United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR THOMAS COGHLIN (of Counsel) Instructed by: Messrs Irwin Mitchell Solicitors 150 Holborn London EC1N 2NS
For the Respondent


 


JUDGE PETER CLARK

1. This is an appeal by Mr Moore and 9 others, Applicants before the Bury St Edmunds Employment Tribunal against the reserved decision of a Chairman, Mr I.S. Lamb, sitting alone, promulgated with Extended Reasons on 10 May 2002, dismissing their complaints of breach of contract bought against their former employer, the Respondent, Simoco Europe Ltd.
2. The Facts

The Respondent Company acquired the business in which the Applicants were employed as successor to the Phillips Group of companies in 1995. Prior to that transfer staff were employed on collectively agreed terms and conditions of employment, incorporated into their individual contracts of employment and contained in the Phillips Blue Book. The relevant edition is dated 9 July 1979. Their employment transferred to the Respondent on those terms. No point was taken below that there was any difference in the terms and conditions of employment as between the named Applicants.

3. The Blue Book contained a definition of a severance payment, the circumstances in which it became payable and the basis of payment dependent on age and length of service on the date of leaving the Phillips Group and when "additional severance payments" are provided in respect of employees who are between ages 55 and 60 at the time when they became eligible for payment.
4. The status of such payments was described in the Blue Book as follows:

"If eligibility for severance payments is changed by legislation or by national agreements, there will be no automatic change in the payments provided for in this agreement. This agreement cancels and supercedes all previous arrangements in the group concerning severance payments that are inconsistent with the provisions of this agreement."

5. Between 1996 and 1998 some 20 redundancy exercises were carried out in various Phillips' companies involving between 3000 and 5000 redundancies. In all cases an enhanced redundancy payment was made taking the form of 50 per cent of pay in lieu of notice payment, in addition to the payments provided for in the Blue Book.
6. On 8 February 1995, at a meeting between management and unions in respect of anticipated redundancies, the union side asked what redundancy payments were on offer and the answer was:

"The Phillips Blue Book plus half of notice period paid in lieu of notice whether you are asked to work it or not. This payment would be tax free. The 60 year scales no longer applied to women but the 65 year one does due to equal opportunities laws."

7. At a follow up meeting held on the 24 February 1995, attended by Mr Tucker, then a full time officer of the Applicant's trade union, MSF, who gave evidence to the Tribunal, the union note of the discussion read:

"Redundancy payments will be made as outlined in the Phillips Blue Book. On top of this figure is added half the employees notice period paid in lieu. This is paid even if the employee works their full notice period. Employees leaving without working notice will still be paid for the notice period."

8. In cross-examination Mr Tucker accepted that this agreement followed negotiations but his position was such that agreement amounted to confirmation of a previous practice which was continuing.
9. On 16 February 1997 at a union/management meeting concerning a fresh redundancy exercise the notes of meeting record, under the heading Any Other Business:

"It was agreed that leavers would be eligible for 50 per cent in lieu of notice even if they leave earlier than half their notice period."

10. The Chairman found (reasons paragraph 16) that in its context "agreed" meant confirmation of a position which had been assumed, rather than a matter which was raised, negotiated and then agreed.
11. At a meeting held on 8 April 1997 the Chairman detected a change in the position reflected in this note:

"Pay in lieu of notice. It was agreed that for the small number of employees required to work more than half of their notice period the pay in lieu element of their severance pay would be extended and still paid at their leaving date."

12. At a meeting held on 16 March 1999 in connection with a further purposed redundancy exercise the union minute read:

"Based on the business needs of each department, a leaving date will be agreed and formal notification from Human Resources will be given based on individual's contractual notice and the agreed practice of working 50 percent notice and 50 percent as pay in lieu."

13. Volunteers for redundancy were sought and in a letter to one employee giving a quotation on an application for voluntary redundancy, dated the 25 January 1999 (misdated 1991 at paragraph 18 of the reasons), Mrs Rolfe, Human Resources Manager who also gave evidence to the Tribunal said:

"You will note that the calculation comprises two elements, namely a severance payment and payment in lieu of half of your contractual notice. The severance pay element is based on your entitlement to a number of weeks pay according to age and length of service. (This figure includes both the statutory redundancy pay element and company's enhancement) a reference to the Blue Book terms. In addition it is standard company policy to compensate for pay in lieu of half of your contractual notice. This is based on the principle that, in normal circumstances, you will be required to work a minimum of half your contractual notice period from the date on which any request for voluntary redundancy is accepted though this is by negotiation with your line manager."

14. In evidence, Mrs Rolfe sought to resile from her use of the word 'policy' in that letter. The Chairman did not accept that evidence, but he did accept that it was not a consistent policy due to the change in wording over the years.
15. The Applicants' employment was terminated by reason of redundancy in 2001. They did not receive an additional sum equivalent to half their pay in lieu of notice on top of the enhanced redundancy payments and ordinary pay provided for in the Blue Book and ordinary pay in lieu of notice to which they were both contractually and statutorily entitled. It was that extra payment, claimed to be 1½ months pay in the case of Mr Moore, which represented the sum claimed in these proceedings by way of damages for breach of contract. The claims were resisted on the basis that such payment was discretionary and non-contractual. Notice was to be worked without an additional payment, according to the Respondent.
16. The Tribunal Decision

The Chairman directed himself as to the relevant authorities and in particular Quinn v Calder [1996] IRLR 126, a decision of the Scottish EAT, Lord Coulsfield presiding, in terms following the approach of the EAT in Duke v Reliance Systems Ltd [1982] IRLR 347 (Mr Justice Browne-Wilkinson presiding).

17. Having reviewed the cases and commentary in Harvey on Industrial Relations and Employment Law the Chairman made this observation, at paragraph 29 of his reasons:

"It follows from the reasons (in Quinn, paragraph 9) that I do not consider that this is truly a case in which the term can be implied through custom and practice. It is in reality a case in which I have to decide whether an express agreement should be inferred from the conduct, the word and deeds, of the parties over a period of years, during which from time to time there were groups of dismissals on the grounds of redundancy".

18. The Chairman went on to hold that the question for him was whether there was an enforceable contractual term that in addition to all other payments to the Applicants' there was an entitlement to a payment equivalent to half the total pay for the period of notice. He concluded that there was not; first because the different formulations of the additional payment over the years pointed to a lack of certainty and secondly because the evidence did not support a finding that the employer intended to be contractually bound by the arrangement. Applying the law in Quinn he was unable to accept that the alleged contractual term was made out.
19. The Appeal

In this appeal Mr Coghlin appears on behalf of the Applicants, as he did below. The Respondent has taken no part in the appeal and indeed has been debarred from doing so. We have therefore heard no argument in support of the Tribunal decision.

20. Having considered the submissions made by Mr Coghlin our first concern is this. The Chairman appears to have excluded consideration of the question as to whether there was to be implied into the Applicant's contracts of employment the term alleged, namely that on dismissal for redundancy the employee would receive, in addition to an enhanced redundancy payment in accordance with the Blue Book and his contractual notice pay an additional payment, equivalent to one half of his notice pay entitlement, by custom and practice. That is how we understand the Chairman's analysis of Quinn in the passage earlier cited from paragraph 29 of his reasons.
21. He believed that the question was whether express agreement as to such a term could be found. We say that by reference to the distinction which he makes, at paragraph 25 between express agreement and custom and practice. We take the view that Quinn was concerned with the implication of a term by custom and practice.
22. However, even assuming that he correctly understood the guidance in Quinn there is a further difficulty as submitted by Mr Coghlin. It is that the Chairman did not give adequate reasons for his conclusions in paragraph 32 of his reasons -

(a) that the express or implied agreement alleged lacked certainty and

(b) that the evidence did not support the conclusion in that the employers intended to became contractually bound by the arrangement. In other words, he submits the Chairman's reasons were not 'Meek Compliant', to borrow the expression coined by Lord Justice Sedley in Tran v Greenwich Vietnam Community [2002] IRLR 735, paragraph 17.

23. We accept that submission for this reason. It was an important part of the Applicant's case that the term relied upon fell to be implied into the employees' contracts before the relevant transfer to the Respondent in 1995. That contention was based on Mr Tucker's evidence, accepted by the Chairman at paragraph 10 of his reasons. Although those facts; that so far as Mr Tucker was aware the 50 percent uplift had occurred in every one of 20 earlier redundancy exercises involving between 3-5,000 Phillips employees is not conclusive of there being a contractual term to that effect, it is plainly a relevant factor to be taken into account. There is no indication in paragraph 32 that the Chairman did take it into account; on the contrary, the indication is that he concentrated only on events after 1995 by his allusion to "some differences of the expression of the alleged entitlement over the years." On the facts as found that could only be a reference to 1997 onwards. When he later goes on to say that the evidence does not support the conclusion that the employers intended to become contractually bound by the arrangement, it is not clear to us whether he is there including the evidence given by Mr Tucker as to the practice before 1995.
24. It is this lacuna in the reasoning process which leads us to conclude that this decision is not Meek compliant. We did not hear the evidence and are not a tribunal of fact. In these circumstances we have concluded that the proper course is to allow the appeal and remit the matter for rehearing.
25. The case was originally heard by a Chairman sitting alone. He was perfectly entitled to sit without members and did so without objection (reasons paragraph 1). In these circumstances I could have heard this appeal sitting alone. Employment Tribunals Act 1996 section 28(4). However, I directed that it would be appropriate to sit with members. This was not a case of pure construction of an express contractual term; it seemed to me to be a matter in which the industrial experience of the lay members would be of value, as has proved to be the case.
26. In these circumstances we accede to Mr Coghlin's further application that on remission the case be heard by a different Chairman, sitting with lay members, and we so direct.