United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS A DENCH The Appellant in Person
For the Respondents	MR N P S MILLS (Solicitors) Fynn & Partners 70 Richmond Hill Bournemouth Dorset BH2 6JA


 


JUDGE JOHN BYRT QC: This is an appeal against the decision of an Industrial Tribunal sitting at London South. The decision was promulgated on 29 November 1996. By that decision it held that Miss Dench, the employee, had been unfairly dismissed in a redundancy situation and she was entitled to compensation for that. It also dismissed her claim for the recovery of money to which she claims she was contractually entitled.

The compensation for unfair dismissal is yet to be determined. Miss Dench now appeals the dismissal of her claim in contract.

The facts, shortly, are that in late 1991 Miss Dench, who was then a lady in her early twenties, was employed by the Respondents, a firm of solicitors in Bournemouth, as an articled clerk. At that time the Respondents were a branch of a large firm of solicitors, named Penningtons. In due course she was admitted as a solicitor and was offered a job by the Respondents in the domestic conveyancing department of their Bournemouth branch. There was then an unfortunate decline in work, so that the fruits it was expected would be derived from the collaboration between Penningtons and the Bournemouth office were not realized. In consequence, proposals were made for a demerger of the Bournemouth branch from Penningtons. They would thereafter operate as a separate firm, trading under their present name with their present partners. The demerger finally took place on 13 July 1995. In advance of that demerger the partners of the branch firm, the new firm that was to be, considered the matter of their future further and decided that they did not have enough work for Miss Dench once they became demerged. The result was that on 16 June 1995 Penningtons, the firm still nominally in existence as being in charge of the branch office, served notice on Miss Dench, terminating her contract of employment as from 16 September 1995.

To cut a long story short, the Industrial Tribunal held that the employers had given insufficient attention to considering whether a suitable alternative employment might be found for Miss Dench and, accordingly, they found unfair dismissal.

Now for Miss Dench's money claim. In 1994 Penningtons introduced a profits-related pay scheme. First, for the scheme to become effective, the Inland Revenue required that at least 80% of the staff should join. It then needed a company to be formulated to take over the employment of the staff from Penningtons, a firm of partners. Next, the scheme, with all its tackle in order, needed to be placed before the Inland Revenue for their approval. Once that approval was obtained, the scheme needed to be registered before the tax benefits which everybody anticipated would be derived from it, could be obtained.

The view of the staff was canvassed in February 1994 with a view to finding out how many people would be prepared to subscribe to such a scheme. In February 1994 a memorandum setting out the scheme at length was circulated to the staff and they were asked to intimate by 7 March whether they were attracted by the proposal. One assumes and, I think, rightly so, that Miss Dench must have indicated that she was at least interested in the new scheme because on 24 March 1994 she received a letter from her employers in which the new contract which was proposed was set out in detail and she was asked to indicate within a short time whether she accepted. On 28 March she endorsed, as she was required to do, the letter of offer signifying that she accepted the terms put to her. In effect, that was a contract between herself and Penningtons whereby her employment would be transferred to a new company and thereafter she, together with other members of the staff, would participate in the profits-related pay scheme. The letter of offer made plain that the new arrangements would come into effect from 1 April and, indeed, they would set out the basis upon which in future she would be paid her salary and that was all said to be beginning with 1 April.

As the Industrial Tribunal found in the centre of paragraph 12 of their reasons, the original intention of Penningtons was that the scheme would be registered by 1 April 1994. Had it been so registered, Miss Dench would have been entitled under the scheme to tax benefits and, indeed, the payment of £380 which she now claims, had she been in the company's employment on 30 June 1995. She, in fact, was in such employment on that date.

As it happened, however, the scheme was not registered by 1 April. It was not registered until 1 August 1994. The only explanation for Penningtons' failure to register it by 1 April is contained in a memorandum dated 13 September 1994 in which they said that there had been an administrative error for which no blame attached to the firm. The result of the registration was that only those persons who were employed by the Respondents as of 30 November 1995 would be able to participate in the payments out under the scheme. As Miss Dench had left the Respondent firm by that date, the Respondents' case is that she did not qualify for the final payment out for that year.

Before proceeding to consider the merits of the parties' respective cases, we should say that no question of identity arises in this case. The Respondents took over the debts and liabilities of Penningtons on the demerger and if they did not do so by reason of the contractual arrangements between them, they would have done so under the provisions of the TUPE regulations.

On those facts the Industrial Tribunal found as, indeed, they had to, that, under the terms of the scheme, as endorsed and approved by the Inland Revenue and registered, Miss Dench was not entitled to payments because of when the scheme was registered and because of when Miss Dench left her job. We do not think that there is any dispute about that. But the Industrial Tribunal went on to find as follows: that there was an implied term of her contract with Penningtons, that the profit-related pay scheme would not take effect until registration. In one sense that is an obvious conclusion because the scheme would not become valid or legal until it was registered but as Mr Mills, for the Respondents, said, it is implicit in that finding that the contract itself did not become effective until such time as the scheme was registered.

The Industrial Tribunal thereafter seems to have thought it would follow that if the contract itself was suspended until there was a registration of the scheme, there was no breach of any contractual term arising from the Respondents' failure to register by 1 April. Miss Dench makes two points: first, she says the contention of the Respondents that there was an implied term that the effect of the contract would be suspended until such time as the scheme was registered, was only raised by the Respondents in their final submissions before the Tribunal. The oral evidence had been completed on 4 October 1996. Time thereafter was running short and the Industrial Tribunal directed that the submissions of both parties, following upon the giving of that evidence, should be in writing; that those submissions should be lodged with the Tribunals by 17 October. As far as we can understand both parties submitted their written submissions by that date. Miss Dench submits that when on 29 October the adjourned hearing took place, she had still not seen the Respondents' written submissions and, in consequence, had no warning or sight of the Respondents' contention about the implied term that the contract would be suspended until such time as the scheme was registered. She says this is tantamount to a breach of the rules of natural justice.

We should say in parenthesis that Mr Mills has indicated that on 29 October his recollection is that he also had no sight of Miss Dench's written submission, thereby giving some credence to what Miss Dench herself has contended. However, this allegation was put to the Chairman of the Industrial Tribunal and he replied through the Regional Industrial Tribunal Office that he ensured that Miss Dench had a copy of the Respondents' submissions at all stages of the hearing. We feel that we cannot go behind that answer and, accordingly, we decline to find that there has been any irregularity in the proceedings and so the matter lies.

Returning to the second point Miss Dench makes, namely whether there were implied terms which would enable her to recover and, if so, what they were; the principal question we have to ask is whether Miss Dench has proved any contractual term which would enable her to recover the sum she now claims under the profit-related pay scheme. There are two possible terms; first, a contractual warranty that Penningtons had secured the approval and registration of their scheme or would have done so by 1 April. Miss Dench recognizes that there is no express term in the contract she signed to that effect. She also accepts that, for there to be an implied term, she would have to suppose a number of assumptions she would not be entitled to make. She would have to assume that 80 percent of the staff had already signified their agreement to the scheme before she signed herself, that the scheme had already been submitted to the Inland Revenue who had already approved of it and that it had been registered. The second possible term is one which Miss Dench has relied on, namely the implied term that Penningtons would use their best endeavours to secure registration by 1 April 1994. The way she actually put it in argument is that if there was evidence before the Tribunal that the scheme had not been registered because of a fault of the Inland Revenue, there would be no breach of contract but if, on the other hand, registration did not take place because of the fault of Penningtons, there would be such a breach.

It is our view that such a contention is arguable and we have come to that conclusion because of the terms of the contract offered in the letter of 24 March. There are firm assertions in that document as to what would happen as from 1 April 1994. We also take note of the fact that, as from 1 April 1994, Penningtons operated the profit-related pay scheme, effected the transfer of their staff to the company, and in all senses acted as if the contract was in being.

We have said that there is case which is arguable but there are two difficulties so far as Miss Dench is concerned. The first is this: where is the evidence that Penningtons did not use their best endeavours? We have already referred to the memorandum dated 13 September 1994 in which Penningtons said that the failure to register was due to an administrative error which was no fault of the firm and there has, indeed, been recorded in the Industrial Tribunal's reasons no evidence to contradict that assertion. The second difficulty is that paragraph 18, which embraces all the relevant findings of the Industrial Tribunal relating to this part of Miss Dench's claim, says the Industrial Tribunal was unable to find any breach of a contractual term which would enable her to substantiate her claims. Stated thus simply, this is a bold statement without any reasons being set out to indicate how and why they came to that conclusion.

What the Industrial Tribunal did find was an implied term that the contract would not be implemented until the scheme was registered and, therefore, it is implicit in their findings that there was no contract upon which Miss Dench could rely up until such registration, that is, until on 1 August and, consequently, they are saying that there was no contractual obligation prior to that date upon which she could rely.

However, there are two difficulties about this proposition, too. For there to be an implication of such a term there had to be some grounds upon which the Industrial Tribunal could have come to that conclusion. Most often such a term would be implied from the contractual documents and from the conduct of the parties. In this particular instance, the Industrial Tribunal could not have relied upon the conduct of the parties because, as we have already indicated, the Respondents acted as if the scheme had been inaugurated on 1 April. The second difficulty is that in coming to their conclusion that there was such an implied term, the Industrial Tribunal do not set out any of the facts upon which they rely to substantiate such an implied term. We have been referred by Miss Dench, to the well-known case of Meek v City of Birmingham District Council [1987] IRLR 250 and we have been referred by Mr Mills to the case of UCCAT v Brain [1981] IRLR 224.

We are mindful of the effect of those two authorities. It is incumbent on an Industrial Tribunal in giving its reasons to set out sufficient of the facts to tell the story and thereafter to enable the parties to the litigation to consider the inferences drawn from those facts, and whether the Industrial Tribunal had committed an error in law. The same goes for this Tribunal. It is impossible for us to fulfil our review functions unless the Tribunal sets out sufficient facts to enable us to see how they arrived at their conclusions in law. In this case we are satisfied the Industrial Tribunal's findings, as set out in paragraph 18 are not sufficient to enable us or the parties to come to any conclusions about whether they had erred in law or not.

The crux of this case is really quite a complicated contractual point and we have every sympathy with the Industrial Tribunal in that it is apparent that they had little assistance from either party. The pleadings of both parties set out the point in the very briefest of terms and so far as the closing submissions are concerned, whilst ostensibly the parties had the opportunity on 29 October of arguing the point, it is quite plain by reason of the fact that they had had limited opportunity of advance warning what the submissions of the other side might be on the issue, the Industrial Tribunal had submissions of little value put before them.

We think, subject to an issue referred to below on jurisdiction, that we would have no alternative but to set aside the Industrial Tribunal's finding on this limited issue, and remit the matter to the Industrial Tribunal for reconsideration. Owing to the fact that the Chairman of the Tribunal which made the decision in this case has now retired, we would direct that it be re-heard by a differently constituted Tribunal.

The issue on jurisdiction can be shortly stated. Owing to a lacuna in s.21 of the Industrial Tribunal Act 1996, it would seem that this tribunal presently has no jurisdiction to hear an appeal arising out of a contractual issue. Accordingly, we think the most appropriate way to deal with this difficulty is that the handing down of this decision should be postponed until the jurisdiction issue has been rectified. At that point in time, the appeal will be allowed with the direction intimated above.

[N.B. I recollect that the issue of jurisdiction was raised at the end of his judgment. I cannot recollect the precise terms in which it was so raised but it was dealt with along the above lines. J.B.]