United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR M DUGGAN (of Counsel) Messrs Astons Solicitors The Stables Manor Road Staverton Nr Daventry Northamptonshire NN11 6JD
For the Respondent	MISS J EADY (of Counsel) Messrs Pattinson & Brewer Solicitors 30 Great James Street London WC1N 3HA


 


MR JUSTICE LINDSAY (PRESIDENT): We have before us as a full hearing the appeal of Tetley GB Limited in the matter Mrs Simbat Ghatahorde v Tetley GB Ltd. The appeal concerns the adequacy or not of evidence in relation to the conditions necessary for the acceptance of a term said to arise by implication into a contract of employment by way of custom and practice. Today, the appellant, Tetley, has appeared by Mr Duggan and the respondent, Mrs Ghatahorde, by Miss Eady.

1. We need to say something of the chronology of the matter. On 25th May 1999 an IT1 was lodged by Mrs Ghatahorde complaining of breach of contract. She had been employed, she said, from 31st October 1977 to 8th March 1999. She was a machine operator. Her claim was neatly summarised in the handwritten Box 11 to her IT1 where it said this:

"During 1997 Mrs Ghatahorde began to have problems with her breathing. Towards the end of 1998 the problem was diagnosed as allergic asthma brought on by her respiratory sensitivity to one of the flavourings used within the factory. On 8 March 99 Mrs Ghatahorde's contract of employment was terminated on medical grounds. Mrs Ghatahorde was paid 12 wks pay in lieu of notice and an ex-gratia payment of £10,000. It is this payment that Mrs Ghatahorde claims is a breach of an implied term of her contract of employment. In all previous cases of termination of contract on grounds of medical incapacity going back at least 10 years the payment made had always been based on the same calculation as the enhanced redundancy payment agreed between the Co & the TGWU. Had this calculation been used in Mrs Ghatahordes case it would have almost doubled her compensatory payment."

2. On 25th June 1999 Tetley lodged its IT3 and they said that, inter alia:

"On 19th June 1998 the Applicant began a medical period of leave suffering from an asthma attack and she was absent for several weeks. This prolonged illness initiated a standard follow up procedure whereby a member of the Respondent Company's Human Resources Department visited her at her home. …"

They said that tests had shown that;

"the Applicant showed no allergic reaction to black tea dust."

According to Tetley, Mrs Ghatahorde had:

"Reluctantly, therefore, … agreed that after 21 years of working for Tetley and Lyons Tetley previously, that she is going to have to be retired on ill health grounds."

They said:

"… the Respondent Company recognised that it would have to terminate her employment on medical grounds."

They said:

"The Company's Pension Fund operates an ill health early retirement policy which was investigated but the Applicant did not qualify. The Respondent Company accordingly terminated her employment on medical grounds with payment in lieu of her contractual notice payment (12 weeks) and a further payment of £10,000 to include three weeks outstanding holiday entitlement with the remainder being an "ex gratia" payment."

They said in paragraph 8b that it was:

"explained that there was no entitlement to the Company's ex gratia payment but rather they were discretionary and when determining the amount to be paid the Company would treat each case on its own merits by reference to the individual's circumstances; as such, there was no contractual obligation to make an ex gratia payment."

In their paragraph 11 in the IT3 they drew a contrast between the redundancy calculation, which was contractual and was contained in a document called "Security of Employment" Agreement negotiated with the Unions, and the medical payments, which were not.

3. So the nature of the case that was going to go forward was shaping up. On 13th October 1999 there was a hearing at London (North) before the Chairman, Mr G Flint, sitting with Mr Dickinson and Mr McCready. The decision was sent to the parties on 5th November 1999 and it was:

"The unanimous decision of the Tribunal is that the Applicant is entitled to the payment which she claims."

4. On 16th December 1999 there was a Notice of Appeal and on 4th April 2000 an amended Notice of Appeal for which leave was given by the Employment Appeal Tribunal on 9th May 2000.
5. With that chronological background we go, then, to the extended reasons. Mrs Ghatahorde's case was summarised in paragraph 1 where it says:

"The Applicant in this case complains that she is entitled under the provisions of her contract of employment by reason of an implied term in that contact to a payment made in the same way as would be made in respect of redundancy payments as set out in the Applicant's contract of employment and in the contract of employment of other employees. …"

Evidence in support of that was described in paragraph 2. The tribunal says:

"… She says that the payment being offered was less than all other employees in the same position as herself had been paid and that the Respondents have refused to pay to her the sum, which she says is contractually due. Her evidence was supported by that of Mr Lehl the Transport and General Workers Union at the representative the site and senior shop steward and branch secretary. He instanced a number of cases of person who had been dismissed because of medical incapacity going back to a dismissal on the 18 June 1990. He said that all these employees received a compensatory payment based on the calculation in the agreed scheme between the Union and the Respondents in respect of redundancy. …"

Then there is a slight difference in the computation that is mentioned. Evidence from the company had been that the payments were not contractual but ex gratia. It was accepted by the tribunal that whereas the enhanced redundancy payments were contractual the written contract of employment made no reference to ill health retirement payments. In two important sentences in their paragraph 4, the first of which I will call the "crucial sentence", the tribunal said this:

"… We were, however, satisfied from the evidence of Mr Lehl that a custom and practice had grown up over the years and at least as far back as 1990 that apart from a slight difference in the calculation of the basis of earnings such employees would be treated in the same way as those dismissed for redundancy. … Our finding is that a custom and practice had grown up which had become a contractual term. All persons who retired on the grounds of ill health as did the Applicant should receive a payment calculated in accordance with the redundancy formula except for the slight difference as to the figure for basic wages. …"

So much for the extended reasons.

6. Mr Duggan on behalf of Tetley in his skeleton argument (although this was not a point greatly pressed orally) first attacks the tribunal's reasoning on the basis that it failed to satisfy the well-known test in Meek v City of Birmingham District Council [1987] IRLR 250 at 251.
7. We do not accept that argument and perhaps Mr Duggan was, to that extent, wise not to press it. The reason why Tetley lost is plain enough. The Employment Tribunal on the evidence it heard believed and held that there was a contractual obligation as to ill health retirement and as to its calculation and that that had been established by way of custom and practice and it was supported, so far as the Employment Tribunal was concerned, by the combined evidence of Mr Lehl and Mrs Ghatahorde. So we do not see Meek v City of Birmingham District Council as assisting the appellant.
8. Next Mr Duggan submits that there was no evidence to support the alleged custom and practice as to a contractual entitlement and a contractual calculation at the redundancy rate.
9. There is a real difficulty in this area. We now have the witness statements on the part of the witnesses on both sides. As for oral evidence, Mr Duggan wished to assert that the Chairman's notes were inadequate. They are certainly very brief. But there is no evidence that they were inadequate and there has been no formal application that they should be supplanted or supplemented by some other notes, perhaps, for example, notes from those present as to what was actually said at the time. We therefore must proceed on the basis that the Chairman's notes are adequate.
10. On that basis we see this point narrowing down to one within a small compass, namely, was there any evidence to support the important finding by the tribunal in what we described as the "crucial sentence". Going back to it and to the reference to "employees would be treated in the same way", 'treated' in that phrase is a word capable of referring to the obligation to pay, to the employee's entitlement, to the calculation of the amount and to the payment of whatever sum was calculated. It is a broad word, quite capable of covering all those particular different concepts. The words "in the same way" are capable of meaning that the sameness should be both as to calculation and as to entitlement and that both calculation and entitlement should be as was the case in redundancy, where, of course, the position was accepted that it was contractual. That was plainly the view of the Employment Tribunal because they went on to hold, as we have described in the second of the important sentences which we have cited. We put to Mr Duggan whether his case was that there was no evidence whatsoever that was given to the Employment Tribunal which was capable of supporting that first crucial sentence. We did not understand him to say that there was none. In any event, Mr Lehl had said in paragraph 7 of the witness statement which he put before the tribunal:

"The compensatory payment and its method of calculation were accepted by Tetley GB Limited to be part of an employee's terms and conditions of employment, as it was accepted as being covered by the TUPE Regulations when the business was taken over." [Our emphasis]

It is hard to attach much weight to the very last reference to TUPE Regulations, because no documents were brought forward to support that, but that, at all events, was important evidence given to the tribunal below.

11. Bearing in mind that one cannot expect a Chairman's Notes of Evidence to capture every nuance of the oral evidence given (and in that respect one needs to bear in mind the observations of Lord Hoffman in Piglowska v Piglowski [1999] IRLR 1360 HL) when we look at what Mr Lehl said in his witness statement and couple it also with what he is recorded as saying in the Chairman's notes, we get a rather fuller picture of his evidence. He says:

"The Respondents have never said that it was a contractual payment. The redundancy payment is contractual. The redundancy payment are as in the agreement.

… Here there is a custom and practice.

I know of no negotiations to establish these payments" [referring, apparently, to the medical payments].

That may be a suggestion that sums were fixed by reference to the redundancy formula rather than by negotiations, but it is not entirely clear. However looking at that passage from what Mr Lehl said by way of written evidence-in-chief, together with what is recorded in the notes as to what he said orally in cross-examination, we then ask was that crucial sentence to which we referred supported by some evidence?

12. Whether we would have regarded it as sufficiently supported is neither here nor there. We might, for example, have drawn attention to Young v The Canadian Railway [1931] AC 83 in the Judicial Committee of the Privy Council, which, it seems, the tribunal did not have before it. But if we ask whether the crucial sentence was totally unsupported by evidence, we cannot hold that that was the case. Whether we would have displaced Miss Waller's evidence to the contrary on so slender a basis as the one that we have indicated, is, again, not a matter for us. It is for the tribunal to decide whose evidence to prefer. Where there is some evidence on the point at issue, the question of whether the evidence is sufficient to support the proposition is essentially a matter of fact and not one of law. We cannot say that Mr Lehl's evidence, in particular his witness statement, does not support the crucial sentence. Once it is seen that the crucial sentence can stand, it seems to us that there is no strength left in Mr Duggan's argument on this part of the case.
13. Next, Tetley say:

"The Tribunal fell into the error of holding that because ex gratia payments had been made in the past a custom and practice had grown up whereby as a matter of contract the Employee was entitled to an ex gratia payment calculated in a certain way.

The Tribunal should have considered the whole circumstances of the formation of the contract and the parties' conduct before and after the formation to decide what terms had been agreed or could be implied. The fact that there was a practice does not mean that this has hardened into a contractual entitlement. Indeed the Appellant has always made it clear that any medical payment was 'ex gratia' and not contractual."

The appellant then refers to a passage in Quinn v Calder Industrial Materials Limited [1996] IRLR 126 in the EAT in Scotland where the judgment was given by Lord Coulsfield. The passage relied on is this:

"The question whether there is an implied term in the present case is really a different way of putting the question of what terms the parties have actually agreed. In order to answer that question, it is necessary to consider the whole circumstances of the formation of the contract and the parties' acts before, and, even, after, the contract, to gather what terms they had actually agreed. (See Liverpool City Council v Irwin, supra, per Lord Wilberforce at 254.)"

The appellant then refers to the Quinn case to suggest that there were issues that the tribunal should have had in mind, for example, whether communication had been made to employees such as might support the inference that the employer had intended to be contractually bound. But here, as we have seen, the tribunal made an assessment on the evidence of the parties put in front of them. They plainly preferred one body of evidence to another and they were entitled to do that. There is, as it seems to us, no foundation for an argument based on lack of evidence as to communication with the employees or with their union. The tribunal cannot be criticised for not considering that which was not put in front of them. There is no clear record that evidence was given of a lack of communication with the union or with the employees as being the conditions which were operative in this case. Indeed, Mr Lehl spoke of communication. He said:

"The Respondent always inform the shop stewards they would get payments. We have not just assumed this."

We do not see an error of law arising such as is suggested by the reference that has been made to the Quinn case. We have no reason to believe that the tribunal did not consider the various points put to them and they cannot be fairly criticised for not considering points that were not put to them.

14. All in all, although one can see that in many respects the case was inadequately dealt with, we do not feel able to discern a point of law that operates in Tetley's favour. Accordingly, we must dismiss the appeal.