United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR F SUTCLIFFE (Solicitor) Messrs Ford & Warren Solicitors Westgate Point Westgate Leeds LS1 2AX
For the Respondent	MISS J JONES (of Counsel) Instructed By: Messrs Richard Hutchinson & Co Solicitors 36 The Ropewalk Nottingham NG1 5DW


 


JUDGE PETER CLARK:

1. This is an appeal by Mr Barry, the Applicant before the Leeds Employment Tribunal, against so much of that Tribunal's decision, promulgated with extended reasons on 20 October 2000, as dismissed his complaint of breach of contract on the part of his former employer, the Respondent Bateman Catering Ltd. The issue is whether or not he was contractually entitled to an enhanced redundancy payment following his dismissal by the Respondent on grounds of redundancy effective on 9 February 2000. There is no appeal against the Tribunal's finding that he was not unfairly dismissed.

The Facts

2. The Appellant commenced employment with Dewsbury NHS Trust or its predecessor on 31 August 1978. There was before the Tribunal a document headed Dewsbury Health Authority; Notification of Appointment, signed by the Appellant in April 1992, signifying his appointment as Deputy Catering Manager in the catering department at Dewsbury District Hospital on 1 April 1992. It is common ground that his employment with the Trust was subject to nationally agreed Whitley Council Terms and Conditions of employment. Those terms included the right to an enhanced redundancy payment on dismissal by reason of redundancy, that is to say a payment calculated in accordance with a formula more generous than that provided for in the statutory redundancy payment scheme.
3. On 31 October 1995 a relevant transfer of that part of the Trust's business in which the Appellant was employed took place. The transferee was the Respondent. It followed, under the TUPE regulations 1981, that the relevant terms and conditions of his contract of employment, including the right to an enhanced redundancy payment, there and then transferred to the Respondent.
4. The Respondent acknowledged that fact. In a document headed Contract of Employment (the first contract) signed by the Appellant and dated 20 November 1995, it is recorded that the Appellant was employed as Operational Catering Manager at Dewsbury, and details were given of his working hours. Above his signature were these relevant words:

"I accept that this statement and the terms and conditions transferred under the Transfer of Undertakings Regulations forms the terms and conditions of my employment. I also accept that these terms may change and that I shall be bound by such changes from time to time."

Above those words was a standard form reference to receipt of the Respondent's staff handbook, against which is recorded 'N/A' (not applicable).

5. So there it was; following the transfer both parties accepted, as was the case, that the Appellant's employment continued with the Respondent on his former Whitley terms and conditions, not those set out in the Respondent's staff handbook.
6. The Tribunal accepted evidence given by Miss Summerhayes, the Respondent's Human Resources manager, that it was their general policy to attempt to get their employees to agree to be employed under the Respondent's general terms and conditions when, following a transfer, an employee first changed jobs.
7. In the Appellant's case, the Tribunal found that he first changed jobs in July 1996. It is common ground before us that he did not in fact do so, but that is not material. At that time the Appellant signed a new document headed Contract of Employment and dated it 3 July 1996 (the second contract). The document was signed on behalf of the Respondent by a Mr Worrell on 1 July 1996. As appears on the face of that document, and as the Appellant told the Tribunal in evidence, he negotiated two principal alterations to the Respondent's standard terms and conditions. The first related to his annual leave entitlement; the second to his sick pay entitlement. Both alterations produced terms more favourable to the Appellant than the Respondent's standard terms. Also, by an amendment, he preserved a back-dated Whitley Council agreed pay increase.
8. At this time the Appellant acknowledged receipt of the Respondent's staff handbook and then immediately above his signature and the date appeared these words:

"I accept that this Statement and the Staff Handbook forms the Terms and Conditions of my employment. I also accept that these terms may change and that I shall be bound by such changes from time to time."

The Appellant did change jobs in January 1998. He then became the Catering Manager at St. Lukes Hospital, Bradford. Again he signed a new document headed Contract of Employment (the third contract) and dated it 15.1.98. In the boxes headed Annual Holiday and Sick Pay the words "Existing Conditions apply as agreed with Rob Ward."

9. Mr Ward, then the Human Resources Manager, also signed the third contract on behalf of the Respondent. The Respondent put in a written statement by Mr Ward before the Tribunal, which the Tribunal discounted. It was the Appellant's evidence that those words 'Existing Conditions apply as agreed with Rob Ward' indicated that he, the Appellant had agreed with Mr Ward orally, as confirmed in the third contract, that the general Whitley conditions of employment applied to the contract and that included, for the purposes of the breach of contract claim, his entitlement to an enhanced redundancy payment.
10. The Tribunal rejected his evidence. They found as a fact that this was a contract of employment coupled with the staff handbook and that there was a significant amendment to the Respondent's normal contracts relating to annual leave and sick pay entitlements. They could not accept that the words "existing conditions apply as agreed with Rob Ward" in the annual holiday and sick pay columns of the third contract related not just to those terms but to Whitley entitlement in total. Thus they found that at the time of the Appellant's dismissal by reason of redundancy in February 2000 the terms of his contract of employment were as set out in the third contract read with the staff handbook.
11. The relevant provision in the staff handbook is to be found at paragraph 21, headed redundancy. That paragraph concludes:

"If relocation or suitable alternative employment is not available, employees will be eligible for redundancy pay, in accordance with the scale laid down by the Employment Protection Consolidation Act 1978."

Upon dismissal in February 2000 the Appellant received a statutory redundancy payment, based on his age and continuous service going back to 1978, of £5,290. Under the Whitley terms he would have received an enhanced payment totalling £20,471. Hence this claim for the difference, that is £15,181.

The Tribunal Decision

12. In short, the Tribunal concluded that the first contract was consensually varied by the parties in the terms provided for in the second contract and finally and critically for present purposes by the third contract. In particular, the original Whitley term as to an enhanced redundancy payment had been varied so as now to provide, under the terms of the Respondent's staff handbook incorporated into the contract, for a statutory redundancy payment only. The claim failed.

The Appeal

13. In this appeal Mr Sutcliffe renews the submissions which he made unsuccessfully below, and contends:

(1) that the Tribunal was wrong in law to conclude that, at the time of dismissal, the Appellant's contract of employment comprised only the third contract, incorporating the Respondent's handbook to the exclusion of the Whitley term relating to enhanced redundancy payment

(2) that the Tribunal was wrong to so conclude when it had found that there was no discussion between the parties as to the enhanced redundancy provision in the original contract

(3) that the Tribunal failed to consider and make findings on his submission below that there was, in the alternative, a breach of the implied term of mutual trust and confidence which sounded in damages.

14. Having considered the arguments developed before us both by Mr Sutcliffe and Ms Jones we have concluded that none of these grounds of appeal are made out. Our reasons for so finding are as follows:

(i) following the transfer both parties acknowledge that the Appellant continued his employment with the Respondent on the same terms as he had enjoyed with the Trust. Those included the terms and conditions nationally agreed by the Whitley Council; one of those terms provided for an enhanced redundancy payment

(ii) circumstances may arise in which the parties may, by agreement, vary those terms and conditions of employment for reasons unrelated to the transfer see Wilson v. St Helen's Borough Council [1998] IRLR 678, paragraph 90, per Lord Slynn of Hadley

(iii) what happened in July 1996 was that the Respondent made an offer of a "Bateman Contract" in a letter from Mr Worrall dated 1 July. That letter enclosed a copy of the Staff Handbook and offered a performance related bonus not previously available to the Appellant.

(iv) the Appellant considered that offer and negotiated the terms offered. In particular, he agreed with Mr Worrall that his terms as to sick pay and holiday entitlement would be more favourable to him than the standard Bateman terms; he also preserved a back-dated Whitley pay increase in an amendment to the second contract. It was clear to the parties, in the Tribunal's judgment, that what was being offered and ultimately accepted by the Appellant was a substitution of the Bateman handbook terms for the Whitley terms, subject to the express terms agreed on the face of the second contract

(v) Crucial to this case is the status of what, for convenience, we have called, the second contract. Mr Sutcliffe submits that it was merely a Statutory Statement of Terms and Conditions of Employment, as required by section 1 of the Employment Rights Act 1996. We disagree and have referred the advocates to the Court of Appeal decision in Gascol Conversions Ltd v. Mercer [1974] ICR 420. Just as in that case, we are satisfied as was the Employment Tribunal, that the second contract represented a written contract between the parties (as did the first and third contracts). It was not simply a statutory statement.

(vi) that distinction is important when considering the obiter remarks made by Mr Justice Browne-Wilkinson President and relied upon by Mr Sutcliffe, in James v. Associated Tunnelling Co. Ltd [1981] IRLR 477. That case was concerned with the effect of an employee not challenging an erroneous record of the contractual terms and conditions of employment contained in the employer's statement. Could he be said to have impliedly agreed to the terms there set out by acquiescence, particularly in relation to terms which did not have immediate practical application? That is quite different from the present case where the second and third contracts represented agreements as to terms which excluded Whitley terms save where expressly adopted by the parties.

(vii) Viewed in this way, there is no ambiguity in paragraph 21 of the handbook. The employee was entitled to his statutory redundancy entitlement and no more. Unless the Whitley terms survived the second contract there is no warrant for reading into the contract at that stage any provisions for enhanced redundancy payment. In our judgment the Tribunal was entitled to find that the Whitley terms did not survive.

(viii) we confess that we find the trust and confidence argument hard to follow. Insofar as it is limited to some general principle to be extracted from the House of Lords decision in Scally v. Southern Health and Social Services Board [1991] IRLR 522, we do not believe that it advances the Appellant's case. In Scally the House held that there was an implied contractual obligation on the employer to take reasonable steps to bring the existence of the right of employees to enhance their pension entitlement by the purchase of added years to the notice of the claimant employees. The reasoning leading their lordships to that conclusion is contained in the speech of Lord Bridge, paragraph 12, where he said this:

"I would define it (the implied term) as the relationship of employer and employee where the following circumstances obtain: (1) the terms of the contract of employment have not been negotiated with the individual employee but result from negotiation with a representative body or are otherwise incorporated by reference; (2) a particular term of the contract makes available to the employee a valuable right contingent upon action being taken by him to avail himself of its benefits; (3) the employee cannot, in all the circumstances, reasonably be expected to be aware of the term unless it is drawn to his attention."

15. In the present case (1) the terms of the second and third contracts were negotiated between the Appellant and Respondent, not collectively (2) no action was required on the part of the Appellant to avail himself of the enhanced redundancy payment (3) the Bateman term as to redundancy entitlement was drawn to his attention at paragraph 21 of the handbook.
16. In our view the Tribunal was right to distinguish the case of Scally from the facts of the present case in these circumstances. For these reasons we shall dismiss this appeal.