United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR S SPENCER (Solicitor) Messrs Jones & Warner Solicitors 60 Lombard Street London EC3Y 9EA


 


MR JUSTICE MAURICE KAY

1. This appeal is listed before us today for preliminary hearing. The decision sought to be appealed is one of an Employment Appeal Tribunal sitting at London (Central) on 6^th April this year. The decision records a decision of the Tribunal to the effect that under his employment contract, Mr Allen was entitled to three months notice pay on termination of his employment by Startup Station Plc, and accordingly the company was ordered to pay him £12,939.27, being based on three months notice pay.
2. Mr Allen had been employed as Finance Director of a company called Carpe Diem Innovations Ltd. That company fell into financial difficulties and in October 2000 entered into discussions with Startup with a view to Startup taking over Carpe Diem, in the words of the decision of the Employment Tribunal, "lock, stock and barrel". In that eventuality the employees would have fallen within the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981.
3. During the discussions between the two companies, there was negotiation about contracts of employment for Carpe Diem employees who would become Startup employees. There was discussion about an initial probationary period for three months, during which the notice period, to which employees would have been entitled, would have been two weeks. However, that suggestion appears to have fallen by the wayside and eventually the commercial parties discussed a proposed contract with an express provision for termination

"by either side on three months written notice of termination".

4. In the event, the discussions between the commercial parties broke down and there was no take-over. On 30^th October 2000, Carpe Diem went into liquidation and the employees of that company had their contracts of employment terminated on that day. There is a document of 30^th October 2000, whereby the Chairman of Startup wrote to all the ex-Carpe Diem employees, including Mr Allen, in the following terms

"I am happy to offer you the opportunity to join the Startup Station as of November 1^st 2000 under similar employment terms you were offered during the merger discussion".

Mr Allen and other former employees of Carpe Diem became employees of Startup on 1^st November.

5. Some time later, the Chairman of Startup made mention to the employees of a proposed term providing for a three month probationary period within which there would be a two week notice period. It seems that most of the employees went along with that suggestion. However, Mr Allen did not. He refused to sign a document that was proffered later in November which was in the form of a contract to commence on 27^th November 2000 with the provisions of three months probation and two weeks notice to which we have referred.
6. Very early in the New Year 2001, Startup terminated the employment contracts of all the ex-Carpe Diem employees by giving two weeks notice. The given reason related to failure to reach revenue targets. All were given verbal notice at that time.
7. On the 2^nd February, the Chairman handed Mr Allen a letter of termination dated 31^st January 2001. It stated

"This letter will confirm our conversation today. Your employment at Startup Station will end on Feb 13, 2001, including the two week notice period I have given you and will not be renewed beyond that date."

8. Against that background, the Employment Tribunal decided that Mr Allen had commenced work for Startup on 1^st November pursuant to a contract that ensured him "similar employment terms you were offered during the merger discussion". The Employment Tribunal concluded that that included an entitlement to three months notice in writing as had been the provision in the draft that had been circulated during the merger discussion. It is upon that basis that the Employment Tribunal decided that Mr Allen was entitled to three months notice and against that he was entitled to the sum of money of just under £13,000 for beach of contract.
9. The Employment Tribunal also decided that, in any event, even if Startup had been right in its contention that a two week notice period was applicable, as the Chairman had handed Mr Allen his termination letter on 2^nd February, that is after the expiry of three months from the commencement of his employment on 1^st November, that would, in any event, have been too late for the two week probationary notice. The right to three months notice in writing had already accrued.
10. Against those findings, Startup seek to advance three grounds of appeal. So far as the terms of the contract are concerned, the ground of appeal eventually developed into a complaint about a lack of reasoning, or adequate reasoning, to support the finding that the contractual entitlement was three months, rather than two weeks.
11. In our judgment, that ground of appeal is doomed to fail. The Employment Tribunal carefully considered the background. It is plain that as at the 1^st November, the terms of the contract were to be "similar employment terms" to those previously offered. The period of notice in an employment contract is an important matter and it cannot be said that two weeks notice and a probationary period come within the notion of "similar employment terms" to those previously offered. In our judgment, the Employment Tribunal was quite right to construe the contract as it did. In our judgment, it appropriately reasoned that construction and we cannot see that there is any arguable ground of appeal there.
12. The second proposed ground of appeal went to the alternative basis of the decision. Mr Spencer sought to rely on the oral notice that was said to have preceded the notice in writing. The difficulty with that submission is that the notice under the written document, that was circulated in late November and to which other employees gave their approval, provided that any notice "must be in writing". It seems to us, with great respect, that that ground of appeal simply does not get off the ground.
13. The third, and final ground, goes not to the construction of the contract as to the notice period but as to the quantum and the award of £12,939.27. Mr Spencer's point about that is that that sum and its calculation are the net pay for three months without deduction for any mitigation of loss which occurred or which ought reasonably to have occurred.
14. The difficulty with that submission is that on the information before us, there is nothing to suggest that the Employment Tribunal was ever invited to find that there had been alternative employment found in the period in question, or that there had been an unreasonable failure to find alternative employment within that period of time. The way in which Mr Spencer then puts it is to complain that the hearing on 6^th April, having dealt with the substance of the matter, then proceeded to finalise the figure without adjournment and without further inquiry as to issues which might have affected the quantum.
15. In the experience of this Employment Appeal Tribunal it is not at all unusual for an Employment Tribunal to consider both the merits and any remedy arising from a finding of breach of contract on the same occasion and without any bifurcation. There is good reason why that should be so in a relatively straight forward case. It saves time and cost.
16. Mr Spencer is unable to point to any objection being taken on the day to that process. Apparently there was no cross examination of Mr Allen as to potential mitigation issues or other factors which might affect quantum. If mitigation was to be an issue then the burden of establishing a failure to mitigate would have lain exclusively on Startup and if they did nothing to put it on the agenda then it is hardly surprisingly that the Employment Tribunal proceeded to its conclusion, as it were, by default on that issue. No mention had been made of quantum issues in the Notice of Appearance, no request for a review was made after the Employment Tribunal had reached its decision.
17. In all those circumstances it seems to us to be unarguable now to say that there may have been some evidence available to Startup, or from Mr Allen, which might in some way have reduced his full entitlement to three months net pay. That is, in our assessment, entirely speculative and nothing has occurred, either before the hearing in the Tribunal or between that day and this, to suggest that there is any material which might have produced a different result.
18. We were invited by Mr Spencer to consider allowing the matter to proceed by reference to this ground of appeal on the understanding that between now and a substantive hearing, or on some other occasion, the parties might be able to come to terms, either by Startup dropping this particular point or Mr Allen conceding something in relation to it.
19. That it seems to us is a wholly conjectural way of conducting litigation at this level. The question we are concerned with is: can there be identified an arguable point of law which would sustain an appeal from the decision of the Employment Tribunal? We have had full regard to the recent of the Court of Appeal in Cerberus Software Ltd v Rolley [2001] IRLR 160 which Mr Spencer eventually invited us to, but in our judgment all that is as of nothing as there was no material before the Employment Tribunal which vitiates the conclusion it reached. It was for Startup to raise that issue if they had wished to do so. In our judgment it is now far too late for them to do so and accordingly, there being no arguable ground of appeal in this case, we shall dismiss the appeal.