United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR J LOFTHOUSE (of Counsel) The Treasury Solicitor Queen Anne's Chambers 28 The Broadway London SW1H 9JL
For the Respondent	MR P MEAD (of Counsel) Messrs Pattinson & Brewer Solicitors Transport House Victoria Street Bristol BS1 6AY


 


JUDGE PETER CLARK: This is an appeal by the employer, HQ Service Children's Education (MOD) ("SCE"), against the decision of the Southampton Employment Tribunal sitting on 30 October 1998, that the Applicant's claim under the Equal Pay Act 1970 ("the 1970 Act") presented on 5 August 1998, was in time.

S.2(4) of the 1970 Act provides that the Employment Tribunal cannot entertain a claim if the Applicant has not been employed in the employment within the six months preceding the date of the reference, in this case, 5 August 1998. There is no provision to extend time.

S.1(6) of the Act provides that for the purposes of s.1 of the 1970 Act 'employed' means, for present purposes, employed under a contract of service. In this case the Applicant was employed under a single continuous contract of employment in the capacity of civilian education officer.

The Facts

The Applicant's employment with SCE commenced on 1 September 1992.

On 2 September 1997 following an earlier letter dated 2 June 1997, which was not produced in evidence below, SCE wrote to the Applicant informing her that she was to be retired on the grounds of redundancy. The following extracts from that letter are material.

"1. Further to the above references, I am writing on behalf of the Chief Executive to inform you that because of the reduction in the number of AEO posts needed within SCE(UK) your service will no longer be required and you are to be retired on grounds of redundancy. You are entitled in these circumstances to 6 months formal notice of retirement and, therefore, your last day of service will be 1 March 1998.

3. Your attention is drawn to the provisions of the MOD Personnel Manual, Volume 9, Annex 1, paragraph 49 which states that if an employee who has received a redundancy compensation payment is re-employed within the Civil Service, part of the payment will be recovered if the period between the date of premature retirement or discharge and the date of re-employment is less than the notional period represented by the compensation payment in terms of weeks of pensionable pay. The amount to be recovered will be the amount corresponding to the difference between these two periods. Recovery will be made by deductions of not less than 25 percent of net pay on re-employment.

5. As SCE is unable to provide employment for you beyond 30 September 1997, you will receive a lump sum payment of CILON from that date until your notice expires on 1 March 1998.

6. With effect from 1 July 1996, Compensation in Lieu of Notice (CILON) comprises two elements:

( the salary, allowances and/or bonus to which you would have been entitled under your contract of employment if you had worked the notice period; plus

( an amount to compensate you for the loss of pension benefits which would have accrued if you had worked the full notice period.

Both elements are subject to Income tax and National Insurance contributions.

8. The period to which CILON relates will not be regarded as service with SCE and will not, therefore, be reckonable for the purposes of calculating either your pension entitlement or the amount of redundancy compensation payable to you.

9. If you do not start working with another employer immediately following your actual date of discharge from the Department you may elect to pay, yourself, National Insurance contributions at the unemployed rate (i.e. Class 3) for the period during which you are not working for an employer. Payment of these contributions is voluntary, but as non-payment may affect your subsequent entitlements to benefits, you are advised to consult your local Social Security Office promptly about your personal position.

10. Entitlement to unemployment benefit and to contribution credits is normally affected during a period to which CILON relates. If you claim benefit and/or credits you should tell the local office of the Department of Employment of any such payment you have received or expect to receive.

13. This notice may be withdrawn at the discretion of the Chief Executive or extended by mutual agreement."

The Applicant's last day of work with SCE was 22 September 1997.

The Applicant replied on or after 6 October 1997, making certain proposed alterations to the letter of 2 September, which she re-dated 30 September. In particular, she amended the date 1st March 1998 where it appears in paragraphs 1 and 5 of the letter to 31 March 1998.

On 1 December 1997 her trade union representative, John Clarke, wrote to David Wadsworth, Chief Executive of SCE on the Applicant's behalf. He said this:

"Further to our telephone conversations, I am writing to advise you that I have now spoken to Helen Davitt.

She has confirmed that she agrees to full and final settlement of her dispute over the formal notice of retirement, if termination could be deferred exceptionally to 30th September 1997.

I trust that this can be agreed."

In response, Mr Wadsworth wrote to the Applicant by letter dated 8 December 1997 in which he said:

"You will be aware that I have received representations on your behalf from John Clark, Assistant Secretary of the PTC Union. He has confirmed that you will agree to full and final settlement of the dispute with SCE over the formal notice of retirement, if the termination date is deferred exceptionally to the 30 September 1997. I have therefore looked once again most carefully at your case, and have, without prejudice, agreed that your termination date should be deferred to the 30 September 1997 accordingly.

You will be aware that as SCE has been unable to provide employment for you beyond the 30 September 1997, you will receive a lump sum payment of CILON from that date until your notice expires on the 31 March 1998."

The Applicant accepted that alteration by acknowledging her agreement at the foot of that letter. In a covering letter, sent on about 18 December to Mr Wadsworth she said:

"Thank you for your letter of 8 December, for reviewing my case and for subsequently agreeing to the termination date of 30 September.

As per the signed acknowledgement enclosed, I agree to full and final settlement of the disputatious aspect of the formal notice of retirement, ie that incorrect notices were sent, and that I now agree to the termination date of 30 September 1997 with CILON from that date until notice expires on 31 March 1998.

This does not affect the separate and outstanding matters of the second increment, nor the matter of equal pay as indicated in my letters to you, most recently 10 December."

On 5 August 1998 she presented her Originating Application to the Employment Tribunal.

The Employment Tribunal Decision

Having reviewed the facts and submissions made by the parties the Tribunal concluded that the word "employed" in s.2(4) of 1970 Act means employed under a contract of employment. They rejected Mr Lofthouse's submission on behalf of SCE that "employed in the employment" required that the Applicant was physically working for the employer.

A person under notice of dismissal, but not required to work out his or her notice remained employed until the notice period expired. That was the effect the Tribunal found of the letter of 2 September. Payment of CILON represented payment of salary and other benefits due during the notice period in one lump sum. In December 1997 the parties agreed a one month extension to the notice period so that the Applicant's employment terminated on 31st not the 1st March 1998. The claim was presented within six months of that date.

The Tribunal found that there was no ambiguity as to the date of termination, 1 March 1998, in the original dismissal letter of 2 September 1997. If it were ambiguous they held, that ambiguity ought to be resolved in favour of the Applicant, who reasonably understood that she was being given six months notice of dismissal and that her service would end on 1 March 1998. They rejected the submissions advanced on behalf of SCE that by the letter of 8 December 1997 and the Applicant's consent to the terms there set out, the employment terminated on 30 September 1997.

In reaching their conclusions the Tribunal considered the cases of R J Dedman v British Building and Engineering Appliances Limited [1973] IRLR 379 and Robert Cort & Son Ltd v Charman [1981] IRLR 437. They also invited submissions on the effect of a recent decision of this Appeal Tribunal in Widdicombe v Longcombe Software Limited [1998] ICR 710.

The appeal

We shall deal with Mr Lofthouse's second submission first. He contends that on a proper construction of the correspondence the employment ended with the cessation of work on 22 September 1997, or at the latest on September, which was the 'termination date' agreed by the parties in the December exchange of correspondence.

We have considered that submission and reject it as did the Employment Tribunal. For the purposes of unfair dismissal protection under the Employment Rights Act 1996, a distinction is to be drawn between summary dismissal with pay in lieu of notice, see Dedman and Robert Cort, and termination on notice where the employee is not required to work out his or her notice. See Adams v GKN Sankey Ltd [1980] IRLR 416 and Chapman v Letterby and Christopher Ltd [1981] IRLR 440.

In the present case SCE consistently referred to notice expiry on, initially 1 March 1998, and later on 31 March 1998. The Applicant was not required to work out her notice and could take other employment after she physically finished work for SCE on 22 September 1997. She was paid her net salary for the period to 31 March 1998 in a lump sum (CILON). Those factors are not fatal in our judgment to the conclusion that this was a termination on notice, see particularly paragraph 9 of the judgment in Adams.

Thus, if the question is, what is the effective date of termination, the answer, in our judgment, is 31 March 1998.

However, that brings us to Mr Lofthouse's primary submission. He points to the different wording in s.2(4) of 1970 Act when compared with the provisions in the 1996 Act. The expression is "employed in the employment". The words "in the employment" add something to the word "employed". It can only mean, he submits, working in the employment in respect of which the Applicant brings her equal pay claim under s.1 of the Act. He draws attention to the facts of Etherson v Strathclyde Regional Council [1992] IRLR 392, where the Applicant transferred her employment with the Respondent from teaching computer studies, in respect of which she brought her eventual equal pay claim, to becoming a teacher of the deaf on 7 October 19990. She presented her complaint on 24 April 1991. The Employment Appeal Tribunal upheld the Employment Tribunal's decision that the claim was out of time.

The issue in that case was whether the time limit applied at all. However, it is implicit possibly by concession that on a change of duties, time began to run.

The principle must apply all the more so here, submits Mr Lofthouse, where the Applicant ceased work in the employment altogether on 22 September 1997, and was free to work elsewhere.

In our judgment "employed in the employment" means employed under a contract of employment in which the quality clause relied upon for the purposes of the claim applies. It is on termination of that employment that time under s.2(4) begins to run.

An employee may be off sick, on holiday or simply not required to attend for work. Until the contract of employment is materially varied or terminated the employee remains employed in the employment.

Here, we are satisfied that the contract of employment under which the Applicant was employed as a civilian education officer contained until expiry of the notice period on 31 March 1998. The fact that she was not required to physically provide her labour under the contract after 22 September 1997 is nothing to the point. The Tribunal's conclusion was correct. The appeal is dismissed.