United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS KERRYSMITH (of Counsel) Instructed by: Messrs Thompsons Solicitors Arundel House 1 Furnival Square Sheffield South Yorkshire S1 4QL
For the Respondents	MR MARK SAHU (of Counsel) Instructed by: Messrs Halliwells LLP City Plaza Pinfold Street Sheffield South Yorkshire S1 2GH


 


SUMMARY

UNFAIR DISMISSAL: Dismissal

Dispute as to change in terms and conditions. Employer's letter referring to 'old contract' ending and re-engagement under 'new contract'. ET found no dismissal under s95(1)(a). Plainly wrong. Claimant appeal allowed.


 


HIS HONOUR JUDGE PETER CLARK

1. This appeal raises a short point of construction. Did the Respondent employer, Microblade Ltd, dismiss the Claimant employee, Mr Rogers, by a letter dated 17 April 2008 for the purposes of s95(1)(a) Employment Rights Act 1996 (ERA)? An Employment Tribunal sitting at Sheffield chaired by Employment Judge Shore held, by a judgment with reasons promulgated on 19 December 2008, that there had been no dismissal. Against that decision the Claimant appeals with the permission of Mr Justice Wilkie.

Background

2. The Claimant commenced employment with the Respondent, a business manufacturing cutting blades, as a machine operator on 12 July 2004. His letter of appointment signed by the then General Manager, Mr Lee, and dated 17 June 2004 stated:

"Dear Russell

Further to your interview of 16th June 2004. Please accept this letter as confirmation of your employment at Microblade Limited.

I can confirm that your start date will be Monday, 12th July 2004, and your shift hours are 6pm to 6am, Monday thru Thursday."

3. Following appointment the Claimant worked a permanent 12-hour night shift, 48 hours per week. Of these 39 hours were paid at ordinary time and nine hours at overtime rates.
4. In 2007 the Respondent wished to alter the hours of work of night shift workers. All agreed to this course except for Mr Rogers. He carried on as before.
5. In February 2008 Mr Egley took over as General Manager. He decided that, in the interests of economy, the night shift should be discontinued. He wrote to the night shift staff, including the Claimant, giving one month's notice regarding a change of shift pattern to meet the needs of the business. As from Monday 21 April all Night Shift Workers would be required to work either morning or afternoon shifts; that would require working five days a week.
6. Mr Rogers objected; he raised a grievance; a grievance meeting was held on 9 April; no resolution was then reached. On 16 April Mr Egley spoke with the Claimant. The Company minuted that meeting and records Mr Egley as saying, "If he (the Claimant) refused to sign the contract and move on to the new shift pattern I (Mr Egley) would have no alternative but to terminate his contract". The Claimant left to think about the matter.
7. On 17 April 2008 Mr Egley wrote to the Claimant in these terms:

"Dear Russell

Contract of Employment with Microblade Limited

I refer to our previous consultations and discussions in the above which commenced some five weeks ago when we notified you in our letter of 17th March that the night shift is being discontinued because of the needs of the business.

I enclose herewith your new Contract of Employment which sets out all your entitlements and confirms the new shift pattern. As you can see your continuity of employment will not be affected nor will any or your accrued benefits. Please ensure you sign a copy of the new Contract and leave it with the Personnel Department in order that you can commence work as planned at 2pm on Monday, 21st April 2008. Although your old Contract comes to an end on 21 April you are immediately reengaged under the new Contract whenever you sign it."

The enclosed contract document provided at clause 4.1 provision for working either the morning or afternoon shifts.

8. The Claimant responded by a formal written grievance dated 18 April in which he stated that he would:

"[…] work the new patterns under protest while commencing legal proceedings to recover losses at the Employment Tribunal."

9. In that letter he also refers specifically to the Respondent seeking to terminate his employment by the letter dated 17 April. That grievance was never adequately resolved through no fault of either party, so the Employment Tribunal found (paragraph 21).

The Employment Tribunal Decision

10. The Employment Tribunal record at paragraphs three and four of their Reasons that the parties referred them to three unreported EAT decisions. Mr Deeney, then appearing for the Respondent, cited YMCA Training v Stuart UKEAT/0332/06/ZT and Amey v Portsmouth Hospitals NHS Trust UKEAT/0130/08/JOJ. Mr Innes, appearing for the Claimant, referred to Darby and Still v Law Society of England and Wales UKEAT/0447/07/ZT
11. The Tribunal's self-direction as to the law is economically stated at paragraph 22 thus:

"The law on the definition of dismissal is contained within Section 95 Employment Rights Act 1996. The EAT cases referred to above contain a number of points relating to the construction of dismissal."

12. One of the grounds of appeal advanced by Miss Smith, now appearing on behalf of the Claimant, is that the Employment Tribunal's reasons were not Meek compliant. It would have been of interest to the reader of this Tribunal's reasons to learn which particular points relating to the construction of dismissal it had derived from those cases. The case of Stuart is not relied on as being material before us today but we have considered what was said in Amey and in Darby.
13. In Amey, the Claimant complained that her transfer from a band 7 to a band 6 post in the health service amounted to her dismissal, and that dismissal was unfair and amounted to a breach of contract. The Employment Tribunal found that she had not been dismissed by the Respondent Trust and her claims failed.
14. In giving the judgment of the EAT Keith J identified two ways in which the Claimant's case on dismissal was put below. Her primary case was that the Trust had expressly terminated her original contract of employment, alternatively it was said that her original contract should be treated as having been terminated by the Trust. That alternative way of putting the case relied on the principle to be found in Hogg v Dover College [1990] ICR 39 (EAT, Garland J presiding), namely whether a purported variation of the existing contract of employment so fundamentally altered the existing terms as to amount to a termination of the old contract followed by re-engagement under a new contract. The facts of Hogg were found to amount to such a fundamental alteration constituting dismissal; those in the later case of Alcan Extrusions Ltd v Yates [1996] IRLR 327 (EAT, Judge Colin Smith QC) did not (see Amey, paragraph 12).
15. In the event the EAT found in Amey that the employment tribunal was entitled to reject the Claimant's Hogg v Dover argument, but had failed to consider the Claimant's primary case, that the original contract had been expressly terminated by the Trust. That issue was remitted for further consideration by the employment tribunal.
16. An example of an express termination followed by re-engagement on different terms is to be found in Darby. There, the Claimant employees enjoyed the benefit of provision of a leased car as a term of their contracts. The employer wished to remove that benefit. The employees would not agree. The employment tribunal found that the Respondent concluded that the way to achieve the removal of the benefit was to dismiss the staff on notice and re-engage then on new terms and conditions of employment. The two refuseniks, Claimants before the employment tribunal, eventually signed up to the new terms and conditions, not including indefinite provision of a leased car, with reluctance. The tribunal concluded that the new conditions had been achieved by a process of variation rather than termination and re-engagement. There was no dismissal.
17. The EAT reversed the tribunal's decision. The relevant letter from the Respondent (see paragraph 23) stated:

"5 However, it would appear that the process of ensuring any variation was not imposed unilaterally has led to confusion for some staff. Given this confusion, the Society has decided that new notices of termination will be issued to relevant staff to expire on 30th April, with the offer of re-engagement commencing 1st May 2006 on the new terms incorporating the variation and with all other terms and conditions remaining unchanged.

6 The purpose of this letter is to give you notice of termination of your present terms of employment to expire on 30th April 2006, rather than on 16th March 2006, but that you will have the option to agree to re-engage on new contractual terms of employment commencing 1 May 2006 incorporating the withdrawal of your company car as it is not applicable to your job role/grade. All other terms and conditions of employment will remain the same."

The EAT held that in these circumstances the Claimants were dismissed and then re-engaged on fresh terms.

18. Against that background this Employment Tribunal expressed their conclusions as follows, under the heading 'Applying Facts to Law':

"23 The key point for the tribunal was the fact that the dispute between the respondent and the claimant around changing contracts and hours of work had been going on for over a year and had been dealt with within a grievance setting.

24 The tribunal therefore believes that the words used by Mr Egley in the letter of 17 April 2008 were not words of dismissal, but words attempting to amend Mr Rogers' terms and conditions of employment. Mr Rogers was not dismissed.

25 The tribunal accepts that the respondent did not wish to dismiss Mr Rogers. It had gone into lengthy discussions with him, but the night shift was finishing and there really seemed very little else that the respondent company could do in this case.

26 The tribunal does not attach any blame to Mr Rogers for taking the stand that he did, but the letter of 17 April 2008 cannot be construed as constituting a dismissal. This case is distinguished from the case of Darby and Still v The Law Society of England and Wales because of the words used in the letter.

27 Issues listed in paragraph 5.3 to 5.15 inclusive were not decided because the tribunal found that no dismissal had taken place."

The Appeal

19. Miss Smith submits based on high authority, see Mannai Investment Co. Ltd v Eagle Star Life Assurance Co. Ltd [1997] 2 WLR 945 HL and Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 HL, that the law excludes from the admissible background when construing contractual documents the previous negotiations of the parties, and that words in a document should be given their order and natural meaning.
20. Applying those principles to the construction of Mr Egley's letter to the Claimant of 17 April 2008, Mr Sahu draws our attention to an exchange between Judge Shore and the Claimant's representative below in argument, where the Judge offered the comment that, "All this is going to turn on what was said in the letter (of 17 April)".
21. Is that approach apparent from the Employment Tribunal's reasoning? Plainly, in our view, it is not. At paragraph 23 the Tribunal refer back to the grievance process during the preceding year and then at paragraph 24 say that, therefore, the Tribunal believes that the words used in the letter were not words of dismissal. That reasoning is flawed in two ways; first it is informed by the previous dealings between the parties and secondly it is a complete non sequiter. How does the fact of earlier grievance proceedings help determine the meaning of the words used by Mr Egley? We ask rhetorically.
22. In our judgment the words in the letter are pellucidly clear. The old contract comes to an end on 21 April and the Claimant will be immediately re-engaged under the new terms and conditions when he signs it. Those are express words of termination given their ordinary meaning coupled with an offer of re-engagement on new terms, which as Miss Smith correctly submits means re-engagement under a new contract, not a variation of the old contract.
23. The Employment Tribunal go on to say that the words used attempted to amend the Claimant's terms and conditions of employment. In our judgment the words used cannot remotely bear that meaning.
24. The Employment Tribunal, without condescending to particulars, then observe (paragraph 26) that the case of Darby can be distinguished because of the words used in the letter. We are quite unable to see any distinction. In Darby the words used were 'notice of termination of your present terms of employment' coupled with 'an option for the employees to re-engage on new contractual terms of employment'. In the present case the material words include:

"I enclose your new contract of employment […] although your old contract comes to an end on 21 April you are immediately re-engaged under your new contract whenever you sign it."

25. In our view there is no material distinction. Terminating the old contract means ending it; re-engagement under a new contract or new contractual terms means the same thing. We can see no basis for distinguishing the EAT approach in Darby and we respectfully agree with it and shall follow it.
26. Finally, Mr Sahu attempted to mount an argument that, in cross-examination below, the Claimant had accepted that he was not dismissed by the Respondent, contrary we think to what was said in his letter of 18 April. We have considered the passages in the agreed notes of evidence to which Mr Sahu has directed us and we are quite unable to construe the Claimant's answers in that way. The fact that he did not appeal the Respondent's decision and accepted that he should have done so does not equate to an admission that he was not dismissed. On the contrary, he said in cross-examination that he was dismissed on 21 April.

Disposal

27. We are quite satisfied that the Tribunal's conclusion on the dismissal question was plainly wrong. We shall allow this appeal and remit the matter to a fresh Employment Tribunal for consideration of the remaining issues identified at paragraphs 5.3 to 5.15 of this Tribunal's Reasons on the basis that the Claimant was dismissed by the Respondent in accordance with Section 95(1)(a) ERA with effect from 21 April 2008.