United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR S C WILDI Representative MR S WILDI Managing Director Storsack UK Ltd 4 St Johns Road Tunbridge Wells Kent TN4 9ET


 


THE HONOURABLE MR JUSTICE MORISON (PRESIDENT): The purpose of this hearing is to determine whether there is an arguable point of law in an appeal which a company called Storsack (UK) Limited wishes to make against a decision of an Industrial Tribunal held at Leeds on 8 July 1998.

The written decision of the Tribunal containing their extended reasons, was sent to the parties on 28 July 1998 and it contained the Tribunal's reasons as to why the Respondent company were ordered to pay the Applicant £90 by way of unlawful deduction from wages and £2,026.25 in respect of a breach of contract of employment. The brief facts pertinent to this appeal will be shortly stated.

The Applicant was initially employed by Storsack Tradco Limited in the early part of December 1996 and worked on their site at Goole. He negotiated a salary and commission arrangement, the details of which are contained in a minute of the meeting of the directors of the company held on 9 January 1997. The bonus arrangements for the year 1997 were agreed to be as follows: 1% of the turnover on all new accounts, Mr Sulley the Applicant to receive 3 points and a bonus of 2% effectively of the net profit of the company for the year after charging all expenses, including a charge of 15% on the issued share capital and 15% on non-interest bearing loan accounts. It was made plain, according to the minute, that the bonus was based on the fact that the recipient must be in the company's employment during the February following the year of the respective bonuses.

In about April of 1997, the Applicant transferred from working at Goole to working at Bradford for a related company. The Industrial Tribunal identified that related company as Storsack (UK) Limited but it may be that technically it was a transfer to Storsack Limited and thereafter in about July, to Storsack (UK) Limited. Nothing, as it seems to us, turns on that distinction.

In late January 1998, there was a meeting between the Applicant and the Managing Director, Mr Wildi. The Applicant was paid off: One month's wages in lieu of notice on the grounds of redundancy and one month's wages in lieu of notice and a figure in respect of his entitlement to a car. Terminating his contract of employment without notice was technically a breach of his contract of employment. Had the contract not been terminated summarily in January, then he would have qualified for the bonus payment as a result of him remaining in employment in February, subject only to the questions of whether the bonus entitlement was restricted to the time when he was technically employed by Storsack Tradco Limited.

The Industrial Tribunal concluded that there were no negotiations in April 1997 in relation to the bonus "other than it would continue on substantially the same basis in his work for the Respondent company, that is Storsack (UK) Limited". He should have been provided, in the Tribunal's view, with detailed documentation setting out its view of the bonus arrangements and entitlements which he enjoyed. There was nothing in writing to indicate that the position which had been agreed in January 1997 had been altered. The Tribunal was shown the minute to which I have referred, but did not accept that it accurately recorded the terms agreed between the parties to the effect that he had to be in employment during the February the following year of the bonus in order to be entitled to receive it. In their grounds of appeal, Mr Wildi who has represented the Respondent's interest with conspicuous ability and frankness, complains that the Industrial Tribunal has adopted what might be described as an improperly selective approach to the evidence which it received. The company produced the minutes of the meeting of 9 January 1997 and said that its terms were applicable. It was as a result of partial use of those minutes that the Tribunal was able to determine the amount of the bonus that was due to the Applicant, yet selectively, they appear to have rejected, for no good reason, the condition relating to employment having to continue until February of the following year. He said that that was just simply trying to achieve a result in the Applicant's favour, which was not justified. If the minutes evidenced an agreement they must have evidenced the whole agreement including the February provision. He also maintained that because the Applicant ceased to be employed before February the following year, he did not qualify for the bonus and in any event, it was simply not right or fair to transfer the Storsack Tradco bonus arrangements to the arrangements which the Applicant had with Storsack (UK) Limited as from July 1997. What Mr Wildi said is that the Applicant had only been with Storsack (UK) Limited for less than 6 months, why should he be entitled to the whole of a bonus year, the bonus being calculated by reference to a company's performance with which he had been concerned for such a short time.

Whilst we can see the force of the submissions which have been made to us, we are not persuaded that they represent any arguable points of law. In the first place, it seems to us that even if the Industrial Tribunal were not entitled to take a selective approach as to the terms of the bonus arrangement as Mr Wildi was suggesting, nonetheless there were good reasons why the Applicant fulfilled the February qualifying condition. By summarily terminating his employment at the end of January 1998, the damage which the Applicant sustained as a result of that breach included the loss of the bonus entitlement which he would have been entitled to had his employment not been terminated wrongfully in breach of the entitlement to 4 week's notice. Thus, it seems to us that the only potential point on this appeal is whether the Industrial Tribunal were entitled on the evidence before it, to find that the bonus arrangements agreed in January 1997 had transferred, so to speak, across to the new company with which he had been associated since April of July of 1997, namely Storsack (UK) Limited.

On that question, it does seem to us that the employers have failed in their responsibilities to ensure that their employees are fully informed of their contractual entitlements. The protection legislation is designed to ensure that employees are in simple terms, told what their basic rights are. It is clear and accepted by both parties that there was a contractually binding arrangement as to bonus which applied as from the beginning of the bonus year 1997 in relation to Storsack Tradco Limited. In April 1997, the Applicant was transferred with a salary increase to Bradford. In the absence of anything being said to the contrary, as this was an inter-company transfer, it was fair to assume that what had been previously expressly agreed continued in existence, at least until the position was clarified or denied by the company. Accordingly, it seems to us that the learned Chairman and colleagues were entitled to conclude that the plain intention of the parties was that the bonus arrangements should continue to apply, and logically could only apply in relation to the trading profit of Storsack (UK) Limited, even though by the end of the bonus year the Applicant had made little contribution to the generation of those profits. Accordingly, we see nothing wrong with the decision of the Industrial Tribunal and we consider that Mr Wildi has been endeavouring to re-argue the merits of the case rather than to raise any arguable point of law. Having said that, we would wish to pay tribute, in particular to the open way in which he presented his case. It does seem to us that the company might have been better advised had they used his services at the Industrial Tribunal rather than using the organisation which they did.

In future, this company must learn that it is their responsibility under statute to provide their employees with full and proper information as to their ongoing rights. For these reasons, the appeal will be dismissed.