United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR N ROBERTSON (Solicitor) Rowe & Man 20 Blackfriars Lane London EC4V 6HD
For the Respondent	MR D McCARTHY (of Counsel) TGWU Transport House 16 Palace Street Victoria London SW1E 5JD


 


JUDGE J HICKS QC: Mr Dorey, the Respondent to this appeal, had been employed by the Appellant, Calor Gas Ltd, as an HGV fitter since 1978. On 20 May 1996 his depot was told that that depot was closing and that all except three drivers would become redundant.

On 12 July the employers wrote Mr Dorey a letter which he received on 13 July, the exact terms of which are important and to which we must therefore return, but it referred to the fact that his employment would be coming to an end because of redundancy on 31 July unless suitable alternative employment could be found for him. In the event, he was asked to work beyond 31 July for a few days and his last day of work was 2 August 1996.

Mr Dorey made an application to the Industrial Tribunal on 8 November 1996 complaining that he was unfairly selected for redundancy and since that was over three months after 2 August, when he stopped work, the employers took the point that the Tribunal had no jurisdiction because the application was out of time - out of the three months allowed - and that issue was dealt with by the Chairman of the Industrial Tribunal, as a result of which the Chairman came to the conclusion that the effective date of termination of Mr Dorey's employment, on the true construction of the letter of 12 July, was 4 October 1996, so that the notice of application was in time and the Tribunal had jurisdiction. It is against that decision that the employers now appeal.

In order to deal with the issues raised on the appeal, it is therefore necessary to consider the full terms of the letter of 12 July, or at least all those which could have any possible bearing on the issues, because it was that document which the Tribunal purported to construe. It reads:

"Dear Mr Dorey

Further to the discussions you have had recently with your manager, I am writing to confirm the redundancy of your position which is as a result of re-organisation.

Unless there is suitable alternative employment that can be offered to you within the Company, your employment will be terminated on grounds of redundancy with effect from 31 July 1996.

You are eligible to receive a payment which is detailed below based on the Company's standard redundancy terms.

This payment is based on a date of commencement of 24 April 1978 and a date of birth of 21 October 1944 and includes entitlements to statutory redundancy pay and payment in lieu of notice.

TOTAL REMUNERATION (tax free) £16,743.30

Any holiday which is outstanding will be paid to you, but will be taxable.

The Pensions Department will be in touch with you concerning all matters relating to your pension."

Then there is a reference to share options, which nobody suggested has anything to do with the issues before us and, similarly, a reference to bonus, a paragraph thanking him for his services and wishing him all the best for the future and a request to sign and return the enclosed copy of the letter, indicating his understanding and acceptance of its contents. It is common ground that he did that, although the copy in our bundle does not contain that acknowledgement and signature.

Attached to or enclosed with that letter was a document headed "Redundancy Estimate", laid out as follows. After the heading came name and location and the title of his employment, something called band, date of birth, date of commencement, both of which are as in the letter, with against them the corresponding figures for his age and length of service, redundancy quotation "based on a salary of", and then the salary figure is given annually and per week.

Then these two boxes, because the whole of this document is laid out on a printed form: "Based on a leaving date of" (that is in type) and against that 28.6.96. Then "Calculation date" (typed) and against that 20.9.96. Then:

1. "Statutory Redundancy" - a box to insert the number of weeks pay which is given as 23 and a figure for that;

2. "Non-statutory payment" - again the same number of weeks pay and a figure for that: and

3. "Additional payment equal to the individual's notice period" - again a box for the number of weeks' pay which is given as 12 and a figure for that.

Then the figures are totalled and against that total appears in type the words "Total Payable (The first £30,000 is tax free)". The figure, as I have said when reading the letter itself, was £16,743.30, less than £30,000, so plainly the reference to the "first" £30,000 being tax free is a standard form of words not varied according to whether the actual figure is greater or less than that.

So that is the document. The way in which the Chairman dealt with the issues was as follows. Having set out the background facts and referred to the letter and the enclosure, the Chairman then recites briefly the submissions on each side and continues as follows:

"9. I reach the following conclusions.

10. The letter of 12 July is the dismissal letter and if considered in the context of the Redundancy Estimate form and the evidence today must be regarded as ambiguous and a line of cases have held that any ambiguity must be resolved in favour of the employee.

The letter states that employment will be terminated on grounds of redundancy with effect from 31 July 1996. The attached form refers to a leaving date of 28 June 1996 with a calculation date of 20 September 1996.

It also shows the applicant as receiving 12 weeks pay in lieu of notice or, as the form ambiguously describes it, 'additional payments equivalent to the individual's notice period'. It is against this background that I must determine the effective date of termination.

11. The applicant carried on working after 28 June so there can be no question of being paid in lieu of notice during the 12 week period after 28 June. It is a matter of law, Section 97(1)(a) of the Employment Rights Act, that when a contract is terminated by notice the effective date of termination is the date on which the notice expires and Section 86(1)(c) of the Act sets out the minimum statutory notice that must be given. In the present case the applicant was entitled to 12 weeks notice and the question is whether acceptance of pay in lieu of notice brings employment to an immediate end or whether despite the payment the effective date of termination still falls at the end of the statutory notice period. I have referred myself to the well known case of Adams v GKN Sankey Ltd [1980] IRLR 416, which held that if an employee is dismissed with notice but given pay in lieu of working out the notice period this is a dismissal with notice which does not cut down the period of employment.

12. Therefore on the correct construction of the dismissal letter of 12 July, Mr Dorey had been dismissed with 12 weeks notice from 31 July (which in fact was extended to 2 August) and consequently the effective date of termination of his employment was 4 October 1996, and even if his notice was given on 26 June ending 12 weeks later on 20 September the application on 8 November would nevertheless still be in time."

The first comment which we wish to make is that, although Mr Robertson for the Appellant submits, and in our view rightly, that the letter, although called a "dismissal letter" was not itself an effective dismissal letter, nevertheless neither party challenges the assumption made by the Industrial Tribunal that the question before the Industrial Tribunal, and therefore on appeal before us, was as to the true construction of that letter since, although it would not have been a dismissal if, for instance, Mr Dorey had been offered and accepted suitable alternative employment, nevertheless it sets out the basis on which his employment ceased and the Tribunal does not refer to any oral evidence which would lead to any conclusion that the termination of the employment, apart from the two days of extra work, took effect otherwise than upon the terms envisaged by that letter. So the Tribunal was faced with a question of construction. It did approach it as a question of construction and it is on that basis that the appeal proceeds.

The second comment is that the parties before us accept what we understand to be trite law that questions of constructions are questions of law, so that this is not a case where the Tribunal has come to a decision of fact behind which, unless perverse, we cannot go.

The third observation is that both parties to the appeal before us accept, in our view rightly, that the question of construction is to be approached on the basis of what meaning the letter would have conveyed to the ordinary reasonable employee. Therefore, on the one hand, it is not a subjective question as to what it meant to Mr Dorey, it is an objective question as to what it would have meant to the ordinary reasonable employee. But, on the other hand, the question is not what it means to a sophisticated lawyer, looking at it with a lawyer's eyes, but what looking at it reasonably and in the industrial context it would have meant to the ordinary reasonable employee.

The fourth preliminary matter is that it is not disputed by the Appellant, and again we consider rightly, that the Tribunal was entitled to have regard not just to the letter proper, but also to the redundancy calculation that accompanied it, and to construe those documents as a whole, although that does not preclude taking into account their different functions and the sort of attention which the reasonable ordinary employee would have been likely to pay to each.

Against that background then, did the Industrial Tribunal err in law in its approach? The sequence of argument in the Reasons, as we understand it, is as follows. The construction of the document taken as a whole the Chairman considered was ambiguous, because first there were three references to dates and they were different dates: one, 31 July 1996 in the body of the letter, secondly what was described as a leaving date of 28 June, and thirdly what was described as a calculation date of 20 September.

The other matter which the Chairman considered ambiguous was the reference in the redundancy calculation to "additional payment equivalent to the individual's notice period" and, although the Chairman does not refer to it, that of course must be set beside the words "payment in lieu of notice" in the body of the letter.

Having pointed to those ambiguities, as the Chairman believed them to be, the Reasons do not, as we understand them, at that point in the train of argument resolve that ambiguity. Before seeking to resolve the ambiguity the Chairman refers to the statutory revisions and then says:

"11. ... the question is whether acceptance of pay in lieu of notice brings employment to an immediate end or whether despite the payment the effective date of termination still falls at the end of the statutory notice period."

Mr Robertson criticises that, on the basis that the statutory notice period as such is of no possible relevance. There might be in suitable circumstances, he says, a question whether termination was by notice or without notice, but the statutory notice period does not as such come into the question. For our part we consider that although that is true it would not of itself be sufficient to set aside this decision of the Industrial Tribunal if, on a fair reading, the Chairman was directing his mind to the issue as properly framed, whether the dismissal was on notice or without notice. But then Mr Robertson says that, having referred to Adams v Sankey as deciding that, if an employee is dismissed with notice but given pay in lieu of working out the notice period, this is a dismissal with notice, the Chairman goes on to say:

"12. Therefore on the correct construction of the dismissal letter of 12 July, Mr Dorey had been dismissed with 12 weeks notice from 31 July."

And Mr Robertson says that that is, as indeed on the face of it it plainly seems to be, a non sequitur because Adams v Sankey does not itself resolve the question posed, whether acceptance of pay in lieu of notice brings employment to an immediate end, but rather decides that whether it does so or not depends on the facts and the true question is a factual question, whether in the events which have happened, including the true construction of any relevant documents, the dismissal was on notice or without notice. Indeed the headnote to Adams v GKN Sankey Ltd [1980] IRLR 416 itself makes that clear, if indeed such a straightforward proposition needs authority. The headnote reads:

"There is a distinction between a case where an employee is dismissed with notice but is given payment in lieu of working out that notice, and a case where no notice of dismissal is given but a payment is made in lieu of notice."

We were also referred to the case of Delaney v Staples [1992] ICR 483 in the House of Lords in which in the speech of Lord Browne-Wilkinson, with whom all the other members of the House agreed, that is slightly further elaborated into four principal categories of cases. First, where proper notice if given but the employee is not required to work out the notice, where the employment plainly continues until the expiry of the notice and the payment is simply wages. Secondly, where the contract of employment provides expressly that employment may be terminated by notice or, on payment of a sum in lieu of notice, summarily. In that case a summary dismissal is not a breach of contract, but the payment on the other hand equally is not wages because it is not a payment for work done. Thirdly, where at the end of the employment the parties agree that employment is to terminate forthwith on payment of a sum in lieu of notice. Again, there is not a breach but equally the payment is not strictly wages. And fourthly, where unilaterally the employer summarily dismisses and tenders a payment in lieu of proper notice, where the strict analysis that there has been a breach of contract, but if the sum tendered is the full amount which would have been earned during the period of notice then normally that is a satisfaction of any claim for damages there might have been and so the employee has received the full amount due.

Against that background, therefore, we have come to the conclusion that the way in which the Chairman reached the decision here did err in law, because it would seem that, having asked as if it were a general question, whether acceptance of pay in lieu of notice brings an employment to an immediate end, the Chairman was asking the wrong question since there is no general answer to such a question.

Secondly, in the reference to Adams v Sankey, having correctly said that it held that a dismissal with notice does not cut down the period of employment, the Chairman disregards the other side of the coin that Adams v Sankey recognises that that is only one possible factual situation, the other being where there is a dismissal without notice, but payment of a sum in lieu of notice, and that leads to the non sequitur of the conclusion: "Therefore, on the correct construction of the dismissal letter, Mr Dorey had been dismissed with 12 weeks notice from 31 July".

Having come to that conclusion, we turn to the consequence, so far as the disposal of the appeal is concerned. For the reason I have already given, as we understand it not in dispute, that this is a question of law, we can and should reach our own conclusion as to the true construction of the documents.

Applying the canon of construction which I have already mentioned, namely the meaning which it would have borne to the ordinary reasonable employee, in our view, the ordinary reasonable employee, having in May been told that the depot was closing, that all except three drivers would be made redundant, on receiving this letter would so far as dates are concerned have understood the letter itself as being entirely clear that, unless suitable alternative employment could be offered, the employment would be terminated on grounds of redundancy with effect from 31 July. Having read that and the reference to a payment which would include statutory redundancy pay and payment in lieu of notice and a total figure, the ordinary reasonable employee would, in our view, have looked at the redundancy estimate, the other page, chiefly with an interest in the figures there. First of all, of course, to check that they added up to the figures stated on the face of the letter and secondly, with an eye to how they were made up. He would see that he was receiving both a statutory redundancy payment and a non-statutory addition based on 23 weeks' pay and on top of that a further 12 weeks' pay expressed to be equivalent to "the individual's notice period" and he would, we are sure, have concluded that that last element was the same element as is referred to on the face of the letter as payment in lieu of notice. In so far as he might pay attention to the dates shown above he would certainly have not believed that the leaving date of 28 June 1996 could be right, because he knew he had not left on 28 June, and therefore, unless he thought that the expression "leaving date" probably had some curious meaning unknown to him, he would presumably have passed that off as simply a straightforward mistake. And as to "calculation date", in our view, to the ordinary reasonable employee that would imply that that date had something to do with the calculation below, but we see no reason whatsoever why he should have thought that was the date of termination of his employment, or that it would be likely to have raised any doubt in his mind as to the date of 31 July given on the face of the letter.

So we, for ourselves, do not regard the letter as ambiguous. But even if we were wrong about that and there were any ambiguity, we believe that the Chairman of the Industrial Tribunal misunderstood and misapplied the general proposition that ambiguities should be resolved against the person putting forward the document. That doctrine is a proper doctrine to help in resolving ambiguities if they exist, but it does not and cannot lead to the conclusion that the same document can mean different things in different contexts. The interest of the employer and of the employee here cannot, if this principle is applicable at all - and for the reasons we have given, we do not consider that it arises because we find the letter unambiguous - but if it were ambiguous then that principle would have to be applied not simply on the basis of who would be advantaged or disadvantaged by a particular construction in the context of a potentially late notice of application, but who would be advantaged or disadvantaged taking the context of the letter as a whole. For certain other purposes it is quite manifest that it would have been to the disadvantage of the employee to construe it in such a way as to postpone the date of effective termination of the employment. One obvious example which was canvassed in argument is that this payment is expressed to be tax free. It can only properly be tax free if it is not wages for a period of employment that is still running and it would be gravely to the disadvantage of the employee if any ambiguity were resolved in that way in a context where his tax liability had to be considered. It might also, although this was not canvassed, affect the date from which his pension would run and it is by no means obvious, to say the least, that it would be to his advantage to have the later date of termination in that context.

In our view, therefore, to apply that kind of construction, as justifying what seems to us in any event to be a strained and unnecessary construction of this letter, leading to a conclusion that the employment terminated by notice, deemed to be given on 31 July 1996 and expiring 12 weeks later, in our view would be quite misconceived.

We therefore consider that on the true construction of the letter and its accompanying sheet the effective date of termination of Mr Dorey's employment was 31 July, and that by agreement between the parties that was then extended to 2 August. August 2 was therefore his effective date of termination, so that the notice of application was out of time.

The Industrial Tribunal has jurisdiction in certain circumstances to extend the time, or to allow the application to proceed notwithstanding its being outside the statutory period, and that point, as we understand, has not yet been considered. The result of our conclusion on the point of law, therefore, is that we remit the application to the Tribunal for that matter to be considered if Mr Dorey wishes it to be dealt with, as no doubt he does.