United Kingdom House of Lords Decisions

Parliamentary Archives,
HL/PO/JU/4/3/1182

HOUSE OF LORDS

FITZGERALD

v.
HALL RUSSELL AND COMPANY LIMITED

Lord Reid
Lord Morris of Borth-y-Gest
Lord Guest
Lord Upjohn
Lord Wilberforce







Lord Reid

MY LORDS,

For the reasons given by my noble and learned friend, Lord Upjohn, I
would allow this appeal and remit the case to the Tribunal.

Lord Morris of Borth-y-Gest

MY LORDS,

On the 8th December, 1967, the Appellant was dismissed by the
Respondents, his employers, by reason of redundancy. He was entitled to
a redundancy payment. An issue arose as to the period of continuous
employment by reference to which his payment was to be calculated. It
was held by the Industrial Tribunal that his qualifying service for a
redundancy payment commenced on the 21st January, 1963. He had,
however, been employed by the Respondents prior to that date. He was
employed by them as a welder from the 31st July, 1958. He contended
that upon a proper application of the law relating to redundancy payments
his qualifying service ought to have been held to begin from that date.
But there had been an interruption in his employment which lasted from the
28th November, 1962, to the 21st January, 1963, (a period of nearly eight
weeks).

The question for the decision of the Tribunal was whether that period
constituted a break in the Appellant's service. The Tribunal held that it
did. The Appellant's appeal was refused by their Lordships of the First
Division of the Court of Session from whose Interlocutor the present appeal
is brought. The principal question of law which arises concerns the
construction of certain words in the Contracts of Employment Act, 1963,
which Act is incorporated by reference in the Redundancy Payments Act,
1965.

By virtue of section 1 (1) of the 1965 Act a redundancy payment is to
he calculated in accordance with Schedule 1 to the Act. The subsection
is in the following terms:

" 1. (1) Where on or after the appointed day an employee who has
" been continuously employed for the requisite period—

" (a) is dismissed by his employer by reason of redundancy, or

" (b) is laid off or kept on short-time to the extent specified in sub-
" section (1) of section 6 of this Act and complies with the require-
" ments of that section,

" then, subject to the following provisions of this Part of this Act,
" the employer shall be liable to pay to him a sum (in this Act referred
" to as a ' redundancy payment') calculated in accordance with
" Schedule 1 to this Act."

The terms of paragraph 1 (1) of Schedule 1 are as follows:

" 1. (1) The amount of a redundancy payment to which an employee
" is entitled in any case shall, subject to the following provisions of
" this Schedule, be calculated by reference to the period, ending with
" the relevant date, during which he has been continuously employed;
" and for the purposes of this Schedule that period shall be computed



2

" in accordance with Schedule 1 to the Contracts of Employment Act
" 1963, but as if—

" (a) any week which began before the employee attained the age of

" eighteen were excluded, and

" (b) the continuity of an employee's period of employment were
" not broken by a week which does not count under that Schedule,
" if the whole or part of that week falls within any such interval
" as is referred to in section 8(3) of this Act."

The provisions of section 8 subsections (1) and (2) of the 1965 Act are
as follows:

" 8. (1) For the purposes of section 1 (1) of this Act the requisite
" period is the period of one hundred and four weeks ending with the
" relevant date, excluding any week which began before the employee
" attained the age of eighteen.

" (2) Subject to the preceding subsection, and to the following provi-
" sions of this section, the provisions of Schedule 1 to the Contracts of
" Employment Act 1963 (computation of period of employment), and
" the provisions of any order for the time being in force under section 7
" of that Act in so far as it modifies that Schedule, shall have effect
" for the purposes of this Part of this Act in determining whether an
" employee has been continuously employed for the requisite period."

As it was common ground that after his dismissal on the 8th December,
1967, the Appellant became entitled to a redundancy payment the only
issue was as to its amount: that issue in turn depended upon the length of the
period of his continuous employment. By reason of the provisions of section
8 (2) of the 1965 Act the provisions of Schedule 1 to the Contracts of
Employment Act, 1963, had effect in determining that period. One of
the objects of that Act is to require a minimum period of notice to terminate
the employment of those who have been employed for a qualifying period.
Under the Act the period of notice to which an employee is entitled before
his employment is determined has relation to the continuity of the period of
his employment. There are varying periods of notice. Thus, the notice
required to be given by an employer to a person who has been continuously
employed for twenty-six weeks or more must be not less than a week if the
period of " continuous employment" is less than two years: or not less than
two weeks if the period is two years or more but less than five: or not
less than four weeks if the period is five years or more.

Provisions were made, by Schedule 1 of the Act, for ascertaining the length
of an employee's period of employment and for determining whether that
period of employment had been continuous. When those provisions are
looked at it will be seen that their effect, doubtless to produce results that
would seem only reasonable and fair, is that some periods of employment
are to be regarded as having been continuous, though they were not in fact
continuous. Those provisions are in turn picked up by the 1965 Act and the
period of continuous employment for the purpose of calculating redundancy
payments is computed in accordance with the provisions of Schedule 1 to
the 1963 Act.

Under paragraph 3 of that Schedule under the heading " normal working
weeks " it is provided that any week in which the employee is employed
for twenty-one hours or more " shall count" in computing a period of
employment. There is a general provision (see paragraph 2) to the effect that
(except as otherwise provided) any week which does not " count" under
paragraphs 3 to 6 breaks the continuity of the period of employment.

Under the heading of " Employment governed by contract" paragraph 4
provides that if in a week an employee's relations with his employer are
governed by a contract of employment which normally involves employment
for twenty-one or more hours weekly such week shall " count".

The next paragraph (5) has the contrasting heading " Periods in which
" there is no contract of employment". It provides as follows:

" 5. (1) If in any week the employee is, for the whole or part of the
" week—

" (a) incapable of work in consequence of sickness or injury, or

3

" (b) absent from work on account of a temporary cessation of work,
"or

" (c) absent from work in circumstances such that, by arrangement
" or custom, he is regarded as continuing in the employment of his
" employer for all or any purposes,

" that week shall, notwithstanding that it does not fall under paragraph 3
" or paragraph 4 of this Schedule, count as a period of employment.

" (2) Not more than twenty-six weeks shall count under paragraph (a)
" of the foregoing sub-paragraph between any two periods falling under
" paragraphs 3 and 4 of this Schedule.

" (3) Paragraph (b) of sub-paragraph (1) of this paragraph shall not
" apply to a temporary cessation of work on account of a strike in which
" the employee takes part."

The general effect of this paragraph is that some weeks may " count" even
though during them the employee was not working and had no contract of
employment. Such weeks that " count" will not, therefore, for the purposes
of the Act break " the continuity of the period of employment ". The whole
scheme of these provisions would seem to me to be designed in the interests
of employees so that certain de facto breaks in the continuity of employment
are to be ignored. In approaching problems of construction of words or
phrases this consideration ought to be had in mind.

The findings of fact of the Tribunal include a finding that the Appellant
was dismissed on the 28th November, 1962, after being employed as a welder
from the 31st July, 1958. A new contract of employment began on the
21st January, 1963, and was ended on the 8th December, 1967. From the
first date to the last was a period of over 9 years and 4 months. It was,
however, not continuous because there was in fact an interruption of nearly
eight weeks. The practical issue that arose was whether the Appellant's
redundancy payment should be calculated on the basis that he had served his
employers for over nine years or on the basis that he had served them for less
than five years.

Was the period of just under eight weeks to " count " or was it not? That
was the issue. During those weeks the Appellant was not employed. So
those weeks did not fall under paragraph 3 of Schedule 1 (of the 1963
Act). Nor during those weeks were the Appellant's relations " governed
" by a contract of employment". So those weeks did not fall under para-
graph 4 of the Schedule. Those weeks were a period in which there was
" no contract of employment" and could fall under paragraph 5. There
was no question of incapacity in consequence of sickness or injury (see para-
graph 5 (1) (a)). There was no question of being absent from work in the
circumstances referred to in paragraph 5 (1) (c). So the whole question is
whether the eight weeks are within the following words: " If in any week
" the employee is, for the whole or part of the week . . . absent from work
" on account of a temporary cessation of work . . . that week shall, not-
" withstanding that it does not fall under paragraph 3 or paragraph 4 of this
" Schedule, count as a period of employment."

The facts concerning the eight weeks are set out in the decision of the
Tribunal. The Respondents are shipbuilders. Because there was a shortage
of work they reduced their labour force between June, 1962, and December,
1962. In June, 1962, the force was 805: in December, 1962. it was 440.
So in all 365 men were dismissed. Of these 78 were welders. The Appellant
was only dismissed towards the end of the period. He was one of a group
of 52 men who were dismissed on the 28th November. He was one of 20
out of that number who were welders. A document then sent by the
Respondents to the Ministry of Labour stated that the dismissals were due to
" the present shortage of work ". The decision of the Tribunal records that
the Appellant stated that the foreman who had given him notice had assured
him and the other discharged men that they would " soon be back ": the
decision adds " but there was no corroboration of this ". But if the Tribunal
accepted the Appellant's evidence that the foreman had made some such
remark then no corroboration of the Appellant was necessary before treating
the evidence as evidence which was relevant to the issue before the Tribunal.

301515 A 2

4

It is clear that the Appellant was dismissed on the 28th November, 1962.
He was then free to take up other employment. But the facts as found
suggest that it was the hope of the Appellant that he would soon be em-
ployed again and that it was the hope of the Respondents that they would
soon be able to employ him again. The mutual hopes were soon fulfilled.
The Appellant had been employed by the Respondents as a welder from
July, 1958, to November, 1962: after an interval of nearly eight weeks he
was back again. Had he been "absent from work on account of a
" temporary cessation of work "? Unfortunately the decision of the Tribunal
hardly deals with the problem. Their decision was as follows: " We
" concluded that the Applicant had been dismissed by reason of redundancy
" on 28th November, 1962 and that his service with the Respondents had
" been broken on that date ". Undoubtedly he was dismissed: undoubtedly
his service was broken. The whole question was whether, notwithstanding
those circumstances, the eight weeks are to " count as a period of
" employment". A question of law is involved as to whether on the facts
as found it could be held that in those weeks the Appellant was absent from
work " on account of a temporary cessation of work ".

The words " temporary cessation of work " are capable of more than one
meaning. In cases falling within paragraph 5 of Schedule 1 the words fall
to be considered in cases where someone after dismissal has been re-employed.
After re-employment there will then by a process of looking back. Looking
back at a period which was an interval between two periods of employment
the question has to be asked—Was the employee absent from work on
account of a temporary cessation of work? The word " temporary " will
involve questions of degree. The words " cessation of work " may be
differently regarded according as to whether they are thought to refer to the
employee's work or the employer's work. If over a period of years an
employer manufactures a particular article but because of a temporary
shortage of demand for the article he dismisses one who for years has
been an employee but then re-employs him after a period which could
properly be regarded as " temporary " there could be two points of view.
The employer could at some later time say that his work had not at any
moment ceased. The employee could at some later time say that he had
worked for his employer for many years save only for a period of a few
weeks during which he was absent from work on account of a temporary
cessation of work.

It is, in my view, important to note that it is the position of the
" employee " that is being considered. So the enquiry becomes—why was he
absent from work? If he was, say, one of a hundred employees there could
be a short period when for some reason the employer had no work for any
of them or there could be a short period when for some reason the employer
had no work for him. From his point of view and when considering why he
was absent and whether for him the short period ought to break his con-
tinuity of employment or ought to " count" it does not seem to me that the
position of his work-mates ought to be decisive. If there was a temporary
cessation of work for him and if because of that he was absent it seems to
me that it would be just as right to say that he was absent from work on
account of a temporary cessation of work as it would be to say so if all his
work-mates were in like situation.

The judgments of their Lordships of the First Division proceeded on the
view that " cessation of work " denotes a cessation by the employer of his
work in the sense that there must be a closing down of his business or of
the part of it in which the employee worked. The Lord President put the
matter succinctly. He said that "to constitute a cessation the business
" must be closed down, or at least the part of it in which the employee is
" involved must cease to operate". To the same effect were the words
of Lord Guthrie, viz. "In my opinion the words 'temporary cessation of
" ' work' mean a temporary stoppage of the operations of the employer
" either in whole or in part". Lord Cameron was of the view that there
must be "a period of absence in which the cause of the absence was
" cessation of the employer's work—not merely a falling off in work or in



5

" the requirement for workmen ". Their Lordships preferred the approach
indicated in the Northern Ireland case of Monarch Electric Ltd. v. Mclntyre
to that indicated in Hunter v. Smith's Dock Co. Ltd. [1968] 1 W.L.R. 1865.
My Lords, I find myself in agreement with the approach in the judgments
in the latter case. I agree with Lord Parker C.J. when he said that though
sub-paragraph 5 would extend to the cessation of a particular department
it goes further and is dealing with the cessation of the job of the employee
who is dismissed. " It is dealing with his absence from his job on account
" of the cessation of that job ". Winn L.J. shared that view when he said
" for my own part I do not think that this test under 5 (1)(b) is only satisfied
" where it can be shown that there has been a cessation of all work, or all
" work of any one department, formerly carried out at a place where the
" employee was employed."

My Lords, it is important, in my view, to remember that the words
being considered are the words used in their context in the Contracts of
Employment Act, 1963. Section 1 subsection (5) provides that Schedule 1
to the Act applies for ascertaining the length of an employee's period of
employment and whether it has been continuous. The very purpose of
paragraph 5, as I have earlier indicated, is to make certain weeks count in
the employee's favour though he was away from work and had no contract
of employment. The build-up of the period of " continuous employment"
(upon the length of which the length of notice to terminate will depend
is arranged in the interests of employees. The situation to be contemplated
is that there will have been employment, then dismissal, and then (after an
interval) re-employment. Then if at some later date it is desired to give a
notice to terminate the contract of employment the question will have to
be asked—Why in that period between the two contracts was the employee
absent from work? If it was a period during which he would have been at
work but for the fact that his employer could not find work for him but
which period ended when the employer did find work for him, I consider
that it could properly be said that he was absent from work on account of
a cessation of work even though the employer's business or the particular
department of it had not completely closed down. Then if in the light
of all the facts and circumstances (on a backward look as from the date
when it is being decided what notice must be given) it could be said that
such cessation of work was only " temporary ", then by operation of law
the period when in fact there was no working and no contract would
" count " as part of a period of continuous employment.

For the reasons which I have given I consider that the Tribunal erred
in law in holding that the Appellant's qualifying period commenced on the
21st January, 1963. They should have held on the facts as found that
between the 28th November, 1962, and the 21st January, 1963, the Appellant
was absent from work on account of a cessation of work. As their approach,
leading to a wrong conclusion, was, in my view, erroneous they did not have
to give consideration to the word " temporary ". We were invited to take
the view that had there been a correct approach on the part of the Tribunal
and had they considered the word " temporary " they could only, on the
facts as found by them, have come to the one conclusion, viz., that the
cessation of work was in this case a " temporary cessation of work ". While
there is much to commend this view, as appeal in this case must relate to
questions of law, I think that the matter will have to be remitted to the
Tribunal. If they decide that the cessation of work was " temporary " then
they will have to determine the amount of the redundancy payment.

In determining whether a cessation of work has been temporary the guid-
ance given by Lord Parker C.J. in Hunter v. Smith's Dock Co. Ltd. should
in my view, be followed. If in reference to the time when a cessation of work
begins there is evidence showing that both the employer and the employee
expected and anticipated that the cessation would only be for a relatively
short time, that would be very relevant evidence in considering at a later
time whether there had been a temporary cessation of work. But the
absence of any such evidence would certainly not be decisive. It is to be
remembered that there must be a looking back process and that it is at
some time subsequent to re-engagement and in reference to a past period of



6

absence from work that the question is raised whether the employee was
absent from work on account of a temporary cessation of work. All relevant
evidence and all relevant factors will have to be taken into account. Ques-
tions of fact will arise. The duration of one period relative to or in relation
to the antecedent and subsequent periods will be one relevant factor.

An argument was advanced which had as its foundation the concluding
words of subsection (1) of paragraph 1 of the Schedule to the 1965 Act.
This argument was not submitted to the First Division and so is not dealt
with in the judgments. Those concluding words of subsection (1) show
that in applying Schedule 1 of the 1963 Act the continuity of an employee's
period of employment is not to be broken by a week which does not count
under that Schedule if the week (or part of it) " falls within any such interval
" as is referred to in section 8 (3)" of the 1965 Act. Section 8 (3) is in the
following terms:

" 8. (3) Whereby virtue of section 3 (2) of this Act an employee is
" treated as not having been dismissed by reason of a renewal or re-
" engagement taking effect after an interval, then, in determining for
" the purposes of section 1 (1) of this Act whether he has been continu-
" ously employed for the requisite period, the period of that interval shall
" count as a period of employment, notwithstanding that it does not
" count under that Schedule."

Section 3 of the 1965 Act is concerned with the circumstances under which
an employee is to be taken to be dismissed by his employer. Section 3 (2)
provides that in certain circumstances an employee shall not be taken to be
dismissed. Thus, by section 3 (2) if an employee's contract of employment is
renewed or if he is re-engaged by his employer and the renewal or re-engage-
ment is in pursuance of an offer in writing made by his employer before
the ending of his employment under the previous contract and takes effect
either immediately on the ending of that employment or after an interval of
rot more than four weeks thereafter the employee is not to be taken to be
dismissed. It is contended that if there were such a renewal or re-engagement
taking effect after an interval of up to four weeks the provisions of section
8 (3) would operate with the result that that interval would " count as a period
" of employment notwithstanding that it does not count" under Schedule 1
to the 1963 Act. Hence it is argued that the 1965 Act proceeded on the
basis that a period between a dismissal and a re-engagement would not count
under and would not be covered by the provisions of the 1963 Act.

My Lords, in my view this new and somewhat elusive contention can have
no greater force than to suggest that Parliament in 1965 took a certain view
as to the construction of the 1963 Act. It may be that section 8 (3) was
merely designed to ensure that the four week interval referred to in section
3 (2) should not be regarded as breaking a period of employment. If, how-
ever, section 8 (3) does seem to express an interpretation of the 1963 Act it
certainly does not amend the 1963 Act and the subsection cannot affect or
alter the correct interpretation of that Act.

For the reasons which I have given I would allow the appeal and remit
the matter to the Tribunal so that if they hold that the Appellant's absence
from work was on account of a cessation of work which was temporary
they should assess the amount of the redundancy payment.

Lord Guest

MY LORDS,

The Redundancy Payments Act, 1965, provides for a payment (known as
a redundancy payment) by an employer to an employee who has been con-
tinuously employed for the requisite period (as subsequently defined) where
the employee has been dismissed by his employer by reason of redundancy.
There are complicated provisions as to what constitutes dismissal for the
purposes of the Act.

Section 8 contains provisions for computing the requisite period for con-
tinuous employment. The requisite period is 104 weeks and by subsection (2)
Schedule 1 of the Contracts of Employment Act, 1963, is to be the yardstick



7

for determining whether the employee has been continuously employed. This
Act was for the purpose of determining the rights of employer and employee
to a minimum period of notice. And in that connection it was necessary to
define what were continuous periods of employment and this was done by
the First Schedule. It is only necessary to quote paragraphs 2 to 5:

" (2) Except so far as otherwise provided by the following provisions
" of this Schedule, any week which does not count under paragraphs 3
" to 6 of this Schedule breaks the continuity of the period of employ-
" ment.

" Normal working weeks.

" (3) Any week in which the employee is employed for twenty-one
" hours or more shall count in computing a period of employment.

" Employment governed by contract.

" (4) Any week during the whole or part of which the employee's
" relations with the employer are governed by a contract of employment
" which normally involves employment for twenty-one hours or more
" weekly shall count in computing a period of employment.

" Periods in which there is no contract of employment.

" (5)—(i) if in any week the employee is, for the whole or part of the
" week—

" (a) incapable of work in consequence of sickness or injury, or
" (b) absent from work on account of a temporary cessation of work,
"or

" (c) absent from work in circumstances such that, by arrangement
" or custom, he is regarded as continuing in the employment of his
" employer for all or any purposes,

" that week shall, notwithstanding that it does not fall under paragraph 3
" or paragraph 4 of this Schedule, count as a period of employment.

" (2) Not more than twenty-six weeks shall count under paragraph (a)
" of the foregoing sub-paragraph between any two periods falling under
" paragraphs 3 and 4 of this Schedule.

" (3) Paragraph (b) of sub-paragraph (1) of this paragraph shall not
" apply to a temporary cessation of work on account of a strike in
" which the employee takes part."

I now turn to the facts of this case. The Appellant was employed as a
welder by the Respondents from 31st July, 1958, to 28th November, 1962,
and again from 21st January, 1963, to 8th December, 1967. He was given
a redundancy payment based on his services from 21st January, 1963, about
which no question arises. The question is whether the period from 28th
November, 1962, to 21st January, 1963, breaks the continuity of service.

The Stated Case stated the following facts:

" The Respondents' labour force was reduced between June and
" December 1962 from 805 to 440, the number of dismissed men (365)
" including 78 welders. This reduction was caused by shortage of work.
" On 28th November 1962 the Respondents discharged 51 men,
" including 20 welders, and on that day a list of the men concerned
" was sent by the Respondents to the Ministry of Labour. This
" document slated that ' due to the present shortage of work the
" ' following list of employees will be dismissed tonight'. Similar lists
" were sent by the Respondents to the Ministry of Labour on various
" other dates before and after 28th November, 1962. The Applicant,
" in common with the other discharged men, was handed his National
" Insurance Card and his Income Tax Form P.45 and his personal
" record card was marked to the effect that the reason for his leaving
" was that he was redundant. He stated that the foreman who had given
" him notice had assured him and the other discharged men that they
" would soon be back but there was no corrobation of this. The
" Applicant reported to the Employment Exchange of the Ministry of
" Labour, and, according to him, he was classed as a ' Hall Russell



8

" 'shipbuilding employee' and his card marked ' T.S.' (temporarily
" suspended). He was unemployed until 21st January, 1963, when he
" was re-engaged by the Respondents. Two fellow employees gave
" similar evidence but all admitted that they were free to take up other
" employment had any been offered to them. One, in fact, took on a
" job as a taxi driver for about nine months before rejoining the
" Respondents as a welder."

The Industrial Tribunal held that the Appellant was dismissed for
redundancy on 28th November, 1962, and that his qualifying service for
redundancy payment commenced on 21st January, 1963. An appeal to the
First Division of the Court of Session failed.

The Respondents' principal argument was that by reference to certain
provisions of the 1965 Act, namely, sections 3(2) and 8(2), and having regard
to the terms of paragraph 5(1) of the First Schedule to the 1963 Act, an
employee who had been dismissed from his employment for redundancy,
as the Appellant had been, could not qualify for the concessions afforded
by paragraph 5(1)(a). Although I found Mr. Ross' argument for the
Respondents attractive I do not feel able to give effect to it. It would
not be safe, in my opinion, to interpret the First Schedule to the 1963 Act
upon the assumption as to what Parliament, when it enacted the 1965 Act,
thought the First Schedule meant. The fact that an employee is dismissed
is not necessarily, therefore, fatal to the claim.

But the period of the Appellant's continuity of employment is broken
unless within the meaning of paragraph 5(l)(b) he was "absent from work
" on account of a temporary cessation of work ". The contest between the
parties is whether " cessation of work " means, on the one hand, cessation of
the employee's work or cessation of work for the employee or whether, on
the other hand, it means " cessation of the employers' work ". The latter is
the view which appealed to the Court of Session following, as they did, the
decision of the Court of Appeal in Northern Ireland in Monarch Electric
Limited v. McIntyre (18th January, 1968. unreported).

The former view was taken by the Divisional Court in England in Hunter
v. Smith's Dock Co. Ltd. [1968] 1 W.L.R. 1865 and Newsham v. Dunlop
Textiles Limited [1968] I.T.R. 274.

As a matter of pure construction of paragraph 5(1))(b) I find it difficult to
read the paragraph as meaning " the cessation of the employee's work ".
This would cover any case where the employee was simply absent from work.
If this had been the meaning it was unnecessary to add " on account of
temporary cessation of work ". The paragraph might have read " if the
" employee is temporarily absent from work ". In my view, work must have
a wider signification than simply the employee's work. This is made clear
by reference to paragraph 5(3) which speaks of " a temporary cessation of
" work on account of a strike in which the employee has taken part".
Work in this context cannot be limited to the employee's work but clearly
refers to a strike which causes a temporary cessation of the employers'
work in the factory.

On the facts the First Division have held that he was not " absent from
" work on account of a temporary cessation of work." The work was
diminished ; it did not cease. It went on on a reduced scale. In saying this
I am merely repeating the reasons given by the judges of the First Division
who, in my view, rightly rejected the Appellant's appeal.

Upon this view it becomes unnecessary to consider whether in the circum-
stances the cessation was " temporary ".

For my part I would dismiss the appeal.

Lord Upjohn

MY LORDS,

The Respondents are shipbuilders of Aberdeen who employed a substan-
tial labour force including a number of welders, among them the Appellant
who had been employed by them since 31st July, 1958. Owing to shortage



9

of work between June and December, 1962, the Respondents made pro-
gressive reductions of their labour force from 805 to 440 including the
dismissal of 78 welders. On the 28th November, 1962, the Appellant (to-
gether with 51 other men, including 19 other welders) was dismissed for
this reason. The Appellant said that when dismissed he was told by the
foreman that he would soon be back. There is no doubt, however, that
his employment was determined and he was perfectly free to take any
other employment, and at least one of his fellow ex-employees did so and
became a taxi-driver for about nine months before he rejoined the
Respondents. The Appellant, however, registered with the Employment
Exchange where his card was marked T.S. (temporarily suspended), a purely
administrative procedure by the Ministry of Labour, and he remained unem-
ployed until re-engaged by the Respondents as a welder on the 21st January,
1963. The Appellant was again dismissed by the Respondents in December,
1967, admittedly by reason of redundancy, and he has made a claim against
the Respondents for a redundancy payment under the Redundancy Payments
Act, 1965, (the 1965 Act). By virtue of sections 1 and 8 of the 1965 Act,
in order to obtain a redundancy payment the Appellant must have been
continuously employed by the Respondents for at least 104 weeks, that is
not in dispute, and then the amount to which he is entitled depends directly
upon the period of his continuous employment. See section 8(2) and
paragraph 1(1) of Schedule 1 to the 1965 Act.

That Schedule provided that the period of continuous employment should
be computed in accordance with Schedule I to the Contracts of Employment
Act, 1963, (the 1963 Act). The purpose of the First Schedule to the 1963
Act was to lay down rules for computing the period of continuous employ-
ment of the employee, for upon this depended the length of notice to which
he was entitled to determine his employment. The relevant paragraphs of
Schedule I to the 1963 Act are as follows: —

" General provisions as to continuity of period of employment

" 2. Except so far as otherwise provided by the following provisions
" of this Schedule, any week which does not count under paragraphs
" 3 to 6 of this Schedule breaks the continuity of the period of
" employment.

" Normal working weeks

" 3. Any week in which the employee is employed for twenty-one
" hours or more shall count in computing a period of employment.

" Employment governed by contract

" 4. Any week during the whole or part of which the employee's
" relations with the employer are governed by a contract of employ-
" ment which normally involves employment for twenty-one hours or
" more weekly shall count in computing a period of employment.

" Periods in which there is no contract of employment

" 5.—(1) If in any week the employee is, for the whole or part of
" the week—

" (a) incapable of work in consequence of sickness or injury, or
" (b) absent from work on account of a temporary cessation of work

"or

" (c) absent from work in circumstances such that, by arrangement or
" custom, he is regarded as continuing in the employment of his
" employer for all or any purposes,

" that week shall, notwithstanding that it does not fall under para-
" graph 3 or paragraph 4 of this Schedule, count as a period of
" employment.

" (2) Not more than twenty-six weeks shall count under paragraph (a)
" of the foregoing sub-paragraph between any two periods falling under
" paragraphs 3 and 4 of this Schedule.

" (3) Paragraph (b) of sub-paragraph (1) of this paragraph shall not
" apply to a temporary cessation of work on account of a strike in
" which the employee takes part."

10

The whole issue in this appeal is whether, upon the true construction of that
Schedule, in computing the amount of the redundancy payment to which
the Appellant is entitled in respect of his dismissal in December, 1967, the
period of his continuous employment began in July, 1958, or only in
January, 1963.

The cross-heading to paragraph 5—" Periods in which there is no contract
of employment"—has occasioned much difficulty for its meaning seems
particularly obscure. I find it very difficult to understand the concept behind
this cross-heading that was in the draftsman's mind when he framed this
part of the Act. Counsel on neither side was able to give it any sensible
meaning but neither did either of them rely in any way upon it. Lord
Cameron, in his opinion, felt the same difficulty in construing this cross-
heading when he said in reference thereto:

" Whatever meaning is to be given to these words I do not think that
" they can operate so as to exclude from the ambit of the paragraph
" those cases in which formal notice of dismissal has been given to a
" workman."

I agree with that and I propose for the purposes of construing the 1963
Act to ignore that cross-heading.

This dispute between the Appellant and the Respondents was referred
to the Industrial Tribunal who decided the matter on the 25th March, 1968.
The Tribunal came to the conclusion that the applicant had been dismissed
by reason of redundancy on the 28th November, 1962, and that his service
with the Respondents had been broken on that date. The Tribunal then
found that his qualifying service for a redundancy payment commenced
on 21st January, 1963. They gave no reasons for reaching this conclusion.

My Lords, no one doubts that when he was dismissed on the 27th
November, 1962, there was a break in his employment with the Respondents,
but that, in my opinion, is by no means conclusive of the matter. No doubt
in many cases a break in employment will prove fatal to a claim to throw
the period of continuous employment back to the period of his earlier
engagement; thus, if he gave notice himself for his own reasons, or was
dismissed because he was unsatisfactory, it would no doubt be impossible
for him to show that his employment was continuous from the earlier
date. But the whole issue in this case is whether the Appellant can show
that, notwithstanding the legal break terminating his earlier employment,
nevertheless the provisions of Schedule 1 to the 1963 Act, properly con-
strued, entitle him to claim that for the purposes of the 1963 and 1965 Acts
the period of his employment was continuous from the commencement of
his earlier engagement, and this point of law seems to have been overlooked
by the Tribunal. That dismissal is not conclusive against the employee's
claim is, I think, clear having regard to the whole structure of the Schedule
to the 1963 Act. Thus paragraph 5 (l)(a) and (b) seems to contemplate
cases where incapacity in consequence of sickness or injury or absence on
account of cessation of work may count as a period of continuous employ-
ment even where the incapacity or absence has led to or at all events
been accompanied by a termination of the employment. That the period
of the earlier employment may be so included in proper circumstances is
in my view supported by the phraseology in section 24 (1)(b) and the
definition of " employee " in section 25 (1) of the 1965 Act. In my opinion,
reference to those sections is permissible in construing the 1963 Act,
for the First Schedule to that Act is really incorporated into the later Act.

Those sections seem consistent only with the view that a previous contract
of employment which has been terminated may be relevant in computing
the period of continuous employment.

The Appellant concedes that to establish his claim to a continuous period
of employment from the 31st July, 1958, he can only rely on paragraph
5(1)(b) which I have set out above, and it is agreed on both sides that this
really poses two questions which may be formulated thus:

1. During this period from November, 1962, to January, 1963, was
   the Appellant absent on account of a cessation of work? And if so,

2. was the cessation temporary?

11

It is not disputed that though the First Schedule is based upon loss of a
week's work, absence from work during several weeks is not necessarily
fatal to the claim. So this Schedule is dealing purely with the continuity of
employment of an individual workman, and upon that continuity depends
the length of notice to which he is entitled to determine his employment
under the 1963 Act, and the amount of his redundancy payment under the
1965 Act when he is finally dismissed. These matters are essentially personal
to each workman and will differ between workmen according to the length
of continuous employment though otherwise their general terms of employ-
ment may be identical. Therefore, in construing paragraph 5(1)(b). which
deals merely with the computation of continuity of weeks work, the ordinary
construction of the phrase " temporary cessation of work " would, in my
opinion, refer to work available for that particular workman and have no
reference to other workmen. The question whether at the same time the
whole works would close down or a department was closed down or a large
number of other employees were laid off at the same time, would seem to be
irrelevant in a computation essentially personal to the particular workman.
But a different construction has been adopted in the Court of Appeal in
Northern Ireland in the case of Monarch Electric Limited v. Patrick
McIntyre, so far unreported, but your Lordships have had the advantage of
seeing a transcript of the judgment. That decision was on an Act of
Northern Ireland, but its provisions, so far as relevant, seem to be the same
as those of the Acts that your Lordships have to consider. Lord MacDermott
C.J. in the leading judgment in McIntyre's case said:

" One must look at the cessation from the point of view of the
" employers who conduct the work and of what is happening at the
" place of work. An employee can lose his job without any cessation
" in that sense; orders may have fallen away and he may have become
" surplus to requirements, or he may have been dismissed because his
" performance has become unsatisfactory; or he may simply have taken
" french leave and gone on a holiday. In such case there has been a
" cessation of work on the part of the employee but not, in my opinion,
" a cessation of work within the meaning of paragraph 5(1)(b)."

Their Lordships of the First Division agreed with this reasoning and held
that on that principle of construction there had been no cessation of work
for the purposes of 5(l)(b), for there had been no cessation of the business
of the employer or of any department in which the employee was employed.

I am unable to agreed with this construction. I prefer the views expressed
on the Monarch case by Lord Parker L.C.J. and Winn L.J. in Hunter v.
Smith's Dock Company Limited [1968] 1 W.L.R. 1865. For the reasons I
have already given it does not seem to me relevant to consider the general
work of the employer and the state of his business. Your Lordships are not
concerned with the question whether the Appellant was redundant in
November, 1962. That is not in dispute (though, of course, it could not
entitle him to any payment for it was before the passing of the 1965 Act)
for it was found by the Tribunal that, de facto, the Appellant was dismissed
on the ground of redundancy both in November, 1962, and in December,
1967. But when computing solely the continuity of his employment it seems
to me that paragraph 5 is directed to matters essentially personal to the
employee; it must be due to incapacity through illness or absence of work
through cessation of work. In my opinion, the words " absent from work
" on account of temporary cessation of work " mean that he was laid off or
dismissed because his employer had no longer work available for him person-
ally any longer. And that was due in this case, as the Tribunal have found,
to a shortage of work, but it might have been due to other causes such as a
serious fire or explosion, and such circumstances seem to fit into paragraph
5 (1)(b) exactly. He was dismissed because there was no work for him: he
was not dismissed because he was unsatisfactory; he was not dismissed
because he took french leave; those seemed to me, with all respect to the
learned Chief Justice of Northern Ireland, to be quite different cases. Here
was a willing employer and a good and willing employee but the former found
that owing to business conditions he could no longer employ him. It would



12

seem to me to be quite unjust to the workman admittedly entitled to a
redundancy payment upon his second dismissal if the computation of the
period of his continuous employment was affected by the question whether,
upon the termination of his earlier employment, the employer was closing
down his business or some department of his business or dismissing a large
number of other employees. That seems, as I have said, quite irrelevant. In
my opinion, the first question which I have posed must be answered in the
affirmative, that is to say, the Appellant was dismissed in 1962 because there
was a cessation of work for him in the sense that the employer had no work
further available for him to do. So paragraph 5 (1)(b) provides that though
there was a legal break in his employment nevertheless for the purpose of
computing his redundancy payment he remained in continuous employment
from July, 1958. I therefor, turn to the second question.

Was the cessation temporary? No doubt there is a certain artificiality
about this conception. It will seldom be possible to say at the time when
the employee is first dismissed, (and the problem before your Lordships must
surely always involve two dismissals), that his cessation of work was tem-
porary. The employee may take up other employment and whatever his
original intentions may never return to his old employer. He may leave for
what he hopes will only be temporary employment elsewhere. In this he
may be disappointed for, contrary to his expectation and possibly that of his
old employer, his old job may never become available. Or he may find that
he prefers his new employment and decides to make it permanent. So the
question—Was the cessation temporary?—in most cases cannot be answered
as at the time of dismissal. The First Division applied the test stated in
Singh v. Patterson [1942] J.C.89 where the question was whether the residence
of an individual in a particular country was temporary : it was held that the
true opposite of " temporary " was not " permanent " but " indefinite '" or
" unlimited ". With all respect, that test can have no relevance here, for in
most cases when the employee is dismissed his dismissal at that time must
be described as indefinite or unlimited. But Counsel on both sides agreed
that, as in every case where this problem arises there will have been a
re-engagement, you must look at the original dismissal with hindsight, that
is to say, with knowledge of all that has happened since the original dismissal
until the second dismissal, and then decide whether in all the circumstances
of the case the original dismissal can properly be described as due to a
temporary cessation of work. I agree with the views expressed by Lord
Parker L.C.J. in Newsham v. Dunlop Textiles Limited [1968] I.H.R.274. As
I have said, that is a somewhat artificial conception, but it is a task imposed
upon the Tribunal by the terms of the Act, and I do not think that any
guidance can be given in determining that question, for each case must depend
upon its own particular circumstances and commonsense must provide the
answer.

My Lords, I should have thought that upon the rather meagre facts of this
case the answer to the second question was fairly simple, but this matter
was never explored by the Tribunal in any detail and it may be that further
evidence may be available upon this question. So I agree that it must go
back to the Tribunal for it to determine this question ; but the Tribunal must
remember that the mere fact that the original dismissal was for an indefinite
and unlimited period is by no means conclusive ; far from it. It must look
back at all the facts and circumstances from the time of the first dismissal
until the time of the dismissal upon which the claim for a redundancy payment
is made and reach a commonsense conclusion upon the whole matter.

My Lords, for this reason I would allow the appeal and remit the matter
for further determination by the Tribunal.

Lord Wilberforce

MY LORDS,

I concur with my noble and learned friend, Lord Upjohn, and would
allow the appeal.




(301515) Dd. 197039 150 10/69 St.S.