United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR T LINDEN (of Counsel) Instructed by: Mr R Linskell Legal Advisor Engineering Employers Federation Broadway House Tothill Street London SW1H 9NQ
For the Respondent	THE RESPONDENT IS IN PERSON.


 


JUDGE WILCOX:

1. The Appellant appeals from a decision of the Employment Tribunal sitting at Reading on 16 September 1998, that the Respondent was entitled to a statutory redundancy payment and to a contractual redundancy payment. It is not necessary to set out in any detail the facts of this case. Suffice it to say that for some years the Respondent to this appeal, Mr Radford, had been employed by Lucas Varity the Appellants, at their plant in Witney. They chose to close that plant, eventually it was closed in or about the end of February 1998 and discussions as to possible redundancy were under way between the Appellant and the employees in autumn of 1997.
2. This appeal focuses on two matters:

1. The entitlement of the Respondent to a contractual compensation and his entitlement to a statutory compensation. There are free-standing matters, although of course having regard to the facts that relate to each, they are inexplicably, bound up with each other. It does not follow that if one finds that a statutory redundancy payment is the entitlement, that necessarily it follows that there is a contractual one. Neither, I suppose, technically in law vice versa.

2. The normal practicalities and facts situation make them interdependent. Certainly that was the approach taken by the Tribunal in this case. At paragraph 12 (b) "On either analysis a contractual right to receive a payment in accordance with the Respondents formula, is made out provided that (as we have found he does) the Applicant qualifies for a statutory payment."

3. We consider first the matters relating to the statutory payment.

The Statutory Payment

Entitlement arises under the Employment Rights Act 1996 but so far as the material to the entitlement here, is s.141 of the Act which provides that:

1. Where an offer, whether in writing or not is made to an employee before the end of his employment to re-engage him under a new contract of employment, with the renewal or re-engagement to take effect immediately on or after an interval of not more than four weeks after the end of its employment.

2. Where sub section 3 is satisfied it the employee is not entitled to redundancy payment, if he unreasonably refused the offer. Sub section 3 provides however, that the sub section is satisfied where the provisions of the contract as renewed, or the new contract would differ from the corresponding provisions of the previous contract, but the offer constitutes an offer of suitable employment, in relation to the employee.

4. There are two limbs therefore that have to be established:

1. Namely that there is an offer of suitable alternative employment, that is an objective test and then

2. Whether there has been an unreasonable refusal of that offer. That is usually judged in a subjective manner looking at all the circumstances of the employee's decision.

There is no issue here as to the first limb. The focus of the Tribunal as to the statutory entitlement was as to the second leg; that is the entitlement to refuse, what could be classed as a reasonable refusal in all the circumstances? The Tribunal found that the Respondents had an offer of alternative employment that was better paid. They found that he never had any intention of taking the Cirencester job, described as and expressed as being a 'suitable offer tailor made for his purposes.' The reason being that he had a much better opportunity in prospect and was the reason why he turned the Cirencester job down.

5. Canvassed before the Tribunal was the evidence dealing with his domestic circumstances. His wife follows a university course in Bristol. He has obligations to help her to look after the children. Distance of travel affects his ability to support her and look after the children. But the finding of the Tribunal in paragraph 12 (3) is that the principal reason for his decision not to accept the Cirencester job was the other job. They do of course mention other reasons. We have to ask ourselves on the findings, what other reasons could there have been? So far as domestic discontinuity was concerned and inconvenience, it is clear that they found that that was equally applied in relation to the alternative job.
6. Travel distance of course was greater. A point that has been urged upon us by the Respondent to this appeal is the fact that the actual offer that was made was somewhat late in the day. He was entitled therefore, to look around and to secure his position and make all endeavours to ensure that he could support his family and fulfil the requirements that he subjectively believed arose in relation to living at Witney. Is that enough? No says the Appellant here and cites authority, the case of Paton Calvert & Co Ltd v Westerside [1979] IRLR 108. There Mr Silm J in the course of his judgment considered a situation not dissimilar to the litigant case. There was a redundancy situation and they had to consider whether it was reasonable for a 61-year-old man to accept an offer for reemployment in an another job. He had doubts about the viability of the company and the continuance of the job. The Tribunal at first instance found that adding the facts together including his age, the new job and the possibility that the company might not survive, held that he had not unreasonably refused the offer.
7. It was contended in that case that that was not sufficient reason and that in fact there should have been circumstances additional, which go to the heart of the employer/employee relationship. In the course of his judgment Mr Slim J also reviewed the case of Thomas Rag & Sons Ltd v Wood [1976] ICR 313. There the employee was given notice, obtained other work only one day before the expiration of the 90 day notice. He was given an offer of alternative employment, but as a man of 56 he feared future redundancies in the construction industry. The Tribunal there was prepared to find that the fears of future redundancy were not in themselves necessarily sufficient to justify a refusal to accept a new offer, neither in itself was the lateness of the offer of new employment but they paid regard to the fact that the employee in the case had with diligence obtained other employment and said:

"If all the factors were put together, as it was right to put them together then the Industrial Tribunal was entitled to conclude that the employee had not unreasonably refused an offer of employment."

8. In paragraph 17 he goes on to observe sagely:

17. "These cases are not always easy."

And then at paragraph 18:

18. "To come to a conclusion as one does in variably in cases that consider the capacity of a Tribunal to look at questions of the fact, we consider that the Industrial Tribunal was entitled on the material before it to come to the conclusion that they reached. Accordingly and despite the able argument of Mr Leverson the appeal fails."

These cases turn on matters of fact. The Tribunal is an industrial jury. It sees and hears witnesses, it weighs up the facts, and it gives such weight to that which it thinks it ought to give weight to. We have considered with very great care the submissions upon this matter. We cannot conclude that the finding of the Tribunal as to the entitlement for statutory redundancy payment, is a finding that is an error of law or is perverse. One must always emphasise, maybe that this Tribunal may not have gone down that route. We cannot conscientiously say that no Tribunal, reasonably directed could.

9. I come to the next consideration, which is the free-standing entitlement to the contractual redundancy payment. The case pleaded from the outset and to do him justice not really departed from, even before this Tribunal by the Respondent is that he was entitled to contractual redundancy payments because it was the custom of that company. He candidly nailed his colours to the mast. It is clear that the findings of the Tribunal by necessary implication did not find that rejection to be the position. They went down a completely different route. They said 'he was entitled to a contractual redundancy payment, not arising out of custom, but arising out of either of two matters'. They set up something that was never canvassed in the pleadings and agreement between Mr Farrell and the Applicant of 27 September 1997.
10. They find there was an implicit or an express agreement, arising out of a sensible discussion between an employer and an employee who might be made redundant, as to what he might receive. In the course of submissions to us today, Mr Radford has never suggested that it was other than that. There was no basis upon the findings of the Tribunal upon which they could properly come to that conclusion, it was not pleaded and opportunity was not given for the Appellants to explore that matter, either by adducing evidence or by other means. The Tribunal clearly were not particularly confident in this approach because they went to consider an alternative basis by implying a term.
11. There was a written contract of employment here and normally, essential terms would find their way into a written contract. Therefore one will look with care to see whether there is any necessity to spell out an implied term, going over and beyond the obligations set out the obligations spelt out in the written contract. What is the proper approach to the implication of terms? Succinctly, that is set out in the current edition of Chitty on Contract at paragraph 13009.

"A term or not to be implied unless it is, in all the circumstances, equitable and reasonable. But this does not mean that a term will be implied, merely because in all the circumstances, it would be reasonable to do so, or because it would improve the contract or make its carrying out more convenient."

12. The touchstone is necessity and not reasonableness. The term to be implied must also be capable of being formulated with sufficient clarity and precision. It seems to us that in investigating whether or not a term ought to be implied and whether necessity was the touchstone, the Tribunal ought to have given the opportunity to the Appellants to produce evidence and explore the factual matrix from which it might be possible to imply a term. Having considered the basis here, we look to the actual term that they were prepared to imply. An implied term those Respondents was to be treated no less favourably than his peers in respect of redundancy compensation payable in the event of the closure of the Witney term were. But in industrial matters employers may properly treat employees differently in economic terms, by way of example, in order to keep a gifted employee, you may pay more to retain him. You are entitled to do that.
13. It may be a desirable matter, to have peers treated on an equal basis, if appropriate, but that is a question of desirability. It does not represent necessity. It is clear to us that there was no proper investigation of that matter; there are no findings as to why that is a matter of necessity, why that implied term as drafted was concluded. Consideration was not given as to the intention of the parties as to whether the employer was prepared to imply such a term. We think on the evidence that they have found they wrongly concluded:

a) That there was a express agreement on 27 September 1997 or alternatively whether there was an implied term.

14. We think the only fair thing to do in the circumstances is to uphold that limb of the appeal as to the contractual entitlement to redundancy payment and to remit it to a fresh Tribunal to consider, whether or not, there was an agreement on 27 September 1997. Secondly whether or not there was an implied term of the contract, as to contractual compensation and what that term was. It follows that a Tribunal, thus looking at those matters would give appropriate discovery as documents relating to those issues. That is a matter of course for the Tribunal. We remit it on that basis.