United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	NO APPEARANCE BY OR REPRESENTATION ON BEHALF OF THE APPELLANTS/RESPONDENT
For the Respondent


 


MR JUSTICE KEENE: These are two appeals which we shall deal with separately. The first is an appeal against a preliminary decision that the Respondent, Miss Sivyer, had had two years' continuous employment at the date of her dismissal, 19 April 1996, and that therefore she had the right not to be unfairly dismissed. That decision by the Industrial Tribunal was made as the result of a hearing on 11 February 1997 and was entered on the register on 19 February 1997.

The appeal is brought in the name of The Stamp Warehouse Ltd, although the Tribunal decision has the employer identified as Mrs Margaret Wright and C.F. Nash t/a The Craft Barn. That was how appearance had been entered on behalf of the then Respondents, the employer, in their IT3. We understand that the Craft Barn is, in fact, the trading name of The Stamp Warehouse Ltd and we shall proceed on that basis.

Miss Sivyer had been employed originally by a company called Funstamps Ltd t/a Stamp It For Fun. She started working for that company on 13 August 1993. The company dealt in rubber stamps for hand-blocking decorative paper and cards. At that time the Manager was Mrs Margaret Wright. However, in August 1994, Mrs Wright left the company and set up in business in competition in nearby premises. She was frequently at the Funstamps premises.

The Tribunal below found that from that time Mrs Wright planned to acquire the Funstamps business. She succeeded in June 1995 after some negotiations. Before she did so she told Miss Sivyer what she was doing and that she would employ Miss Sivyer and the part-time workers, who were also employed by Funstamps Ltd, after the take-over.

On 5 June 1995 Funstamps Ltd gave Miss Sivyer notice of termination, notice to expire on 9 June 1995. They sent her P45 and they paid her one month's pay in lieu of notice and accrued holiday pay. On 9 June Mrs Wright told Miss Sivyer to come into work on the following Monday, 13 June, as normal. Miss Sivyer did so and continued to work at the same premises with the same stock. The only difference was that the business was renamed The Craft Barn. It seems also that Miss Sivyer's rate of pay was somewhat lower then than it had been while she was working for Funstamps Ltd.

The Tribunal, in its decision, referred to Regulation 5 of the Transfer of Undertakings Regulations 1981, which reads as follows:

"A relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee."

The Tribunal stated that the effect of those Regulations and Section 218 of the Employment Rights Act 1996 is that a transfer of business does not break the continuity of employment of an employee and it cited the European Court of Justice decision in Rotstart de Hertaing v J Benoidt SA (in liquidation) [1997] IRLR 127, as supporting such automatic transfer.

The Respondent argued before the Tribunal below that, as a result, her period of continuous employment had not been broken in June 1995, and that therefore she had the requisite two years of continuous employment.

The present Appellant had argued that there was no transfer of a business, but that Mrs Wright and C.F. Nash purchased the stock of Stamp It For Fun from Funstamps Ltd and that the contracts of employment of the staff had been terminated before the transfer.

The Tribunal however, concluded otherwise. It stated, and we quote paragraph 9:

"It is clear that there was a transfer of the business and that Miss Sivyer's employment was continued by operation of law through the transfer from Funstamps Ltd to the Respondent. The notice of dismissal did not operate to terminate Miss Sivyer's employment and nor did the transfer. So Miss Sivyer's employment was not terminated on 9 June 1995 but continued until she was ultimately dismissed in August 1996. It follows that she has two years' service at the effective date of termination and that she had the right not to be unfairly dismissed."

The Appellant employer relies on written grounds and representations in this appeal and does not appear and is not represented before us today. The same is true of the Respondent.

The Appellant's argument is that, while it is true that the contracts of existing employees are not terminated by the transfer of undertaking as such, the Respondent's contract of employment had already been terminated by her previous employer by the time of transfer. She was not an existing employee therefore at the date of transfer or immediately before, and so it is submitted that the 1981 Regulations and other sources of law relied on by the Tribunal below do not achieve continuity of employment in this case. It also argues that the Tribunal failed to give reasons for its decision with sufficient clarity.

The Respondent also relies on representations in writing and refers to a number of cases said to have been cited before the Industrial Tribunal. Those include Litster v Forth Dry Dock & Engineering Co Ltd[1989] IRLR 161.

The Tribunal was right in saying that, by virtue of the 1981 Regulations and Section 218 of the Employment Rights Act 1996, the transfer of an undertaking by itself does not break the continuity of the period of employment. Section 218(2)(b) provides that in terms. That, however, did not deal with the employer's argument which relied on the express termination of the employee's employment by her original employer, by means of the notice of termination dated 5 June 1995.

The Industrial Tribunal found that the notice of dismissal did not operate to terminate Miss Sivyer's employment. The Tribunal does not explain in its decision why not, and we note that Funstamps Ltd had paid her one month's pay in lieu of notice, which she apparently accepted. It may be that the Industrial Tribunal took the view that the 1981 Regulations and Section 218 had the effect of automatically continuing her employment, not only despite the transfer of the undertaking, but also despite the notice of dismissal. If so, that could raise an important and interesting point of law, but at the moment we find it impossible to discern why the Tribunal concluded as it did on this significant aspect of the case.

It is, of course, for the Tribunal below to arrive at such findings of fact as it thinks fit and whether or not a notice of dismissal terminated an employee's employment will, in part at least, be a finding of fact. It will also, on the other hand, involve considerations of law. In any event, in the circumstances which we have described, we have reached the view that the Industrial Tribunal here failed to give clear and adequate reasons for its decision in respect of the effect of the notice of dismissal, and we propose therefore to allow the first appeal to that extent and to remit this matter to the same Industrial Tribunal for it to deal with the deficiency in its expressed reasons. It may, if it thinks so fit, also reconsider that decision itself.

That deals with the first appeal.

The second appeal is against an interlocutory decision made by the Tribunal as a result of a hearing immediately after the preliminary hearing on 11 February 1997. The decision on the interlocutory directions hearing was communicated by a letter dated 17 February 1997. Again, the Appellant was not represented at that hearing.

In a letter dated 17 February 1997 the Chairman's directions were set out. Those directions begin by identifying the issues. The first issue so identified was whether the employer had unfairly dismissed Miss Sivyer. The second issue was expressed as follows and we quote:

"(2) whether the Applicant is entitled to damages for breach of contract: the breach of contract alleged by the Applicant is the Respondent's continuous treatment of the Applicant from June 1995 to the effective date of termination which the Applicant alleges was a breach of the implied term that neither employer nor employee will act so as to breach the relationship of trust and confidence which should exist between them."

There was then a third issue so identified, which was described as a claim under Section 13 of the Employment Rights Act 1996, that is to say a Wages Act claim which might also be formulated.

The letter then goes on to direct certain particulars, including particulars of every act relied on by Miss Sivyer, amounting to the breach of the implied term referred to. The letter then fixes the full merits hearing for 16 April 1997.

The Appellant, in its Notice of Appeal on this appeal, points out that the issues thus identified amount, in its view, to additional claims by the Respondent. Her IT1, the Originating Application, on the face of the form alleges "harassment and unfair dismissal", although it is right to say that that same form, under box 12, the details of the complaint, says: "Typed on separate sheets" and there are then a large number of separate sheets running on for many pages, which set out those details.

The Appellant submits, in its written representations to us, that the claims for breach of contract and the claim under the Wages Act, identified in the letter of 17 February, are out of time. It says this and we quote:

"Miss Sivyer did not intimate or pursue either of these claims within the specified time limits, and there appears to be no evidence that it was not reasonably practicable for her to present such claims within the time limits. The Industrial Tribunal gives no reasons for allowing such out-of-time additions, and thus errs in law and demonstrates perversity in allowing the addition of these claims, or instructing that they be added. Indeed, it is not clear from the Extended Reasons how the addition of these claims came about: whether at the Employee's request, or at the direction of the Tribunal Chairman unprompted by the Employee or her representative.

For the Appellants, a request for review of the Tribunal's decision in regard to these additions was made immediately notification of their inclusion was made known, which was in the Tribunal's letter to ourselves of 17 February 1997. That request for review has been refused by the Chairman, with the comment that the accusation of breach of contract is raised by Miss Sivyer's grounds of complaint. As the Tribunal has only now asked Miss Sivyer to itemise any actions considered to amount to breach of contract, it is hard to see how that statement can be justified.

In regard to the complaint of unlawful deduction from wages, the Chairman now directs that we 'may make your representations as to whether the complaint is out of time to the Tribunal at the start of the hearing on 16 April.' The Appellants find that position most unsatisfactory and prejudicial."

The Respondent, in her written representations on this aspect of the matter, argues that there was no amendment of the original application at the directions hearing, or as a result of it. It is said that the Chairman wanted to know under which heading she was bringing the harassment allegation contained in the Originating Application, and the Respondent then states that it was decided by her representative that this fell under the heading of breach of contract.

The representation goes on to say that:

"The claim under the Employment Rights Act has not been decided on whether it can be taken. This is going to be decided at the merits hearing to be held on April 16th 1997."

An Industrial Tribunal has power to allow claims to be made out of time, so long as it is satisfied that it was not reasonably practicable for the claim to have been brought within three months. However, it does not appear to us, that that is what the Tribunal Chairman was doing in this case.

Having read the many documents constituting the Respondent's Originating Application, we can see that the Industrial Tribunal Chairman was anxious to clarify what the then Applicant's claims were, as a matter of law. As we have indicated, those claims were set out in a large number of pages and were not easy to classify, if left simply as they stood.

The Chairman, in our view, was entitled to identify more clearly what the claims contained in the IT1 and supporting documents were, so as to assist in the eventual disposal of the claims at the full hearing in a reasonably efficient manner. The Chairman was able to discern that the allegation of harassment, set out in the IT1, amounted in fact to an alleged breach of an implied term in the contract and therefore the Chairman identified that as one of the issues.

We do not see anything wrong in that proceeding. It is important that the procedures before an Industrial Tribunal should remain reasonably flexible so long as injustice is avoided. Originating Applications are often drafted by laymen, as happened in this case, and it is sometimes going to be inevitable that the Tribunal itself, or its Chairman, should seek to assist such Applicants in order to put their claim into a form which is recognisable to those who are legally qualified. Has there, or will there be, injustice, as a result of that procedure being adopted in this case?

The Appellant was told in advance that there would be a directions hearing on 11 February. The Appellant was notified to that effect in a letter sent by the Industrial Tribunal's office, dated 3 February 1997. That letter dealt first with the preliminary hearing on that date, as to whether or not the period of two years' continuous employment had been satisfied, but the letter then concluded in the following terms:

"Please note that if the Tribunal decides the preliminary issue in the Applicant's favour, the Tribunal will proceed to make any necessary directions (including the arrangement of dates) for the merits hearing. Both sides should come to the Tribunal prepared for this."

It must have been clear to the employer's representatives on receipt of that letter that the directions in relation to the merits hearing would not necessarily be confined to the issue of unfair dismissal, but would be likely to impinge upon the harassment claim as well, or the form in which that harassment claim might more properly be presented. The problem that has arisen in this appeal comes about very largely from the Appellant's failure to attend or to be represented at that hearing.

There is, in any event, to be a further hearing in the present case at which the Appellant will be able to put forward any representations in respect of the Wages claim and could also seek an adjournment, if it considers that it needs more time and has been prejudiced by the way in which the Tribunal Chairman formulated the issues in that decision of 17 February. Whether such an adjournment should be granted or not is a matter for the Tribunal below, as is the question of whether the date fixed for the hearing should stand. We do not propose to get involved in those questions in this appeal decision.

It seems to us that that ability to seek an adjournment on that date and/or to argue about these issues on that date will ensure that any injustice which might otherwise result from the identification of the issues in the way in which the Chairman has identified them will be avoided.

We can therefore see nothing wrong in law in the decision which has been made in this case as to the appropriate directions.

In those circumstances this second appeal will be dismissed.