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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Cutler v BRS Ltd [1995] UKEAT 518_94_1110 (11 October 1995)
URL: http://www.bailii.org/uk/cases/UKEAT/1995/518_94_1110.html
Cite as: [1995] UKEAT 518_94_1110
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At the Tribunal
HIS HONOUR JUDGE J HULL QC
MR R JACKSON
MISS D WHITTINGHAM
JUDGMENT
Revised
APPEARANCES
For the Appellant MR S BEDEAU
(Of Counsel)
Messrs Waddington & Co
Yorkshire Bank Chambers
65 North Street
Keighley
West Yorkshire
BD21 3RZ
For the Respondents MR T LINDEN
(Of Counsel)
Messrs Eversheds Hepworth & Chadwick
Cloth Hall Court
Infirmary Street
Leeds
LS1 2JB
JUDGE HULL QC: This is an appeal by Mr Howard Cutler, a gentleman who is now aged 52, from a decision of the Industrial Tribunal sitting at Leeds on 22 February and 28th March 1994 under the Chairmanship of Mr Record with two industrial Members. Their decision was promulgated on 25 April 1994 and by it they held that Mr Cutler had not been dismissed by his employers, the Respondents BRS Limited, the well-known national freight corporation. They had parted company with Mr Cutler on 4 June 1993. He was the Regional Human Resources Director for BRS at Harrogate. There were three such Directors for different parts of the country. He was for the northern section. He had been with the company for something like 20 years, not always in the important position which he held, he had worked his way up from more junior posts.
He had complained to the Industrial Tribunal that he had been unfairly dismissed by the company and that he wished to be awarded compensation on the basis that he had been unfairly selected for redundancy. The Industrial Tribunal was trying the preliminary issue as to whether he had indeed been dismissed. They went through the facts in the course of their decision. They said that their unanimous decision was that the Applicant had not been dismissed. They said in paragraph 3 of their decision:
"3. At the beginning of September 1992 the applicant was approached by Mr Victor Mark Ross the Human Resources Director of the respondent who requested a meeting. This meeting took place between the applicant and Mr Ross on the 6 September 1992. Mr Ross told the applicant that the trading position of the respondent was not good, that there was a need to reduce costs and that the number of employees especially needed to be reduced. Reductions were taking place across the company in various functions including its operational side. In particular the Human Resources Department was affected. He referred to quality training and driver training schemes, all of which were being affected. The applicant asked if his immediate superior was a party to the decisions being made and was told that he was not and that he was not to be troubled as he was away ill. Mr Ross then said that the 3 regionally based specialists in Human Resources namely, the applicant, Mr Standbanks and Mr Meera had been considered and that the applicant's post was redundant. Two new positions had been created at the centre of the respondent's organisation at Milton Keynes. Their main duties were to be day to day Human Resources support to managers and the implementation of various schemes. The new proposals were to be implemented on Friday the 9 October 1992. Mr Ross said that he had heard that the pension scheme was being enhanced. The scheme was then in surplus and one way of reducing the surplus was to enhance the pensions of those who were involved in the redundancy situation. The applicant said that he was in a state of shock and that the implementation date was early. He wished to work his contractual notice entitlement - 26 weeks as a member of senior staff. Mr Ross replied that it might not be possible to do that, but he would consider putting the date back as appropriate. He emphasised that the newly created posts were being taken by the applicant's 2 colleagues. The applicant asked why he was not considered and was told that they were in terms of salary somewhat below his, but in line with that of his colleagues. With that the conversation ended."
"4. A confirmatory letter was sent to the applicant by Mr Ross on 9 September 1992. The letter begins:
`Further to our conversation at Wandsworth I must now write to formally confirm that your post of Regional Human Resource Director will be closed as a result of the streamlining of the Human Resource function which is being implemented on Friday, 9th October 1992. It is therefore with regret that I now advise you of our notice of intent to declare you redundant unless alternative employment can be found for you within the NFC. As discussed you will of course be individually considered for any suitable position within the organisation over the coming weeks, and should such suitable alternative employment be found then this notice of intent to declare redundancy will obviously be withdrawn. In the event of your redundancy taking place the following arrangements will be made...'
There then followed details of the arrangements in some detail with which we are not primarily concerned at this stage. The letter concluded as follows:
`...... Regarding the effective date of your leaving service you have indicated a wish that this might be agreed at some date beyond the implementation date of 9th October 1992 by working all or part of your notice period. I would advise you that I am still considering the practicalities of this and will respond to you as quickly as possible, although I would ask you to bear in mind that the need to implement the organisational changes at the earliest opportunity so that overhead costs may be reduced is urgent and severe. In conclusion it is clearly with considerable regret both personally and on behalf of the company that I have to write to you in these terms. However I can assure you that I will do what I can to identify a suitable alternative post for you within the organisation and to resolve the issues raised in the best way that I can. Please feel free to contact me at any time.'
It is quite clear that through Mr Ross, who at all times has in effect been the protagonist for the company, it was being made perfectly plain to Mr Cutler that his post was redundant, was to be eliminated and that there was therefore a prospect that Mr Cutler would be dismissed. But neither then, nor are we told at any later date, was there any question of his being served with a notice to end his employment. Of course such a notice, if it is to be a good and valid notice, must name a definite date. If it is too short, if it is not the 26 weeks to which Mr Cutler was entitled under his agreement, then it may very well amount to a breach of contract, but nonetheless in general it will be effective. Whether it is a short notice or the proper notice, it will be effective to terminate the employment, whether rightly or wrongly. But unless it names a date, or by necessary implication names a date, it will not be a good notice of termination of employment, because it will be altogether lacking in certainty.
That was the situation, and they record that:
"5. Now the applicant was considerably aggrieved at having been selected for redundancy and wrote both to Mr Ross on 7 September 1992 and 9 September 1992 and to his Managing Director, Mr G S Roberts also on 9 September 1992. He received replies to these letters. However at this stage it may be said that there is nothing in this particular correspondence which relates specifically to the question of whether or not the applicant was in fact dismissed by the respondent, which is the subject of this preliminary hearing."
Then they went to a matter which is of importance here:
"6. Now returning for a moment to the pension scheme a memorandum was circularised by the respondent to its Divisional Managing Directors and Human Resources Directors on the 14 September 1992 indicating how a certain surplus in pension funds was to be applied. The relevant section refers to "Employees over 50 who are made redundant" and provides as follows"...
and then it sets out that the proposal was that part at any rate of the surplus in the fund should be devoted to enhancing pension benefit, so that the proposal was that the employee could choose between the conventional redundancy package or an enhanced pension benefit. Then they go on to say how the enhanced pension is to be financed. The point about it is that Mr Bedeau, who has appeared for Mr Cutler both here and below, points out that the scheme itself appears to apply as a matter of right to all those who are made redundant. There is nothing here, says Mr Bedeau, which shows that there is a matter for negotiation so that the employee can obtain better terms by negotiation, this was simply something which was available to all employees who were made redundant.
If it were our task to construe this matter on the basis of the letter, it might be said that the expression "made redundant" is ambiguous and may be held to beg the question whether the employee is dismissed through redundancy or whether it also applies to those whose posts are, so to speak, redundant, whose posts disappear and who, by agreement, are said to be redundant, in that their services are no longer required, but who, by agreement between the company, leave voluntarily. We do not have to decide that.
Having set out those terms, the Tribunal record that there were various conversations and they refer to various letters. The terms of the agreement refer to "employees over 50 who are made redundant" and at this time Mr Cutler was aged 49. The intent was, if the original letter were implemented, that he should go in October, he would still be 49 then. He was not going to be 50 until the end of May the following year. So, on the face of it, he could not participate in these enhanced terms. The Tribunal set out all the material letters as it appeared to them to be and they also referred to various conversations which took place. They do not set those out, but there is no doubt that the conversations are referred to, some of them at any rate, in the letters. They are referred to by the Industrial Tribunal. Of course, as again was pointed out in argument, and I do not think this is in issue, conversations are important in two ways. First, they show the reality of the situation and the understanding of the parties, as expressed colloquially to each other. Secondly, when one is looking at letters, particularly here at the E.A.T., we have to remind ourselves that although the meaning of a letter, on the face of it, is a matter for us which we can judge just as well as the Tribunal, that has to be subject to what is said about the letter because it may very well be that that meaning was amplified orally, or contradicted, or reservations or exceptions were made, in conversations, which show the reality of the situation. It is not therefore right to embark on re-trying the case so to speak on the basis of the papers, even if we were allowed to do such a thing. The notes of the evidence taken by the Chairman are not before us. They have not been requested and we cannot of course say what happened in these conversations, although the Industrial Tribunal could have said, if they had thought it important to set them out, because they heard about them in evidence.
Mr Cutler gave evidence and Mr Ross, who as I say was the protagonist so far as the employers were concerned, and they were cross-examined. What was agreed was that the employment should continue until 4 June, so that Mr Cutler should achieve the age of 50 and then be able to participate in the benefit of this enhanced scheme. (The enhancements were new, the scheme was not a new one.) It was agreed that he should go. All sorts of matters were dealt with. One example which was dealt with, apparently orally, following a letter from Mr Cutler during this period when he was on "garden leave" (he did not work after October) was the question: could he take up other work? He could not have done that, except by agreement, if the intention was that he was to remain an employee. He was of course bound to work for his employers whenever they required him to do so. But he was orally informed that he could work during this period for another employer, if he could obtain such employment. There were a number of matters which were for discussion.
Having set out all those matters, the Industrial Tribunal directed themselves as follows: first of all they said this in paragraph 13:
"13. Dismissal is defined in Section 55(2) of the Employment Protection (Consolidation) Act 1978 as follows;
Subject to subsection (3) an employee shall be treated as dismissed by his employer if but only if
a) the contract under which he is employed by the employer is terminated by the employer whether it is so terminated by notice or without notice,..." (They set out the other provisions of that subsection which I do not think we need read.)
"14. Clearly the applicant if he is to succeed must rely upon alternative a) above, and in our view the question whether the respondent did terminate his contract of employment is essentially one of fact. We find that in its terms the initial conversation between the applicant and Mr Ross (that is the conversation of 6 September which I have referred to) amounted to no more than the communication by Mr Ross of the respondent's general intentions before those intentions were carried into effect. The confirmatory letter sent to the applicant on 9 September 1992 is inelegant in its terms which are perhaps somewhat contradictory." (They read the first paragraph again, they are critical of it.)
"If the letter was no more than a notice of intent one wonders why the notice of intent should need to be withdrawn in any circumstances. The final paragraph indicates that the anticipated date of dismissal had not finally been arrived at. Furthermore, it must be borne in mind that this letter was sent in a form and implementing the procedure which was familiar both to Mr Ross and to the applicant. We are satisfied that this letter was what it purported to be namely, a statement of intent only and that if it had been contended by the applicant that he understood it as a letter of dismissal at the time it was sent, then that conclusion would have been unreasonable and untenable. This view is in our mind reinforced by the content of the letter of 30 November 1992 setting out the 2 alternatives. Clearly by then the employment of the applicant had not been brought to an end and that was entirely consistent with the procedure of giving a notice of intention followed by a confirmatory letter, which of course by 30 November 1992 had not in fact been sent. The employment of the applicant continued during the ensuing correspondence in which explanation of various matters was sought and given. Finally in the letter of 2 December 1992 the applicant elected to remain in employment until the end of the week in which his 50th birthday arrived, namely 4 June 1993 which selection was confirmed by the respondent in its letter of 21 December 1994. We hold therefore, that the applicants contract of employment was not terminated by the respondent but rather that, the respondent having given notice of its intention to dismiss the applicant for reasons of redundancy, the parties then entered into negotiations resulting in agreed termination of the contract upon the terms negotiated. As that does not fall within any of the alternatives specified in section 55(2) of the Act we hold that this applicant was not dismissed."
That was their conclusion. They say it is basically a conclusion of fact. When we look at the authorities to which we were very helpfully referred, that plainly is the position. It is not a question of law, of construction of letters, matters of that sort, it is a question of fact, because the Industrial Tribunal as the Tribunal of fact, has always to look at the reality of the situation. To take one possible situation, if an employer says to an employee, perhaps a man in a very humble position, "you are sacked" or "you are going to be sacked", "I will give you the option of resigning this instant" or "tomorrow", "but the position is that you are going to be dismissed if you do not resign" then as has been said by eminent judges, it is very difficult to see how, if the employee elects to resign there and then, these could be construed as anything but a dismissal by the employer. But looking at it as a matter of commonsense and fact, if a senior executive, indeed a Director, is to be dismissed by the employer and there are prolonged negotiations about the basis on which he is to go, as to whether he is to be dismissed or whether he is to resign and matters of that sort, then quite clearly the factual background to such a situation is wholly different.
Therefore the Industrial Tribunal has to look at everything that is said, in the light of a true and just appraisal of the background, the reality of the situation, and not be put off by forms of words. Here it is said by the Appellant that the Industrial Tribunal failed to direct itself correctly because it failed to pay attention to important decisions and dicta of judges on this subject and, secondly, that in any event their decision is perverse. There is no evidence to support it. It is clearly contrary to the evidence. Dealing with the first contention, Mr Bedeau, who has been of very great assistance to us, referred in his Skeleton Argument to these essential dicta as he says they are, which should have been taken into account by the Industrial Tribunal. He refers to Burton, Allton and Johnson Limited v Peck [1975] IRLR87 where Mr Justice Griffiths states:
"It must be appreciated that it is to be hoped that in the large majority of cases where man is made redundant, it will be effected after discussions and where both parties are in agreement that that is the best course to take. In any large organisation one expects to find that there are consultations between management and unions to thrash out the whole redundancy situation, that the employees are then brought into discussions and that the first to be made redundant are those who volunteer for it. One also hopes that before they are made redundant very serious attempts will have been made to have other employment ready for them. But the fact that all that is done does not prevent the dismissal, when it comes, being a dismissal within the terms of Section 3(1)(a) of the Act."
That of course, as the text shows, is set in a rather different context. Mr Justice Griffiths there is referring to the situation of which a number of employees are being made redundant and this Tribunal and the Court of Appeal and indeed the House of Lords has said that in those circumstances one expects proper consultation and warning, and if there are volunteers for redundancy then they may volunteer and be dismissed first, and others may have to be selected by the employer. As Mr Justice Griffiths says, that does not prevent the dismissal, when it comes, being a dismissal, within the terms of Section 3(1)(a) of the Act. But that, with respect, is begging the question when it is cited in the context of the present case. The mere fact that there are "civilised" preliminaries by a responsible and careful employer does not mean that the redundancies, when they come, are prevented from being dismissals. But it does not follow automatically that when there is consultation and discussion, that means that the parting which follows at the end is necessarily a dismissal. That does not follow at all. It is especially likely to mislead if one cites from the words of the judgment in a very different case; when, as I say, it must be a question of fact in each case. Mr Bedeau sets out in his argument, again very helpfully, the case of Mowlem Northern Limited v Watson [1990] IRLR502. There Sir John Latey said as follows:
"It is well established that employer and employee can by mutual agreement advance the date of expiry. Why then should they be precluded from postponing it by mutual agreement to take effect on the happening of an agreed event? ... It does not follow, of course, that these arrangements are not going on to the satisfaction of employers and employees. The effective date,... can be brought forward or put back by agreement. But at the heart of the matter the dismissal for redundancy remains.
There being no authority directly on the point, is the submission objectionable, wrong in principle? There is nothing, in our unanimous opinion, to suggest that it is."...
One could say with justice that in that case the language is very similar to that of Mr Justice Griffiths in Burton, Allton and Johnson Limited v Peck. That was a case in which the reality of the situation, as perceived by the Industrial Tribunal, was that the applicant had been told that he was redundant. His job where he was employed to work was going. He was employed for a short time by consent in another job. He could not take it permanently he felt, because it was too far and too inconvenient, nonetheless he took it temporarily, and then he was finally made redundant. It was held that he was indeed dismissed by reason of redundancy and it was held, as a matter of law, that there was no reason why that should not be the holding of the Industrial Tribunal. That is the substance of that.
On the basis of those dicta, which Mr Bedeau says the Industrial Tribunal failed to pay proper attention to, he took us through a number of matters. He, in particular, said as follows: first of all that this period of "garden leave" was very largely financed by Mr Cutler himself. He was entitled to 26 weeks of notice with his seniority and therefore he could have received, relying simply on his contractual rights, 26 weeks pay in lieu of notice. That would seem to be perfectly correct. Then it is said by Mr Bedeau, well look at the view of this which is shown by Mr Cutler himself, in the letters which he wrote. One in particular appeared to me, and I think to all of us, to be very striking. On 11 December, when the negotiations were largely concluded, Mr Cutler wrote to Mr Ross and said:
"... I have now considered the two alternatives offered to me (that was referring to the pension scheme) in respect of the Company terminating my employment and have opted for remaining on the books as a paid employee until the end of the week in which my 50th birthday occurs, at which time I will be eligible for the enhanced pension benefits..."...
We have to remind ourselves that both Mr Ross and Mr Cutler were, so to speak, seasoned campaigners in the field of personnel, human resources, and that might be thought to be, although this was not canvassed we understand before the Industrial Tribunal, an artistic statement by a gentleman who was well skilled in the arts of his particular part of the business, "in respect of the company terminating my employment". It is certainly a very favourable point that can be made and was made apparently for Mr Cutler, before the Industrial Tribunal, that that was what he said himself in writing to Mr Ross and Mr Ross did not write back and say "you are very mistaken about that, as you appreciate we are negotiating to end your employment by agreement". That was a point which was perfectly fairly made.
Then, says Mr Bedeau, there is no question of any discretion being involved in all this, by the Respondent. They were simply offering to Mr Cutler something which in any event they would have to offer under the scheme. That, with respect, cannot be quite correct. They were extending Mr Cutler's employment by agreement, indeed at his request, until 4 June. He could not have insisted on that. He could of course have been dismissed in October and he would then have had a very proper claim to compensation and damages for short notice, but he could have been dismissed after 26 weeks and he would still not have achieved his 50th birthday. So that was something which was undoubtedly a matter of agreement between the parties. Then Mr Bedeau says that on the evidence here there was only one conclusion to which the Industrial Tribunal could have come. He says the evidence was far from clear that the Applicant was agreeing to leave and therefore the Tribunal, in reaching the conclusion which they did, were guilty of reaching a perverse conclusion. He said the evidence was really overwhelming that this was a dismissal. He cites the matters I have referred to and a number of other matters. This scheme, he said, was not voluntary. He referred us to a passage (which was not in our bundle) in a company leaflet:
"How can I apply for this enhanced pension?" says the notional enquiry.
Answer: "This is not a voluntary scheme and applies only to those individuals who have been made redundant."
Again, in passing we made the comment, that does beg the question, because "being made redundant" is capable of meaning either dismissed for redundancy or, in colloquial terms, leaving by agreement; "I have been made redundant". In any event, it was applied to the Applicant, who left when he had achieved the age of 50.
In answer to these matters, Mr Linden concedes very frankly, and we think quite rightly, that this was a decision which might have gone the other way. We cannot say, he says. We have not heard the evidence. Mr Linden was not present at the hearing before the Industrial Tribunal; but he has certain instructions about what took place there, which I have mentioned. He says, in those circumstances, it was a pure question of fact for the Industrial Tribunal. It may well be that one could go further than that and say, looking at the material which is before us in the form of documents, one might say this was rather a surprising decision. It might very well have gone the way of the Applicant and bearing in mind all that has been said on his behalf, if those points were made to the Industrial Tribunal and they most certainly were made as we understand from Mr Bedeau, then one would think that this was a good case. It would stand a very reasonable prospect of success for Mr Cutler. That, says Mr Linden is not of course the question for this Tribunal. We in this Tribunal can only consider questions of law, under Section 136 of the Act. We have no jurisdiction whatever to review findings of fact, we can only interfere on matters of fact if, as Mr Bedeau has told us, we were to conclude that this was a perverse decision.
That is the submission and what Mr Linden tells us to do is to have regard for the decision in Scott v Coalite Fuels and Chemicals Limited [1988] IRLR131. That was a decision of this Tribunal. It has never been overruled or indeed questioned so far as we know. I will not refer, as we were referred by Mr Bedeau, to a very large number of passages from that. I will just read the headnote:
"As a result of a decrease in the demand for solid fuels, the employers decided to close one of their works and make a number of employees redundant. On 22 January 1986 the applicants were sent written notices that they were to be made redundant on 22 April. Negotiations took place and the applicants were given a number of options which included redundancy, with a redundancy payment, and a pension frozen until the age of 65, in which case it was the policy of the trustees of the pension fund that in the event of the employee's death before 65 his widow would be disentitled from receiving anything, or redundancy with a redundancy payment and a pension transferred to a new firm, which would give protection to a widow, but which would mean a reduced benefit or early retirement, as an alternative to redundancy. The applicants requested early retirement as from 22 April. On their applications for redundancy payments an industrial tribunal dismissed their claim on the ground that the written redundancy notices had been superseded by the subsequent negotiations and agreement for voluntary retirement, that they had terminated their own employment by choosing to retire voluntarily and they had not been dismissed within the meaning of Section 83(2)(a) of the Employment Protection (Consolidation) Act 1978. On the applicants' appeal: held, dismissing the appeal by a majority, that although it was possible for questions of law to emerge when considering whether there had been dismissal within the meaning of Section 83(2)(a) of the Act, it was likely in the majority of cases and provided that the industrial tribunal had asked themselves the right question, that the issue was essentially one of fact and that the finding of fact could only be disturbed on the basis that the decision was perverse. That in the present case the industrial tribunal had not erred in law in holding that the notice to dismiss the applicants for redundancy had been superseded by the agreement to take voluntary retirement. Since their decision that there was no dismissal under Section 83(2)(a) was not perverse, the industrial tribunal's decision to dismiss the applications would be upheld."
That of course was in a quite different factual context and the workers were in a quite different position in the company from Mr Cutler. But nonetheless, the principal is a good and valid one. As this Tribunal said, the issue is essentially one of fact and that is indeed accepted on behalf of the Appellant by Mr Bedeau. We are very grateful to Mr Bedeau, first of all for the very careful way in which the documents have been prepared for us and secondly for his patient submissions, in which he has made very plain to us all the matters on which he relies, and the basis on which he submits that this decision was perverse. Mr Linden has pointed out to us that not having the Notes of Evidence, not knowing what was said, we cannot say that there was no evidence to support particular conclusions, and that submission too appears to be well-founded: particularly since the Tribunal did refer, from time to time in the course of their reasons, to the oral evidence which they had heard. We accept all of us, that this Tribunal might have reached a different conclusion. We think Mr Linden is quite right to accept that.
It may well be and it really is pointless to say this, that had we heard the oral evidence we would have reached a different conclusion from the Industrial Tribunal. We do not know. That is entirely beside the point. What we have to ask ourselves is whether there is any error of law here, first of all in the Industrial Tribunal not applying, as Mr Bedeau says, the dicta which he refers to, which he says rightly are important dicta, or whether the decision itself is perverse. We are unanimous in saying that we do not think this Industrial Tribunal erred in law by failing to apply the dicta to which we have referred. We think that although those dicta are perfectly capable of supporting a decision to the contrary of the present decision, namely that the mere fact that there are negotiations or arrangements made, does not prevent a dismissal being a dismissal; equally, those dicta do not lead necessarily to the conclusion, whether on the facts of this case, or of any other imaginable case, that the reality was a dismissal, rather than a parting by agreement, when the facts appear to be contrary to that.
The facts are a matter for the Industrial jury (as the Tribunal have been called) and not for us. If, having fairly considered the evidence and the submissions made to them, the Tribunal conclude that the reality of the situation was a consensual parting rather than a dismissal, then the Industrial Tribunal are not only entitled but bound to say so, whatever eminent judges have said in other cases. We are all satisfied here. First of all that this Tribunal did not mis-direct themselves in any way and, secondly, in spite of the very persuasive way that it has been put before us, that they were not perverse in the conclusion which they reached. In those circumstances we simply have to say that this appeal must be dismissed.