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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> London Borough Of Hammersmith & Fulham v Jesuthasan [1996] UKEAT 1131_95_1006 (10 June 1996)
URL: http://www.bailii.org/uk/cases/UKEAT/1996/1131_95_1006.html
Cite as: [1996] UKEAT 1131_95_1006
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At the Tribunal
Judgment delivered on 28th June 1996
THE HONOURABLE MR JUSTICE BUTTERFIELD
MRS J M MATTHIAS
MRS T A MARSLAND
JUDGMENT
Revised
APPEARANCES
For the Appellants MR N GIFFEN
(of Counsel)
Head of Legal Services
London Borough of Hammersmith & Fulham
Town Hall
King Street
London W6 9JU
For the Respondent MR T PULLEN
(of Counsel)
Hammersmith & Fulham
Community Law Centre
142-144 King Street
Hammersmith
London W6 0QU
MR JUSTICE BUTTERFIELD: This is an appeal against the decision of the Industrial Tribunal sitting at London South promulgated to the parties on 6th September 1995.
The matter arises in this way.
Mr Jesuthasan, the Applicant before the Industrial Tribunal and the Respondent in this appeal, was employed by the London Borough of Hammersmith and Fulham as a teacher of mathematics and numeracy at Wormwood Scrubs prison. He is of Asian ethnic origin and a Sri Lankan national. He took up that employment in November 1990. He worked part-time only. His hours of work varied between 4 to a maximum of 10 hours each week. At no time was he employed to work under a contract of employment which normally involved him working 16 or more hours each week.
In July 1993 Mr Jesuthasan was dismissed by the Appellant Council. On 25th October 1993 he presented an Originating Application to the Industrial Tribunal in which he complained of unlawful racial discrimination during his period of employment and in respect of his dismissal. There was no complaint of unfair dismissal or redundancy. It is common ground that it would not have been open for the Respondent to bring such claims at that time under the domestic legislation because he did not have the requisite continuity of service under the Employment Protection (Consolidation) Act 1978 entitling him so to proceed.
The Appellants entered a Notice of Appearance resisting the complaint.
On 6th February 1995 the Employment Protection (Part-time Employees) Regulations 1995 came into effect. These regulations remove from Schedule 13 to the 1978 Act the requirement for minimum weekly working hours in order to qualify the right not to be unfairly dismissed or for entitlement to receive a redundancy payment. There are no transitional provisions.
The regulations were made by the Secretary of State in order to ensure compliance with Article 119 of the Treaty of Rome, the Equal Pay Directive and the Equal Treatment Directive following the House of Lords decision in R v. Secretary of State for Employment ex parte Equal Opportunities Commission [1994] ICR 317.
The House had there decided that the minimum number of weekly working hours necessary to establish continuity of employment under Schedule 13 were sex discriminatory and contrary to the Treaty and the Directives promulgated under it.
The effect of the 1995 Regulations is to permit employees who have 2 years continuous service to seek compensation for unfair dismissal and to seek redundancy payments irrespective of the number of weekly hours worked.
On 18th April 1995 Mr Jesuthasan applied to amend his originating application to include claims of unfair dismissal and for a redundancy payment. It was directed that the application should be determined as a jurisdictional preliminary point. Clearly if the Tribunal found it had no jurisdiction to entertain the additional claims no purpose would be served by granting the application to amend.
The Industrial Tribunal, with the Chairman sitting alone, considered the matter at considerable length, dealt extensively in its Extended Reasons with the competing submissions of the parties, and cited extracts from a number of decisions to which it was referred. The Tribunal concluded that the 1978 Act as amended by the 1995 Regulations applied to the dismissal of Mr Jesuthasan. It held that the 1995 Regulations were retrospective in effect and applied to a dismissal which took place before the Regulations came into force. The Tribunal further held that time began to run against the Respondent from the date on which the 1995 Regulations came into force, namely 6th February 1995. It further held that the appropriate time limits were 3 months and 6 months respectively from that date for claims of unfair dismissal and redundancy payments by analogy to the relevant statutory time limits provided in the 1978 Act. Accordingly the application to amend was granted.
The principle ground of appeal is that the Industrial Tribunal was wrong in law to find that the 1995 Regulations applied to the Respondent's dismissal in July 1993 and were thus retrospective in effect. The Appellants submit that if the 1995 Regulations did not apply to the Respondent's dismissal it cannot rely on those Regulations in any circumstances and no question of time limits in respect of the application to amend arises.
It is important to consider the legal framework under which claims for unfair dismissal are brought before an Industrial Tribunal. A tribunal has jurisdiction to consider a complaint by an applicant that he was unfairly dismissed by his employer. The dismissal must have been an unfair dismissal at the date when it occurred. There must, in other words, have been an infringement by the employer of the employee's right not to be unfairly dismissed. If that right is not infringed, no legal wrong has been committed and no legal remedy lies.
The right not to be unfairly dismissed is conferred by Section 54(1) of the Employment Protection (Consolidation) Act 1978. The right is conferred on employees in every employment to which Section 54 applies. Section 54 does not apply if the employee was not continuously employed for 2 years prior to the effective date of termination. Accordingly an employee without continuous employment of 2 years prior to the effective date of termination as defined by the Act does not enjoy the right conferred by Section 54. The dismissal of such an employee is not an infringement of his right not to be unfairly dismissed since he does not enjoy such a right.
At the date of his dismissal in July 1993 Mr Jesuthasan had not in law been continuously employed for 2 years within the meaning of the Employment Protection (Consolidation) Act 1978. He thus had no right not to be unfairly dismissed, and it could not have amounted to a legal wrong sounding in compensation or any other relief at the time it took place.
If the Tribunal's ruling is correct, the introduction of the 1995 Regulations converted the dismissal of Mr Jesuthasan from a lawful act in respect of which no remedy existed to a potentially unlawful act for which compensation, re-instatement or re-engagement might be ordered. This is retrospective legislation red in tooth and claw.
In support of their submission that the Industrial Tribunal erred in so finding the Appellants point to the undoubted fact that there is nothing in the Regulations themselves which supports such a draconian interpretation. The Regulations are silent on the issue and in general there is a presumption against their being retrospective in effect.
Those general principles have most recently been considered by the House of Lords in Plewa v. Chief Adjudication Officer [1994] 3 WLR 317. In that case the House was considering the application of Section 53 of the Social Security Act 1986, which as from 6th April 1987 reversed the former provisions under which recipients of benefit were not required to make repayment following non-disclosure of earnings if due care and diligence had been used to avoid overpayment. The question for the House was whether those provisions were retrospective in effect so as to apply to overpayments made before Section 53 came into effect.
The House cited with apparent approval the principle identified by Staughton LJ in Secretary of State for Social Security v. Tunicliffe [1991] 2 AER 712 as being:
"that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather it may well be a matter of degree - the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended."
On the facts of the appeal before it the House held that Section 53 was not retrospective in its application on the ground that the Section imposed liability on third parties for innocent misrepresentation in addition to removing the defence of due diligence for the claimant. This, the House found, would create unfairness to third parties affected so that the presumption of retrospectivity operated. Lord Woolf, with whose speech all their Lordships agreed, added this:
"Although the position of the actual payee is obviously not as clear as that of a third party, even in the case of a claimant, I would have been inclined to attach more importance to section 53's possible retrospective unfair effect than the Court of Appeal did in Tunnicliffe. This is because it removed the defence of due care and diligence. If recipients would not have been under a liability in fact to make a repayment under the former machinery then from the practical point of view they were being placed under a liability which did not previously exist by the change in the law. This is a situation where the presumption against retrospectivity should apply." (Emphasis added)
The Industrial Tribunal considered the issue of fairness in reaching its conclusion that the 1995 Regulations applied to the Respondent's dismissal. The Chairman's finding on this issue was:
"The situation in Plewa where the House of Lords held that the presumption against retrospectivity should apply was one in which, in their Lordships view, recipients of benefit were from a practical point of view "being placed under a liability which did not previously exist by a change in the law". That is not the position of the first Respondent if retrospective effect is given to the 1995 Regulations. From 3 March 1994 it was placed, as an emanation of the State, under a similar liability under European law by the decision in the EOC case and was from that date on notice as to that liability."
However the Respondent was dismissed in July 1993. The application of the law as the Tribunal found it to be means that the Appellants were not on notice of any potential liability as at the date of dismissal, which is, as the Tribunal recognised, the crucial date.
Is there anything to displace the presumption against the Regulations being retrospective? To the contrary, submit the Appellants.
The presumption against the regulations being retrospective is, submit the Appellants, made clear beyond a peradventure by the fact that if the regulations were retrospective they would be ultra vires the power under which they were made by reason of Schedule 2 paragraph 1(1)(b) of the European Communities Act 1972. This paragraph precludes the use of the power to make delegated legislation:
"taking effect from a date earlier than that of the making of the instrument containing the provision."
The Appellants submit that the 1995 Regulations are concerned with the lawfulness or unlawfulness of the dismissal of an employee at the date at which that dismissal takes place. It is that circumstance on which the Regulations bite. If the Regulations were to apply to dismissals occurring before the date on which they came into force the Regulations would be "taking effect" - that is, converting what was lawful into something potentially unlawful - earlier than the date of the making of the Regulations.
The Respondent submits that Schedule 2 paragraph 1(1)(b) does not have the effect contended for by the Appellants. On behalf of the Respondent Mr Pullen argues that the words in paragraph 1(1)(b) operate to disallow a piece of subordinate legislation commencing on an earlier date than that on which it is made. The words, he submits, do not preclude the making of retrospective subordinate regulations, but the regulations must not have a commencement date earlier than the date on which they were made. We cannot accept that submission. If such had been the intention of Parliament it would have said so. It did not. The words are clear and in our judgment bear the meaning advanced on behalf of the Appellants.
This same argument in respect of the meaning of paragraph 1(1)(b) was advanced by Mr Pullen as part of his submissions to the Employment Appeal Tribunal in the decision of Harvey v. Institute of the Motor Industry [1995] IRLR 416, a decision to which he referred the Industrial Tribunal in the instant case. In Harvey the EAT was considering whether the Sex Discrimination Equal Pay (Remedies) Regulations 1993 operated so as to remove the compensation limit for acts of sex discrimination which took place before the regulations came into force when ordering compensation at hearings which took place after the regulations came into force. Mr Pullen argues that the decision in that case accepted his submission on the point. An analysis of the judgment of Morison J in Harvey does not support that proposition.
In our judgment there are two vital distinctions between the case of Harvey and the instant situation. First the constructions adopted by the EAT in Harvey did not involve making unlawful an act which was lawful when done. It merely increased the maximum compensation which could be awarded against the person who had done the lawful act. As Morison J said when considering the possible prejudice to employers if the construction contended for by the employee was adopted:
"We must, we think, accept that there may be employers who will find, if we acceded to the Appellant's contentions, that some such decisions would, or might, have been different had they known of the regulations at the time they did the act complained of. Such employers would be prejudiced by the Appellant's construction of these regulations. On the other hand, such employers will, ex hypothesi have committed acts which were unlawful when done, whatever the date of commencement of Regulation 2." (Emphasis added).
Second, the compensation provisions considered in Harvey were provisions dealing with the powers which the Tribunal had when it actually came to adjudicate upon a sex discrimination case and decided that a case of sex discrimination was established. Thus the provisions did not, to use the words of Schedule 2 of the 1972 Act, "take effect" until the adjudication itself took place. In contra distinction, the rules about continuity of employment for the purpose of the 1978 Act do not deal with the powers of compensation of the Tribunal at the date of the hearing but with the lawfulness or otherwise of the dismissal when it took place.
In our judgment the 1995 Regulations apply only to dismissals which took place after those Regulations came into force in February 1995. In so far as the Industrial Tribunal's reasoning in holding to the contrary relied upon the fact that the Appellants were an emanation of the State which in some way eliminated any unfairness which a retrospective enforcement of the Regulations might otherwise produce, the Appellants submit and we agree that the Industrial Tribunal has again fallen into error. Either the Regulations are retrospective or they are not. The answer cannot depend upon the identity of the employer against whom the particular claim happens to have been brought. The consideration of whether an employer is an emanation of the State may have application when considering from what point of time a time limit runs where there is a right under the European law to disapply the domestic law but has no relevance in determining whether domestic regulations simpliciter apply retrospectively or not.
Mr Pullen submits that even if the Chairman was wrong to hold that the 1995 Regulations operated so as to enable the Respondent to seek the amendment he required, the decision to permit the amendment was correct, though on other grounds. He submits that the Appellant is entitled to bring claims of unfair dismissal and for the payment of a statutory redundancy payment because both the Equal Pay Directive (75/117) and the Equal Pay Treatment Directive (76/207) have direct effect as against the Appellant local authority as an emanation of the State. Thus the Respondent's intended claims were not time-barred as at the date of the application to amend and the application could and would inevitably succeed.
If that submission fails, Mr Pullen submits that he should be permitted to argue the Respondent's case under or by virtue of Article 119 of the Treaty of Rome.
The Appellants' first response to these submissions is to assert that the Respondent should not be permitted to advance the arguments at all, whatever their merits may be. The Respondent was legally represented, indeed by Mr Pullen, before the Industrial Tribunal. The Appellants say that at the Tribunal Mr Pullen expressly disclaimed any intention of relying directly upon European Community law, and he should not now be allowed to withdraw the concession, however wrong he was to make it.
For his part, Mr Pullen accepts that he disavowed any intention of relying on Article 119 but did not disclaim reliance upon the Equal Pay Directive and the Equal Treatment Directive. It is to be noted that if he did not do so, the Tribunal appears to have mistakenly thought that he had. Certainly the Tribunal did not rule on the alternative basis upon which Mr Pullen now seeks to argue this appeal.
In the event we do not need to resolve that question. We accept that normally if the point is one of pure law which can be disposed of without any further findings of fact or the exercise of judicial discretion the EAT will allow the point to be taken. On the other hand where a case would have to go back to the Tribunal for further findings of fact to enable the point of law to be argued properly, the EAT should not permit the point to be taken. Between these two opposites lies the middle ground in which, in our judgment, this appeal lies and where we must exercise our own discretion as to whether to permit a new point to be taken.
Much argument was directed to the Industrial Tribunal, many cases cited to it and much energy devoted by the Tribunal itself to the issue of time limits within which the Respondent's claims of unfair dismissal and for a redundancy payment could be brought. It does not appear to have been noticed by either party or the Chairman himself that the hearing was not to determine whether an originating application was within any applicable time limit, but whether the Applicant should be permitted to amend his Originating Application to add further claims. Time limits were of some relevance, but by no means decisive. If the application to amend had been made within any applicable time limit, leave would ordinarily automatically be granted: this indeed was the effect of the Tribunal's ruling in this case.
However, even if an application for leave to amend is made outside the applicable time limits such leave can be and often is granted. Indeed in reality such applications are usually made outside the time limits since a further and fresh application could be made if the time limits have not been exceeded. Whilst there is a statutory time limit covering the lodging of applications to Industrial Tribunals, Parliament has not laid down rules for time limits in relation to amending applications which have already been made. In deciding whether or not to allow an amendment to an Originating Application, the test to be applied is that laid down in Cocking v. Sandhurst Ltd. [1974] ICR 650. The Tribunal should have regard to all the circumstances of the case, in particular any injustice or hardship which maybe caused to any party if the proposed amendment were allowed or refused. The proper questions to be addressed by a Tribunal dealing with such an application were identified by the Master of the Rolls in British Newspaper Printing Corporation Ltd v. Kelly [1989] IRLR 222 as:
"What are the relevant hardships expected to be suffered by the parties if the amendment is or, as the case maybe, is not allowed? and "What would be the injustice to the parties respectively, again, if the amendment is or is not to be allowed?""
No doubt the extent to which the new allegations are out of time is a factor to be weighed by any tribunal in exercising that discretion, but the weight to be attached to it is likely to vary almost infinitely.
Neither the Respondent nor the Appellants invited the Tribunal to have regard to the proper test. We have carefully considered the basis upon which the matter was presented by each party before the Tribunal, and the possibility that there may have been a misunderstanding as to the extent to which Mr Pullen was disavowing the application of European law. ln the wholly exceptional circumstances of this case we consider it would be just and equitable to allow the Respondent to take the points now raised whether or not his representatives have abandoned them before the Tribunal. We wish to make it clear that this decision is not to be taken as anything more than an exercise by us of our discretion on the particular facts of this case.
We turn to consider the question of whether the European law in conjunction with domestic legislation did in fact confer upon the Respondent, at the date of his dismissal, a right not to be unfairly dismissed. In recent months the law relating to time limits for redundancy payments and unfair dismissal has changed dramatically. At the time of the hearing before the Industrial Tribunal the understanding of the effect of the decision of the European Court of Justice in Emmott v. Minister for Social Welfare and Attorney General [1991] IRLR 387 was very different to the present state of the law. In Emmott it was decided that:
"Until such time as a Directive has been properly transposed, a defaulting member state may not rely on the individual's delay in initiating proceedings against it in order to protect rights conferred upon him by the provisions of the Directive and that a period laid down by national law within which proceedings must be initiated cannot begin to run before that time."
It was understood that the effect of this was that if an applicant relied upon the Equal Pay Directive and the Equal Treatment Directive against an employer who was an emanation of the State, time would not start to run against him unless and until the Directives had been transposed into domestic legislation.
Since the promulgation of the decision of the Tribunal the law has been clarified by the decisions of the Court of Appeal in Biggs v. Somerset County Council [1996] ICR 364 and Stafford County Council v. Barber [1996] ICR 378.
The effect of those decisions is, briefly, that the time limits laid down by the 1978 Act apply to a claim by a part-time worker who invokes Community Law in the form of Article 119 of the Treaty of Rome and the Equal Pay Directive. There was no discretion to extend the time in respect of claims for unfair dismissal, because the applicants were unable to satisfy the jurisdictional requirement that it was not reasonably practicable for them to institute their claims within the three month time limit. If the reasoning in those decisions is applied to the facts of the present appeal the result is that the Respondent presented his application to amend about 18 months outside the time limit for making an Originating Application for such relief. If the application had been to present an Originating Application it would have been out of time and there would, in our judgment, be no basis for granting him an extension of time for either claim.
Further, so far as the redundancy payment claim is concerned, although the Court of Appeal in Biggs did not deal with the case of an applicant relying on the Equal Treatment Directive, since that was not in force at the material time, the reasoning of the decision applies in a case such as this where the Respondent also invokes the Equal Treatment Directive. The position under European Community Law is that statutory redundancy payment is "pay" within Article 119 (see Barber v. Guardian Royal Exchange Assurance [1990] ICR 616). "Pay" within Article 119 is excluded from the scope of the Equal Treatment Directive: see Gillespie v. Northern Health and Social Services Board [1996] IRLR 214. The Respondent is not therefore entitled to rely on the Equal Treatment Directive in any event.
The position with regard to compensation for unfair dismissal is different. If unfair dismissal compensation is not "pay" the Respondent may be entitled to rely on the Equal Treatment Directive against the Appellants. Such a claim would not be precluded by the decision of the European Court of Justice in Gillespie. Unfair dismissal in other respects falls within Article 5(1) of the Equal Treatment Directive. On that basis the principle in Emmott would require the Tribunal to disregard the time limit until the requirements of Article 5(1) had been properly transposed into domestic law by the 1995 Regulations. The decision of the Court of Appeal in Biggs did not affect this argument, since that case was concerned with a dismissal which took place before the Equal Treatment Directive came into effect.
In a number of recent decisions of the EAT and the Court of Appeal it has been held that there is a very strong argument in support of the proposition that compensation for unfair dismissal is "pay" but the question has yet to be determined decisively. It is anticipated that the House of Lords will address the question directly in an appeal due to be heard in July 1996 from the decision of the Court of Appeal in R v. Secretary of State for Employment ex parte Seymour Smith [1994] ICR 885.
If the House decides that compensation for unfair dismissal is "pay" the Respondent will not be able to rely on the Equal Treatment Directive. If, however, the House decides to the contrary prime facie the Respondent can rely on the Equal Treatment Directive and furthermore his application to amend was submitted within three months of the 1995 Regulations so that no exercise of discretion is likely to be required.
However, the Appellants point to an additional difficulty facing the Respondent even if it were held that compensation for unfair dismissal is not "pay". All the provisions upon which the Respondent relies are ones which are directed towards equal treatment between men and women. The House of Lords held in the EOC case that the provisions in the Employment Protection (Consolidation) Act Schedule 13 which restricted the rights of part-timers were indirectly discriminatory against women (emphasis added). The Respondent is a man. Accordingly, it is argued, the application of the Schedule 13 provisions cannot, as such, have made him the victim of unlawful discrimination. Further there is no evidence of a female part-timer being dismissed by the Appellants at the same time as the Respondent having been treated more favourably than the Respondent. This interesting argument has not been considered by the Tribunal but plainly raises an arguable point.
We are not persuaded for the reasons set out above that the decision of the Tribunal to grant the application to amend can be upheld on the alternative grounds advanced by the Respondent. We are quite satisfied that the Respondent cannot rely upon European Community law in support of his application to amend seeking a redundancy payment and we are not persuaded that the law in relation to compensation for unfair dismissal entitles him to advance such a claim either.
In those circumstances this appeal will be allowed and the amendments to the Originating Application ordered by the Chairman will be set aside. Whilst we do not seek to encourage the Respondent to entertain any hope that a further application will be successful our decision does not, of course, preclude his making a renewed application to amend based on the Equal Treatment Directive in conjunction with domestic law if the legal position improves to his benefit. It seems to us that it is unlikely in reality that if the Tribunal has jurisdiction to determine an application for unfair dismissal that the Appellants will suffer any great hardship even if that claim has been brought a considerable time after the dismissal occurred. We make that observation bearing in mind that the Respondent's principle claim of unlawful race discrimination was lodged within the prescribed time limit and included an allegation that he had been discriminated against in the circumstances of his dismissal. Thus the Appellants have been on notice since shortly after his dismissal that the Respondent was alleging his dismissal to be unlawful in that it was tainted by discriminatory conduct.
We have considered whether, should an application be made to us, we would be prepared to grant leave to appeal in this case. If such an application is made, we would refuse it.