn during the unpaid rest days.
These arrangements were extended, evidently on a pro rata basis, to workers like Mrs Burke who worked part time. In 1993 she was entitled to be paid £5.6262 per hour and her working week was (nominally) 23.72 hours; although she actually worked 25 hours in a normal week. She, like the full time workers, enjoyed 12 rest days a year.
Nestles said that Mrs Burke's severance payment was to be calculated by taking her week's pay as being the product of £5.6262 and 23.72 hours; Mrs Burke asserted that the proper calculation was to multiply £5.6262 by 25 hours, being the length of her ordinary working week. Since it was agreed that she had amassed 88 weeks as the appropriate multiplier in respect of her 19 years service, the respective contentions led to the severance payment being calculated as £11,743 and £12,377 respectively. Either sum of course very greatly exceeds the maximum sum for a statutory redundancy payment.
Under Schedule 14 to the 1978 Act, which as we have said is expressly referred to by the Agreement, a week's pay is defined by Part II.
Paragraph 3 provides:
"(1) This paragraph and paragraph 4 shall apply if there are normal working hours for an employee when employed under the contract of employment in force on the calculation date.
(2) Subject to paragraph 4, if an employee's remuneration for employment in normal working hours, whether by the hour or week or other period, does not vary with the amount of work done in the period, the amount of a week's pay shall be the amount which is payable by the employer under the contract of employment in force on the calculation date if the employee works throughout his normal working hours in a week."
Paragraph 4 provides:
"(1) This paragraph shall apply if there are normal working hours for an employee when employed under the contract of employment in force on the calculation date, and he is required under that contract to work during those hours on days of the week or at times of the day which differ from week to week or over a longer period so that the remuneration payable for, or apportionable to, any week varies according to the incidence of the said days or times.
(2) The amount of a week's pay shall be the amount of remuneration for the average weekly number of normal working hours (calculated in accordance with sub-paragraph (3)) at the average hourly rate of remuneration (calculated in accordance with sub-paragraph (4))."
The parties' contentions on the merits of their dispute arise from the facts and statutory provisions which we have set out.
Nestles contended that they had paid Mr Burke an amount considerably in excess of her entitlement under the statutory redundancy payment scheme, so that there was no issue for the Industrial Tribunal to decide. The Industrial Tribunal dealt with this contention as follows:
"(a) Section 81 of the Employment Protection (Consolidation) Act 1978 provides that where an employee who has been continuously employed for the requisite period is dismissed by his employer by reason of redundancy then, subject to the following provisions of the Act, the employer shall be liable to pay to him a sum (in the Act referred to as a redundancy payment) calculated in accordance with Schedules 4, 13 and 14.
(b) Section 91 of the Act provides:-
"(1) Any question arising under this part as to the right of an employee to a redundancy payment, or as to the amount of a redundancy payment, shall be referred to and determined by an Industrial Tribunal".
It was contended as a preliminary issue by the respondents that, as the applicant had, in fact, been paid an amount considerably in excess of her entitlement under the statutory redundancy payment scheme, then there was no issue for the tribunal to decide. It was said that it was contrary to the practice of the courts and tribunals to decide matters which were merely of hypothetical or academic interest. Counsel for the respondents contended that the proper course of the applicant was to proceed in the County Court under what was of course the respondents' contractual scheme for redundancy severance payments if she was not satisfied that the amount had been calculated correctly. It was contended on behalf of the applicant that she was not aware, until these proceedings commenced, how her statutory entitlement had been calculated and that she was entitled, under the provisions of Section 91, to refer such a matter for determination by the Industrial Tribunal and, moreover, that Section 102(1) of the Act provided:-
"On making any redundancy payment, otherwise than in pursuance of a decision of a tribunal which specifies the amount of the payment to be made, the employer shall give to the employee a written statement indicating how the amount of the payment has been calculated."
and that as the applicant had not received the details of her statutory payment from the respondents she was entitled to bring the claim.
(c) The tribunal has concluded that it has jurisdiction to decide the issue in this case. In doing so the tribunal has taken into account the provisions of Section 91 of the Act and the provisions of Section 102 bearing in mind that, under this section, the failure of the respondents to supply the requisite information to an employee cannot lead to any proceedings before the tribunal itself but can only result in criminal proceedings, in addition to giving the employee the right to apply in writing for such a statement. We have also had in mind the fact that, under the provisions of Section 96 of the Act, where employers and trade unions representing employees have made agreements relating to payments on termination of the contracts of employment of employees (as was the case here), then the parties to the agreement can apply to the Secretary of State for an exemption order. However, Section 96 goes on to say that the Secretary of State should not make an order unless such agreement indicates the willingness of the parties to submit any questions to an Industrial Tribunal including questions as to the amount of payment under such an agreement. Therefore, had the parties to the agreement in this instant case applied to the Secretary of State for an exemption order and the Secretary of State had been minded to make such an order, it would have been subject to the right of the applicant to make the application which she has now made to the tribunal. We fail to see why an employee who has been covered by such an exemption order should be in any worse [sic] position than an employee where such an agreement has not been approved for an exemption order by the Secretary of State. Moreover, we have in mind in deciding that the tribunal has jurisdiction to hear this case, that the Act imposes a statutory duty on the employer to provide the information which the applicant seeks and, in our view, notwithstanding that she has received far in excess of an amount that any tribunal could award to her under the statutory scheme, she is nonetheless entitled to know what her statutory rights would have been in connection with the redundancy payment. Furthermore, we have been informed that this is a matter which not only affects the applicant but about 170 other employees, and so whilst, as a general rule the Industrial Tribunal should not deal with matters of an academic nature - see the decision of Browne-Wilkinson J in the case of IMI Yorkshire Imperial Limited v Olender & Others - [1982] ICR 69, nonetheless, as a matter of principle involving other employees of the respondents is in issue we regard that as a further ground for us to exercise our jurisdiction in this matter."
The Industrial Tribunal proceeded to reach a conclusion on the merits in which they accepted Mrs Burke's contentions.
As can be seen the Industrial Tribunal dealt not only with the question whether they had jurisdiction, but also with the further question whether they should, in the exercise of their discretion, decide points which were not strictly necessary to the determination of the dispute before them.
Before us, Mr Pitt-Payne for Nestles made his primary contention perfectly plain. Nestles had paid a sum not only larger than Mrs Burke's statutory redundancy payment (however calculated) but larger than any statutory redundancy payment could possibly be. Accordingly, the Industrial Tribunal had no jurisdiction whatever to entertain her complaint. Mrs Burke should sue on her contract in the County Court or the High Court if she wished to persist in her contentions about the calculation of the severance payment.
The Industrial Tribunal is the creature of statute and has no jurisdiction outside that which is given to it by statute. Under Part VI of the Employment Protection (Consolidation) Act 1978 employees are given the right to a redundancy payment.
Section 81(1) provides:
"Where an employee who has been continuously employed for the requisite period -
(a) is dismissed by his employer by reason of redundancy, or
(b) is laid off or kept on short-time to the extent specified in subsection (1) of section 88 and complies with the requirements of that section,
then, subject to the following provisions of this Act, the employer shall be liable to pay to him a sum (in this Act referred to as a "redundancy payment") calculated in accordance with Schedules 4, 13 and 14.
It is clear to us that in Part VI of the Act a "redundancy payment" is a payment falling due under the Act and not a contractual severance payment or any other payment which an employer may be bound to pay, or may choose to pay, on the termination of an employee's employment.
Section 91(1) provides:
"Any question arising under this Part as to the right of an employee to a redundancy payment, or as to the amount of a redundancy payment, shall be referred to and determined by an industrial tribunal.
In our view no question arose on the facts of the present case as to Mrs Burke's rights to a statutory redundancy payment, or as to its amount. She was on any view entitled to such a payment, and was content to receive a contractual severance payment larger than any conceivable statutory redundancy payment could be, to include the amount of such a statutory redundancy payment whatever it might be. It is true that to calculate that contractual severance payment it was necessary to decide on the amount of a week's pay in accordance with Schedule 14 to the Act of 1978, which is a decision which would also have to be made if (hypothetically) Nestles reneged on its contractual obligation and Mrs Burke chose to insist on her statutory rights; as well, no doubt, as seeking payment of the balance as damages, or as a liquidated payment due under the contract. It does not follow that this calculation of a week's pay, for the purposes of determining the amount of the contractual severance payment, was a question "as to the right of [Mrs Burke] to a redundancy payment, or as to the amount of a redundancy payment" within section 91. On the contrary, it was a question as to the amount of a week's pay, albeit calculated in accordance with the provisions of the Act.
It would of course be otherwise if (on very different facts), an employee insisted that the contractual severance payment which he was offered was or might be less than the proper redundancy payment under the Act: in that event a question or questions justiciable under section 91 would clearly arise.
We have not overlooked the provisions of section 102 of the Act: under subsection (1):
"On making any redundancy payment, otherwise than in pursuance of a decision of a tribunal which specifies the amount of the payment to be made, the employer shall give to the employee a written statement indicating how the amount of the payment has been calculated."
It may very well be that that provision applies to the contractual severance payment made to Mrs Burke by Nestles, since it is by agreement inclusive of the statutory payment and it may well be that Nestles are therefore making a redundancy payment within the subsection. The calculation required is the employers' calculation and even if it is alleged to be wrong we do not think that "a question arises as to the amount of the redundancy payment" since ex hypothesi the actual amount paid will not be affected by the correctness or otherwise of the calculations. In the ordinary case, where the employer is purporting to make payment of the statutory redundancy payment, the employee will, if dissatisfied with the amount, apply to the Industrial Tribunal; and the Industrial Tribunal will, in deciding on the correct amount, in effect say whether the employers' calculation is correct or not. That is to be contrasted with the present case.
Mr Linden was allowed by us to amend his Notice of Appeal to contend that by virtue of sections 1(3)(a) -(c) and 11 of the Act, the Industrial Tribunal had jurisdiction to determine Mrs Burke's normal working hours and/or the amount of a week's pay under her contract of employment. Under section 11 an employee may require a reference to determine what particulars ought to have been included or referred to in a statement of employment particulars under section 1.
The short answer to that submission is that no such requirement or reference was made, and we note that an Industrial Tribunal shall not entertain such a reference if the employment has ceased more than 3 months before it is made. Accordingly, it appears to us that the Industrial Tribunal had no jurisdiction under section 11 to consider the question which was raised by the present application, or indeed any other question relating to Mrs Burke's contractual rights to a severance payment, or her statutory redundancy payment.
Accordingly the Industrial Tribunal had in our judgment no jurisdiction to entertain Mrs Burke's application and the appeal is allowed. The application is to be dismissed. The determination by the Industrial Tribunal is therefore, of course, of no effect in law.