United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 391_95_2802

Appeal No. EAT/391/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 28th February 1996

HIS HONOUR D JUDGE PUGSLEY

MR L D COWAN

MRS P TURNER OBE

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CRAY SYSTEMS LTD          APPELLANTS

MISS A WHITE          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR A HILLIER

(of Counsel)

Messrs Shoosmiths &

Harrison

Regents Gate

Crown Street

Reading

Berkshire

RG1 2PQ

For the Respondents MISS A WHITE

(In person)


 


JUDGE PUGSLEY: Industrial Tribunals were established to provide an expeditious and economic means for employees to put their case without an elaborate trapping of legal formality. It is not always the employee to whom injustice can be done. A small employer might not be able to afford to become involved in protracted litigation. Equally, someone who has just acquired a job cannot often afford to take the time off, especially if it is lowly paid, to go to a tribunal. Therefore there is a right to make written submissions rather than attend a Tribunal hearing.

It is against that context that we have to look at the appellant employer's appeal against the decision of London (North) Tribunal.

Ms Anna Rebecca White, who had been employed by the employer, Cray Systems, had not had a pay rise but in letters which are set out at page 18 of the bundle she was told she was to be paid a commission of some 1% on invoice. By a letter dated 18th March 1994, page 19, Ms White set out her agreement to that. Events then took a different turn, in that the applicant was made redundant, and she, not unnaturally, brought a claim for a bonus and a commission. As far as the bonus is concerned, she was awarded the sum of £660 by the tribunal. It is significant to note that it was certainly suggested in a letter to the appellant, page 37:

"... you may wish to know that Nigel Coxon informs me the results for the quarter in question were such that no bonus would have been earned anyway."

The tribunal found a bonus was payable and it has been made quite clear that that part of the decision is not now being appealed.

The guts of the matter, to use an inelegant phrase, is set out in paragraph 2 and 3 and the first part of paragraph 4 of the decision. It is worthwhile to quote those particular paragraphs:

"2 We considered the matter with the Applicant. She said that she had received an order from Lovell White Durrant and said that by the date when she was dismissed for redundancy this order had progressed to the stage where Lovell White Durrant had sent to the Respondent a draft contract for the supply of these goods. The matter had not proceeded further because of the decision of the Respondent to close down that part of its business. The Applicant's case was that as she had taken the matter to the point where but for the closing down of the Respondent's business the order would have been concluded she was therefore entitled to commission on the basis that it was not any fault of hers that the order had not gone through to a conclusion. On the question of the quarterly bonus she also submitted that since she had been dismissed through no fault of hers she was entitled to receive a pro rata bonus for the part of the quarter during which she had worked on the basis of the order which she had achieved during that quarter.

3 Our view on this was as follows. We find that if as here an Applicant is prevented from earning commission and bonus to which she would otherwise have become entitled because of some action of the Respondent such as here the closure of that part of their business which leads to the employee's dismissal for reasons of redundancy or for other reasons which are not the employee's fault then the employee is entitled to commission pro rata and a bonus pro rata provided that the employee has during the continuance of the employment has done all that the employee can to secure the order and the payment of bonuses and has only been prevented from earning them by some action of the Respondent for which she is not responsible and which is outside her control.

4 On the basis of this proposition we find in relation to the order from Lovell White Durrant that the Applicant had progressed this matter as far as she could and that she was prevented from earning commission on an order that would almost certainly been placed by the action of the Respondent in deciding not to go further with that part of their business. ..."

The tribunal who heard this matter obviously approached it with care. The only matter they had before them were the respondent's submissions both as to the commission and bonus. The respondent's written submissions did not deal with the issue which the tribunal found to be the live issue set out in paragraph 3.

We do not make any secret of the fact that we have every sympathy with the applicant. Mr Hillier who appears for the appellant told us that he thought he would come under fire and he has dealt with the matter with good humour and robustness. The reason he has come under fire is this; the respondents chose not to go to the tribunal. They are now raising a highly sophisticated argument and we have considered whether it was right that they could raise that argument, because in the applicant's words "why were they being allowed two bites of the cherry". We do not think that she will be under any doubt where our sympathies lay. She went along, she presented her case, the respondents chose merely to do it by written particulars, to which they are perfectly entitled to do. But why should her employers now come to the Employment Appeal Tribunal, learned Counsel being instructed, to raise arguments that had never been addressed to the tribunal?

However, in fairness, we have to say this; the respondent dealt with the matters that were in the applicant's originating application. But the tribunal did decide it, and we are not criticising them, on a basis which the respondent did not have an opportunity of dealing with.

We have come to the view that the argument Mr Hillier has addressed to us, foreshadowed in his skeleton argument, makes it quite clear that the tribunal have misdirected themselves in law. In so doing, it arises purely, from what we are quite sure, is a wholly laudable attempt to deal with the matter in a fair and equitable way.

We have to bear in mind that we are dealing with a claim for commission. A commission is rough justice. A sales negotiator on a new housing estate on a modest salary, may earn a lot of money if a number of people happen to come and buy a number of houses very quickly. But if, for example, there is some dramatic change in financial fortunes, or, let us say, some security scare that means that people are not likely to travel to such an area, that person can go to work sometimes for little or no financial gain.

We have every sympathy with applicant. The truth of the matter is that she probably had done all the work she could have done and she has not got any money for that. But that to some extent is the nature of commission. Similarly, it may have been, if life had been different, she might have earned a considerable amount of money with a minimum amount of work.

The correspondence in March 1994 did not deal with this issue: what happens if the employer decides that they are not going to continue in this area of work? We have struggled to find what term could be implied as a matter of business efficacy. We have thought of the range of circumstances which might apply. The applicant might, for example, have been struck down by some disease after she had done all the work, but before the invoicing. The applicant might have been dismissed for reasons totally unconnected with redundancy. The product might have been found, speaking hypothetically, to have been defective. It might have been, in certain circumstances (though not in this case) that the customer had gone into liquidation.

We cannot say that as a matter of business efficacy there should be implied the term which the tribunal found in this case. Of course the parties might have got together and negotiated a specific term, such as, that if the employee successfully obtains a draft order, but, for reasons through no default of the employee the company no longer sells and supplies these items, then a percentage of the commission should be payable. The company may have sat down and negotiated very specific terms. But we cannot say that it is possible to imply any term which is that precise. In fairness to the respondent company, their term is not so draconian as to depend on payment. Had the applicant been fortunate enough to be there when a sale was invoiced, even though the company was not paid, she would have been entitled to her commission.

At the end of the day paragraph 3 of the decision sets out a conclusion of law without the reason for that proposition of law. It sets out a general fairness test but does not identify what is the particular breach of contract which arises, which would enable the applicant to succeed in her claim under the Wages Act. We can fully understand their wish to see the applicant compensated. In saying that we are very mindful that, unlike ourselves, that tribunal did not have the benefit of Mr Hillier to assist them. In our view the tribunal set out an implied term which cannot be said to be necessary to give commercial efficacy to the contract.

Ms White, who has behaved with great dignity throughout, has been given the opportunity to argue the case be remitted to the tribunal. She has, while maintaining her arguments to us as to why she should be paid, has not sought that. We actually think that she has made a very wise decision. We have considered the arguments, but at the end of the day we are bound to say we do not think a tribunal could frame an implied term sufficient to enable her to recover this money. Therefore, we allow the appeal, in so far as it concerns the commission. We note that no appeal takes place as far as a bonus, and although we are told in the skeleton argument, that has been paid, we understand that that is not actually the case. We are confident that this sum will now be paid.

We cannot leave this without dealing with one matter. It is simply this: in their letter to the applicant in the penultimate paragraph, Mr Klinger, who described himself as "Legal Counsel" wrote this:

"The Tribunal's jurisdiction under the Wages Act relates to unlawful deductions from wages, which is not the case here. Please will you now agree to withdraw your claim and save us all the time and expense of attendance at a hearing in London on 9 February. If you do insist on a hearing despite the information provided, I regret that I will have to seek an order for costs and for reimbursement of the overpayment from the Tribunal Chairman if he confirms my view of law on this matter."

We regret that letter was written. This applicant has succeeded as to part of her claim and it is not the subject of an appeal. She had every cause to feel that she had a case. It is only in exceptional circumstances that orders for costs are made, and we are bound to say that applicant has done nothing in our view to come anywhere near the position where she should be stigmatised by any order against her for costs.

The appeal is allowed in so far as it applies for the commission concerned.