United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS J EADY (of Counsel) Instructed by: Messrs Thompsons Solicitors Richmond House Rumford Place Liverpool L3 9SW
For the 1st Respondent For the 2nd Respondent	MR K UNDERWOOD Solicitor Messrs Underwoods 2 Bushfield Road Bovingdon Hertfordshire HP3 ODR MR C JEANS QC Messrs Hill Dickinson Solicitors Pearl Assurance House Derby Square Liverpool L2 9XL


 


MR JUSTICE LINDSAY (PRESIDENT)

1. In 1998 Mrs Ryan and some colleagues of hers sought to re-amend the IT1s which they had presented in January 1993. They wished to substitute, for the claims for declarations and as to unauthorised deductions of wages previously made, some claims for unfair dismissal. The Employment Tribunal, which held that it had been reasonably practicable for such claims to have been presented within the statutory 3 month period, refused leave to re-amend. Mrs Ryan, for whom Miss Eady appears, appeals to this Appeal Tribunal. Both Taylorplan Services Ltd., First Respondent, appearing by Mr Underwood (who also appeared below) and Initial Health Care Services Ltd., Second Respondent, appearing by Mr Jeans Q.C., resist the appeal.
2. On the 15th January 1993 Mrs Joan Ryan, who described her job as being that of a "domestic", presented an Originating Application, an IT1, and in Box 1, which reads "Say what type of complaint(s) you wish the Tribunal to decide (see Note opposite)" she wrote:-

"Incorrect statement of terms and conditions under section 1 of the [Employment Protection (Consolidation) Act 1978] by [reference] to Tribunal under section 11 [of that Act]. Unlawful deductions under the Wages Act 1986."

She had, she said, begun her employment on the 2nd April 1974. Section 1 of the 1978 Act required that not later than 13 weeks after the beginning of the employment the employer should give to the employee a written statement of particulars of employment, such particulars being those specified in the Act and including, for example, details as to when the employment had begun, the rates of pay, hours to be worked, holiday and sick pay arrangements and so on. Section 11 of that Act enabled an employee who had not been given a section 1 statement to "require a reference to be made to an [Employment] Tribunal to determine what particulars ought to have been included or referred to in a statement so as to comply with" section 1. The only respondent at that stage was Taylorplan Ltd., which had given her a statement of particulars but one which identified the beginning of her employment as the 23rd October 1992. She added at her Box 10 ("Give the full details of your complaint ...") that she had begun work for Walton Hospital Trust on the 2nd April 1974 and had worked for that Trust continuously "Until transferred to Taylorplan on the 23rd October 1992 as part of the transfer of undertakings". Her Box 10 continued:-

"On my statement of terms and conditions it is stated incorrectly that my continuous employment began on the 23rd October 1992 rather than the date I started work for the transferor. I wish the Tribunal to determine this and what other particulars ought to have been included in my statement of terms and conditions by the Respondent."

3. As for her claim under the Wages Act 1986, section 1 of the Act provides that an employer shall not make any deduction from any wages of any worker unless (broadly) it is required by Statute, authorised by the contract between them or previously agreed in writing by the employee. Section 5 of the Act entitles a worker to complain to a Tribunal if a deduction is made in contravention of the Act. Mrs Ryan's IT1 rather confusingly filled in Box 8 of the IT1 in a way that suggested that her employment had ended on the 23rd October 1992 but she was still in Taylorplan's employment at the date of her IT1 and her IT1 makes no assertion that she had been dismissed. Box 11 (headed "For unfair dismissal complainants only") was left blank, showing no provisional wish on her part for reinstatement or re-engagement or for compensation for unfair dismissal,
4. Mrs Ryan's case has been taken to be a lead case; there were 120 others who made similar claims ("the Ryan cases") and their IT1s were presented at much the same time as hers in January 1993. All were claims of cleaners who had transferred from the employ of Walton Hospital, Aintree Hospital NHS Trust to Taylorplan on the 23rd October 1992 when the Trust, which had hitherto accepted a tender from its own Domestic Services Department, first arranged for its cleaning services to be conducted by wholly outside contractors, namely, on that occasion, Taylorplan.
5. Mrs Ryan's IT1 named her representative as NUPE. At some date between Spring and September 1993 Mrs Ryan was given leave to amend her IT1. The amendments appeared to have been directed to establishing that within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE"), there had been a relevant transfer from the NHS Trust to Taylorplan. They also made no allegation of any dismissal; it was asserted that:-

"The majority of employees transferred to Taylorplan in October 1992. After the transfer took effect employees continued to undertake the same duties within the domestic department as before the transfer."

Whilst that was true in respect of Mrs Ryan and her 120 colleagues there were a further 7 former colleagues, Mrs Rees and 6 others. who had not transferred into the employment of Taylorplan in October 1992 either because they had not been offered employment or because they had refused to accept it upon Taylorplan's terms, which were, in general, less attractive and less remunerative than had been the Trust's. Mrs Rees and her 6 colleagues, also represented by NUPE, lodged IT1s in January 1993 for unfair dismissal ("the Rees cases"). Mrs Rees ticked the Box 11 for reinstatement.

6. Taylorplan had resisted both the Ryan and the Rees cases. They asserted that there had been no relevant transfer; the Acquired Rights Directive did not apply, they said, and Mrs Ryan and her colleagues therefore properly had the 23rd October 1992 as the starting date of employment with Taylorplan. At a pre-hearing discussion in May 1993 at the Employment Tribunal it was arranged that the question of whether or not there had been a relevant transfer should be heard as a Preliminary Issue and there was a hearing to that end spread over some 3 or 4 days in November and December 1993. On the 7th January 1994 the decision, by a majority, was sent to the parties; there had been a relevant transfer to Taylorplan from the Trust in 1992. The decision records that the NHS Trust had dismissed all the staff in the domestic services department on the grounds of redundancy but that the majority of the employees had then continued to work in their "old" work positions.
7. Taylorplan did not accept this decision and first sought a review and then appealed to the Employment Appeal Tribunal. The review was refused. Taylorplan lost in the Employment Appeal Tribunal and was refused leave to appeal, a refusal confirmed by the Court of Appeal itself on the 4th October 1995. From that date the position was thus that there had unassailably been a relevant transfer to Taylorplan in October 1992. But, also in October 1995, there was a further transfer, this time from Taylorplan to Initial Health Care Services Ltd. ("Initial"), which latter company then restored the employees' terms and conditions to those which had applied when the NHS Trust had been the employer.
8. On the 5th June 1997 Initial was provisionally added to the Ryan proceedings as second respondent. On the 5th July 1997 Initial filed a Notice of Appearance denying that there had been a relevant transfer as between Taylorplan and it, an issue, of course, which had not been decided in the proceedings thus far.

In July 1997 the 7 Rees cases were settled.

9. On the 28th July 1997 there was a further pre-hearing discussion at the Employment Tribunal, now involving both Respondents, and Mrs Ryan's solicitors indicated that she and her colleagues might, in the light of uncertainties and emerging difficulties in the law, wish to amend their claims to substitute claims for unfair dismissal. Reference was made to Wilson infra. The issue of Initial's joinder, which Initial had resisted, was adjourned.
10. On the 21st October 1997 Mrs Ryan's solicitors proposed a stay of the Ryan cases to await clarification of the law as it emerged in other authorities. It was informally agreed that further proceedings in the Ryan cases should await final resolution of Wilson and others -v- St Helens Borough Council, a case heard at the Employment Tribunal in early 1995, at the Employment Appeal Tribunal in March 1996 and at the Court of Appeal in the Summer of 1997. It was heading for the House of Lords. At about the same time Initial abandoned its opposition to its joinder; it has remained the Second Respondent.
11. On the 29th October 1998 the House of Lords decision in Wilson was given; it held that an actual dismissal before a relevant transfer was not a nullity but was effective and an employee so dismissed was thus not disabled from claiming for unfair dismissal. The informal stay was lifted.
12. On the 16th November 1998 Mrs Ryan's solicitors requested a hearing at the Employment Tribunal as to whether, in the light of Wilson in the House of Lords, re-amendment of the IT1 would be permitted. They did not frame the particular amendments they would seek but it was made plain enough that unfair dismissal was to be claimed on the basis that there had been dismissals at or before the transfer of the 23rd October 1992, dismissals the bill for which, so to speak, was to be claimed to have passed to Taylorplan.
13. Section 111 of the Employment Rights Act 1996 provides:-

"(1) A complaint may be presented to an [Employment Tribunal] against an employer by any person that he was unfairly dismissed by the employer.

(2) Subject to sub-section (3), an [Employment Tribunal] shall not consider a complaint under this section unless it is presented to the Tribunal -

(a) before the end of the period of 3 months beginning with the effective date of termination, or

(b) within such further period as the Tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of 3 months."

14. The hearing took place in March and April 1999 at the Employment Tribunal at Liverpool under the Chairmanship of Mr M.D. Homfray-Davies. The decision, which was unanimous, was sent to the parties on the 24th May 1999. Leave to Mrs Ryan and others to re-amend to substitute a claim for unfair dismissal was refused. The Tribunal's decision, in summary, shows:-

(i) It had been conceded that the amendment sought was substantial;

(ii) In terms of section 111, the presentation of a complaint for unfair dismissal in late 1998 or early 1999 was over 6 years out of time;

(iii) There was no finding that the Tribunal was satisfied that it had not been reasonably practicable for a claim for unfair dismissal to have been presented within the 3 months after the effective date of termination. On the contrary, there was a decision that such a presentation had been reasonable practicable;

(iv) The Ryan claimants were fully advised by skilled legal advisers during the 3-month period (indeed, as it would seem to us the Tribunal had intended to say and perhaps said, they were so advised at all material times);

(v) The substantial cause of the failure to claim unfair dismissal within the section 111 period was because the claimants' legal advisers made an informed choice not to claim for unfair dismissal but rather to seek the relief which they had, a course which the Tribunal said was adopted in many cases at the time because the benefits capable of being recovered for unfair deduction of wages were unlimited whereas unfair dismissal claims were capped (and, at that time, at a relatively low level). There had, said the Tribunal, been an informed decision to pursue a cause of action different to that of unfair dismissal;

(vi) Most of the evidence that would be relevant to an unfair dismissal claim still existed as documents and witness statements had been preserved from the 1994 hearing as to a transfer but two relevant witnesses were lost to Taylorplan, its former Managing Director and its former Human Resources Manager. The Managing Director was in Australia and unlikely to be willing to assist Taylorplan and the Human Resources Manager was suing Taylorplan for constructive dismissal;

(vii)Taylorplan had indicated that if the re-amendment was granted it would wish to plead the "ETO" grounds provided by TUPE Regulation 8 (2) and the evidence of those two witnesses could be relevant to that defence and to any examination of Taylorplan's likely claim that it did not re-bid for the contract in 1995 because of a lack of commercial viability in such a bid. The Tribunal said that in the two respects noted here and in (vi) it could be said that Taylorplan would be prejudiced by the re-amendment;

(viii) The sums at stake in the amendment were variously estimated at between £160,000 and £500,000 and Taylorplan would be put to the expense of a further hearing;

(ix) The Ryan claimants had suffered no financial loss after October 1995 (when Initial restored the Trust's terms of employment);

(x) But, of course, if leave was refused, the Ryan claimants would be denied such compensation as successful claims for unfair dismissal could lead to.

As a matter of discretion the Tribunal concluded that it would not be appropriate to grant leave for the re-amendment.

15. For the purposes of this appeal Miss Eady has specified the precise re-amendment she invites the Tribunal to permit. She would strike out the wish to have determined the particulars to be included in Mrs Ryan's statement of terms and conditions of employment and also the assertion that there had been unlawful deductions from Mrs Ryan's wages. Mrs Ryan adds an assertion that she was dismissed by the NHS Trust, purportedly for redundancy, with effect from the 23rd October 1992 and asserts that the principal reason for her dismissal was the relevant transfer and that as such it was an "automatically" unfair dismissal under Regulation 8 (1) of TUPE. She adds a reliance on a letter of the 20th July 1992 sent to employees by the Trust that purported to terminate employment with effect from the 23^rd October 1992, apparently because of a plan that Taylorplan would assume responsibility for the provision of domestic services which were to be transferred to it on the 24th October 1992. Mrs Ryan asserts that she commenced employment with Taylorplan under a new contract of employment on the 24th October 1992 and contends that she was unfairly dismissed and claims a compensatory (but not a basic) award. She accepts that she would have to bring into account sums received from Taylorplan and that she had received statutory redundancy pay (thus extinguishing her basic award). She pleads that there has been a further transfer, Taylorplan to Initial, in October 1995 and "To the extent that any liabilities remained due to me under my contract of employment from Taylorplan, I claim that these transferred to Initial".
16. Miss Eady, adopting a distinction drawn by Harvey on Industrial Relations and Employment Law Vol 5, T3ll.02-312.03, claims that the re-amendment sought, whilst (as she accepts) one which is substantial and which seeks to add a new cause of action, adds only a new cause of action linked to or arising out of the same facts as the original claim and that, on that account, the proposed amendment is not to be subjected to scrutiny in respect of time limits but is properly to be considered under the general principles as to amendment. Those principles, she claims, are such that here the re-amendment should readily be granted.
17. It has to be noted that section 111 (2) contains no exception for claims for unfair dismissal added by amendment. There is no hint that some different code applies to them. Save where one can say that, properly and fairly regarded, the claim for unfair dismissal is already present, even if in a form that it would be wise to clarify, it is thus difficult to construct some class in respect of which there is no need to scrutinise the time limit.
18. In any event, does the proposed new cause of action in unfair dismissal arise out of the same facts as the original claim? Facts alleged in the proposed re-amendment which were not in the amended claim include that the Applicant had been dismissed, that it was purportedly a dismissal for redundancy, that the relevant transfer had been the principal reason for it, that Mrs Ryan commenced employment with Taylorplan pursuant to a new contract of employment and that there had been a further transfer in 1995 to Initial. Not only was there no mention of dismissal, there was none, either, of unfairness. This is not a case in which, on a generous reading, it can be seen, on the facts alleged in the original claim, that the original claim was pregnant with the amended one; it may thus be contrasted with Ashworth Hospital Authority -v- Liebling (1997) EAT/1436/96 unreported. In that case a woman psychiatrist, complaining of unfair dismissal, had, even at the outset, complained in her IT1 that she felt she had been treated differentially compared to a male consultant psychiatrist, a fact that facilitated the course adopted by both the Employment Tribunal and Employment Appeal Tribunal of allowing her to amend to add a claim for sex discrimination, a claim which the Respondent in that case had been alerted to even before it had served its Respondent's Notice of Appearance. Equally, Home Office -v- Bose [1979] ICR 481 EAT is no parallel; there the view was taken that if Box 1 of the IT1 had been left blank by the complainant "That which he set out in [Box 10] would be sufficient for him to be able to present a complaint under either Act" - namely for race discrimination and unfair dismissal - p. 487 f. In our case, if only the facts alleged in the IT1 had been proved there could have been no relief for unfair dismissal.
19. Miss Eady relies heavily on Jesuthasan -v- London Borough of Hammersmith and Fulham [1998] IRLR 372. There the complainant had presented a claim for racial discrimination in October 1993. In April 1995 he sought to add claims for unfair dismissal and for redundancy payment. He had not been able, as it would have seemed to him in 1993, to claim for unfair dismissal or redundancy as he had not worked the hours which the regulations then required. With effect from February 1995 those requirements as to qualifying hours were removed. They had been found to be incompatible with European Community law. By seeking to amend in April 1995 the complainant had thus moved relatively promptly after it became legally possible to do so which, presumably is why no question arose in the Court of Appeal as to the time limit - see para 22 in the IRLR report. The Court of Appeal held that the qualifying hours regulations, having found to be incompatible with European Community law, had to be comprehensively disapplied and that the respondent, as an emanation of the State and hence as a person bound by the direct effect of the Directive, could not rely upon those qualifying conditions to defeat a claimant's claim. The amendments were thus permitted. But there were significant differences between that case and the one at hand. There what had seemed to be an insuperable legislative provision barred the complainant from claiming at the outset as he later wished to do by amendment. By contrast, in the case at hand there was no such bar. It was not held that any belief or even grounds for a belief on the part of the Ryan claimants in the impossibility of a claim, or even a difficulty in raising a claim, for unfair dismissal at the outset had existed; rather there was an informed decision not to pursue unfair dismissal in order to avoid the statutory cap. Secondly, in Jesuthasan no new facts at all were pleaded in the amendment; the amendment simply attached more labels to the facts already pleaded - see paras 16 and 38. That cannot be said to be the case here. Thirdly, the amendment there caused no prejudice to its respondents - para 38; here the Employment Tribunal has found some prejudice to be likely. Fourthly, the delay there was 18 months; here it is well over 5 years. All in all we cannot see Jesuthasan as assisting Mrs Ryan.
20. If the case cannot be put into a category in which the statutory time-bar can properly be left unscrutinised (to adopt the phrase used in Harvey supra) can the amendment be permitted at all? A similar question arose in Harvey -v- Port of Tilbury [1991] ICR 1030 EAT which reviewed many cases in the area. There it was sought to add an out-of-time claim for disability discrimination to a timely complaint for unfair dismissal. Extensions of time for disability discrimination cases are subject to the "just and equitable" test of paragraph 3 (2) of Schedule 3 of the Disability Discrimination Act rather than to the much stricter "not reasonably practicable" test that is relevant to unfair dismissal. At p. 1040 in Port of Tilbury the Employment Appeal Tribunal said:-

"In our judgment, where the statutory 3 months has expired and where an Industrial Tribunal is unable duly to conclude that it is just and equitable to extend time under [para 3 (2)] then the presentation of a complaint is as totally barred if it is sought by amendment as it would have been had it been sought then to be made by an Originating Application (although. of course, the fact that there are existing proceedings may feature largely in the consideration of whether or not it would be just and equitable to extend time)."

The Employment Appeal Tribunal in Port of Tilbury also referred to a passage in Selkent Bus Co. Ltd. -v- Moore [1996] ICR 836 at 843 where the Employment Appeal Tribunal, referring to the then-applicable statutory time-limit, said:-

"The applicability of time limits. If a new complaint or cause of action is proposed to be added by amendment, it is essential for the Tribunal to consider whether that complaint is out of time and if so, whether the time limit should be extended under the applicable statutory provisions, e.g., in the case of unfair dismissal, section 67 of the Employment Protection (Consolidation) Act 1978."

The analysis in Port of Tilbury of the Court of Appeal case of Housing Corporation -v- Bryant [1999] ICR 123 also points to the view that what is truly a new claim cannot be added by amendment out of time where there is a time-bar and where the appropriate test for an extension of that time (be it "just and equitable" or "not reasonably practicable") is not satisfied.

21. It has not been argued that Port of Tilbury is wrong and we would not wish to have conflicting cases at this level. We thus conclude, the case being one of the proposed addition, indeed substitution, of a new form of claim, one not set out, sufficiently or at all, in the earlier formulation, that the Employment Tribunal had no discretion to allow the amendment unless the requirements as to extension of time were satisfied.
22. As for that the appropriate test, as we have seen, was here that of section 111 (2) (b) supra, the "not reasonably practicable" test. It is a strict test - London Underground Ltd. -v- Noel [1999] IRLR C.A. - and no other is applicable. The Tribunal concluded that it had been reasonably practicable for the complaints as to unfair dismissal to have been presented in time.
23. Miss Eady's argument, whilst asserting that, until Wilson supra was decided in the House of Lord, there had been uncertainty in the law and great change, stopped short of any assertion that Mrs Ryan's advisers had believed it impossible in 1993 to assert that she had been dismissed and that such dismissal had been unfair. Given that and also the Tribunal's holding that an informed decision had been made by those advisers not to claim unfair dismissal, we need not deal with Mr Jeans' arguments firstly that there never had been any justified perception that such a claim was not possible and, secondly, that, even if there had been, it would have been a mistake of law which would not have availed Mrs Ryan - see Biggs -v- Somerset County Council [1996] IRLR 203 at paras 22 and 25.
24. No error of law is visible in the Tribunal's decision as to reasonable practicability; given that the same advisers had issued unfair dismissal claims in the Rees cases in January 1993, it would have been difficult for a Tribunal to have come to any other conclusion on the facts. Indeed, Miss Eady does not attack that part of the Tribunal's reasoning.

It follows that we see the Employment Tribunal as having had no discretion to re-amend and hence being right to have refused it.

25. Even had there been a discretion, it would have been difficult to find error of law in the Tribunal's exercise of it. They held that the Ryan claimants were fully advised throughout by skilled advisers, that an informed election not to pursue claims for unfair dismissal had been made with a view to escaping the relatively low statutory cap on compensation for unfair dismissal; that if unfair dismissal were to be permitted to be run, the complex "ETO" defence would have been wished to have been raised by the Respondents and that, whilst much evidence had remained available, the evidence of two persons relevant to that defence had, over the period, been lost to the first Respondent.
26. Mr Underwood points to the difficulties in dealing with an unfair dismissal claim raised so late. Different employees amongst the 121 would have had different lengths of service (some, no doubt, not having sufficient service to qualify for unfair dismissal) with different rates of pay and different overtime worked. A massive inquiry would be needed. Mitigation (not material to the original claims for unlawful deductions from wages) could come into play; had this claimant or that had the opportunity to mitigate by, say, working for Taylorplan at least the hours of overtime which it had offered or the hours that she had habitually worked for the NHS Trust? After so long a time all such inquiries, even if still capable of leading to accurate answers, would involve considerable research. The costs incurred would not be likely to be recovered even if Taylorplan was wholly successful in its defences. The further expense to which the Tribunal had referred could be considerable and all such factors contributed, he urged, to prejudice consequent on the proposed late amendment.
27. Mr Jeans adds that the lateness of the proposed amendment introduced the questions of whether there was a relevant transfer from Taylorplan to Initial and also of how far, if at all, Initial is bound by the 1994 decision, to which it was not party, that there had been a relevant transfer from the NHS Trust to Taylorplan.
28. These more exotic forms of possible prejudice can easily be exaggerated and may not have been addressed to or have been given weight by the Tribunal below but the discretion (if there was one) which the Tribunal would have had would have been a broad one - see Selkent Bus supra at para 21 - and within it regard may properly be paid to an increase of costs - para 8. The Tribunal was well aware of the need to balance the respective injustices and hardships of granting or withholding leave to re-amend. It would be immaterial for us to consider whether we would have exercised the discretion (had there been one) in the same way as did the Tribunal but we notice no clear taking into account of anything which should necessarily have been left out of account nor any indication of regard having not been paid to that which should have been taken into account. Even if, contrary to our view, there had been a discretion in the Tribunal below, we would not have felt able to upset their decision as having been in error of law.

Accordingly, for the reasons we have given, we dismiss the appeal.