United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 233_94_1907

Appeal No. EAT/233/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 19th July 1995

THE HONOURABLE MR JUSTICE MUMMERY (P)

MISS A MADDOCKS OBE

MR A E R MANNERS

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MR T MCHUGH          APPELLANT

COSTAIN BUILDINGS & CIVIL ENGINEERING LTD          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MS F PEMBERTON

(of Counsel)

The Miller Feldman Partnership

Station House

Stamford New Road

Altrincham

Cheshire

WA14 1EP

For the Respondents MR J DONOVAN

(of Counsel)

Costain Building &

Civil Engineering Ltd

Legal Department

111 Westminster Bridge Road

London SE1 7UE


 


MR JUSTICE MUMMERY (PRESIDENT): This is an appeal by Mr Terence McHugh against the decision of the Industrial Tribunal held at London (South) on 11th November 1993.

The Tribunal dealt with a preliminary issue of jurisdiction, which arose in proceedings by Mr McHugh against Costain Building & Civil Engineering Limited, the company by whom he claimed he had been unfairly dismissed from his job as a quality assurance engineer.

The Tribunal notified the parties on 18th November 1993 of their unanimous decision to dismiss Mr McHugh's application for want of jurisdiction.

The Tribunal gave summary reasons as no full reasons had been requested.

The case had been conducted by Mr McHugh in person. Mr Donovan appeared for the respondent at the Industrial Tribunal. He has also appeared for them on this appeal. On the appeal Mr McHugh has been represented by Miss Pemberton.

As only summary reasons were lodged with the Notice of Appeal dated 17th February 1994, the case was set down for a preliminary hearing. That is the usual practice of this Tribunal where only summary reasons have been given, because the Employment Appeal Tribunal rules require, unless some dispensation is granted, that full reasons of the Industrial Tribunal should be accompany the Notice of Appeal.

The preliminary hearing took place on 22nd July 1994. An Order was made that the appeal should be allowed to proceed to a full hearing. Leave to amend the Notice of Appeal was given and an Order was made for the production of the Chairman's Notes of Evidence. An attempt was also made to obtain full reasons.

Mr McHugh made an application in December 1993 which was rejected on the ground that the time for making the application had passed. As the Chairman could see no reason for granting an extension the full reasons were not produced. There was subsequent correspondence, following a comment of Morison, J, at the preliminary appeal hearing, that, if the Chairman was so minded, full reasons would assist the Employment Appeal Tribunal on the full hearing of the appeal. The reply from the Regional Secretary on 16th September 1994 was that so long had passed since the decision was produced that the Chairman considered it was not practicable to produce a decision with extended reasons. It was hoped that the Notes of Evidence would clarify the matter sufficiently for the hearing of the full appeal.

In order to decide whether this appeal succeeds or not, it is necessary to examine first the facts which gave rise to the claim. Because the Tribunal decision contains only summary reasons, the findings of fact are minimal. Fortunately, the case is reasonably well documented and it is possible to obtain a fairly accurate picture of the employment position from the documents.

The question for the decision of the Tribunal was whether Mr McHugh was employed under his contract of employment with Costain Building & Civil Engineering Limited in circumstances where he ordinarily worked outside Great Britain. This question has a crucial impact on jurisdiction because of the provisions of Section 141(2) of the Employment Protection (Consolidation) Act 1978. Section 141 is the first in a group of sections which concern excluded classes of employment. Section 141 deals with employment outside Great Britain. Section 141(2) provides that Part V of the Act, the part that deals with unfair dismissal, does not apply to "employment where under his contract of employment the employee ordinarily works outside Great Britain."

The Tribunal decided that jurisdiction had not been established. The Tribunal accepted the contention of the respondents that Mr McHugh ordinarily worked under his contract of employment outside Great Britain until that contract was terminated.

There are no other relevant findings of detail, but it is possible to gather these facts from the documents.

Mr McHugh was initially employed by Richard Costain Limited as a welding inspector based at Fawley in Southampton. That employment was with effect from 17th April 1989. In his originating application presented on 11th November 1992, Mr McHugh gave 17th April 1989 as the start date of his employment. He was then trained for and appointed to the post of quality assurance engineer in the employment of another company in the Costain Group, Costain International Limited Maintenance and Construction Division. He continued to work at Fawley. That employment was with effect from 1st September 1989. Continuity of employment was preserved.

He was relocated to Woking in July 1991, and to Manchester in September 1991. Between the end of December 1991 and end of March 1992 he was seconded to work short-term on a sulphur plant project at Das Island, off Abu Dhabi in the United Arab Emirates, and in Abu Dhabi itself at the direction of Costain Oil, Gas and Process Limited. We have been shown by Miss Pemberton a letter addressed to Mr McHugh dated 19th December 1991. It says:

"I am writing to confirm your short-term assignment to Das Island, Abu Dhabi."

The letter continued:

"Due to the temporary nature of the assignment, you will remain on the UK payroll. Your basic salary will be uplifted by 50% during the assignment for all days spent overseas, including days of travel.

... you will also be provided with free messing and accommodation."

After the end of March 1992, Mr McHugh returned to base at Maidenhead. With effect from the beginning of April 1992 he was transferred to Costain Oil, Gas & Process Limited. Continuity of employment was preserved. Terms and conditions were unchanged. On 27th April 1992, he signed an agreement after discussing and agreeing terms with the respondent's staff manager, Mr McCann. The agreement, signed and dated 27th April 1992, is central to the decision of this case. The agreement is between the respondent and Mr McHugh. It is agreed in clause 1 as follows:

"The Company shall employ the Employee and the Employee shall serve the Company (or such subsidiary or allied Company as the Company shall from time to time direct or) as a

QUALITY ASSURANCE ENGINEER

(or at the option of the Company in such other capacity whether of higher or lower grade as the Company shall reasonably during the course of his employment hereunder consider to be within the scope of the Employee's capabilities) at

DAS ISLAND

in U.A.E.

(hereinafter called the "zone of operations") or at such other place in connection therewith as the Company may from time to time require."

Clause 2 provided that:

"The Employee shall proceed to the zone of operations as and when directed by the Company in writing."

It was provided in Clause 4:

"Unless this Agreement is cancelled ... it shall continue in force for a period of TWENTY-FOUR months excluding leave periods from the Employee's arrival in the zone of operations except where such period is extended by mutual agreement in writing."

Clause 8 provided:

"The Company shall from the date of his arrival in the zone of operations pay the Employee during the continuance of his employment (provided the Employee shall duly perform and observe the provisions herein contained and on his part to be performed and observed) a salary at the rate of

£25,000.00

per annum payable in calendar monthly instalments in arrears."

Provision is made in Clause 9 in relation to travelling outward at the start of the tour or homeward at the start of the tour. That provides for payment on an ex gratia allowance on one days salary.

Clause 24 provided that:

"This Agreement shall be construed according to ENGLISH law."

The last clause, 25, states:

"This Agreement shall supersede any previous contract of employment between the Company or any other subsidiary or Associated Company in the Costain Group and the Employee in force at the date hereof."

There is no dispute that Mr McHugh signed that contract, though there does appear to be some dispute as to how far the situation was fully understood by him or fully explained to him.

On 1st May 1992 Mr McHugh travelled to Abu Dhabi and thereafter to Das Island. He was responsible to local management for timekeeping and conduct. The administration and salary was dealt with locally, although National Insurance contributions were deducted in the United Kingdom. Mr McHugh reported to the operations support manager in Manchester on professional and technical matters. Apart from home leave, Mr McHugh worked exclusively in Abu Dhabi and on Das Island until 11th August 1992 when he was dismissed, pursuant to the provisions of clause 15(b) of the agreement, which provided that the Company may determine the employment of an employee at any time after the commencement of the period of his employment by paying him one month's salary in lieu of notice. He was paid one month's salary in lieu of notice. He was re-patriated to the United Kingdom. He was not given any other employment by the respondent company or any associated company in the Costain Group.

Those circumstances led him to present the originating application claiming unfair dismissal and redundancy.

His case is set out in the originating application in some detail. At that time he had solicitors to advise him. The grounds of his application traced the history of his employment with the Costain Group of Companies. He alleged in paragraph 4 of the detailed grounds that he had been assured by Mr McCann that he would in due course revert to employment with Costain Oil, Gas and Process Limited after the service agreement dated 27th April 1992. He set out the events which led up to his dismissal, and stated his belief that, although the respondent claimed that he had been made redundant, he was subsequently replaced. He believed that his employment was terminated because he had raised legitimate criticisms of the respondent and other contractors and sub-contractors, and that therefore his dismissal was unfair.

The respondents asked for a preliminary hearing on the question of jurisdiction. As already mentioned the Tribunal found in favour of the respondents on this point.

Mr McHugh was disappointed with that result. He appealed by Notice of Appeal dated 17th February 1994. In that appeal, which he prepared himself, he set out a number of detailed grounds on which he sought to challenge the Industrial Tribunal's decision.

It is important, when considering those grounds and the arguments which have been advanced by Miss Pemberton today, to bear this point in mind. This Tribunal only has jurisdiction to hear and decide appeals on points of law. There can be no question of re-opening facts or, in the absence of exceptional circumstances, admitting fresh evidence on the appeal.

The crucial question is: was there an error of law in the Tribunal's decision to decline jurisdiction. If there was an error, what is it?

In his Notice of Appeal Mr McHugh made these points. He said that his employer never in fact changed. He was originally employed by Richard Costain Ltd, in April 1989. He worked for a subsidiary company called Costain International at Fawley Refinery until June 1991. He dealt with the subsequent changes (already mentioned in the summary of his employment history). He said he was asked to go to Abu Dhabi in December 1991 to help out another Costain subsidiary, Cost Abu Dhabi Ltd. He went to the Middle East as a visitor. All his trips there could only be classed as a visitor, as he did not have a visa or work permit. Every time he entered the country he declared to the authorities he was only visiting. Costain were aware of this.

He detailed the crucial events of April 1992. He said he was asked to sign a service agreement with Costain Building and Cavil Engineering Ltd and contended that that agreement varied conditions within his contract. It did not, he contended, vary his employer. His case was (and this is made clear by the Notes of Evidence made by the Chairman at the hearing) that he always remained an employee of Richard Costain Ltd.

He pointed out that all the senior managers on the project were from Costain Oil, Gas and Process Ltd, who he did work for. Major policy decisions were taken by those managers. He pointed out that the service agreement stipulated that it was to be governed by English law. The total project life was only 12 months. So he only anticipated about 7 months work associated with the project. The fact that the service agreement stated it was for two years was simply because it was a standard company document.

He received at payment in August 1992 from Costain Engineering Ltd (a company which ceased to exist in October 1991). They deducted National Insurance, income tax and paid it to Costain Dubai Ltd.

In summary, his case was that he had never worked for Costain Engineering and Construction Ltd who sent him the final account. All the personnel who went to work originally in the Emirates returned to Manchester to work once again for their respective companies in the Costain Group. That is what would have happened to him.

His argument is that Costain should be viewed as one large operating unit using resources as they see fit, and, he contends, to the detriment of employees when it suits them, by using various company names.

As far as he was concerned, monies were deducted for tax and National Insurance by different companies within the Costain Group. He repeated that he could only work in Abu Dhabi if he had a visa, which he did not.

Those points have been amplified by an amendment which adds these grounds.

"(1) The Industrial Tribunal only considered the contract of employment which was in force at the time of my dismissal. Throughout my employment in the Costain Group my continuity of employment was unbroken as I transferred from one branch to another. The Industrial Tribunal should have considered the whole of my employment in the Group: Janata Bank v Ahmed [1981] ICR 791. Had they done so they would have concluded that, apart from my posting to Abu Dhabi, I was employed in England.

(2) When the overseas posting in the Group came to an end, the employee resumed his employment with one or other of the associated employers, as happened with my colleagues who were working in the Emirates and as happened to me when I returned after a short spell in Abu Dhabi between 27 December 1991 and end of March 1992."

He added that, at the preliminary issue hearing before the Industrial Tribunal, the point on jurisdiction had been raised for the first time at that hearing. He had no opportunity to prepare his submission or to consider how to argue his case.

Miss Pemberton developed those arguments at the oral hearing. She has emphasised these points. Mr McHugh had continuous employment with the companies within the Costain Group between April 1989 and August 1992. She submitted that there were postings under a continuing contract. One such positing was for the period end of December 1991 to end of March 1992. The contract dated 27th April 1992 was another such posting.

In these circumstances, the correct approach was to look at the work situation along the lines explained by the Court of Appeal in Janata Bank case. According to that case, whether an employee ordinarily works outside Great Britain has to be determined by considering the whole period of the contract, not merely at the time of its termination. Unless the terms of the contract were varied, the place where the employee ordinarily worked did not vary during the period of the contract. It was necessary to look at the whole matter. If you looked at the whole history of employment from April 1989 onwards, the only correct conclusion which could be reached was that the employment by Costain of Mr McHugh was ordinarily in Great Britain.

She pointed out various details. The same staff number had been given to Mr McHugh throughout his employment. The visit to Das Island under the arrangements made in April 1992 was described as a "tour". This really is a case of a contract "within a contract", a variation of a continuous contract, the variation being as to the place where he worked. It was Mr McHugh's assumption, on the basis of what he had been told, that he would return to Great Britain after the posting and be employed by a company in the Costain Group.

In brief, Mr McHugh's base always was in Great Britain.

There are some confusing circumstances of Mr McHugh's employment, in particular the change of names of companies within the Group. It is clear, from the documents we have seen, that it was never expressly spelt out to Mr McHugh that the consequence of going to work under a contract, which specified a place of employment outside Great Britain, was that he would, or might lose, his employment rights.

There was one further matter in the form of a document which lends some support to Mr McHugh's contention that he had a continuous contract with another company in the Group, and that this was simply a posting under that contract by reference to the name of a different company within the Group. The document is an acceptance of an offer of employment for the position of a quality assurance engineer on the staff of Richard Costain Ltd, in accordance with the terms and conditions of employment described in a letter 14th April 1992. The letter of acceptance states that Mr McHugh would be able to commence employment with the company on 1st May 1992. Perhaps most important of all, the letter is dated 28th April 1992, that is after the formal written agreement with the respondent. So it might be argued that the agreement of 27th April 1992 was simply a variation as to posting under an existing continuous contract with another company within the Group. In particular, it could be said that the important clause 25 in the contract of 27th April 1992 did not have the effect of superseding the contract with Richard Costain Ltd. Because, clause 25 only provides that that agreement shall supersede any previous contract of employment between the Company or another company within the Group and Mr McHugh.

The difficulty with that document is that it is only the acceptance of an offer. It does not appear that the Industrial Tribunal were shown the offer of 14th April 1992. We have asked the parties if they can provide a copy of that letter. Neither side can. It is difficult to make legal sense of an acceptance of an offer without knowing the terms of the offer.

Those are all the points made on behalf of Mr McHugh. We have dealt with them in detail for this reason. If the Industrial Tribunal are right, the effect of the decision is that Mr McHugh has no remedy anywhere for the wrong he claims to have suffered. He is not even entitled to ventilate his grievance. If the respondents are right and the Industrial Tribunal have no jurisdiction, he has no right to have the merits of his claim investigated. Exclusion of employment rights is a serious matter, Parliament has provided in clear terms various circumstances in which rights are excluded. It is not for us to question why Parliament have done this, or whether it is a fair thing to do. They have done it. The question of law is: was the Tribunal legally wrong in saying that, under his contract of employment, Mr McHugh worked ordinarily outside Great Britain. In our view, there was nothing legally wrong in their decision. It is clearly laid down in the authorities on Section 141(2), that the correct approach is to look first at the provisions of the contract. This appears from the Court of Appeal decision in Wilson v Maynard Shipbuilding Consultants AB [1978] QB 665 and from the later Court of Appeal case of Janata Bank v Ahmed.

The first question to be asked is under what contract of employment was Mr McHugh employed at the date of his dismissal? In our view, the Industrial Tribunal were entitled to conclude, on the documents shown to them, that the contract of employment that he was employed under at that time was that dated 27th April 1992. No other contract of employment has been established on the evidence. If there were any earlier contracts of employment, the effect of clause 25 is to supersede them.

The next question is whether, under that contract of employment, Mr McHugh ordinarily worked outside Great Britain. The correct approach as summarised by Donaldson, LJ, at page 806 of the Janata Bank case, where he said this:

" The consecutive posting situation has, of course, to be distinguished from the case where an employee is appointed to a new position, involving a significant variation in his contract of employment, as a result of which he is required to work in one particular country unless and until that contract is further varied. In such a case that will be the place and the only place at which he ordinarily works under his contract of employment."

You look therefore at the contract of employment of 27th April 1992. That provides in clause 1, in variation of all the earlier arrangements, that Mr McHugh would be required to work in Das Island unless and until that was varied. It was not varied. He did in fact, only work in Das Island under this agreement. In those circumstances, we accept the contention, made by Mr Donovan on behalf of the respondents, that the Tribunal reached the correct decision. Mr Donovan conceded the matter of continuity of employment. That was not broken by transfers as between the various companies within the Costain Group. But he pointed out, correctly in our view, that that is a different question from that posed by the exclusion provision of Section 141(2).

We can see no way in which Mr McHugh can get round the difficulty of the full terms of the written contract and the application of Section 141 to it.

We are unable to find that there is any thing incorrect or perverse in this decision. In those circumstances we have no option but to dismiss the appeal.

We would add this footnote. There have been a number of cases before this Tribunal in the last six weeks raising similar points under Section 141(2). It is legitimate to comment that there has been ill-feeling on the part of employees who have had this point taken against them when they had not been made aware by their employers, at the time of the contractual arrangement, that the effect would, or might, be to exclude their employment rights under the law of the United Kingdom. It is not for us to say how an employer, in these circumstances, should deal with his employee. As a matter of legal obligation an employer is not bound to give advice to the employee about the legal consequences of a contract which he is asked to sign. In our view, however, it would ease matters in employment relations if it was pointed out at the time what the consequences might be for the employees' employment rights. It would be open to the employee to decide whether he wished to go ahead and sign the contract, fully aware of the consequences or whether he would prefer not to take the job benefits of employment outside Great Britain. It is better, in our view, that an employee is able to make an informed decision than that he finds out later that he has taken a decision with drastic consequences for his rights if the relationship between employer and employee results ultimately in dismissal.

We have some sympathy with Mr McHugh's position. But sympathy is not a ground of law. For the reasons already explained we dismiss the appeal.