United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR P S L HOUSEGO (Representative) Messrs Beers 29 Fore Street Kingsbridge Devon TQ7 1AA
For the Respondent	IN PERSON


 


JUDGE J HICKS QC: Mr Blake, the Respondent to this appeal, was employed as a security officer by a company called Firm Security Group Limited until its business, or that part of its business in which he was employed, was taken over by the Appellant, Capitol Security Services Ltd, on 17th February 1997 in circumstances covered by the Transfer of Undertakings (Protection of Employment) Regulations 1981, so that under Regulation 5 his contract of employment took effect after the transfer as if originally made between him and the Appellant, or should have done so. On 21st February he wrote to the personnel manager resigning with immediate effect. He then made an application to the Industrial Tribunal complaining of unfair dismissal and claiming compensation. Since he had resigned his Application recognised that the dismissal alleged was constructive.

Mr Blake was born on 11th September 1931 and was therefore over 65 years of age on 21st February 1997, the effective date of the termination of his employment. The normal retirement age for a person holding his position in the undertaking in which he was employed was 65, but Firm Security Group Limited had kept him on past that age.

By virtue of section 109(1)(a) of the Employment Rights Act 1996 the statutory right not to be unfairly dismissed does not, with the exceptions provided for in section 109(2), arise if on or before the effective date of termination the employee has attained the relevant normal retiring age. The employer took the point, at the outset of its Notice of Appearance, that for that reason the Industrial Tribunal had no jurisdiction to entertain the Application. The Application was therefore listed for a hearing before the chairman of the Industrial Tribunal, sitting alone, to determine that issue of jurisdiction.

At that hearing the employer did not appear and was not represented, but made submissions in writing relying on section 109. Mr Blake appeared in person. During the course of his submissions it became apparent, say the chairman's Extended Reasons, that he was relying on his rights under section 104 of the Act. The Reasons continue:

"5. ... That Section essentially provides that a dismissal will be automatically unfair if the principal reason for it is that the employee either brought proceedings against the employer to enforce a relevant statutory right or alternatively alleged that the employed had infringed such a right.

6. The Applicant's grounds of complaint as set out in his Originating Application are sufficiently clear to show that this is what he has been claiming from the outset and it would in my view be manifestly unfair to penalise him as a layman for not making specific references to Section 104. In his Originating Application, the Applicant avers that following a relevant transfer within the meaning of the 1981 Regulations, the Respondent varied his terms and conditions of employment to his detriment by reducing his rate of pay and that he made known to his employer that he conswidered this to be wrong and alleged an infringement of his statutory right to have his terms and conditions of service maintained.

7. Where a claim is brought alleging a dismissal for asserting a statutory right, an Applicant does not need to have either qualifying service nor do the normal upper age limits apply. I am consequently satisfied that the Tribunal has jurisdiction to hear the complaint ..."

In order to understand that passage and to approach the issues raised by this appeal it is necessary at the outset to refer to some further provisions of the Act. Section 109(2)(g) provides that subsection (1) does not apply if section 104(1), read with section 104(2) and (3), does. Section 104 is as follows:

"(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee -

(a) brought proceedings against the employer to enforce a right of his which is a relevant statutory right, or

(b) alleged that the employer had infringed a right of his which is a relevant statutory right.

(2) It is immaterial for the purposes of subsection (1) -

(a) whether or not the employee has the right, or

(b) whether or not the right has been infringed;

but, for that subsection to apply, the claim to the right and that it has been infringed must be made in good faith.

(3) It is sufficient for subsection (1) to apply that the employee, without specifying the right, made it reasonably clear to the employer what the right claimed to have been infringed was.

(4) The following are relevant statutory rights for the purposes of this section -

(a) any right conferred by this Act for which the remedy for its infringement is by way of a complaint or reference to an industrial tribunal,

(b) the right conferred by section 86 of this Act, and

(c) the rights conferred by sections 68, 86, 146, 168, 169 and 170 of the Trade Union and Labour Relations (Consolidation) Act 1992 (deductions from pay, union activities and time off)."

The Reasons do not unequivocally identify the statutory right in question by reference to any specified statutory provision, but do refer to the 1981 Regulations and do describe Mr Blake as alleging an infringement of "his statutory right to have his terms and conditions of service maintained". In our view the most natural understanding of the decision is therefore that the statutory right in the mind of the chairman was that under Regulation 5 of those Regulations, and we address the issues before us in the first place on that basis.

Mr Housego, for the Appellant, submits that Regulation 5 confers no statutory right, but simply transfers the benefit and burden of contractual rights. For reasons which will appear we can reach a conclusion on this aspect of the appeal without deciding whether that submission is correct, and we prefer to do so. We certainly do not find the proposition immediately compelling. Regulation 5 undoubtedly effects a statutory transfer of the employee's rights, and it is not at once obvious why it should be a misuse of language to describe the benefit of that provision as a statutory right.

The reason why it is not necessary to decide that point is that section 104(1) does not apply to all statutory rights but only to "relevant" statutory rights. Relevant statutory rights are defined exhaustively in section 104(4) and rights under Regulation 5 (if such they be) are not among them - not within head (a) because they are not conferred by the 1996 Act, the 1981 Regulations having been made under the European Communities Act 1972, and not within head (b) or (c) because they are not conferred by any of the sections there specified.

In so far as the chairman's decision proceeded on the footing of rights under Regulation 5, therefore, we consider it erroneous in law. Mr Housego, however, very fairly drew our attention, by reference to documents which were not originally in our bundle but were before the chairman, to the possibility that since Mr Blake's main complaint was of a change in pay arrangements which amounted in his view to a reduction in pay the statutory right which the chairman had in mind was that arising under section 13 of the 1996 Act, of which subsections (1) and (3) are material:

"13(1) An employer shall not make a deduction from wages of a worker employed by him unless -

(a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker's contract, or

(b) the worker has previously signified in writing his agreement or consent to the making of the deduction.

(3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker's wages on that occasion."

The first difficulty in the way of upholding the decision on that basis, apart from the fact that section 13 is not mentioned, is that since the proceedings referred to in section 104(1)(a) or the allegation referred to in section 104(1)(b) must be the reason for the dismissal they or it must precede the dismissal. The very proceedings before the Industrial Tribunal itself cannot therefore be relied upon for that purpose, nor allegations made in initiating or prosecuting those proceedings. The only allegations relied upon in the chairman's Extended Reasons are those made or referred to in Mr Blake's Originating Application. It is true that the chairman reads that as averring that Mr Blake had earlier "alleged [sc. to the employer] an infringement of his statutory right" and that the Application itself does refer to complaints to the employer about pay, but it is clear from the contemporaneous correspondence and the employer's Notice of Appearance that its case is that Mr Blake's complaints were about conditions of work, not pay, and there is no finding of fact by the chairman on that issue. It does not, indeed, appear that any evidence was adduced or expected.

In our view, therefore, if the relevance of section 13, in conjunction with section 104, is to be determined the appeal must be allowed and the matter remitted to the Industrial Tribunal so that the necessary facts can be found. Mr Housego, however, submitted that we can and should go further and, having allowed the appeal, ourselves determine that the Industrial Tribunal has no jurisdiction and dismiss the substantive application.

Mr Housego's first ground for that submission was that an allegation of infringement of a "section 13 right" can bring section 104 into operation only when there has been an actual deduction; a threatened deduction is not enough. He recognised in his skeleton argument that the decision of this Tribunal in Mennell v Newell & Wright (Transport Contractors) Ltd [1996] ICR 607 was against him on that point but submitted that it was incorrect. By the date of the hearing before us, however, that case had reached the Court of Appeal ([1997] IRLR 519) which, although allowing the appeal for other reasons, agreed with the Employment Appeal Tribunal on the present point. Mummery LJ, with whom Waller and Phillips LJJ agreed, pointed out that although a complaint by an employee seeking payment of sums deducted in breach of the Wages Act 1968 (now section 13 of the 1996 Act) could not be made unless a deduction had already been made the position was different under section 60A of the Employment Protection (Consolidation) Act 1978 (now section 104 of the 1996 Act). As to that he said at p. 523, para. 28:

"On this point I agree with the Employment Appeal Tribunal that the industrial tribunal were wrong to construe s.60A as confined to cases where the right under the Wages Act had been infringed. It is sufficient if the employee has alleged that his employer has infringed his statutory right and that the making of that allegation was the reason or the principal reason for his dismissal. The allegation need not be specific, provided it has been made reasonably clear to the employer what right was claimed to have been infringed. The allegation need not be correct, either as to the entitlement to the right or as to its infringement, provided that the claim was made in good faith. The important point for present purposes is that the employee must have made an allegation of the kind protected by s.60A; if he had not, the making of such an allegation could not have been the reason for his dismissal."

It may be that since the decision of the Court of Appeal went the other way for different reasons that passage is not strictly binding on us as part of the ratio decidendi. The concurrence of their view with that of this tribunal on the point below, however, is highly persuasive, and in any event we respectfully agree with the reasoning. That argument therefore fails.

Mr Housego's other ground for submitting that we can and should ourselves dismiss the application for lack of jurisdiction was that whether there is a "deduction", or threatened deduction, for the purposes of section 13 depends on a comparison between the sum properly payable under the contract and the sum actually paid or threatened to be paid. Here, Mr Housego says, the employer had imposed a new contract and what was to be paid was precisely the amount due under that new contract, not a deduction from it. In our view that argument also is fallacious. Variation of a contract requires the concurrence of both parties; it cannot be imposed unilaterally by one except under a pre-existing provision to that effect. It is precisely the attempt to impose new terms of which Mr Blake complained and complains as a breach. If the employer nevertheless maintains that the attempt was effective to alter the terms of the contract as a separable event prior to the threat to reduce wages that will be an issue of fact to be determined at whatever stage it becomes relevant; it certainly cannot be resolved by us in the employer's favour without evidence for the purposes of the jurisdiction issue.

We therefore remit the application to the Industrial Tribunal in order that the necessary facts may be agreed or found to enable the question to be determined whether there is jurisdiction to hear a complaint of unfair dismissal founded upon sections 104 and 109(2)(g) of the 1996 Act. We appreciate that while the crucial question whether an allegation by the employee of infringement of a relevant statutory right was "the reason ... or ... principal reason" for the dismissal may be relatively straightforward in cases of direct dismissal by the act of the employer its resolution is potentially more complex in a case of alleged constructive dismissal such as this, and the attempt to answer it may perhaps appear to be an artificial exercise. Nevertheless it must in our view be answered.

There is another reason why it would in any event have been undesirable, in our judgment, for this application to have been dismissed at this stage. The necessary basis of a claim for compensation for unfair dismissal in the form of constructive dismissal is that the employee has accepted a repudiatory breach of contract on the part of the employer. That is also the basis of a common-law claim for damages for breach of contract by wrongful dismissal. There is no age bar to the latter of the kind relied upon by the employer in relation to the former, but at the moment no common-law claim is included in Mr Blake's Application. He would still have some years before his time for pursuing it in the County Court ran out, but separate proceedings raising largely, if not exclusively, the same issues of fact would be wasteful and expensive. A common-law claim can, however, be brought before an Industrial Tribunal only by amendment of the current Application, since time for a separate one has expired. We therefore consider it desirable that Mr Blake should have, as by our order he will, the opportunity of considering whether to apply to the tribunal for leave to make such an amendment. It is, of course, for him to decide, we hope with the benefit of legal advice, whether to make such an application, and for the tribunal to decide whether to grant it.

We add one final observation. This Application has already had one hearing in the Industrial Tribunal and one here in a well-intentioned, but in the event misdirected, attempt to shorten the proceedings. There must now be a further hearing in the Industrial Tribunal of the jurisdiction issue and, if it requires a hearing, any application which Mr Blake may make to add a common-law claim. Although it is a matter for those in charge of the Industrial Tribunal list, they may wish to consider the possibility of listing the matter as proceeding directly to the substantive hearing, if any, at the close of those preliminary steps, rather than going off to yet another date some distance ahead.