United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 186_94_1605

Appeal No. EAT/186/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 16 May 1995

MR JUSTICE MORISON

LORD GLADWIN OF CLEE CBE JP

DR P D WICKENS OBE

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SECRETARY OF STATE FOR EMPLOYMENT          APPELLANTS

MRS J KIRBY          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR R JAY

(Of Counsel)

The Treasury Solicitor

Queen Anne's Chambers

28 Broadway

London

SW1H 9JS

For the Respondent NO APPEARANCE OR

REPRESENTATION ON BEHALF OF RESPONDENT


 


MR JUSTICE MORISON: Mrs Kirby was employed by ILG Travel Ltd which traded as Intasun from 1973 until her dismissal in 1991. Administrators were appointed in circumstances such that the conditions specified in Sections 106(5) and 127(1)(c) of the 1978 Act ("the Act") were fulfilled.

Intasun was insolvent for the purposes of both sections 106 and 122 of the Act. The administrators dismissed Mrs Kirby with effect from 8 March 1991, immediately following their appointment. An employee who was employed by a company which becomes insolvent is granted certain rights under sections 106 and 122.

In relation to section 106, if the employee can show that her former employer was liable to make her a redundancy payment but failed to do so because of her employer's insolvency, then she may apply to the Secretary of State who would be bound by section 106 to make her such a payment out of the National Insurance fund. It is a necessary condition of the Secretary of State's liability that the employer himself was liable to make such a payment.

Section 141 disapplies an employee's right to a redundancy payment in the circumstances set out in subsections 3 and 4. In reliance on those subsections the Secretary of State refused to make a payment to Mrs Kirby. She presented a complaint to an Industrial Tribunal seeking an order against him. However, the complaint was dismissed by an Industrial Tribunal held at Ashford on the grounds relied upon by the Secretary of State.

The Tribunal held that Mrs Kirby ordinarily worked outside Great Britain under her contract of employment, and at the date when the termination of her employment took effect, she was not in Great Britain.

Accordingly, applying the provisions of section 141 she was not entitled to a redundancy payment from Intasun and ex hypothesi, to a payment from the Secretary of State under section 106 of the Act.

It is to be noted that Mrs Kirby ordinarily worked in Spain, a community country.

Mrs Kirby made a further application to the Secretary of State under section 122 of the Act (which falls within Part VII) arising out of Intasun's failure to pay her monies in lieu of notice. Under that section the Secretary of State becomes responsible to pay out of the National Insurance Fund to former employees of an insolvent company, monies in respect of specified "debts" owed to them by their employer. The "debts" are specified in section 122(3). One of the specified "debts" is:

"(b) any amount which the employer is liable to pay the employee for the period of notice required by section 49(1) or (2) or for any failure of the employer to give the period of notice required by section 49(1)".

Mrs Kirby applied to the Secretary of State to make her a payment in respect of monies in lieu of notice to which she was entitled. The Secretary of State refused and relied upon the provisions of section 141 of the Act.

She presented a further complaint to an Industrial Tribunal held at London (South) which upheld it. In their decision, which was sent to the parties on 17 January 1994, the Tribunal detected what they considered to be a conflict between the provisions of

subsection 1 and 2(A) of section 141. The relevant parts of the provisions are these:

"(1) Sections 1 to 4 and 49 to 51 do not apply in relation to employment during any period when the employee is engaged in work wholly or mainly outside Great Britain ....

(2) .... .

[(2A) Part VII does not apply to employment where under his contract of employment the employee ordinarily works outside the territory of the Member States of the European Communities.]".

The reasoning of the Industrial Tribunal was that it must be implicit in subsection 2A that if the employee ordinarily worked outside Great Britain, but within the European Community as here, she would be entitled to claim the matters dealt with in Part VII, including monies in lieu of the statutory minimum period of notice which is one of the "debts" specified in section 122(3). Therefore, subsection 2A gave a right which

subsection (1) appeared to take away. Hence the conflict.

The Industrial Tribunal continued [paragraph 3 of the decision]:

" 3 .... Faced with this conflict our view is that sub section 2A prevails ....".

It should be said that this decision was arrived at without the benefit of any oral argument. In our view, there is a logical fallacy in the reasoning of the Industrial Tribunal. A statement that a person will lose rights where situation X occurs, is not a statement that where X does not occur, the person will have rights. Whether that person has rights may be dependent upon other factors. Accordingly, subsection 2A cannot be said to confer rights where an employee ordinarily works within a community country, it simply does not take them away on that account. Accordingly, there is no conflict between the two subsections and no need to seek to resolve the conflict by choosing which subsection prevails.

A person who ordinarily works outside Great Britain and countries within the community will lose all rights to payments under section 122 in respect of the specified debts. All persons who ordinarily work outside Great Britain, whether or not within a community country, will by virtue of section 144(1) lose entitlement to the rights conferred by sections 1 to 4 and 49 to 51 of the Act.

The debt for which the Secretary of State may become liable is contingent upon the application of section 49. Section 49 confers rights upon an employee to a minimum period of notice and is an enforceable right, independent of the contract of employment. If

section 49 does not apply then section 122(3)(b) does not apply and the monies in lieu of notice cease to be a debt specified in section 122(3). The Secretary of State is only liable for specified debts for which the insolvent employer was responsible by reason of section 141(1). Mrs Kirby was not entitled, as against Intasun to a statutory minimum period of notice.

Therefore, the condition precedent to the Secretary of State's liability is not fulfilled. He was right to refuse to meet Mrs Kirby's claim and the Industrial Tribunal were wrong to uphold her complaint.

Accordingly, the appeal is allowed and we substitute an order that Mrs Kirby's complaint is dismissed.