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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Travell v Secretary Of State For Employment [1994] UKEAT 810_92_2006 (20 June 1994)
URL: http://www.bailii.org/uk/cases/UKEAT/1994/810_92_2006.html
Cite as: [1994] UKEAT 810_92_2006
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At the Tribunal
Before
HIS HONOUR JUDGE D M LEVY QC
MRS M L BOYLE
MR A D SCOTT
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellant MR J D COOK
(Of Counsel)
Messrs Milford & Dormor
Silver Street
Axminster
Devon
EX13 5AJ
For the Respondents MR P A J KILCOYNE
(Of Counsel)
Treasury Solicitor
Queen Anne's Gate
London
SW1
HIS HONOUR JUDGE LEVY QC: The basic facts in this appeal are not really in dispute. The Appellant was employed from February 1983 until 5th February 1992 by David Preston Motoring Limited or its predecessor as a Sales Manager. He continued his service through a change of employer. On 4th July 1992 he made an application to an Industrial Tribunal in respect of redundancy pay due to him. By this his employer was insolvent and the Secretary of State for Employment belatedly entered a Notice of Appearance in September 1992.
The Industrial Tribunal sitting at Exeter on 29th September 1992 heard the Appellant's complaint and communicated their decision to the parties on 6th October 1992. At paragraph 7 of their decision, the Tribunal says:
"The employment ended ultimately on 5 February 1992. He was employed as being in charge of cars sales, both old and new vehicles, and all went well until November 1991, when there were major financial problems.
On 4 December, following negotiations which failed in an attempt to have the business taken over, the stock of new vehicles was taken back by the Volkswagen distributors and within 24 hours, in order to raise the cash, the second-hand vehicles were sold off in the trade as quickly as possible. That meant that after that time there were no cars for sale at all. Nevertheless, Mr Travell continued in employment until 5th February 1992.
There was no written contract of service, but his basic pay was £110 at the end and he received commission on car sales."
We have been handed a schedule of his basic pay and commission at the start of the hearing of this appeal. As one would expect, the commission showed a burst in the month of August and the weeks following it after a new car registration letter comes into existence.
Mr Travell had no written contract of service but his basic pay was, as was found, £110 at the end and the effect was to produce an average of £224 per week prior to possibility of making sales evaporated. When sales were no longer being made Mr Travell remained in his employment to assist the owners to keep the business going. It was envisaged that the Company would be sold as a "going concern". There were a number of interested parties but the Company had no franchise and had difficulties in obtaining one because of its financial position. The Managing Manager had fractured his ankle and basically Mr Travell's job from being Sales Manager came to be a general oddsbody and a chauffeur. Eventually the Company went into liquidation. Mr Travell was made redundant and the Industrial Tribunal had to discuss and decide on the question of the basics of the calculation of his payment. That led them inevitably to Schedule 14 of the Employment Protection (Consolidation) Act 1978 and to that they and we turn. Schedule 14 is divided into two parts, Part 1 deals with "Normal Working Hours". Part II deals with "A Week's Pay". There are subheadings, and the first of these subheadings is "Normal Working Hours". The second subheading is "Employments for which there are no normal working hours". The third subheading "The calculation date". There is a fourth subheading which is not material here, and a fifth subheading "Supplemental".
It is common ground that in this appeal, as below, the "Week's Pay" had to be considered but the amended Notice of Appeal, dated 4th October 1993 says in paragraph 1:
"The Industrial Tribunal erred in law in finding that the Appellants case fell to be considered under paragraph 5 of the 14th Schedule to the Employment Protection (Consolidation) Act 1978. The industrial tribunal should have found that the appellants case fell to be considered under paragraph 6 of the aforementioned Schedule to the said Act."
It will be convenient at this point to first to read paragraphs 3 of the 14th Schedule.
"3(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."
Subparagraph (3), is thought by both Counsel to have applied if there were normal working hours here:
"(3) Subject to paragraph 4, if sub-paragraph (2) does not apply, the amount of a week's pay shall be the amount of remuneration for the number of normal working hours in a week calculated at the average hourly rate of remuneration payable by the employer to the employee in respect of the period of twelve weeks -
(a) where the calculation date is the last day of a week, ending with that week;
(b) in any other case, ending with the last complete week before the calculation date.
(4) References in this paragraph to remuneration varying with the amount of work done include references to remuneration which may include any commission or similar payment which varies in amount."
I think it is common ground that paragraph 4 does not apply. Paragraph 5 reads:
"5(1) For the purpose of paragraphs 3 and 4, [but we can ignore 3] in arriving at the average hourly rate of remuneration only the hours when the employee was working, and only the remuneration payable for, or apportionable to, those hours of work, shall be brought in, and if for any of the twelve weeks mentioned in either of those paragraphs no such remuneration was payable by the employer to the employee, account shall be taken of remuneration in earlier weeks so as to bring the number of weeks of which account is taken up to twelve."
Then I do not think that subparagraph (2) or subparagraph (3) of that paragraph matters. So those are the calculations which have to be made for employment with normal working hours. There was no finding one way or another as to whether Mr Travell worked normal working hours and we think that Mr Cook, is right in submitting that the case fell to be considered under paragraph 6 of the Schedule to the Act rather than subparagraph 5 which was accepted would be subparagraphs 3 and 5.
It is material to add that Mr Cook said whether the calculation was done under paragraphs 3 and 5 or paragraph 6, the answer in both cases so far as Mr Travell was concerned would be the same. However, having accepted that paragraph 1 of the Notice of Appeal is right, we turn to consider paragraph 6 of the 14th Schedule, it reads:
"(1) This paragraph shall apply if there are no normal working hours for an employee when employed under the contract of employment in force on the calculation date.
(2) The amount of a week's pay shall be the amount of the employee's average weekly remuneration in the period of twelve weeks -
(a) where the calculation date is the last day of a week, ending with that week;
(b) in any other case, ending with the last complete week before the calculation date."
No difficulty arises on that; but sub paragraph 3 reads:
(3) In arriving at the said average weekly rate of remuneration no account shall be taken of a week in which no remuneration was payable by the employer to the employee and remuneration in earlier weeks shall be brought in so as to bring the number of weeks of which account is taken up to twelve."
It is common ground that in the twelve weeks at the termination of Mr Travell's employment there was remuneration, namely, basic pay. It is also common ground in those last twelve weeks there was almost no sales commission paid. What Mr Cook has asked us to do is to have regard to paragraph 11 of the 14th Schedule which reads as follows:
"Where under this Part account is to be taken of remuneration or other payments for a period which does no coincide with the periods of for which the remuneration or other payments are calculated, then the remuneration or other payments shall be apportioned in such manner as may be just."
Mr Cook asked us to construe the words "remuneration or other payments" to go into subparagraph (3) of paragraph 6 and thus bring in paragraph 11. In that connection he has referred us to a decision of Bristow J in Bickley (J & S) Ltd v. Washer [1977] ICR 425 where there was a contract of employment, which was absent in this case, and where Bristow J on the construction of that contract had been able to bring in that paragraph (albeit it was its predecessor which is found in the Contracts of Employment Act 1972, Schedule 2, paragraph 3(2)). Mr Cook has drawn to our attention the telling paragraph at page 428B of his judgment where Bristow J says having brought it in:
"It is of course obvious if this is the right approach, that in any business in which, as here, the opportunity earn commission fluctuates with the seasons, if you are made redundant at the right moment for you, you may collect a quite unmerited windfall. If you are made redundant at the right moment for the employer, you may collect a quite unmerited raw deal. It seems to us unlikely that Parliament should have intended to produce such a capricious result."
He also draws our attention to the passage at the bottom of the same page at letter H:
"If there had been no such provision in the contract, paragraph 9 of Schedule 2 to the Contracts of Employment Act 1972 would have enabled the Industrial Tribunal to come to an equally just conclusion. In our judgment they were right to do what they did."
Here the Industrial Tribunal did not feel able to add in the commission on the bonus figure going back over the years and Mr Kilcoyne here, says they were right to refuse to do so. He says paragraph 6 of Schedule 14 is clear, there was no contract of employment; there was no redundancy which would enable that to come into play; and "remuneration" is quite clear. He suggests to us and refers us in that regard to the paragraph in "Harvey" which is at paragraph 8.7.1 at the foot of the page C320 (Harvey Issue 101) which say in relation to Bickley v. Washer:
"If the bonus payments, annual payments or otherwise do not coincide with normal periods then a proportionate amount may be included paragraph 9 effectively reversing Skillen v. Eastwoods Froy Ltd [1966} 2 ITR 112 on that point."
Mr Kilcoyne says what paragraph 9 does is enable the employee in redundancy to get the benefit of a bonus payment, not to get the benefit of a flowing commission.
Not without some regret we have come to the conclusion that Mr Kilcoyne's submissions are right and that the Tribunal, although they may have erred by considering the Appellant's case under paragraph 3 and 5 of the 14th Schedule, rather than under paragraph 6, nevertheless came to the right conclusion.
Mr Cook has accepted that if the calculations are done as they were by the Tribunal under paragraphs 3 and 5 it comes to the same result and therefore it does not seem to us necessary to consider further the constructions of 3 and 5 of the 14th Schedule to this case.
The last point raised in the Notice of Appeal reads as follows:
"The tribunal erred in finding that the Appellants employment ceased on 5th February 1992. The tribunal should have found that the Appellants employment ceased on 4th December 1991 when his employment as a car salesman ceased."
The facts of the matter are that he remained in the employment of his employers until the 5th February 1992. He did not claim redundancy on the 4th December 1991. There was not, therefore, a constructive dismissal of any sort on the 4th December 1991 and in those circumstances, he, having stayed in employment until 5th February 1992, we cannot see that the decision of the Tribunal below was in any way wrong.
In the circumstances, as we say not without regret, we feel that this appeal has to be dismissed. We should say that we have also been referred to the decision in Dawson v. Effingham Steelworks Ltd [1967] ITR 286 but the facts of that case were different to the facts here because there was an offer of redundancy at an earlier date. If that had been offered in this case then the result of this case might have been different. We should also add that Mr Cook has suggested to us the unfairness of the result to the employee. Because he stayed on from December 1991 to February 1992 he did not get the redundancy payment to which he would have otherwise be entitled. That may be so, but in our judgment, this does not help a Respondent when a Court has to construe and give effect to the Act of Parliament to which we have referred.