United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS P MULLAN (a Representative on behalf of the Appellant))
For the Respondent	No appearance or representation by or on behalf of the Respondent


 


SUMMARY

Contract of Employment: Implied term/variation/construction of term

Matter regarding breach of contract, anticipatory breach and claim for damages. The Employment Tribunal Judgment set aside and Mr Toon's claim for breach of contract dismissed.

HIS HONOUR JUDGE WILKIE

Introduction

1. This is an appeal by cScape Strategic Internet Services Limited against a decision of the Employment Tribunal dated 22 October 2007, the Chairman sitting alone, which gave judgment to the Claimant, Mr K Toon, in the sum of £2,564 gross as damages for breach of contract of employment. Before the Employment Tribunal the Claimant did not attend. The Appellant, the Respondent before the Tribunal, was represented by its Account Director. The Respondent to this appeal, the Claimant, has not attended the hearing of the appeal, but submitted a written response.

The Facts

2. The facts of the matter were short and were set out by the Chairman in her reasoned decision. On 15 May 2007 the Claimant and the Respondent signed the contract of employment which was intended to come into effect on 23 July 2007, some two months plus after the date the agreement was reached. It was for him to commence employment with the Respondent as from 23 July 2007.
3. The contract had two clauses providing for termination. Clause 5.1 concerned a trial period and it read as follows:

"The first 3 months of your employment will be on a trial basis and the Company reserves the right to terminate your employment either during or at the end of that period on 1 week's notice."

4. Clause 13 of the contract also provided for notice. 13.1 provided as follows:

"The period of notice to be given in writing by the Company to terminate your employment is 1 month if you have been employed for less than 5 years and thereafter 1 week's notice per year of continuous employment up to a maximum of 12 weeks' notice and after 12 years' continuous employment provided that nothing in this clause shall preclude the Company from terminating your employment without notice in the event of gross misconduct. The Company reserves the right to pay net salary (ie after normal PAYE deductions) in lieu of notice."

5. Unhappily the Appellant decided that it was not in a position to honour the contract of employment by engaging Mr Toon as from 23 July, and on 24 May wrote him a letter, including the following:

"I am writing to confirm that we have to withdraw our offer of employment to you. This is, as I explained over the phone, due to unforeseen circumstances unfortunately beyond our control. We have concluded that we are unable to offer effective support to ensure a viable Birmingham office. I am really sorry about this. We will honour the contract by remunerating you with a week's pay. This will be sent to you shortly."

6. £769.25, which represents one week's gross pay, was sent to Mr Toon shortly thereafter. The sum awarded by the Tribunal was the balance of one month's pay. The decision of the Tribunal is succinctly put in paragraph 5 of the decision which reads as follows:

"The issue for me is which of the two notice clauses applies. I take the wording literally. By clause 13.1 Mr Toon is entitled to one month's notice. The issue is whether Clause 5.1 applies. In reading that clause it says the first 3 months of your employment will be on a trial basis and the company reserves the right to terminate your employment either during or at the end of that period on one week's notice. Mr Toon's employment was not terminated during the first 3 months which would have started on 23 July and was not terminated either during or at the end of that 3 month period. In those circumstances the provisions of Clause 13.1 must apply and Mr Toon is entitled to one month's notice."

7. In my judgment the Tribunal fundamentally erred in law in coming to that conclusion. What has happened in this case is that the Appellant, by its letter of 24 May, has committed an anticipatory breach of contract, that is to say, it expressed a firm intention in advance of performance of the contract that it would not perform the contract by engaging Mr Toon as from 23 July. It was announcing its intended breach before the point at which the time for performance arose. Mr Toon was in a position to accept that anticipatory breach and to claim damages.
8. In assessing the amount of damages it is trite law that the Court must assume that the party in breach would have performed the contract in the way most advantageous to it. Under this contract it was open to the employer by virtue of clause 5.1 to have given one week's notice of termination of the contract on the first day of its coming into effect.
9. Therefore the Court must assume that the Appellant would have performed the contract in that way, thereby limiting the damages for breach of contract to payment for the one week's notice which it would have been obliged to give under clause 5.1. Accordingly, the Appellant has already paid Mr Toon in full in relation to the damages for breach of contract.
10. Furthermore, it had reserved to itself under clause 5.1 the right to pay that sum rather than to have Mr Toon serve that period of notice. In the circumstances, therefore, the Tribunal Chairman erred in law in assuming that the Appellant would not have performed or would not have been able to perform the contract in that advantageous way, but would have been bound to terminate by giving one month's notice.

Conclusion

11. Therefore this appeal succeeds. The judgment of the Tribunal is overturned and Mr Toon's claim for damages for breach of contract is dismissed.