United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR MICHAEL DUGGAN (of Counsel) Instructed By: Messrs Trowers & Hamlins Solicitors Sceptre Court 40 Tower Hill London EC3N 4DX
For the Respondent	MR HOBBS (of Counsel) Instructed By: Messrs Carpenters Solicitors Priory House Monks Ferry Birkenhead Merseyside CH41 5LH


 


JUDGE J BURKE QC:

Background

1. In 1981 Mr Budd was employed by Fisons Ltd at their premises at Bramford near Ipswich. Over the following years both the name and identity of his employers changed; by 1997 his employers were Levington Horticulture Ltd; by August 2000 they had become Scott Co (UK) Ltd, the present Appellants. The mechanisms by which these changes occurred are not relevant; it is accepted that Mr Budd had continuity of employment from 1981 until the termination of that employment by the present Appellants on 4 August 2000.
2. Mr Budd's job also changed; having started as a Packaging Technologist, by 2000 he was in a managerial position and was a member of the Institute of Packaging.
3. By 1996, as the Employment Tribunal found, Mr Budd was expressing a degree of strain in his employment relationship. Although the first half of 1997 saw improvement, difficulties between him and his employers grew. In February 1998 Mr Budd went off work and was certified by his doctor to be suffering from migraine and stress. There were discussions about severance terms and ill-health retirement but nothing came of them. After one year of absence Mr Budd had exhausted his contractual entitlement to sick pay; he remained in employment, although off work through his illness and not in receipt of any pay, until May 2000 by which time he had been away from work for over two years. At that juncture the employers wrote to him, drawing attention to his lengthy absence and the lack of any indication of a likely return to work. They said:

"Please treat this letter as written notice of the termination of your employment. In accordance with your contract of employment, you are entitled to a period of 13 weeks' notice of termination, which means that your employment will terminate on 4 August 2000."

4. That letter was received by Mr Budd on 10 May 2000; the period from then to 4 August 2000 was not 13 weeks but 12 weeks and 2 days.
5. Mr Budd presented claims to the Employment Tribunal that he had been unfairly and wrongfully dismissed and that the employers had been guilty of breach of contract. By the time of the hearing, in February 2001, before the Employment Tribunal, sitting at Bury St Edmunds and chaired by Mr Crome, the issues were three, namely:-

(1) Was Mr Budd unfairly dismissed?

(2) Was he entitled to any payment for the weeks of his period of notice, no such payment having been made by the employers?

(3) Was he entitled to a compensation payment pursuant to the terms of paragraph 2.15 of the employers' Staff Handbook dated September 1997?

The Tribunal, in their Decision, sent to the party with Extended Reasons on 25 May 2001, found against Mr Budd on the first issue; on the second issue they found in his favour and ordered the employers to pay to him £7,717.85 said to be due to him in respect of the notice period. They decided the third issue in favour of the employers.

6. The employers now appeal against the decision in Mr Budd's favour on the issue of pay during the notice period; Mr Budd cross-appeals on the issue of the compensation payment; there is no appeal against the Tribunal's decision dismissing Mr Budd's unfair dismissal claim. In this judgment we will deal first with the employers' appeal and, thereafter, with the cross appeal.

The Legal Framework

7. (i) Section 86(1) of the Employment Rights Act 1996 sets out statutory minimum

periods of notice to be given by an employer to terminate the contract of employment of a person who had been continuously employed for one month or more. In Mr Budd's case his statutory minimum notice was not less than 12 weeks.

(ii) Section 87(1) of the 1996 Act provides:-

"(1) If an employer gives notice to terminate the contract of employment of a person who has been continuously employed for one month or more, the provisions of sections 88 to 91 have effect as respects the liability of the employer for the period of notice required by section 86(1)."

(iii) Section 88(1) of the 1996 Act provides:-

"(1) If an employee has normal working hours under the contract of employment in force during the period of notice and during any part of those normal working hours –

...

(b) the employee is incapable of work because of illness or injury,

the employer is liable to pay the employee for the part of normal working hours covered by any of paragraphs ………. [b] ……….. a sum not less than the amount of remuneration for that part of normal working hours calculated at the average hourly rate of remuneration produced by dividing a week's pay by the number of normal working hours."

8. It is common ground between the parties that, at common law and unless the contract of employment otherwise provides, if an employee is incapable of working during a period of notice because of sickness and is not in that period contractually entitled to pay or sick pay, he is not entitled to any payment from the employers in respect of that period of notice. It is also common ground that the effect of Section 87(1) and Section 88(1)(b) of the 1996 Act, in a case to which they apply, is to entitle an employee who is unable to work through sickness during a notice period nevertheless to be paid a week's pay for each week of at least his statutory minimum period of notice. Neither Mr Duggan on behalf of the employers nor Mr Hobbs on behalf of Mr Budd was able to explain why the statute should have this effect which may seem to be odd, at least in the context of a case such as the present, in which prior to dismissal the employee has been on sick pay for a year, has exhausted his entitlement to sick pay and is then absent from work because of illness for another year and more without pay. However, the result produced by Section 87(1) and Section 88(1)(b) of the Act, in a case to which they apply, is clear and is not in dispute.
9. The crucial issue in the appeal is whether Section 87(1) and Section 88(1)(b) do apply to the present case. The employers rely on Section 87(4) which provides:-

"(4) This section does not apply in relation to a notice given by the employer or the employee if the notice to be given by the employer to terminate the contract must be at least one week more than the notice required by section 86(1)."

They rely further on paragraph 12 of what is accepted to be a contract of employment entered into between Mr Budd and his then employers, Fisons Ltd, in June 1981 which provided:-

"Your employment may be terminated by 3 calendar months notice in writing from either side or in the case of notice from the Company by any greater statutory entitlement."

The employers' argument, based upon that sub-section and on paragraph 12 of the contract of employment, can be simply summarised; it is that this is a case in which Mr Budd was contractually entitled not to the statutory minimum notice of 12 weeks but to 3 months or 13 weeks' notice and that, therefore, the notice which the employers were obliged to give to terminate Mr Budd's contract of employment had to be one week more than that required by Section 86(1). Accordingly, Section 87(1) did not apply by reason of Section 87(4); and as a result the provisions in Section 88 rendering the employers liable to make payments to Mr Budd in respect of the notice period also did not apply. Thus Mr Budd had no entitlement to pay in respect of the notice period under the provisions of the 1996 Act; it was accepted that he had no such entitlement under his contract; and therefore his claim to pay during the notice period ought to have been rejected by the Tribunal.

10. Mr Budd's case was put on two alternative bases by Mr Hobbs. Firstly he relied on Section 91(5) of the Act which provides:-

"(5) If an employer fails to give the notice required by section 86, the rights conferred by sections 87 to 90 and this section shall be taken into account in assessing his liability for breach of the contract."

He submitted that, if Section 91(5) was taken into account, Section 87(4) should not be construed as operating so as wholly to disapply Section 87(1) and Section 88(1)(b) – although he accepted that there was not statutory right to notice pay in respect of any period of notice beyond the statutory minimum, i.e. in this case in respect of the 13^th week. Thus there arose before us, as before the Tribunal, a question of statutory construction. Secondly he submitted that at the relevant time, in May 2000, Mr Budd's contractual notice period was 12 and not 13 weeks, that therefore Section 87(4) could not disapply Section 87(1) and Section 88(1)(b) and that the Tribunal was right so to decide, as they did at paragraph 24 of their Decision. Thus there arose before us a question as to what was the term of Mr Budd's contract of employment as to notice in May 2000 when the employers gave notice to terminate that contract. The parties were in dispute as to whether this point had been argued before the Tribunal and whether it was open to Mr Hobbs to argue it before us.

Statutory Construction

11. We have said that the agreed effect of Section 87(1) and Section 88(1)(b), in a case to which they apply, might be thought to be odd. The result, if Mr Duggan's submission as to the effect of Section 87(4) be right, might be thought to be even more curious. If Parliament has decided that, whether working or contractually entitled to pay while not working or not contractually entitled to any pay, an employer is entitled to a week's pay for each week of his statutory minimum notice period, why should Parliament have decided to remove that entitlement if the employee is contractually entitled to a notice period which happens to be one week or more longer than the statutory minimum period? Counsel were unable to help us towards an answer to this question; and it seems that, although these statutory provisions have existed in the same or similar form since the Contracts of Employment Act 1963, the statutory construction issue which confronts us has never previously arisen for decision.
12. Nevertheless we have not found it difficult to arrive at what is, in our judgment, the correct construction of the relevant provisions – as to which we are in agreement with the conclusion reached by the Tribunal. The words in Section 87(4):-

"… if the notice to be given by the employer to terminate the contract must be at least one week more than the notice required by section 86(1)."

draw a contrast between the statutory minimum notice required by Section 86(1) and the contractual notice which the employers are required by the contract of employment to give to terminate the contract (save, of course, in a case where they are entitled to dismiss summarily). If the latter is at least one week more than the former, then Section 87(1) is expressly disapplied; and it follows that the provisions of Sections 88 to 91 which set out the liability of the employer for payments in respect of the statutory notice period, which only come into play if Section 87(1) does apply, are also disapplied. We are not deflected from this conclusion by the seemingly curious result thus achieved.

13. We do not accept that Section 91(5), on which Mr Hobbs founded his argument on this issue, has the effect of preventing the operation of Section 87(4) in a case where the contractual notice period is one week longer than the statutory minimum notice period. Firstly Section 91(5) only applies if the employers fail "to give the notice required by Section 86"; Mr Hobbs submitted that the giving of a longer notice than that required by Section 86, as happened in this case, was a failure to give the notice required by Section 86: we regard that as a valiant but unacceptable submission. The giving of 13 weeks' notice in a case in which Section 86 requires 12 weeks' notice is not, in our judgment, a failure to give 12 weeks' notice; it is the giving of that 12 weeks' notice and more. Secondly, even if Mr Hobbs' submission were right, Section 91(5) would not in our judgment operate so as to revive the entitlement under Section 87(1) and Section 88(1)(b) which the statute does not provide in a case in which those sub-sections are disapplied by Section 87(4). The words of Section 91(5) do no more, in a case in which they apply, than to require the rights conferred by Sections 87 to 90 to be taken into account in assessing the employer's liability for breach of contract; they do not define or create such rights. If Section 87(1) and Section 88(1)(b) do not apply so as to create any rights to payment, there is nothing by way of liability upon which Section 91(5) can bite.
14. For these reasons we conclude that, if Mr Budd was contractually entitled to 13 weeks' or 3 months' notice (which both parties have treated as the same), he had no entitlement under the statute or at common law to pay in respect of his period of notice.
15. We should add that in his skeleton argument Mr Hobbs sought to argue that the fact that the time between receipt of the termination letter and the date of termination was 12 weeks and 2 days and not 13 weeks, presumably as a result of some error of calculation, should lead to the conclusion that this was not a case which fell within Section 87(4). However, before us Mr Hobbs did not pursue this point, accepting correctly that Section 87(4) refers to the employer's contractual entitlement to notice and not to the notice actually given, if shorter than such contractual entitlement, the relevant words are "if the notice to be given", not "if the notice given".

The Contractual Notice Period

16. We have set out in paragraph 9 of this judgment the notice provision in Mr Budd's written contract of employment. Paragraphs 11 and 15 of that contract provide as follows:-

"11 You will be required to comply with the Company's instructions, rules and regulations. In the Staff Handbook you will find details of the most important rules applicable to you together with the disciplinary procedure. Other instructions, rules and regulations will be brought to your attention.

15 The Personnel Department will be pleased to supply any further information you may require, and you will also find useful information in the enclosed Staff Handbook. Any changes in conditions of employment will be brought to your notice."

Under the employers' signature at the foot of page 3 of that contract and above the employee's signature there appear the following words:-

"I accept the appointment on the terms and conditions set out and referred to above. In particular I understand that this is subject to the receipt of a medical report and references satisfactory to the Company, and I undertake at all times to comply with the Company's instructions, rules and regulations."

17. In 1997 the employers, then Levington Horticulture Ltd, issued a new Staff Handbook. In the introduction to that handbook, at page 4, they stated that:-

"Section 2 amplifies the current terms and conditions of employment."

Paragraph 2.5 of the Handbook, which was part of Section 2, said:-

"2.5 Period of Notice

Staff are contractually entitled to a minimum of four weeks' notice from the Company. The statutory minimum period of notice from the Company is such that after four years' service, staff are entitled to one additional week's notice for each completed year of service up to a maximum of 12 weeks after 12 years' service.

…

The Company may, at its discretion, increase the period of notice offered to individuals."

18. The Tribunal, having in paragraph 23 of their Decision reached what we regard as the correct conclusions on the constructions of Sections 87 and 88 of the Employment Rights Act 1996, then decided in paragraph 24 that Section 87(4) did not, in Mr Budd's case, operate to disapply Section 87(1) and Section 88(1)(b) because Mr Budd's contractual notice of entitlement was not 3 months or 13 weeks but 12 weeks. They reached that result on the basis of their conclusion that the notice period set out in the contract of employment had been amended by the 1997 Staff Handbook so that at the date of his dismissal Mr Budd was contractually entitled only to 12 weeks as set out in paragraph 2.5 of the Staff Handbook and not 3 months' notice as set out in paragraph 12 of the contract of employment.
19. The Tribunal, at the close of the hearing, gave a short oral decision without Extended Reasons. Some six weeks after the hearing had concluded, the Tribunal sent a letter to the parties solicitors seeking further submissions as to whether:

"Accepting the respondent's interpretation of the effect of sections 87 and 88 so that section 88 is disapplied by reason of section 87(4), whether on common law contract principles the applicant in this case is entitled to notice pay: and if so, at what rate."

The Tribunal indicated that, if the parties agreed, they could make submissions in writing and, if not, the Tribunal were willing to reconvene to hear further argument. Both parties agreed to make written submissions; and by their respective counsel they did so. The Tribunal promulgated their Extended Reasons thereafter.

20. Mr Duggan submits that at no time during the course of the hearing before the Tribunal was it argued on behalf of Mr Budd that his contractual notice period had been reduced by a variation of the original contractual provision of 3 months to one of 12 weeks. In his written submission in response to the Tribunal's question, Mr Duggan plainly did not address any question of such a variation; and, more significantly, nor did Mr Hobbs raise that question in his written submissions. Indeed, Mr Duggan relies specifically on paragraphs 5, 8 and 10(f) of Mr Hobbs' written submission in which Mr Hobbs expressly conceded that the original contract of employment took precedence over the Staff Handbook and that the contractual notice period was 13 and not 12 weeks. Accordingly, Mr Duggan submitted that there was no basis on which the Tribunal could reach the conclusion that there had been a downwards variation of Mr Budd's contractual notice entitlement; it was not only, said Mr Duggan, that the point had not been argued; on behalf of Mr Budd the 13 week period had been expressly conceded; and, on the familiar principles which apply where a new point is sought to be argued in the Employment Appeal Tribunal which could have been but was not argued before the Tribunal, as set out most recently in Jones v Governing Body of Burdett Coutts School [1998] IRLR 521, it was not open to Mr Hobbs now to seek to resile from his concession and to argue before us that the Tribunal had reached the right conclusion on this issue.
21. Mr Hobbs submitted, by reference to his written skeleton argument which was put in as his opening at the Tribunal hearing, that he had relied on a 12-week notice entitlement at that stage; and that skeleton argument certainly does say, at paragraph 1 (a)(i):

"This is a claim for notice pay. The Applicant's terms and conditions gave him 12 weeks notice entitlement."

However there is no reference to the 1981 contract of employment in that skeleton; and Mr Hobbs fairly accepted that when he drafted that skeleton he did not anticipate the Section 87(4) point which would, had he anticipated it, have directed his attention to the difference between the 12 weeks' notice period referred to in paragraph 2.5 of the Staff Handbook and the 13 week notice period provided by the contract of employment. At that stage the difference between 12 and 13 weeks was, therefore, relevant only to the amount of notice pay and not to Mr Budd's entitlement to any notice pay. Furthermore, Mr Hobbs told us that at that stage he was focussing on the statutory and not the contractual notice period. After the hearing, when Mr Hobbs had heard Mr Duggan make his point as to the application of Section 87(4) in the light of the 1981 contract of employment and the consequent disapplication of Section 87(1) and Section 88, Mr Hobbs wrote, in Mr Budd's written submission in response to the Tribunal's question:-

"4 The Applicant's terms and conditions as set out in the company handbook bestowed 12 weeks notice entitlement on the Applicant.

5 His letter of appointment actually gave him 13 weeks notice entitlement. In the circumstances it is conceded that the 13 week provision of the letter of appointment takes precedence.

8 Thus, had the required contractual notice been the 12 weeks stated in the handbook or the 12 weeks and 2 days actually given by the Respondent, the Applicant would be able to rely upon s. 88 to recover his notice pay in full. By twist of fate, the notice period was, in fact, 13 weeks and that, says the Respondent, disapplies s. 88 and leaves the Applicant unable to recover the notice pay.

10 The Applicant therefore repeats its submission, which was rightly accepted at the Tribunal hearing by the Chairman, and states as follows:-

…

(f) Since the Applicant's contractual period of notice was 13 weeks and the statutory minimum applicable to him was 12 weeks, he is entitled to rely upon s. 88 in order to recover 12 weeks notice pay. With regards the 13^th week of his notice, he can only seek to recover it on contractual principles and therefore cannot recover it at all."

Mr Hobbs submits that these passages do not contain a concession that the contractual period was 13 weeks but merely represent answers to the specific question posed by the Tribunal in its letter to the parties. We accept that the context in which the written submissions were made was that of the Tribunal's question and that Mr Hobbs was answering that question; but he provided those submissions in the knowledge that the effect of Section 87(4) was very much in issue. It is abundantly clear to us that those submissions involved an unequivocal concession that, at the relevant time, Mr Budd was entitled to 13 weeks' notice and not to 12 weeks' notice and that the provision in the contract of employment to that effect prevailed over paragraph 2.5 of the Staff Handbook.

22. The Chairman's notes, which are before us, contain nothing which indicates that either party, in evidence or in their closing addresses, dealt with any issue of variation of the contractual notice period. We accept that if Mr Hobbs had taken the point Mr Duggan would have responded to it strongly; but there is no note of any such response. It is wholly clear that the Tribunal took the variation point of their own volition, without argument from either party and in the face of an express concession on behalf of Mr Budd by his counsel that the notice period prescribed by the original contract of employment prevailed. In Jones v Governing Body of Burdett Coutts School (supra) the Court of Appeal reinforced the principle, often expressed in earlier decisions of the Employment Appeal Tribunal, that the Employment Appeal Tribunal should exercise their discretion to allow a new point of law to be raised or a conceded point to be reopened only in exceptional circumstances, especially if the result would be to open up fresh issues of fact which were not sufficiently investigated before the Tribunal (see per Robert Walker LJ at paragraph 20). Mr Duggan submits and we accept that this is not a case in which the Employment Appeal Tribunal should permit Mr Budd to seek to sustain the Tribunal's conclusion, in paragraph 24 of their Decision when in order to do so he would have not only to rely on a substantive point which was not raised before the Tribunal but also to withdrew from an express concession. We see no exceptional circumstances in this case which would justify us in allowing Mr Budd to put his case on the basis of a variation as to the contractual period of notice; both in the interests of finality and because, as Mr Hobbs fairly accepted, the issue of variation was not canvassed in the evidence and would or might therefore have to be remitted to the Tribunal for further evidence and argument, it would not be right to permit him to do so. The dismissal in this case occurred well over two years ago; it is highly undesirable that the case should now be set back for further factual investigation or further argument.
23. For these reasons we conclude that the Tribunal erred in law in deciding that Mr Budd's contractual period of notice had been reduced by variation from 13 to 12 weeks when that point had not been argued and there had been an express concession on behalf of Mr Budd that the relevant period was one of 13 weeks. We do not regard it as right to exercise our discretion to allow Mr Budd to argue the variation point for the first time before us.
24. However, because there was disagreement as to the circumstances in which the variation issue first arose and the context in which Mr Hobbs made what we have decided were unequivocal concessions, we heard full argument on the variation issue from both parties on a provisional basis; and it is only fair that we should state our conclusions in the light of those arguments.
25. Mr Duggan submitted that:

(i) the contractual notice period was prima facie to be found in the 1981 contract;

(ii) the contract did not expressly incorporate the terms of Staff Handbooks so that the provisions in such Handbooks (assuming they were of a contractual nature) automatically altered inconsistent provisions of the contract;

(iii) therefore Mr Budd had to establish a consensual variation of the contractual notice period, i.e. that Mr Budd had expressly or impliedly accepted a reduction in that period;

(iv) the words of paragraph 2.5 of the 1997 Handbook did not constitute any indication of an attempt on the part of the employers to achieve a reduction in that period; if they did Mr Budd should not be taken to have accepted such an attempt simply by continuing to work. He had not signed the Handbook or any document acknowledging that he was bound by it or by paragraph 2.5 of it.

26. Mr Hobbs accepted that the terms of the Staff Handbook were not incorporated into Mr Budd's contract so as automatically to vary it. He submitted that the words of paragraph 2.5, which if ambiguous, should be construed against the employers, constituted a clear offer to Mr Budd which, by continuing to work without objection, Mr Budd should be taken to have accepted. The 1997 Handbook as a whole and earlier Handbooks, Mr Hobbs submitted, contained numerous provisions which were beneficial to Mr Budd which added substantially to his contractual package overall and which were regarded by both parties as contractually binding; the reduction of the contractual notice period should not be regarded differently simply because, to a minor degree, it removed a benefit.
27. In Jones v Associated Tunnelling Co Ltd [1981] IRLR 477, an issue arose as to whether, in a case in which the employer's right to transfer the employee from one place of work to another was at the heart of the dispute, the employee should be taken to have accepted a mobility clause in a document issued to him which appeared to set out his terms and conditions of employment by continuing to work without demur after receipt of the document. Browne-Wilkinson J, then President of the Employment Appeal Tribunal, said at paragraph 22:-

"In our view to imply an agree to vary or to raise an estoppel against the employee on the grounds that he has not objected to a false record by the employers of the terms actually agreed is a course which should be adopted with great caution. If the variation relates to a matter which has immediate practical application (eg, the rate of pay) and the employee continues to work without objection after effect has been given to the variation (eg, his pay packet has been reduced) then obviously he may well be taken to have impliedly agreed. But where, as in the present case, the variation has no immediate practical effect the position is not the same. It is the view of both members of this Tribunal with experience in industrial relations (with which the Chairman, without such experience, agrees) that it is asking too much of the ordinary employee to require him either to object to an erroneous statement of his terms of employment having no immediate practical impact on him or be taken to have assented to the variation. So to hold would involve an unrealistic view of the inclination and ability of the ordinary employee to read and fully understand such statements."

Although, for reasons we do not need to go into, that paragraph was strictly obiter dicta, we regard it as valuable guidance representing an eminently sound and sensible approach; and it was followed and adopted in Aparau v Iceland Frozen Foods Plc [1996] IRLR 119.

28. It could not reasonably be and was not argued that the alleged variation would have been thought in 1997, at the time of the new Staff Handbook, to have had any immediate practical effect on Mr Budd. When that Staff Handbook was issued, in September 1997, according to the Tribunal's findings in paragraphs 6 and 7 of their Decision, Mr Budd had emerged from a period of strain in 1996; a verbal warning had been removed from his records in March 1997 and he had had a successful appraisal in May 1997. We see no basis on which his continuing to work without protest could be regarded as an acceptance of any attempt by the employers, by issuing paragraph 2.5 of the 1997 Staff Handbook, to reduce his contractual notice period.
29. However, it is not strictly necessary for us to examine whether Mr Budd should be taken to have accepted an attempt by the employer so to vary his contract because we are firmly of the view that paragraph 2.5 of the Staff Handbook did not amount to such an attempt. The first sentence at paragraph 2.5 sets out a contractual minimum of four weeks' notice in the case of all staff; since on any view Mr Budd was entitled to a longer period, the statement of a minimum contractual notice period of four weeks did not affect him; it would only have been relevant to staff who had not been continuously employed for four years and, therefore, did not have a statutory entitlement to four weeks' notice and did not have a pre-existing contractual entitlement to such notice. That sentence did not seek to reduce or affect Mr Budd's contractual notice period in any way. Nor, in our judgment did the second sentence, which was the part of paragraph 2.5 on which the Tribunal and Mr Hobbs principally relied; that sentence simply sets out what was the statutory minimum period of notice to which staff were entitled after four years' service, consistently with Section 86 of the 1996 Act, ie. one additional week's notice for each complete year of service up to a maximum of 12 weeks. That sentence was also of no relevance to Mr Budd; he had a contractual entitlement to three months' notice irrespective of his length of service which paragraph 2.5 did not seek to reduce or affect. We do not accept Mr Hobbs' argument that the words "from the Company" should be taken to indicate that this sentence was a statement as to what contractual notice would be available in the future, so as to reduce, if accepted, any longer periods of contractual notice; that argument ignores the words "the statutory minimum is … "Accordingly, irrespective of any argument as to acceptance, in our judgment the 1997 Staff Handbook did not even constitute an offer to vary or an attempt by the employers to impose a variation of Mr Budd's contractual notice period. There is no call for any application of the contra proferentem rule relied upon by the Tribunal.
30. For these reasons the Tribunal's conclusion that there was a variation of Mr Budd's contractual notice period, with the result that Section 87(4) did not apply and Mr Budd was entitled to payment during a 12-week notice period, cannot stand; the employers' appeal must be allowed; and Mr Budd's claim for such payment must be dismissed.

The Cross Appeal

31. The Staff Handbook at paragraph 2.15 provided as follows:-

"All employees are contractually entitled to compensation for the termination or repudiation, i.e. breach, of their contract of employment, by reason of redundancy or substantive unilateral alteration, which does not arise from disciplinary cause.

Such compensation payments will be calculated in accordance with the following scale."

The scale which followed would have provided in Mr Budd's case, if he fell within the above words, for a payment of 57 weeks' pay, a sum of nearly £37,000.

32. The Tribunal rejected Mr Budd's claim that he should have received payment under paragraph 2.15 on the basis, set out at paragraph 21 of the Tribunal's decision, that he did not fall within the terms of that paragraph because his contract of employment had not been terminated by reason of redundancy or substantive unilateral alteration. Mr Hobbs put his case on the cross appeal with candour; he submitted that the true meaning of paragraph 2.15 was difficult to discern but that it could and should be interpreted as applying to a termination which did not arise from a disciplinary cause; there was no disciplinary cause in this case. He did not seek to sustain any criticism of the Tribunal's conclusion that there was no repudiatory breach on the part of the employers.
33. We agree with Mr Hobbs that paragraph 2.15 is very poorly drafted. However, in our judgment it was not intended to create a right to a substantial payment whenever an employee's contract of employment was terminated other than for disciplinary reasons and, seemingly, irrespective of the fairness or unfairness of the dismissal (if dismissal occurred at all – the words would appear to include consensual termination or resignation). It is to be noted that after the words "the termination or repudiation" what follows is "i.e." not "e.g.". Thus, the paragraph contemplates two situations only in which a payment under it should be made, namely redundancy and substantial unilateral alteration; the first of these situations would be one in which the contract of employment came to an end by termination by the employer, that is to say by ordinary dismissal; the second would be one in which the contract of employment came to an end by acceptance by the employee of the employer's repudiation i.e. constructive dismissal. No liability would arise if, in either case, the redundancy or unilateral alteration arose from a disciplinary cause (although it is difficult to see how a true redundancy could so arise). Our conclusion is that paragraph 2.15 cannot properly be construed as to create an obligation upon the employer to make a contractual payment under it on the specified scale to an employee who has been dismissed for reasons based on his health, as in the present case. The Tribunal were right to reject this aspect of Mr Budd's claim for the reasons which they gave.
34. In the light of our views as to the construction of paragraph 2.15, we need not consider whether or not that paragraph of the 1997 Staff Handbook had obtained contractual effect.
35. For these reasons the cross appeal is dismissed.