United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 161_94_2707

Appeal No. EAT/161/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 27th July 1995

THE HONOURABLE MR JUSTICE TUCKEY

MR A E R MANNERS

MR S M SPRINGER MBE

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MR H GILLILAND          APPELLANT

EVESHAM WORKING MENS CLUB AND INSTITUTE LTD          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR MICHAEL HORNE

(of Counsel)

Messrs Atter MacKenzie

Bridge Court

64 Bridge Street

Evesham

Worcestershire

WR11 4RY

For the Respondents MR ROBERT THOMAS

(of Counsel)

Messrs Saunders Roberts

58 Bridge Street

Evesham

Worcestershire

WR11 4RY


 


MR JUSTICE TUCKEY: Following a hearing in the Hereford Industrial Tribunal on 23rd November 1993, that Tribunal reached the unanimous decision that Mr Gilliland had not been unfairly dismissed. Mr Gilliland appeals against that decision.

The respondent is a member's social club founded in the last century, with premises in the centre of Evesham, above which there is a flat where until November 1993 the steward lived. Mr Gilliland was appointed the Club Steward with his wife to assist on 14th January 1978.

In common, we suspect with other establishments of this kind, over the years their had been a decline in their financial fortunes. Much of their revenue was from the sale of beer in their bar. Over a period of 10 years or so, that had fallen dramatically and their wages had risen in proportion to the amount of their takings in a similarly alarming fashion.

The club had conducted financial reviews in order to assess where they stood, and there came a time when they had to consider replacing the steward with a bar manager, and dispensing altogether with the services of the stewards wife. So far as Mrs Gilliland was concerned, she was given notice and paid a redundancy payment. Her employment ended in September 1993.

The decision made to dispense with her services had of course implications for Mr Gilliland. His contract of employment which provided for he and his spouse to be employed was no longer appropriate. The club sought to produce an amended contract to reflect the new position. The first draft was produced before a meeting which took place on 14th June 1993. At that meeting Mr Gilliland made 22 proposals for amendment to the draft which he had been given. A second draft was then produced which incorporated all those amendment and this was discussed at a meeting week later, when Mr Gilliland asked for two further amendments to be made. Whilst this draft was still in play, the evidence before the Tribunal (in the form of a proof prepared by Mr Gilliland for the purpose of the hearing) was that he had a conversation with one of the officials of the club in which he was told that unless he signed the draft then on offer, he had better look out for his future.

Following the meeting on 21st June a third draft was produced by the club, and there was some correspondence about the position. Solicitors became involved for the applicant. The third draft was discussed at a meeting on 12th August 1993 between Mr Gilliland and the four members of the clubs management committee. The chairman of the committee invited Mr Gilliland to sign the third draft of the contract. He declined to do so, saying that he wanted things changed, but when questioned he was unable to say what things he did want changed. He was then asked by one of the members of the committee, the following question: "Leaving aside these things you keep talking about will you sign this contract?" His answer to that was "No." He was then asked to leave the room.

The background to the meeting is that the club had by this time been very seriously considering replacing the steward with a bar manager, but had decided before the meeting that Mr Gilliland should be offered the opportunity to sign the contract. When he left the room, the management committee discussed the matter. The minute of what happened is quoted in the Industrial Tribunal's decision. It said:

"15. ... The management committee discussed the steward's refusal to sign the new contract and it was decided that future financial prospects of the club demands that decisive action be taken by the committee. Resolution. It was resolved unanimously that the post of steward be dispensed with and that the club seek the services of a bar manager who would have a much wider range of duties to perform than the steward's post presently has.[Then it went on to record that when that decision had been taken] The steward was invited back into the meeting and given the decision of the committee."

He was told that the bar manager would not be required to live on the club premises. The minutes recorded that this was a "verbal notice of redundancy", and the matter was formalised at some stage by letter which told Mr Gilliland that his employment would cease with effect from 12th November 1993. He was subsequently paid and accepted a redundancy payment to reflect his years of service.

At the time when the committee informed Mr Gilliland of his dismissal, he was told that he could if he wished apply for the post of bar manager, which they had resolved to create. But he did not do so. Nor, as is clear from the Tribunal's reasons, did Mr Gilliland at any time after the meeting on 12th August and before he left on 12th November 1993 seek in anyway to persuade the committee or anyone else to reconsider the position. This was a club where he had worked for many years and was in fact indeed the only full-time employee.

Having found the facts, which we have summarised above, preferring the evidence of the respondents where it differed from the evidence of Mr Gilliland in any material respect, the Tribunal went on to ask themselves the statutory questions. In paragraph 20 they deal with the reason for dismissal. They say:

"... it is for the employer to show the reason for the dismissal and that it was a substantial reason such as one relating to redundancy within sub-section (2)(c). We take the view that the club had a substantial reason for the action which they took. The contract under which the applicant had served was no longer appropriate because of the dismissal of his wife. They tried unsuccessfully over a period of time to reach a sensible agreement with the applicant putting to him a final draft which we believe to be appropriate and reasonable. He declined to sign for reasons which we think are inadequate. They were under financial pressure to make savings. They therefore decided no longer to employ a steward but instead to appoint a Bar Manager."

The Chairman of the Tribunal has amplified what is said in the passage which we have quoted as follows:

"We concluded that no purpose would be served by deciding whether the facts (which the respondents established) amounted to redundancy or SOSR. That was a highly technical matter depending on the considerations set out in Harvey on Industrial Relations, Part III, paragraph 342 onwards. We felt that either the Club was right and the reason for dismissal amounted to redundancy; or it was wrong, in which event it would be guilty of no more than an understandable mistake of labelling of the kind described by Lord Denning in Abernethy."

(That is a reference to Abernethy v Mott Hay and Anderson [1974] 9 ITR 251)

So the Tribunal found the reason for the dismissal to be either redundancy or some other substantial reason. In paragraph 21 the Tribunal turned to the question of reasonableness. They say:

"21. We then have to enquire whether the employers acted reasonably in treating that substantial reason as a sufficient reason to dismiss, see Section 57(3). In our view the employers made honest and repeated attempts to negotiate a satisfactory contract with the employee but, through no fault of their own, failed to do so. the final draft submitted to him was reasonable. he had had an adequate opportunity of considering its details. At the meeting he declined to accept it without, however, giving any adequate reason. We fail to see therefore what else the employers could have done. In the light of his refusal they decided to implement the change recommended (again in good faith) by a sub-committee. The applicant had an opportunity if he wished to apply for that job but failed to do so. In those circumstances we conclude that the applicant was fairly dismissed."

Well, now that decision and the essence of the reasoning which is to be found in paragraphs 20 and 21 is attacked root and branch by the appellant on whose behalf Mr Horne of Counsel has appeared today and advanced with clarity and skill various arguments. Dealing with them in the logical order (although Mr Horne made it clear that his last point was his best point.) He attacks the first of the alternative findings that the reason for the dismissal was redundancy by arguing that the Tribunal did not apply the correct test. They concentrated, so he submits, on the differences between the job of steward and the proposed job of bar manager and did not consider the similarities between the two positions. If they had done so they could not have concluded that this was a redundancy situation. In other words, by not applying the correct test they reached a decision which can be characterised as perverse.

As to their approach and the test the Industrial Tribunal applied there is nothing in their decision to support the submission that Mr Horne makes. From paragraph 20 in particular, it is clear that they are very aware of what is required to establish redundancy, because they discuss the obscurities and uncertainties surrounding the correct interpretation of the term redundant. They do no at any point say they are concentrating on the differences between these two jobs. We therefore reject the submission that they applied the incorrect test. There was much evidence to support the conclusion that this was a redundancy and the Tribunal's decision that it was, cannot, in our judgment, be characterised as in anyway perverse.

The next point that Mr Horne concentrated on was the alternative finding that the refusal of Mr Gilliland to sign the new contract was some other substantial reason for dismissal. It is common ground between the parties, that this was the Industrial Tribunal's point. The employers were arguing that it was redundancy, and that was the case that the applicant who was legally represented before the Tribunal met and argued at the hearing. So, it is complained, by raising the point for the first time in their reasons, the Tribunal were in breach of natural justice.

There is no dispute about the principle which has to be applied when such a complaint is made. It is set out clearly in the headnote in Hannan v TNT-IPEC (UK) Ltd [1986] IRLR 165. The relevant extract reads as follows:

"A tribunal is not entitled to find a dismissal fair on a ground not pleaded or argued where the difference in grounds goes to facts and substance and there would or might have been some substantial or significant difference in the way the case was conducted so that the employee was thereby prejudiced. However, where the different grounds are really different labels and nothing more, the late introduction, even without pleading or argument, is not a ground for interference on appeal."

It is clear from their reasoning, because they say so in terms, that the Tribunal regarded this as being a case where the alternative grounds which they found were really different labels and nothing more. If they were right about that, then obviously there is no substance in this point. It is, we think, worth noting that it was not until Mr Horne put together his able skeleton argument that anyone had been able to identify a reason why Mr Gilliland might have been prejudiced by the introduction of this further point. Mr Horne's point is this: The introduction of some other substantial reason would have given a different focus to the case. Dismissal for a refusal to agree new terms would have opened up the question as to how essential from a commercial point of view the change was, and whether the advantages of the change from the employers point of view where outweighed by disadvantages to the appellant. Allied to this point, Mr Horne argues that because no proper consideration was given to those sort of points, it was not open to the Industrial Tribunal to conclude that the refusal to sign the contract was in fact another substantial reason for dismissal. Put another way it was not capable, absent such enquiry, of being characterised as such.

We are unable to accept those submissions. The need for the change was at the heart of this case. It is obvious that the Tribunal investigated and heard evidence about the declining financial fortunes of the club. A change in Mr Gilliland's terms of employment was any way necessary because his wife had left, so it was not a case of an employer unilaterally, imposing or requiring an employee to agree to varied terms. Nor, in this case, was it suggested that the new terms were in any way unreasonable or disadvantageous to Mr Gilliland, for the simple reason that the employers here had agreed to almost all the changes he had suggested. So we agree with the conclusion which the Tribunal reached that this alternative ground was no more than a question of labelling and therefore reject the complaint that there was a breach of natural justice. There was abundant material to support the conclusion that the refusal was a substantial reason for dismissal. It was obviously capable of being such a reason. Indeed the authorities to which we have referred where this point has been considered proceed on the assumption that a refusal to accept varied terms of contract is a substantial reason, the argument focusing in each case upon whether it was reasonable for the employers to treat that refusal as a reason justifying dismissal. So we reject the grounds based upon the alternative ground, some other substantial reason.

That leaves us with Mr Horne's last point on the question of reasonableness. Here it is said that the Tribunal ought to have found that there was procedural unfairness. A number of aspects of unfairness are listed in Mr Horne's skeleton argument. The point he concentrated on however was that before the committee made its decision to go for the bar manager option and dismiss Mr Gilliland they ought to have warned him that unless he signed the contract that would or might be the consequence. This is characterised as a failure to consult or failure to warn. Mr Horne submits that from the Tribunal's decision it is apparent that they did not consider that point although they were obliged to do so since procedural unfairness is one of the aspects of reasonableness, which every Tribunal must consider under Section 57(3) test. It is accepted on behalf of the appellant that in fact no specific complaint was made about procedural unfairness before the Industrial Tribunal. That, we agree, did not absolve them from considering it. But it may explain why in the reasons there is no extended reference to the point. The essence of their conclusion on this part of the case is that they could not see what else the employers could have done which would have made any difference. Does this show that they considered the point, and any way what substance was there in it? The appellant was the Club's only full-time employee, so it was a very small business. Size is one of the matters specifically mentioned in Section 57(3) Moreover, and perhaps more importantly, the appellant had an intimate knowledge of this business. He had worked there for many years, he was a member of its committee, he knew or must have known in general terms about its financial plight, and if he had not focused on this before he must have done so by the time his wife was made redundant because that is why she was made redundant. That meant that he needed a new contract. In other words, the question of his continuing employment or at least the terms of it, were wide open for consideration. He had at some stage, been told that if he did not sign up he had better look out for his future. Against this background, the appellant persistently and unreasonably refused to sign after lengthy discussions. The club felt that the time had come for action. Confronted with the appellants refusal to agree to terms, they decided that they would have to change tack, and go for the option which they had come close to implementing before. This involved disappearance of the club steward to be replaced by a bar manager. That is what happened. If one looks at subsequent events one can see that Mr Gilliland did not apply for the job of manager, although he had been asked to do so, and he did not attempt in any way to try get them to change their mind. If he had been offered the job as manager before he was dismissed, would it have made any difference? Clearly the Tribunal thought that it would not. Likewise he had been told at the meeting that if he did not sign he might lose his job. We cannot think that the Tribunal overlooked the process by which Mr Gilliland came to be dismissed. Their conclusion was that there was nothing else that the employers could have done which would have been of any effect. That was a finding of fact. It was one, we think, that they were entitled to reach and it is not for this Tribunal to interfere with it.

There are other points about procedural unfairness which we have also considered, but which we do not think takes the appellant's case any further. It follows that we do not accept Mr Horne's final point and this appeal must therefore be dismissed.