At the Tribunal | |
Before
MR COMMISSIONER HOWELL QC
MR S M SPRINGER MBE
MR K M YOUNG CBE
APPELLANT | |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
Revised
For the Appellants | MR DAMIAN MCCARTHY (of Counsel) Messrs Moss Beachley Mullem & Coleman Solicitors 116 Seymour Place London W1H 1NW |
For the Respondent | MR JEREMY LEWIS (of Counsel) Messrs Herbert Smith Exchange House Primrose Street London EC2A 2Hs |
MR COMMISSIONER HOWELL QC
"7 During 1994 negotiations took place in connection with a right-sizing plan for the London operation of the Respondent. A note made by Ms Gleeson, one of the Applicants, in relation to a meeting on 11 February 1994, indicated that the Respondent would pay one month's salary for every year of service and suggested that any employees to be made redundant in the future would also receive one month's salary per year of service. At that time the General Manager of the European operation of the Respondent was Mr C Suzara.
8 The Respondent's Personnel handbook" [which we interpose is accepted for the purposes of this appeal as comprising terms incorporated into the employees' terms and conditions of employment], " states in section 1 at paragraph 4: -
"On matters not included in the booklet, corporate policies so long as they are not in conflict with English law will apply."
There is nothing in the English Handbook that sets out what the corporate policy is. We did have a copy of a memorandum dated 16 December 1991 which was from the President and Chief Executive Officer at that time, Feliciano Belmonte Junior, to Senior Vice Presidents, Vice Presidents, Regional Vice Presidents, Assistant Vice Presidents, Directors and Managers stating:
"I am pleased to provide you at this time with the updated edition of our Personnel Policies and Procedures Manual (Philippines).
The PPPM is intended primarily to provide you with one source of information about the various policies, rules and procedures governing Philippine based P.A.L. employees and to establish guidelines to help you in making decisions on matters that affect and concern the employees under you."
The policy did contain provisions of severance of employment which provided for payment of one month's salary for every year of service based on the employee's salary at the time of termination." [Again we interpose that it is common ground that a copy of this Philippines manual was circulated to the relevant Vice Presidents and other managerial staff responsible for the United Kingdom employees with whose cases we are concerned.]
"9 Miss Gleeson was one of those made redundant with effect from 31 March 1994 and was paid a redundancy payment of one month's salary for each year of employment at that time. Miss Gleeson was subsequently offered reinstatement with effect from 1 July 1994 and recommenced employment with the Respondent upon terms that she had already been compensated in severance pay for the period up until 31 March and would not be entitled to additional severance or retirement payments in respect of that period.
10 In 1996 a decision was made that the Respondent would no longer operate from Gatwick and that its United Kingdom operation would move to Heathrow. Relocation would involve travelling difficulties for many staff and the implications were discussed at a meeting with Gatwick staff in late August or early September 1996.
11 By a fax dated 11 July 1996 Ms Amy Lipana, the Country Manager for UK and Ireland, sent a fax to Mr Dias de Rivera which stated in relation to redundancy:-
"Redundancy. We are obliged to offer redundancy and it is my recommendation that we follow the same redundancy package offered to our L.O.N. employees during the right sizing exercise in 1994. This is based on one month for every year of service.."
Mr Dias de Rivera told the Tribunal that he checked with his head office to establish whether there was any agreement in place in the United Kingdom as to redundancy terms and was advised that there was no such agreement.
12 On 23 September 1996 Mr Dias de Rivera sent a memorandum to Mr Carne, the Vice President of Human Resources in Manila, setting out proposals for payments to staff who transferred from Gatwick to Heathrow. He proposed that enhanced redundancy payments should be made to staff who agreed to undertake trial periods of work at Heathrow and for those who worked at Heathrow for less than two months he proposed a redundancy payment of two thirds of the monthly pay for each year of service. However, it was decided by the head office in Manila that for this round of redundancies no enhanced terms would be offered in excess of the statutory redundancy entitlement.
13 On 25 September 1966 Ms Lipana wrote to the members of staff who were being made redundant upon the transfer to Heathrow stating:-
"In the event that an entitlement to redundancy pay arises, this will be calculated in accordance with the statutory minimum. There is no term of our current contract which provides for contractual redundancy pay."
14 During 1997 and 1998 the Respondent suffered considerable losses as a result of the Asian economic crisis. At the beginning of 1998 the Respondent had to consider what measures to take in order to safeguard its business. One measure which was seriously considered was the cessation of its flights to and from Europe. This would clearly have an impact on all employees of Philippine Airlines in Europe.
15 On 23 February 1998 a meeting was held in London attended by Mr Dias de Rivera. He explained the financial position of the Respondent and losses being sustained by the European operation and told the staff that if the London operation closed down or was handed over to a General Sales Agency then the Respondent would not give less than it is required to do by British law in making redundancies. That was reflected in the minutes prepared by Mrs I Murray of that meeting."
The Tribunal then went through the events and the negotiations which followed that announcement and the dissatisfaction that was expressed by employee representatives that the company on this occasion was preparing to pay only the statutory redundancy entitlement which it considered to be the limit of its legal obligation. Finally, the negotiations with a view to persuading the company to offer more generous redundancy payments on this occasion having been unsuccessful, the company served redundancy notices as recorded by the Tribunal in their Extended Reasons at paragraph 33:
"33 On 29 June 1998 Ms Lipana wrote to all employees confirming that their employment would terminate by reason of redundancy with effect from 30 June 1998. Thereafter the Respondent had operated no flights in or out of London."
"The claim for breach of contract
34 It is maintained by the Applicants that the provisions in the Personnel manual used in the Philippines in relation to redundancy pay were corporate policies which should apply pursuant to paragraph 4 of the introduction to the English Handbook. The issue for the Tribunal is whether there was an express term or an implied term that entitled the Applicants to an enhanced redundancy payment of one month's salary for each year of employment.
35 In reaching our decision on this issue we took the following matters into account:-
(a) The covering letter dated 16 December 1991 to Senior Vice Presidents and others enclosing the updated edition of the Personnel Policies and Procedures Manual (Philippines) clearly stated that the Manual was to cover Philippine based employees.
(b) The Personnel Manual applicable to English based employees does not contain a provision for enhanced redundancy pay and does not incorporate the provisions of the Philippines Manual. It merely states:-
"On matters not included in the booklet, corporate policies so long as they are not in conflict with English law will apply."
(c) There is no evidence that there was a corporate policy for enhanced redundancy pay. Both Mr Blum in his evidence and Mr Dias de Rivera confirmed that the Philippines Manual did not have application to employees based outside the Philippines.
(d) In relation to the 1994" [the original Statement of Extended Reasons before us refers to 1991 but that, it is quite apparent, was a misprint] "round of redundancies the reference to the enhanced redundancy payment covering future redundancies did not make clear whether it related to future redundancies in that round of redundancies or connected with that round of redundancies or something else. On the evidence that we have before us the balance of probabilities is that the enhanced redundancy pay applied only to the 1994 round of redundancies.
(e) In the 1996 round of redundancies it was clearly stated by the letter to staff of
25 September 1996:-
"In the event that an entitlement to redundancy pay arises, this will be calculated in accordance with the statutory minimum. There is no term of your current contract which provides for contractual redundancy pay."
It is clear from this provision that even if there had been any prior rights that was no longer the case in 1996 and any prior policy must have changed prior to 1996 if such a policy existed.
(f) There is no express term in the Applicant's contracts of employment entitling them to a payment of enhanced redundancy pay.
(g) The Tribunal also considered whether there was any implied term in the Applicants contract of employment. We took into account the decision in Pellowe v Pendragon plc unreported, 17 June 1999 EAT which Mr Lewis, for the Respondent, referred to us. It was held in that case that the question as a pure matter of contract law was whether it could properly be inferred from all the circumstances that it was the intention of the parties that an enhanced redundancy payment should form a term of the contract. We can draw no such inference. There is no evidence that any corporate policy applied outside the Philippines and although an enhanced redundancy payment was paid in the UK in 1994 no such payment was made in 1996. The Tribunal is unable to imply any term into the Applicant's contracts of employment entitling them to an enhanced redundancy payment.
36 It is the unanimous decision of the Tribunal that the Applicants' claims for breach of contract fail."
"On matters not included in the booklet, corporate policies so long as they are not in conflict with English law will apply."
Mr McCarthy made it plain and it is common ground that the booklet itself contains no express provisions about entitlement to payments on redundancy, either in accordance with or in conflict with what is stated to be applicable to Philippine employees under the corporate Personnel Policies and Procedures Manual to which he also referred us, which is at page 140 and following of the appeal file. It is not necessary to repeat the provisions cited by the Tribunal in their Statement of Extended Reasons but it is worthy of note that in the part of the manual headed 'Severance of Employment' a number of rules are set out, obviously of primary application to Philippines based employees. In particular, on the entitlement on termination of service, reference is made to various schemes such as one referred to as a 'Separation Assistance Grant', and the 'Employees Group Protection Plan' and in particular 'the PAL Employees Retirement Plan' which we understood from Mr McCarthy were references to either Philippines-based or world wide employee benefits plans, which were not necessarily applicable to the UK based employees with whom we are concerned. We mention that because in Rule 2(d) providing for the benefits for Philippines based employees on termination of service "due to reduction of force or layoff", the entitlement for those employees which is the basis of the claim for a contractual entitlement for the UK based employees under this head of the argument is expressed as follows:
"Employees so terminated shall, by way of termination pay, be entitled to whichever amount is greatest among the following:
- One month's salary for every year of service based on the employee's salary at the time of termination
- Amount due under the Retirement Plan
- Amount due under existing legislation."
That, Mr McCarthy said, was perfectly capable of applying in accordance with its terms to United Kingdom based employees even though they might not be members of the Retirement Plan referred to at all, and even though the United Kingdom employees' pension arrangements would be highly unlikely to provide for the payment of a cash amount out of the pension scheme which could be compared arithmetically with the calculation of one month's salary for every year of service that these employees were claiming.
"A corporate policy for enhanced redundancy payments contained within the PPPM and this was incorporated into each employee's [meaning UK employees] contract of employment."
The four facts identified were, the general reference in the British personnel manual to corporate policies to which we have already referred. Second, the fact that there was nothing in the British employees' manual which set out what the corporate policy was in relation to severance payments, as was indeed the case. Third, the wording in the memorandum of
16 December 1991 referred to by the Tribunal and referring in terms only to Philippine based PAL employees as being the employees to whom these terms were directly applicable and to the provisions of the document being only guidelines otherwise to help the managers around the world make decisions on matters concerning their employees. Fourthly, the fact that that policy for Philippine based employees did contain the provisions for part of the calculation to be done by reference to one month's salary for every year of service.