United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A BERRY (of Counsel) Messrs Hodgsons & Mortimer Solicitors Rosemary House Rosemary Lane Richmond North Yorkshire DL10 4DP


 


MR JUSTICE LINDSAY (PRESIDENT): We have before us by way of a preliminary hearing the appeal of Mr D J Moore in the matter Moore v A R Calvert (Leyburn) Limited.

This morning Mr Moore has appeared by Mr Berry of Counsel, having earlier been represented at the tribunal below by Mr Ramage, his solicitor.

1. On 12th November 1999 Mr Moore signed his IT1 and in Box 1 he said:

"(1) Unfair dismissal

(2) Unlawful deduction from wages

(3) Holiday pay & pay in lieu of notice"

So far as concerns bonus, which is a subject we shall need to concentrate on, in the typed details of complaint in paragraph 4 Mr Moore added this:

"On arriving at work Mr Sadler [he was an officer of the employer] was very abusive towards me and denied that I had had permission to go on holiday and informed me that he was not going to pay me my weekly bonus for the next two months. …"

In paragraph 5 he says:

"I was very upset by this treatment. I had said to Mr Sadler that he could not refuse to pay my bonus. He had replied, "Just watch me"."

In paragraph 8 Mr Moore said:

"I deny that the termination of employment was at my own instigation. I claim to have been constructively dismissed on 21st September when Mr Sadler made it clear that he was not prepared to pay my contractual entitlement to a bonus which forms a substantial part of my earnings and also that he was not prepared to treat me with a reasonable degree of respect to which I was entitled as an employee."

So whether there was a contractual right to bonus was obviously going to be one of the issues.

2. On 8th December 1999 the company's IT3 made, inter alia, the point that the bonus was non-contractual.
3. On 8th March 2000 there was a hearing at the Employment Tribunal. On 25th April 2000 the decision was sent to the parties.
4. So far as is relevant, the decision read as follows:

"…

(ii) the applicant was not constructively dismissed by the respondent, but resigned;

(iii) the respondent pay to the applicant the sum of £497.10 in respect of outstanding wages and holiday pay;

(iv) the respondent pay to the applicant the sum of £51.58 in respect of an unlawful deduction from wages of the applicant."

That was the decision of the Employment Tribunal at Thornaby under the chairmanship of Dr I J Watt.

5. Those figures for £497.10 and £51.58 do not include reimbursement of withheld bonus, but, more importantly for immediate purposes, the decision that there was no constructive dismissal was based on the tribunal's view that there had been no improper withholding of an element of remuneration, namely, bonus. The employer was, in other words, not withholding that to which Mr Moore was contractually entitled and that was an important point in relation to constructive dismissal because had there been a withholding of that to which Mr Moore was contractually entitled, well, that could and probably would have been a repudiatory breach and would have assisted his case that he was constructively dismissed.
6. On 30th May 2000 the Notice of Appeal was lodged by Mr Moore's solicitors and paragraph 6 says:

"The grounds upon which this Appeal is brought are that the Employment Tribunal erred in law in that the Tribunal misconstrued the rights and obligations of the parties under the Appellant's Contract of Employment dated 15th September, 1997 in finding that the weekly bonus of £40.00 for 5 full 8 hour days' attendance was discretionary and not part of the Appellant's contractual entitlement. The Tribunal should have considered whether a letter dated 2nd February 1999 was sufficiently certain as to be capable of constituting a variation of contract and, if so, whether that variation was communicated to and accepted by the Appellant. Had the Tribunal given such consideration it should have found that the proposed variation was too uncertain as to constitute a contractual term; gave no indication as to the date from which any such variation would apply; and was not in any event communicated to and/or accepted by the Appellant."

The last point was going to be a slightly difficult argument, given that, on the face of things, the letter of 2nd February was signed by Mr Moore.

7. So the question before us is this: what was the contract between the company and Mr D M Moore at the time when bonus payments were not paid to him in August and September 1999 or, more accurately, did the Employment Tribunal err in law in finding, as they did, in that regard?
8. Mr Berry argues that the contract was one which included a bonus which the company had to pay as long as Mr Moore had in any given week in issue worked five full eight-hour days. That argument is based chiefly upon a written contract in the papers, dated 15th September 1997. But that contract on its own terms makes it plain that it expired on 14th September 1998. Therefore, it cannot be the case that in September 1999 that written contract, alone and unmodified, could have been intended by the parties to be the contract for the time being regulating their relationship. That factor leads us to the tolerably recent case of Carmichael v National Power plc [2000] IRLR 43 HL and in particular to the speech of Lord Hoffmann in that case. Speaking of whether the ascertainment of a contract of employment and its terms is solely a question of law or is other than solely a question of law, he says this at paragraph 29 of the IRLR report:

"… But I think that the Court of Appeal pushed the rule about the construction of documents too far. It applies in cases in which the parties intend all the terms of their contract (apart from any implied by law) to be contained in a document or documents. On the other hand, it does not apply when the intention of the parties, objectively ascertained, has to be gathered partly from documents but also from oral exchanges and conduct. In the latter case, the terms of the contract are a question of fact. And of course the question of whether the parties intended a document or documents to be the exclusive record of the terms of their agreement is also a question of fact."

In paragraphs 33 and 34 he says:

"Putting the matter at its lowest, I think that it was open to the industrial tribunal to find, as a fact, that the parties did not intend the letters to be the sole record of their agreement but intended that it should be contained partly in the letters, partly in oral exchanges at the interviews or elsewhere, and partly left to evolve by conduct as time went on. This would not by untypical of agreements by which people are engaged to do work, whether as employees or otherwise. Although the tribunal did not expressly state this to be their finding, their whole approach to the evidence was consistent only with their having come to such a conclusion. In my view, they were entitled to do so.

On this basis, the ascertainment of the terms of the agreement was a question of fact with which the Employment Appeal Tribunal were right not to interfere. …"

9. By a parity of reasoning, it seems to us that here the constituents of the contract of employment as between Mr Moore and the company were a matter of fact because the only document that is referred to as a complete embodiment manifestly is not so because it had expired a good time before the material period.
10. The tribunal made a number of findings and in paragraph 3 they say:

"… The Tribunal is satisfied that this bonus was always discretionary but was nearly always paid because the workforce performed well.

(c) When there were changes in the National Agreement it was the practice of the respondent to issue either a new Statement of Particulars or a new contract of employment. The most recent document produced to the Tribunal was dated 22 January 1999. Although this is described as a Statement of Particulars, the Tribunal is satisfied that it is in fact a form of a contract of employment. …"

One notices there the reference "the most recent document" which does suggest that the tribunal was mindful of the fact that other documents had been produced to it. A little later in paragraph 3(c), the tribunal says:

"Although the contract variously specifies the hours and days of work, basic rate of pay, holiday pay and sickness payments, it is silent on the matter of the bonus. However, the bonus had been paid since 1996 and was the subject of Mr Sadler's letter a few days later on 2 February 1999. This supports the respondent's evidence that the bonus was a discretionary payment outside the normal terms of remuneration. …"

11. There was a non-payment of the bonus; that is dealt with in paragraph 3(j) where the tribunal says:

"… As a result of this incident, which took place in July, the respondent deducted a total of £51.58 following the annual holiday. In the first week the whole of the bonus of £40 was withheld and in the second week £11.58 was withheld."

Indeed, a little later, in paragraph 12 the tribunal says:

"With regard to the second complaint, that of withholding bonus for two months, if the respondent did not have a right to do this, then that would be a more serious matter that would constitute a fundamental breach. However, the Tribunal is satisfied that the bonus was a matter within the discretion of the respondent and that it was from time-to-time withdrawn for absences and poor timekeeping."

A little later they say:

"The response of withholding bonus for two months may appear to be rather harsh, but the bonus was a discretionary payment and the Tribunal finds that the respondent was entitled to take this action. Because withholding the bonus was contractually justifiable, this did not constitute a fundamental breach of contract entitling the applicant to consider himself dismissed."

In paragraph 14 they say:

"In relation to the unlawful deduction of wages the Tribunal has decided that by custom and practice the respondent had established that the bonus would be withheld for poor attendance and for poor output or workmanship. The Tribunal is not satisfied that the respondent had established that there was custom and practice to deduct damages or losses from the bonus. The Tribunal has therefore decided that the deduction of £51.58 was without lawful authority."

12. It cannot be said that there was no evidence whatsoever upon which the tribunal could have fastened in order to hold that the bonus was discretionary. We do not know precisely what the oral evidence either of Mr Moore or Mr Sadler was, but there was a letter dated round about the 2nd February 1999 on the writing paper of the company and sent to Mr Moore that says:

"Bonus will not be guaranteed, but propose to pay bonus on a fair system at our discretion. …"

The lower part of the letter appears to be signed by Mr Moore. Although it is not in terms acknowledging a change of contract or recognition of the bonus proposal, it is, for all that, signed by him. As I have mentioned, oral evidence was given by a director of the company.

13. One thus gets to the position that the only paper relied upon in support of an arguably contractually payable bonus cannot have been the totality of the contract of employment because, as we have mentioned, the only piece of paper that describes the bonus is a document purporting to be a contract which had expired in 1998. Therefore, one is a position in which, recognising the force of the Carmichael argument, the ascertainment of the terms as to any bonus was a matter of fact. And here, on the facts, the tribunal concluded against Mr Moore's interests. We cannot interfere with that unless it can be said that there was no evidence whatsoever upon which the tribunal could have concluded that the bonus was discretionary. And yet that seemed not to be case, at any rate in the face, at least, of the letter of or about 2nd February 1999.
14. Mr Berry argues that the tribunal failed to mention the 1997 contract and that they failed to consider it. That they failed to mention it is unquestionably the case. But whether they failed to consider it is a rather more difficult point. They did mention that they had in front of them documents of which that of 22nd January 1999 was the most recent, which as we have mentioned earlier, acknowledges that they had earlier documents. The 1997 contract was manifestly not the current contract. It cannot have been because, on its face, it expired in 1998. Nor can one assume that a matter is not mind of a tribunal simply because they do not expressly mention it. There is a well known dictum of Lord Russell on that point – see Retarded Children's Aid Society v Day. The tribunal does refer to their having documents and to the most recent of the documents. I do not think that we can take it that that is an indication that they did not have the 1997 contract in mind.
15. Accordingly, reverting to the Carmichael point, here it was for the tribunal to find, as a matter of fact, what the current provision was in late 1999 as to payment of bonus. They went into that. They concluded that the bonus was discretionary. They concluded that as a matter of fact and under the Carmichael doctrine it truly was a matter of fact. Accordingly, we cannot upset it unless there was no evidence whatsoever upon which that finding could have been supported. That is not a conclusion to which, at least in light of the letter of 2nd February 1999, we could possible come. Accordingly, we see no arguable error of law and must dismiss the appeal even at this stage.