United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MS ANYA PROOPS (of Counsel) Instructed By: Messrs Wragge & Co Solicitors 55 Colmore Row Birmingham B3 2AS


 


MR JUSTICE LINDSAY (PRESIDENT)

1. We have before us way of a preliminary hearing the appeal of Fontana (GB) Ltd in the matter Andrea Fabio v Fontana (GB) Ltd and this morning Ms Proops has appeared for Fontana.
2. On 8 October 1999 Mr Fabio lodged an IT1 for unfair dismissal, wrongful dismissal, breach of contract and wrongful deduction from salary. He had, he said, been dismissed on 31 July 1999. He claimed that the disciplinary mechanism deployed against him had been inadequate and, in point of contract, he said that neither his proper salary nor his proper pension contributions had been paid to or credited for him. He had a solicitor acting for him.
3. On 1 November 1999, the company, Fontana, lodged its IT3 and the allegations were denied and it was said that he had been dismissed for poor performance. There was a four-day hearing between 23 and 26 October 2000 and on 4 December 2000 the decision of the Tribunal, which was under the Chairmanship of Mr R F Ashton at Birmingham, was sent to the parties. The decision was that Mr Fabio had been unfairly dismissed and that he was entitled to an award in respect of arrears of pension contributions and the respondent was ordered to pay the applicant the sum of £15,312.45 in respect of the pension aspect of things and there was, more generally, to be a later remedies hearing as to other financial awards.
4. On 15 January 2001 a Notice of Appeal was lodged by Fontana. Pension contributions had been a very substantial issue between the parties and Mr Fabio's appointment by Fontana had taken place after some interviews in Italy which culminated in a meeting on 25 September 1997. Three persons were then present. Mr Fabio himself and two on the company side, Dr Donati and Mr Enio Fontana. Mr Fabio then signed a service agreement in writing which inter alia provided that he should be employed as General Manager, that the company should pay the General Manager's salary at the rate of £50,000 per annum and then, in clause 11.1:

"No provision of retirement or death service benefits will be made by the Company for the General Manager."

There was a provision for summary termination if the General Manager failed to perform his duties to a satisfactory standard, after having received written warning from the Company and at clause 18.1:

"This Agreement shall be in substitution for any previous letters of appointment, agreements or arrangements, whether written, oral or implied, relating to the employment of the General Manager."

The Employment Tribunal held that Mr Fabio had signed the service agreement at the meeting on 25 September 1997. The Employment Tribunal heard Mr Fabio deal with a conflict between some alleged oral and, presumably, antecedental dealings as to pension contributions and the important clauses, firstly, 11.1; "No provision of retirement or death service benefits will be made by the Company for the General Manager", and, secondly, the clause 18.1 making provision that the written agreement should be in substitution for any previous arrangements or agreement.

5. The Tribunal said:

"It was accepted that the question of pension contributions was raised by the applicant at the meeting which was held on 25 September 1997."

And then went on:

"We find, as a matter of fact, that at the meeting on 25 September 1997 a commitment was given by Fontana that pension contributions would be paid on behalf of the applicant and it was not a question of "maybe" but of "how much"."

That, of course, also leaves open the question to whom they would be paid. Unfortunately, the Tribunal does not set out with any precision in their findings who said what or to whom, nor even whether whatever was said was before or after the signing of the written contract.

The Tribunal continues at 9.6:

"The applicant was asked why, if the respondent had agreed to pay pension contributions on his behalf he did not strike out or amend clause 11.1 in his Service Agreement. We accept the applicant's evidence that at that stage in his relationship with Fontana he felt it was neither appropriate or necessary for him to do so; he was simply relying on their word."

It is to be noted that that paragraph fails to deal with clause 18.

6. It can be seen that if a party, employer or employee, can escape the ordinary consequences of a written provision which he signed by saying, credibly, that he relied on the other side's word not to enforce it, then the object of certainty, which is the chief object of written contract, would be negated. Ought not such a person seeking to escape the ordinary consequences of his signature at least have to indicate to the other party that to him the agreement did not mean what it said? It seems in this area there is an arguable point of law as to the proper approach to contracts in writing. Ms Proops has put in a full skeleton argument identifying a number of relevant authorities and we see the matter as proper to go to a full hearing. It may be, that clauses such as clauses 11 and 18 can, in appropriate circumstances, be overborne by a very clear oral agreement the terms of which cannot be doubted. But that leads to a second area of doubt.
7. The Tribunal held:

"In our view clauses 11.1 and 18.1 of the applicant's Service Agreement must be read subject to what was agreed at the meeting on 25 September 1997, namely that Fontana would make pension contributions on behalf of the applicant and it remained only to agree what those contributions should be."

But, of course, that was not the only question left as the ordinary way one would not expect the company to pay direct to the employee that which was intended by way of pension contributions. Left over also therefore would be the question of to whom the payment should be made .

8. The Employment Tribunal received evidence and it concluded in its paragraph 12 as follows:

"On behalf of the applicant it was argued that in the event of a failure to agree, the amount payable by the employer under the Italian social security system, namely 22.36% should be payable. However, the applicant in his evidence said that he did not expect the full amount to be paid and he would have accepted contributions of between 15 and 20% of his salary. In this case we have no doubt that had Fontana (GB) Ltd been operating successfully, Fontana would have agreed that it should pay pension contributions on behalf of the applicant of not less than 15% of his gross salary as being "reasonable" and we have calculated the amount due to the applicant in this respect accordingly."

But Fontana was arguably not operating successfully in any event and at paragraph 15 the Tribunal said:

"We find that during the period in which the applicant was in charge as General Manager at Fontana (GB) Ltd there was deterioration in its financial performance. While some adjustments may have to be made to these figures, this is illustrated by the deterioration from a net profit of £185,555.00 in the year to 31 December 1996 to a loss of £157,831.00 in the year to December 1997, a loss of £156,679.00 in 1998 and a loss for the period to 30 June 1999 of £100,315.00."

9. Leaving aside the argument as to whether the Employment Tribunal was entitled to write a contract which the parties had not, for the Tribunal to complete it on the basis as to what would have been reasonable had the company had been operating successfully poses real doubt as to the propriety, at law, of what the Employment Tribunal was doing. It was odd too, although this is only a small point, to find that the Tribunal, when assessing for the purposes of section 98(4): "The administrative resources of the employer's undertaking", should rely on the fact that the employer was represented by "One of the largest firm of solicitors in Birmingham". It is hardly unknown for little firms to use big solicitors and for big firms to use little solicitors. It would be a matter of some concern if reference under section 98(4) was properly to be made to the size of the firm of solicitors that happened to be instructed by one side or another. We do not need to explore that further. We accept that Ms Proops's skeleton raises serious questions of law. We do not deny any of them the right to go to a full hearing and so there shall be a full hearing of the full Notice of Appeal. Skeleton arguments are to be lodged not less than 14 days before the date fixed for the hearing. As there are a number of authorities already plainly likely to be cited at the full hearing, we leave it to the appellant - instructing, after all, one of the largest firms in Birmingham - to compose a bundle of authorities to be quoted by either side at the full hearing, that to be sent to the Employment Appeal Tribunal not less than 10 days before the hearing. We estimate the case to take half a day and to be in Category A.