United Kingdom Employment Appeal Tribunal

JUDGE COLLINS:

1. This is an appeal against the decision of an employment tribunal sitting in Southampton. The extended reasons were promulgated on 8 November 1999. The tribunal made an award against the first respondents, Lava Systems (Europe) UK LTD, of £16,180, but dismissed the claim against the second respondents, Open Text UK LTD, on the ground that they acquired the undertaking of the first respondents on 29 December 1998, and the appellant having been dismissed on 4 December 1998, some weeks before the relevant transfer was not entitled to the benefit of the Transfer of Undertakings (Protection of Employment) Regulations 1981.
2. The first respondents are either in receivership or liquidation and did not seek to resist the appellant's claim or appear. The sum which the tribunal awarded was made up as follows: damages for wrongful dismissal equivalent to three net months net pay in the sum of £2,800; 13 days for accrued leave at £159.20 per day and 50% of the bonus to which the appellant was entitled in the sum of £3,300 making a total of £16,180.
3. By his notice of appeal dated 9 December 1999, the appellant who appeared in person before us, points out he was a Director in Research and Development with the first respondents and claims he was still an employee of the first respondents on the date of the transfer so that the burden of his rights was transferred to the second respondents under the Regulations.
4. The tribunal concentrated upon a letter dated 4 December 1998 as the material document for their consideration, although it has to be pointed out that three letters in all were sent to the appellant, one on 3 December, one on 4 December and one on 15 December. Mr. Sadiq signed them all and they were all in very similar terms. The differences between them being these: the letter of 3 December refers to the appellant's health benefits as terminated on the date of the letter; the letter of 4 December refers to the health benefits being terminated at the date of that letter and also makes provision for the appellant's company car; the letter of 15 December refers to the letter of 4 December and the health benefits being maintained until 4 March. The way the tribunal dealt with the matter in paragraph 7 of their reasons, was that it is a general rule that construction of a dismissal letter should not be technical, but should reflect what an ordinary reasonable employee's understanding of it would be. Mr Henderson agreed with that approach and so do we. The tribunal applied those guidelines to the letter of 4 December 1998. It reads:

Dear Andrew,

Due to company restructuring effective immediately, your position with Lava Systems has become redundant and your services are no longer required. As per your contract of January 16 1997, we are prepared to offer you three months pay, less statutory reductions and pay for any unused vacations as follows:

(Then a series of payments is set out and so the letter goes on)

Benefits Health care benefits will terminate on 4 December 1998,

Company car. (then there are provisions the effect of which are that the appellant is entitled to keep the car until February 27^th, but that maintaince on the car from 4 December until it is returned to those respondents will be the responsibility of the appellant. )

Stock options,. You have 12,500 stock options and have invested at the exercise price of 91c and you have three months until 3 March 1999 to exercise these options

(and there follow provisions relating to company property and confidentiality agreement.)

5. Mr. Henderson points out that under the provisions of his contract, any period of notice takes effect at the end of the month in which the notice is given, so that if he was given three months notice in this case, it would have commenced at the end of December and ended at the end of March. He also points out under the terms of the contract the employer is entitled to give him notice without requiring him to undertake work and is in effect contractually entitled to put him on garden leave throughout the period of his notice. It was his contention before the tribunal and before us that on a proper construction of any or all of the three letters and the surrounding circumstances, the proper interpretation was that the company had given him three months notice which would not have expired until the end of March 1999 and in those circumstances, he was still employed at the date of the transfer of the undertakings.
6. The alternative interpretation which is the one preferred by the tribunal is that he was summarily dismissed as at 4 December. The question of construction of the letter and surrounding circumstances is one of mixed fact and law in that the tribunal has to decide the legal principles and apply those principles to the facts. Mr Henderson has no quarrel with the test which the tribunal laid down for considering the facts and it might therefore be sufficient to dispose of this appeal by saying that the tribunal considered the facts according to the correct principle and were entitled to come to the conclusion which they came. However, we propose to look at the merits.
7. Had it been the intention of the first respondents to give the appellant three months notice of termination of his employment and also take advantage of the terms of his contract of employment by requiring him to be on garden leave during that period, nothing would have been easier than for the letter of 4 December or one of the other two letters to say so. But the letters do not say so. Mr. Henderson has conceded that it was not agreed that he should be on garden leave and the tribunal found as a fact that the question was not even discussed.
8. In argument, Mr. Henderson asks us to concentrate not on the words 'effective immediately' in the letter which the tribunal interpreted as meaning summary dismissal, but on the expression 'We are prepared to offer you three months pay etc' . He invites to say that it is so obvious that that indicates that he was being dismissed on notice that the tribunal was perverse in coming to the contrary conclusion.
9. It seems to us that to a reasonable employee the letter would have had a different significance. If the appellant were being dismissed on notice, there would be no question of an offer being made to him at all. He would simply be paid what he was contractually entitled to during the period of notice together with any benefits. The reference to an offer suggests that there was some kind of claim which was open to settlement by negotiation. The language of offer and acceptance whether used in a technical sense or not would be much more appropriate to a situation of summary dismissal giving rise to a claim for damages for wrongful dismissal, than dismissal on notice. And that is borne out it by the fact that after receipt of these letters, Mr. Henderson did attempt to improve upon the offer by negotiation and by 15 December the offer was in fact slightly improved, at least as to benefits.
10. After receiving the letters in early December, Mr. Henderson negotiated; he told us he wanted to negotiate to get his three months pay up front. It does seem to us that his attempt to negotiate was consistent with negotiating severance or damages terms for summary dismissal, rather than an acceptance that he would paid what he was due under his contract.
11. So for those reasons, we are of the view that the tribunal was entitled to take the view of the letter and surrounding circumstances which it did. We do not find any arguable point of law. What follows is that Mr. Henderson was summarily dismissed on 4 December and was not employed by Lava Systems immediately before the transfer to Open Text UK LTD He therefore he has no claim under the 1981 Regulations.

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12. As indicated in his notice of appeal, the appellant also has a point on the amount of damages that he was awarded. I have summarised the components of the tribunal's award in the early part of this judgement, but under the terms of his contract of employment, the appellant was entitled to three months notice from the end of the month in which notice was given; he was also entitled to benefits. There is a question about what benefits he was entitled to in relation to the company car. There is also a question relating to health benefits and insurance. Those were valuable aspects of the remuneration package and he was entitled to damages for being put out of them. The tribunal does not appear to have made any award in relation to those items or given them any consideration. There is also the question of interest from the date when the monies became due, although I suspect Mr. Henderson in fact has no claim in relation to that because he was awarded damages for breach of contract by the tribunal and interest runs only from the date of which the tribunal ordered in the note attached to their reasons.
13. Mr. Henderson wants to proceed with his appeal against the amount of damages he was awarded. Although it may turn out that any increased award is worthless because even the award of £16,180 may be turn out to irrecoverable, it seems to us that there is a point of law on the question of the failure of the tribunal to award any damages for the loss of the full notice entitlement , benefit of the motor vehicle and health insurance and insurance benefits and we give order that the appeal should proceed to a full hearing on the narrow ground only of the amount of the award.
APPEARANCES

 

For the Appellant	MR HENDERSON IN PERSON
For the Respondents