United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR JOHN CAVANAGH (of Counsel) Instructed by: National Union of Teachers 25 Chorley New Road Bolton Lancs BL1 4QR
For the Respondent	MR TIM KENWARD (of Counsel) Instructed by: Mr J Wardle Solicitor Legal Services Agency Personnel & Admin Directorate Liverpool City Council PO Box 88, Room 130, 1st Floor Municipal Buildings Liverpool L69 2DH


 


JUDGE PETER CLARK

1. We have before us appeals by Messrs Wareing and Chidwick against the decision of a full Employment Tribunal chaired by Mr A M Coventry sitting at Liverpool, promulgated with extended reasons on 9 June 1999, dismissing their complaints of unfair dismissal brought against (1) The Governors of Anfield Community Comprehensive School (the School) and (2) Liverpool City Council (the Council).

The Facts

2. Mr Wareing commenced employment with the LEA in 1986. In 1994 he was a member of the "Advisory Agency" within the LEA, paid in accordance with the "Soulbury" scale. On 1 September 1994 he was re-deployed to work as a teacher at the School under the terms of the Council's Management and Staffing Agreement (the 1993 Agreement).
3. By a letter dated 15 December 1994 Mr Wareing was informed by the Council that although the teaching post at the School which he now filled was at point 9 on the pay spine, his salary would be protected for 4 years in the first instance at point 14, the comparable position to that which he enjoyed on the "Soulbury" scale.
4. It was anticipated that in his new teaching post he would transfer to a post or undertake responsibilities which would eliminate the 5 point difference between his protected position and the point on the spine properly attributable to his new teaching post. In the event he was unsuccessful in applications for higher posts and additional duties which he undertook subsumed only 2 of the 5 protected points.
5. Mr Chidwick arrived at the school on a permanent basis on 1 September 1990. At his previous school he had 2 points of responsibility which were then protected, without limit of time, under the Council's then practice. He did not acquire those points of responsibility at the school prior to the relevant events.
6. In March 1997 the Council faced severe budgetary problems. One cost saving measure adopted by the Council was to phase out salary protection for their employed teachers. Such protection had been removed from all other Council employees in July 1996. Accordingly the Director of Education wrote to the Governors of the School (the Governors) on 7 March 1997, informing them that in respect of teachers whose pay was protected other than as a result of a school re-organisation, which the Director described as resulting in "statutory salary protection", such protection would be phased out over 2 years. Those teachers included the Appellants.
7. On 8 May 1997 Mr McNamara, Personnel Officer in the Education Directorate, wrote to the Governors informing them that from 1 September 1997 the LEA would reimburse school budgets with half the actual costs of pay protection. The Governors were asked whether they would make up the difference from their own school budget, failing which the Director would take action to vary the relevant teachers' contracts, alternatively dismiss them.
8. Initially the Governors took the view that the problem lay between the LEA and affected teachers and not with them. However, following consultations with interest groups, including the teachers' Trade Union (NUT) which has represented these Appellants throughout, the Governors, mindful of the dwindling reserves which were held in the School's finances, predicted to fall from £194,000 on 31 March 1997 to £30,000 or less by 31 March 1999, reluctantly concluded that they could not meet the cost of pay protection out of their budget.
9. Accordingly Mrs Schlechte, Chairman of the Governors, wrote to Mr Wareing and Mr Chidwick giving both contractual notice of dismissal with effect from 30 April 1998, coupled with an offer of immediate re-engagement on identical terms, save for the removal of their pay protection.
10. Both teachers appealed against their dismissals, with the assistance of their NUT representative, Mr Kent. Those appeals were heard on 28 January 1998. Both were unsuccessful, save that the effective date of termination of their old contract was deferred to 31 August 1998.
11. From 1 September 1998 both Appellants remained in employment at the school; Mr Wareing was offered and accepted the post of Staff Development Co-ordinator at point 11 on the pay scale, losing the additional 3 scale points previously protected, from 1 September. Mr Chidwick kept his former post, but was then paid at scale point 9, losing the 2 protected points which he had previously enjoyed.

The Complaints

12. Both Appellants lodged Originating Applications to the Employment Tribunal dated 27 November 1998, naming Mr Kent as their representative. They described their complaints as "Unfair Dismissal; Declaration". In their particulars of complaint both Appellants contended:-

"The Respondents have failed to show that there is any potentially fair reason for the Applicant's dismissal and that therefore his dismissal is unfair. Further, the procedures adopted by the Respondent, particularly in relation to the Appeal Panel held on 28 January 1998, were unfair and in breach of the rules of natural justice".

13. The claims were resisted. By their Notices of Appearance the Respondents contended that the reason for dismissal, the School's financial situation and resource implications in meeting the costs of the Appellants' pay protection, amounted to some other substantial reason under Section 98(1)(b) Employment Rights Act 1996, a potentially fair reason and asserted that the dismissal was fair, both substantively and procedurally.

The Employment Tribunal Decision

14. In short, the Tribunal accepted the case advanced by the Respondents and rejected that of the Appellants. At paragraph 8.5 of their reasons the Tribunal accepted the Respondents' evidence that once the cost of pay protection fell on the school's own delegated budget the financial situation of the school was such that it could not afford to meet the costs of that protection or part of it. That was the Respondents' reason for dismissal and it was some other substantial reason within the meaning of Section 98(1)(b) Employment Rights Act 1996.
15. On the question of fairness under Section 98(4) Employment Rights Act 1996 they found that in the circumstances described, dismissal fell within the range of reasonable responses of a reasonable employer and that, in the implementation of the decision, the Respondent acted reasonably. We take that last finding to be a reference to the challenge to the procedural fairness of the internal appeal proceedings, raised in the evidence of Mr Kent before the Tribunal and developed in the closing argument of Counsel then appearing for the Appellants, Mr Geey, summarised at paragraph 8.3 of the reasons.

Teacher Pay Protection

16. In this appeal, but not before the Tribunal below, Counsel have traced the statutory regime governing pay protection for teachers. In short, the position was at the material time governed by the 1997 Pay and Conditions document issued in accordance with the provisions of Section 2 of the School Teachers Pay and Conditions Act 1991 (and its predecessor in the case of Mr Chidwick).
17. The relevant provisions of the 1997 document are these:-

"2.4 A teacher in a school which has a delegated budget shall be entitled to be paid by the authority any remuneration to which he is entitled by virtue of the provisions of this Document or any determinations made hereunder.

24.1.1 where as a result of:

(a) the closure or reorganisation of an educational establishment,………

a teacher ……loses his post or would (but for this paragraph) suffer a diminution in his remuneration, and is thereupon employed full-time as a teacher in the provision of primary or secondary education (whether or not at a school) in a post where his remuneration is paid by the same authority as before, he shall be deemed for all salary purposes to continue to hold the post he held, and to be entitled to those allowances listed in paragraph 24.1.4 to which he was entitled immediately before the closure, reorganisation or …..

24.1.2 where, in circumstances other than those mentioned in paragraph 24.1.1, ……such a teacher loses his post or would (but for this paragraph) suffer diminution in his remuneration, and is thereupon employed full-time as a teacher in the provision of primary or secondary education:

(a) in a post (whether or not at a school) in which his remuneration is paid by the same authority as before;

he may, at the discretion of the authority…….be deemed for all salary purposes to continue to hold the post he held, and to be entitled to those allowances listed in paragraph 24.1.4 to which he was entitled immediately before the circumstances occurred; and the authority …..shall not unreasonably refuse to exercise their discretion in this matter in favour of the teacher;"

The Appeal

18. These appeal proceedings were commenced by a Notice dated 19 July 1999, signed by the Union solicitor. There were 2 grounds of appeal there set out:

(1) That the effect of the 1991 Act was that it was unlawful for the Council to withdraw the funding of the Appellants' salary protection and it could not be a potentially fair reason for their dismissal that the Respondents sought, by the dismissals, to effect an unlawful variation to the Appellants' terms and conditions of employment. We take that formulation from paragraph 5(1) of the skeleton argument prepared by Mr Cavanagh, who now appears on behalf of the Appellants, for this full appeal hearing.

(2) The Tribunal failed to give adequate reasons for rejecting the Appellants' case that the internal appeal process was flawed for the reasons given by Mr Kent in evidence, thereby rendering the dismissals unfair.

19. Prior to the preliminary hearing held in this case before a division presided over by Mr Commissioner Howell QC on 21 January 2000, Mr Cavanagh was instructed. He prepared a skeleton argument for use at the hearing which formulated 2 further grounds of appeal, later contained in an amended Notice of Appeal with the permission of that division. They were that:-

"(3) The Tribunal erred in law in failing to take account of the statutory framework relating to teachers pay and conditions when considering whether the Appellants' dismissals were fair for 'some other substantial reason'.

(4) The Tribunal erred in law in considering that the dismissals could be unfair only if they fell outside the range of reasonable responses."

The appeal was permitted to proceed to this full hearing without restriction.

Submissions

20. The Respondents take a preliminary objection to any of the grounds (1), (3) and (4) being allowed to proceed at this full appeal hearing on the basis that each raises a new point of law not taken below.
21. That objection is rendered academic in respect of ground (4), which Mr Cavanagh added in the light of the then recent EAT decision in Haddon -v- Van Den Bergh Foods [1999] ICR 1150. Following the Court of Appeal decision in Post Office -v- Foley [2000] IRLR 827, disapproving the EAT's approach to the range of reasonable responses test in Haddon, Mr Cavanagh accepts that he cannot pursue his 4^th ground of appeal below House of Lords level, but formally preserves his position in case this matter should go further. In these circumstances we heard no argument on this ground of appeal.
22. Further, Mr Cavanagh acknowledged that ground (3), which goes to the question of reasonableness under Section 98(4) Employment Rights Act 1996, would, if successful, necessarily involve remission to an Employment Tribunal for further findings to be made. In these circumstances he recognises that he cannot pursue this new point, not taken below, in this appeal. That leaves ground (1) to which the preliminary objection is taken.

New Points of Law

23. We have been referred to the familiar line of cases, beginning with Kumchyk -v- Derby City Council [1978] ICR 1116 and earlier cases there referred to, up to the Court of Appeal decision in Glennie -v- Independent Magazines Ltd [1999] IRLR 719. Mr Cavanagh accepts that the point sought to be taken in ground (1) does not go to the Tribunal's jurisdiction. cf Aparau -v- Iceland Frozen Foods PLC (No 2) [2000] ICR 341.
24. It is possible to discern from the authorities two lines of approach, the narrower line, which prohibits the taking of any new points on appeal save in exceptional circumstances, such as deception by the opposing party causing the point not to be taken below (see GKN (Cwmbran) Ltd -v- Lloyd [1972] ICR 214; Kumchyk ) and the less restrictive line suggested obiter by Ralph Gibson LJ in Hellyer Bros -v- Macleod [1987] ICR 526, where a remission to the Employment Tribunal for further enquiry would not be necessary in order to decide the new point on appeal. On either approach Mr Cavanagh accepts that if it is necessary to remit the matter to the Employment Tribunal before what he concedes is a new point in ground (1) is finally determined, then he cannot raise it in this appeal. However, he submits that remission is not necessary.
25. The proposition which is advanced under the first ground of appeal relates solely to the Tribunal's finding that the Respondents had established a potentially fair reason for dismissal, some other substantial reason under Section 98(1)(b) Employment Rights Act 1996 . It is put in this way; the reason for the Respondents dismissing the Appellants and offering immediate re-engagement on terms omitting the previously enjoyed pay protection was to evade the statutory protection granted to teachers under the 1991 Act; that, it is submitted, cannot be a potentially fair reason for the purposes of Section 98 Employment Rights Act 1996. It is a discrete point of law which requires no further investigation by the Employment Tribunal .
26. Mr Kenward could not point to any further findings of primary fact required to deal with the specific point raised by Mr Cavanagh. However, he submitted that what the Appellants were seeking to do was to challenge the Tribunal's factual finding as to the reason for dismissal. It was not that the Respondents were seeking to evade the Appellants' statutory protection, it was that for good economic reasons the Respondents were unable to continue the original terms of employment. The position is analogous to that in Gilham -v- Kent County Council (No 2) [1985] ICR 233, amounting to some other substantial reason for dismissal, per Griffiths LJ 239 C-E.
27. Mr Cavanagh seeks to distinguish Gilham on the grounds that there the Applicant's terms and conditions were determined by a joint negotiating committee of employers and trade unions, here they are determined by statute.
28. That gives rise to a further consideration. It is correct to say that the 1997 document derives from the statutory provisions in Section 2 of the 1991 Act. However Mr Kenward draws a distinction between mandatory pay protection under paragraph 24.1.1 of the document (School Re-organisations etc) and 24.1.2 (the present case) where pay protection is discretionary. See the Director's letter of 7 March 1997. Mr Cavanagh submits that a discretion once exercised cannot be re-visited. We cannot accept that submission. On the facts of this case Mr Wareing received pay protection for 4 years in the first instance. That period expired on the same day as his notice of dismissal, 31 August 1998. We cannot accept that the temporal limitation was itself unlawful. Thus, the question in his case, under paragraph 24.1.2 is whether in refusing to continue the pay protection after that date the Respondents' refusal was unreasonable. That is a question of fact for the Tribunal which can only be determined on remission. In Mr Chidwick's case the pay protection was without limit of time. However we have concluded that it is open to the Respondents to revoke the pay protection in the further exercise of their discretion, provided that their refusal to exercise discretion in his favour is not unreasonable; again a question of fact for the Tribunal.
29. Initially, Mr Cavanagh advanced an alternative submission, based on administrative law cases, that the Respondents could not withdraw pay protection once granted unless account was taken of the personal circumstances of the teachers affected. However he was constrained to abandon that argument on the basis that it would require further factual findings by the Employment Tribunal .
30. In these circumstances we have concluded that it will not be possible to determine the new point raised in ground (1) without remission to the Employment Tribunal. Accordingly we shall not entertain it.
31. There is a further point which was not canvassed before us and therefore does not form part of our reasoning. Nevertheless we think that for completeness we should mention it.
32. It is the Respondents' case that as a matter of law they were entitled, in the proper exercise of their discretion, to withdraw teachers' pay protection in accordance with paragraph 24.1.2 of the 1997 document, in the absence of agreement between the parties, by lawfully terminating the old contract of employment and offering immediate re-engagement on the same terms, save for pay protection. Let us suppose that both they and we are mistaken in that view and that as a matter of law they had breached the Appellants' statutory rights as Mr Cavanagh contends. Could they, in those circumstances, establish a potentially fair reason for dismissal, which dismissal was fair?
33. In Kwiksave Stores Ltd -v- Greaves [1998] ICR 848, 864G, Lord Woolf MR was of the opinion that a mistaken belief as to the law cannot be a basis for saying that a dismissal was not unfair. In Halfpenny -v- Ige Medical Systems Limited [Times. 19 December 2000] Lord Browne-Wilkinson, giving the leading speech in the House of Lords, expressly rejected that firm conclusion. I have read the transcript. He stated that it does not follow that as a matter of law a dismissal made because of a mistake is necessarily unfair. That includes a mistake of law as to the employee's statutory rights.
34. In these circumstances it would have been necessary for the Employment Tribunal to consider, had the point been taken below, first whether as a matter of law the Respondents had a discretion to terminate the contract and thereby end the pay protection; if so, then the question arises for the Employment Tribunal whether the consequent refusal to exercise the discretion in favour of the Appellants was unreasonable. Alternatively, if they had concluded that the Respondents had no such discretion on the facts of either or both of these cases, then the question would arise as to whether the Respondents acted under a mistake of law and if so, whether the dismissals were nevertheless fair in accordance with the dictum of Lord Browne-Wilkinson in Halfpenny. All matters of fact for the Employment Tribunal.
35. We have reached the conclusion that the Appellants ought not to be allowed to take this new point without any feeling of unease. The Appellants were represented by their trade union throughout. Before the Employment Tribunal they were represented by solicitors and Counsel. The principle of finality of judicial proceedings requires parties to bring the whole of their case before the Tribunal at one time. No excuse or explanation for not taking the point has been advanced before us. There are, as Mr Cavanagh accepts, no exceptional circumstances in this case.

Adequacy of Reasons

36. The point in ground (2) was raised below by the Appellants, through the evidence of Mr Kent and relied upon in submission by Mr Geey. Mr Cavanagh submits that the Tribunal has failed to give adequate reasons for rejecting the complaint of procedural unfairness in the conduct of the internal appeal. Meek -v- Birmingham City Council [1987] IRLR 250.
37. In response, Mr Kenward points to passages in the Tribunal's reasons where they make findings of fact in relation to the internal appeals of both Mr Wareing and Mr Chidwick; they record the submissions of Mr Geey as to the unfairness of the procedure at the appeal hearing, and submissions to the contrary from the Respondents, and they expressly say in their concluding paragraph that they have taken into account all the foregoing matters in their conclusion, among others, that "in the implementation of the decision the Respondent acted reasonably".
38. Mr Kenward reminds us that Tribunal reasons are not intended to include a comprehensive and detailed analysis of the case, either in terms of fact or in law. per Donaldson LJ. UCATT -v- Brain [1981] IRLR 225. The question is whether the parties know why they have won or lost (Meek). Here, he submits, the Tribunal's reasons adequately do so.
39. We accept Mr Kenward's submission. The rival contentions as to the procedural fairness of the internal appeal process were plainly before the Tribunal. They preferred the case advanced by the Respondents on this issue. They said so. That is why the Appellants lost on this point. Accordingly we reject the only ground of appeal properly raised before us.

It follows that these appeals must be dismissed.