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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Michael Testler Management Services Ltd v Greenwood [1994] UKEAT 826_92_3006 (30 June 1994)
URL: http://www.bailii.org/uk/cases/UKEAT/1994/826_92_3006.html
Cite as: [1994] UKEAT 826_92_3006
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At the Tribunal
Before
HIS HONOUR JUDGE J HULL QC
MR G R CARTER
MR R TODD
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellants MR M REEVE
(OF COUNSEL)
Legal Protection Consultants
Ltd
Marshall's Court
Marshall's Road
Sutton
Surrey SM1 4DU
For the Respondent Mr C Ciumei
(OF COUNSEL)
FRU
49-51 Beford Row
London WC1R 4LR
JUDGE HULL QC: The decision which I am about to give is the decision of us all and in view of the lateness of the hour I hope we shall be forgiven if I do not go on quite as long as I might otherwise have done to explore all the arguments which have been addressed to us, for which we are very grateful.
In this case Mr Greenwood began his employment with Michael Testler Management Services Ltd at the Priory Shopping Centre in Dartford, where he was the Shopping Centre Manager. His employment began on 12 February 1990. We do not know any details concerning that employment and are not concerned with them but we do know that his employment came to an end in 1992. What happened was Mr Burgin, a Management Surveyor, called on him and asked him whether he was prepared to resign and he, after a little thought and a telephone conversation, said that he was not; so Mr Burgin then produced a letter written on behalf of Michael Testler Management Services Ltd which was handed to him and that letter reads as follows and is dated 24 January 1992, addressed to Mr Greenwood:
"I write to inform you that with effect from 24th January 1992 [that very day] we will be terminating your employment with Priory Centre Limited. Please find enclosed your P45 together with a cheque equivalent to one month's salary.
By now you will be well aware of the reasons for your dismissal. These have been discussed with both Steven Burgin and his predecessor Tim Goodliffe."
There are several things to be said about that letter. There was attached to it a P.45 as was said and also a Kalamazoo form of pay advice to which I will refer in a moment. They had not apparently been originally enclosed, at any rate not the P.45, and the letter had been altered from its original draft to make specific reference to the P.45 and no doubt also the employers had in mind that the cheque should be explained.
Looking at that letter one asks oneself - what does it mean? Does it mean that employment is to end that day or does it, mean that the employment will be terminated in due course by notice? To terminate it by notice would be a lawful method of terminating the contract. It might lead of course to a claim for unfair dismissal, but at any rate it would be a lawful termination and there could be no claim that there had been a wrongful termination of the contract if it was done by notice. Or did it mean that the employment was to end that day? If so, that would be unlawful in the sense of amounting to a breach of contract. There was not and has never been any suggestion that Mr Greenwood, a senior man, was guilty of such misbehaviour that his employers were lawfully entitled to end his contract summarily; nor of course did the letter say "we are summarily terminating your contract". It said "...with effect from 24th January 1992 we will be terminating your employment." It could have said "Your employment ends today" - it did not. Therefore there are two alternative possibilities as it seems to us. One is that this was an unlawful and improper termination of the contract which might conceivably be the subject of an application by Mr Greenwood to restrain the wrongful termination of the contract (although that is exceedingly unlikely); the other is that it was an intimation of a lawful intention to end the contract by notice at the earliest possible moment.
As I indicated to Counsel there is, however weak it may be, a presumption when one looks at actions or documents or anything else that any person who is taking any action is doing so lawfully. That is to say one would not take it against anybody that he was committing a breach of contract, a tort, a breach of trust or any other wrong, civil or indeed criminal, unless the matter was plain and unambiguous and one was left with no alternative. Of course the presumption is much stronger when it comes to considering a possible crime but there is undoubtedly a presumption which is put in Latin omnia praesumuntur rite esse acta. One bears that in mind in looking at this letter and one asks oneself what it means.
It does not say of course "we are tendering you here a sum of damages for breach of contract". There is nothing unambiguous of that sort which leads one inevitably to the conclusion that the employment is being ended there and then on that day.
In looking at that letter one must, it seems to us, be entitled to look at what went with that letter and was expressly referred to on the face of the letter. There was the P.45. On that form there is a box which asks the employer to state the date of leaving. The date of leaving was given as 29 February 1992, that is to say a month later. There was no completion of the "total pay to date" or "total tax to date" but that was what the P.45 said: added to "date of leaving" were the words "paid up to". If indeed the date of leaving was 29 February 1992 as that document states, plain as a pikestaff, then those words add nothing to it because clearly if he was leaving on 29 February 1992 he would be paid up to that date. It is sought to explain that by saying that in fact it did not mean date of leaving at all. That was put down for convenience by a member of the accounting staff who was not the dismissing officer. But one looks at these documents, in our belief, objectively. One looks to see what is in fact said by the employer when he came to dismissing the employee, to see exactly what is being done.
Over the page is another document which was attached to this letter. This is headed "Pay Advice". It is from a Kalamazoo book which is a standard form and states that it is a pay advice (on the face of it) up to 29 February 1992 and underneath it puts the monthly pay quite correctly up to that date as £2,250; but underneath that is "month in lieu of notice". Now as was pointed out in a case which has been cited to us, Leech v Preston Borough Council [1985] ICR 192, those words are ambiguous. They may mean that a contractual right is being exercised, that the pay is in lieu of notice in the sense of exercising a right to terminate without notice or making such a payment; or they may mean that since a wrong is being done in terminating without notice the pay is in lieu of that notice and is in fact damages. In that case it was said that either sense may be used.
Does it mean that it was simply a case of saying to Mr Greenwood - You need not work out your notice; or was it saying - We are terminating your contract forthwith and this pay is in lieu of the notice, that is to say is damages. Mr Reeve, who is counsel for the employers, has told us that that is what it does mean and this document, he says, so far from being a pay advice is a calculation of damages.
We all know that in commercial circles, if somebody is dismissed without notice in circumstances where he would be entitled to notice, it is the commonest thing to pay him his money gross for the period of notice because the revenue customarily regard that apparently as an ex gratia payment and neither in the hands of the employee is it taxed nor is the employer required under the PAYE Regulations to deduct tax because the employment is at an end; so we look to see what was done about that and we find that the tax has been deducted as though he is still in employment up to 29 February, and Mr Reeve seeks to explain that by referring us quite properly to the Gourley decision. But then National Insurance is deducted. One asks oneself, what possible right have the employers to deduct National Insurance from this sum if indeed Mr Greenwood was no longer in their employment? What is said by Mr Reeve is - Well of course if he had been in employment he would not have got that money, that would have been deducted and therefore that is part of the calculation of damages. He cites no authority for that proposition. It seems to us on the contrary that Mr Greenwood would be entitled to say - "Whilst I was in employment one of the benefits which I received was a payment on my behalf to the National Insurance Fund made by my employers and if I am put in the position of claiming damages I am entitled to a sum on account of that". One sees that underneath, at the bottom, it carries on precisely like a pay advice rather than what Mr Reeve optimistically describes it as, a calculation of damages, by setting out other deductions of tax and national insurance. All that was sent with this letter.
Mr Reeve says - You have really no right to consider those matters because the letter is plain and unambiguous - and the Industrial Tribunal so found.
Then there is the UB85, the document which is sent by the Department of Employment to the employer and to which the employer replies. The Department of Employment ask for various details. That was filled in by Mrs McDonald on behalf of the employers and it says first that the employment was to 24 January 1992 which of course is the employer's case and it said that the reason for dismissal was
"Not up to standard required for a Manager".
(Mr Reeve does not suggest that he was guilty of such misbehaviour or incompetence that he could be summarily dismissed). It then goes on to say "Did you give the claimant notice?" and Mrs McDonald answers that on behalf of the employers "Yes on 24.1.92". "Did the claimant work out the full period of notice?" and the answer is "No". "Have you made a payment to him as a result of the employment ending". Answer "Yes a payment was made on 25.2.92". "Does the payment include payment in lieu of notice?" There the lady has written "one months pay" and ticked that so the answer to that is "yes".
Finally, in this little bundle of documents which was given to us by Mr Ciumei on behalf of Mr Greenwood, there is a form P.60 and in the middle of that, apparently having "come through" we were told from a form P.14 which is apparently filled in at the same time, is a date about which the only sensible inference is that it is the date of the ending of the employment: 29 February 1992.
Mr Greenwood complained to the Industrial Tribunal of unfair dismissal and of course he was met with the argument - "You have not served the two years which is required. Your employment began on 12 February and it was ended on 24 January by the letter" (which has been read). He said, though, that the employment ended on 29 February. The Industrial Tribunal tried that matter as a preliminary issue and their decision is at page 4 of our bundle. They attached importance to the documents to which we have referred. They attached importance to the fact that the pay was not paid gross but there were deductions from it. They referred to the documents which we have referred to. They then said that where there is ambiguity, the general rule of construction is that the ambiguity is to be construed against the party responsible for it. We were referred to an authority which amply justifies that.
Mr Reeve says - All that is beside the point because there is here no ambiguity. Nonetheless he says - Well of course you must look at all the surrounding circumstances and you must look at the evidence. We have looked at the evidence, reminding ourselves of course that the Industrial Tribunal were in a far far better position than us; an incomparably better position to assess that evidence, because they heard it. They heard Mr Greenwood. He said, when he was cross-examined:
"Burgin gave me no indication that I was employed after 24 January
Clearly in answer to an astute and well calculated question because he was not asked whether any indication was given the other way. He might have added if he had been an astute witness - "Apart from the documents which came with the letter which left me in considerable doubt"- but there it is.
"He told me the company was paying me until the end of February".
That of course, in the circumstances, is entirely ambiguous and can be taken either way. Mr Burgin said it was made clear to him that dismissal would be with immediate effect, and he produced the letter of dismissal. "I said the cheque was in lieu of notice. My secretary produced a copy. We don't take carbon copies. Net pay was made because the Accountant said it was procedure. I cannot comment on it. He was told he would be dismissed with effect from that day. The resignation letter was dated 24 January 1992" and then he referred to the resignation letter which of course Mr Greenwood had refused to sign. It was made quite clear that he was being dismissed on that day, said Mr Burgin.
Again, it seems looking at it from a safe distance an ambiguous expression. If I give my employee a notice of dismissal I am dismissing him on that day; or at least that is a perfectly permissible use of language. Of course if I summarily dismiss him I am dismissing him on that day. His employment will end, in the case of notice, when the notice expires.
Mr Burgin admitted that no mention was made that Mr Greenwood need not work.
The Industrial Tribunal, having heard that evidence and having considered all these matters reached a conclusion which is fundamentally one of fact. They say:
"Accordingly, we find that the Applicant was dismissed on 24 January 1992 with notice, but given a month's pay in lieu of working out that notice period, thereby extending the effective date of termination to 29 February, the date mentioned in the P45. Mr Greenwood thus satisfies the requirement of sub-sub-Section 64(1)(a) of the Act and his application will proceed to a full hearing on the merits".
We can only entertain an appeal on the ground that there has been an error of law. It appears to all of us that this Tribunal were well entitled to construe the documents and interpret the facts laid before therein in the way which they did. They knew what to make of the conversations which took place. They weighed up the two gentlemen, the two protagonists and they were able to form a reliable view of the import of those conversations. They were also able to form a reliable view of the total impact of all this evidence, the letter and what was attached to the letter and the undoubted admissions, because that it was they were, contained in the UB85 form and finally the form P60 in addition.
We can see no reason why they should not take it all together and indeed every reason why they should. They were entitled to take the view that this was a dismissal on notice and not a wrongful, unlawful dismissal at all and that the employers were saying - We don't want you to attend any further; we are going to pay you for your last month, giving you pay in lieu of notice, not in the sense that a wrong is being committed but that we are simply exercising our contractual right to terminate and to pay you as it is colloquially put "in lieu of notice" although you will not be working."
We do not think that it can be said that the Tribunal, on a just reading of their decision, found the letter wholly unambiguous so that it was unnecessary to go any further; on the contrary, it seems to us that a just reading of their decision is that they found the matter sufficiently unclear for them to want to go to the documents which we have referred to and of course to the conversations of the parties and to look at the matter in the round. They did look at it in the round and in our view there is no error of law disclosed by their decision.