United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR D STILITZ (of Counsel) Messrs Beachcroft Stanleys Solicitors 20 Furnival Street London EC4A 1BN
For the Respondent	MR R INGRAM-SMITH (In Person)


 


JUDGE H WILSON: This appeal arises out of an application submitted by the Respondent, Mr Ingram-Smith to the Industrial Tribunal on 3 February 1997 in which he complained of unfair dismissal by the Appellant Authority by reason of what he said at that time was unfair selection for redundancy.

The application was amended the same day - or treated as amended the same day - by a further cause of complaint: Mr Ingram-Smith claimed that there was a breach of his contract because clause 9 of the Grievance Procedure had not been imported and ought to have applied to his domestic redundancy appeals procedure. The Respondent authority entered an appearance on 2 April 1997 and in due course, the matter came before the Industrial Tribunal.

The date on the Decision and Extended Reasons is given as 9 January 1997, but we think that clearly must be wrong, although it is not a point that has been corrected. However, the Decision of the Industrial Tribunal at which the Authority was represented by Mr Stilitz of Counsel and Mr Ingram-Smith appeared on his own behalf, was that the dismissal by reason of redundancy was fair on the evidence that they heard, which included an admission by Mr Ingram-Smith in the course of the case that it had been a fair selection. However, so far as his additional complaint of breach of contract was concerned, the Industrial Tribunal found that that succeeded.

Mr Ingram-Smith had been employed as a maintenance officer by a contract dated 11 April 1995 and had continuous employment prior to that date from 11 August 1986. In May 1996, the Respondents had proposed a reorganisation, part of which involved their suggesting that the post which Mr Ingram-Smith occupied should be made redundant. Procedures were carried through and under the reorganisation there were two posts of a different nature and lower paid and four officers working in the department applied for them. None of those applicants was appointed and in due course, the two posts themselves were phased out.

Mr Ingram-Smith was interviewed on September 6, and was informed of his potential redundancy and there was a 30 day statutory consultation period. On October 10, he was formally informed that he was going to be made redundant and informed that if they were not successful in redeploying him, his employment would terminate on 31 December 1996.

Mr Ingram-Smith informed the appropriate Respondent Authority's staff that he wished to appeal against his selection for redundancy and that official told the Tribunal that there was no particular procedure in the Authority which applied to these circumstances, and so he advised Mr Ingram-Smith that the grievance procedures would be followed. The Authority accepted that the grievance procedures are incorporated into an employee's contract of employment. One of the terms in the grievance procedures - one declaration of intent, at any rate - is that speed is to everybody's benefit and that things should start and finish within 8 weeks. There is also clause 9 which provides that:

"Where management seeks to change a term or condition of employment which is either agreed or is customarily applicable to employees or individual employee's conditions, the existing condition shall be maintained until agreement has been reached or the above procedure exhausted."

That is what is otherwise referred to as the status quo clause, and we will so refer to it during this judgment.

What happened was that, although Mr Ingram-Smith had put in his application under the grievance procedure in October, it was not heard before the termination of his employment on 31 December, there having been no prospect of success so far as an acceptable redeployment was concerned. Once it did get going there were delays, some of which Mr Ingram-Smith accepts were down to him, but primarily due to the Appellant's difficulties so that, the second stage appeal was not heard until 20 June 1997 and he was informed on 8 July that his appeal against redundancy had been unsuccessful.

The Industrial Tribunal stated in the course of its Decision that when one looked at the procedures that had been followed and confirmed by the Respondents, it was difficult to see exactly what procedures the Respondents had decided to follow. They went on to say that they took the view that there must be an implied term in the contract that the procedures would be followed and would be those that were incorporated into the contract of employment. As we have said, Mr Ingram-Smith in his evidence accepted that his post no longer existed and he had correctly been made redundant and of course that was the end of his claim for unfair dismissal. But he maintained his other claim: he had been paid up until 18 February as the Tribunal found in paragraph 14 of its Decision and he claimed therefore a payment from 18 February until 20 June when his second appeal was dismissed, and those were the facts upon which the Tribunal based its Decision.

Dealing with the breach of contract claim, in paragraph 18, the Tribunal stated:

"We find that the clause in the grievance procedures which the Respondents chose to incorporate into the applicant's contract does apply along with the implied term that the grievance should be resolved before the employment actually terminated and until that time the Applicant should be paid on full salary. The contractual term in the grievance procedure implies that if there is a change in the contract of employment either in a term or condition or a termination then the existing contract shall be maintained until the matter has been resolved. This contract matter was resolved on 20 June 1997 when the Applicant's second appeal against the dismissal for grounds of redundancy was rejected."

They went on to say under the status quo provision that the delay in dealing with the grievance was not the fault of the Applicant as the Respondents had failed to follow their old time limits as set out in the procedures, and it should have been resolved prior to the Applicant's termination on 31 December 1996. For those reasons they found that the claim for unfair dismissal failed but the claim for breach of contract succeeded, and it is against that finding that the Appellant Trust now appeals.

We have been assisted in our deliberations by the skeleton argument which had been submitted by Mr Stilitz on behalf of the Appellant and which asserted in paragraph 6 that there was a plain error of law on the Tribunal's part, so far as clause 9 is concerned. Mr Stilitz's skeleton argument as amplified before us in oral argument today says that clause 9 of the grievance procedure, the status quo clause, is stated in terms to apply only in the context of a proposed variation of terms and conditions, that is:

"Where management seeks to change a term or condition of employment which is either agreed or is customarily applicable to employee......"

It does not apply therefore, when there is no proposed variation of terms of employment and that was the case here. What was at stake here, was not a change in the terms of employment at all, but purely whether or not a termination of the contract of employment on notice by reason of redundancy, was fair. By virtue of its expressed terms therefore, the status quo clause could not apply where the issue for determination was whether Mr Ingram-Smith should have been made redundant. So asserts Mr Stilitz on behalf of the Appellant. He goes on to say that the Tribunal erred in law insofar as it purported to imply an additional term into the Respondent's contract of employment entitling him to salary after the expiry of the notice period. For implying such a term, the Tribunal did not apply any relevant legal test.

Mr Stilitz put before us at the beginning of his case a supplementary skeleton argument, together with a file of authorities to which he referred during the course of his oral submissions. In particular, so far as the construction of the status quo clause is concerned, he submitted that the language of the clause does not apply where the grievance concerns the lawful termination of a contract. He submitted that the words of the clause are perfectly clear and precise and there was no question of a slip or shoddy draughtsmanship and accordingly, he went on to draw our attention to the provisions about implication which are set out in Chitty on Contracts at 13-005 to 13-008. In summary, a term will be implied only if it is necessary to do so, that is to say, only if without such a term, the contract is either incomplete or will not work. He referred us to the leading authority of Liverpool County Council v Irwin [1977] AC239 and in particular Lord Wilberforce's judgment in that case.

At page 253F, Lord Wilberforce said:

"Where there is, on the face of it, a complete, bilateral contract, the courts are sometimes willing to add terms to it, as implied terms: this is very common in mercantile contracts where there is an established usage: in that case the courts are spelling out what both parties know and would, if asked unhesitatingly agreed to be part of the bargain. In other cases, where there is an apparently complete bargain, the courts are willing to add a term on the ground that without it the contract will not work - this is the case, if not of The Moorcock (1889) 14 PD 64 itself on its facts, at least of the doctrine of The Moorcock as usually applied. This is, as was pointed out by the majority in the Court of Appeal, a strict test - though the degree of strictness seems to vary with the current legal trend - and I think that they were right to accept it as applicable here. There is a third variety of implication, that which I think Lord Denning MR favours, or at least did favour in this case, and that is the implication of reasonable terms. But though I agree with many of his instances, which in fact fall under one or other of the preceding heads, I cannot go so far as to endorse his principle; indeed, it seem to me, with respect, to extend a long, and undesirable, way beyond sound authority."

Pausing there for a moment, as we will indicate here, it would lead to unforeseen results if it were established or applied here. To go on with the quotation from Lord Wilberforce, he says that:

"The present case, in my opinion, represents a fourth category, or I would rather say a fourth shade on a continuous spectrum. The court here is simply concerned to establish what the contract is, the parties not having themselves fully stated the terms. ....."

Lower on page 254F, he says:

"....it is necessary to define what test is to be applied, and I do not find this difficult. In my opinion such obligation should be read into the contract as the nature of the contract itself implicitly requires, no more, no less: a test in other words of necessity. ...."

Mr Stilitz then went on to submit that the question then arises in this case, whether it was necessary to imply the status quo clause as a term in this contract, and he suggested that it was not necessary. Finding that it was necessary, would in fact be contrary to what the House of Lords had said was the proper approach in the case of West Midlands Co-operative Society Ltd v Tipton [1986] 1 ICR 192, in particular, Lord Bridges speech at page 198C. That case was in fact an Industrial Tribunal case originally and involved an unfair dismissal found to be unfair because the employers refused to entertain an appeal under the domestic procedure.

Dealing with matters of principle rather than the immediate facts of that case, Lord Bridge said that:

".....A possible view might be that when an employee whose contract entitles him to a domestic appeal is summarily dismissed, the dismissal does not take effect until the refusal to entertain an appeal or its ultimate rejection effectively confirms the dismissal. .......... "the effective date of termination" in relation to an employee whose contract of employment is terminated without notice, means the date on which the termination takes effect."........"

The same must be true as in this case where there is a termination on notice. Substituting those words, whose contract of employment is terminated on notice means the date on which the termination takes effect. He went on to refer to the application of the provision having been considered in another case, in the Court of Appeal, Sainsbury (J) Ltd v Savage [1981] ICR 1 where there had been another summary dismissal, a domestic appeal hearing and a dismissal letter dated 1 June 1978. At letter 198E, Lord Bridge pointed out that the employee in that case:

".......could only establish that his total period of employment was sufficient to qualify him to make a claim of unfair dismissal if it included the period from 21 February to 1 June 1978. The Court of Appeal held that it did not. My noble and learned friend Lord Brightman (then Brightman LJ) quoted at p5 with approval the following passage from the judgment of the Employment Appeal Tribunal [1979] ICR 96, 102:

"In our view, when a notice of immediate dismissal is given, the dismissal takes immediate effect. The provisions of this contract as to the appeal procedure continue to apply. If an appeal is entered, then the dismissed employee is to be treated as being 'suspended' without pay during the determination of his appeal, in the sense that if the appeal is successful then he is reinstated and he will receive full back pay for the period of the suspension. If the appeal is not successful and it is decided that the original decision of instant dismissal was right and is affirmed, then the dismissal takes effect on the original date. In our view, that is the date on which the termination takes effect for the purposes of the Act.""

And Lord Bridge says:

"I entire agree with this reasoning in the absence of an express contractual provision to the contrary effect...."

What goes for instant dismissal must equally go for dismissal on notice.

In response to Mr Stilitz's argument, Mr Ingram-Smith submitted to us that his contract did incorporate the grievance procedure, that that included the status quo clause and also expressed the intention that for everybody's good, any grievance procedure through all its stages, should be exhausted in 8 weeks. That which applied to him had lasted considerably longer than that for 4 or 5 months, we think, and he pointed out that he was responsible for only 3 or 5 weeks of that delay which had been posted long before because he had given notice of the extended holiday some twelve months before. He said that therefore the delay grossly exceeded 8 weeks, even if account was taken of his holidays and that therefore the finding of the breach of contract should be upheld. We unhappily are unable to agree with his view. We are satisfied that the Industrial Tribunal did fall into errors of law, because clause 9 had no application to the facts here. There was no change of terms of contract and we are sure that Mr Ingram-Smith will agree that there were not any terms of contract at stake. What was at stake in the activation of grievance was whether or not he had been unfairly selected for redundancy. There had been what was, as the Industrial Tribunal found, Mr Ingram-Smith having conceded it, a lawful termination of his employment on notice.

The real problem in all of this had been created by the failure of the Appellant Trust to have in place a proper tailor-made redundancy policy and procedure. It does have one now, but that does not excuse its absence earlier and had there been one in place in time, we are quite satisfied that none of this case and litigation would have arisen. Because of its own dereliction, the Appellant had to fall back on using the grievance procedure for a purpose for which it was not designed. To use it for redundancy purposes, it was not necessary to imply clause 9. Only those parts of the procedure which are concerned with the grievance stages are relevant and necessary for the adaptation to redundancy. To apply clause 9 as part of that necessary adaptation, not only is not necessary, but it would be open to abuse. Namely, it would enable employees to extend for one reason or another the period of time occupied by the grievance procedures out of all proportion and often without ground.

Here it seems to us that there is no injury because redundancy has been conceded as fair. It follows therefore that the Appellant's appeal succeeds and we reverse the decision of the Industrial Tribunal. We find that there was no breach of contract and accordingly Mr Ingram-Smith's application on that basis must also stand dismissed.