Shannon & Ors v Tyzack Transmission Components Ltd [1992] UKEAT 194_92_1711

EAT

Shannon & Ors v Tyzack Transmission Components Ltd

[1992] UKEAT 194_92_1711 · 1992-11-17

LORD COULSFIELD :

This is an appeal from the decision of an Industrial Tribunal on a preliminary hearing to determine whether the Tribunal had jurisdiction to deal with claims for unfair dismissal made by seven applicants. The employment of the applicants was, purportedly, terminated either verbally on 14 June 1991 or in terms of a letter, on 21 June 1991. The application to the Industrial Tribunal was made on 27 September 1991, well outside the three month period from either 14th or 21st June. There was no argument based that it was not reasonably practicable for applications to be made at an earlier date. The argument before the Industrial Tribunal was that the termination of the contract of employment did not occur until 23 August 1991.

The facts giving rise to this contention are as follows; after some preliminary notices of expected redundancy had been issued by the Respondents, there were discussions as to who should be made redundant. According to the findings of the Industrial Tribunal:

"On 11 June the respondents operations manager discussed with the shop stewards the names of those to be made redundant. Some alterations were made to the list and on 12 June the names were announced by interviewing each of the employees concerned in the presence of their particular shop steward. There is no issue about what was said at the interviews and the employees, including the 7 applicants were all told that their employment would terminate on Friday 14 June but if they wished to do so they were free to leave there and then. Letters confirming the dismissal showing the appropriate financial calculations were given to each employee. Although those letters contained an error showing the date of termination on 21 June nobody was misled and everyone assumed that the last day of employment was 14 June."

In the following paragraph of their decision the Industrial Tribunal say:

"On 18 June Mr O'Farrell the union convenor served on the employers a "notice of failure to agree" pursuant to the National Agreement dated 1976 between the Engineering Employees Federation and the Confederation of Shipbuilding and Engineering Unions. The notice referred to the redundancies and the method of selection and called for an external conference to be arranged."

There were further informal discussions and during one such discussion it appears to have been said by the Respondents' managing director that, pending the results of the conference the employees, including the applicants would "remain on the books". The conference duly took place on 23 August. That date which marks the conclusion of the procedure under the National Agreement and is the date which the applicants say was the date of termination of their contracts of employment.

The relevant terms of the National Agreement which were before the Industrial Tribunal are contained in paragraph 1.2 which states:

"Instant Dismissal (a)In any case of gross industrial misconduct which necessitates instant dismissal, then it is open to the dismissed person to contest that dismissal, but the person will no longer be an employee of the company as from the time of the dismissal.

Dismissal with due notice

(b)Where notice of dismissal is given (other than instant dismissal), it is open to the dismissed person to contest that dismissal, and if necessary, to call through the union for an EXTERNAL Conference, and in such a case the person will remain an employee of the company until such time as either agreement is reached, or the procedure is exhausted."

Before going further with the Industrial Tribunal's reasons, we should draw attention to two documents which were before the Industrial Tribunal. The first is a memorandum dated 11 June 1991 which referred to the proposed redundancies and stated in para (3):

"With regard to the redundancy programme already announced, should the named employees wish to leave by Friday 14th June, their pay in lieu element will be enhanced by one week, tax free."

The second document is the letter dated 14 June 1991 which was referred to in the findings of the Industrial Tribunal quoted above. The letter which we have before us is addressed to the applicant, Mr Candon, but it appears that all applicants received the letters were in the same or similar terms. The letter refers to cutbacks in orders, leading to a need to reduce the workforce, and continues:

"Therefore, effective from 21st June, 1991, we confirm that your job with the company will become redundant and your employment will cease."

Later, the letter to set out the employee's entitlement to payment. It contained and is for a period of notice of 12 weeks, at a certain rate of payment and for, a redundancy payment, and a further entry for pay in lieu of notice for the week ending 21 June 1991. At the foot, it had an acknowledgment of receipt of a cheque for the sum calculated in the letter, signed by the employee, and bearing the date 12 June 1991.

Having summarised the facts before them the Industrial Tribunal went on to hold that in their view termination of the contract of employment in this case took place, as both parties agreed, on 14 June, the date when the notice given on 12 June expired. They go on to say:

"It follows that from that date the applicants were no longer employees of the respondent. We do not accept that by offering to "keep them on the books" the applicants were somehow re-employed by the respondents nor do we accept that the note to the "Procedure for Avoidance of Disputes" can have the effect of automatically reviving the employment which had already been terminated."

The Industrial Tribunal then refer to the decisions in J SAINSBURY LTD v SAVAGE

[1980] IRLR 109

and WEST MIDLANDS CO-OPERATIVE SOCIETY v TIPTON

[1986] IRLR 112

and repeat their conclusion that the effective date of termination in the case of all seven contracts was 14 June 1991.

The date of termination of the contracts is material because the affect of Cl.1.2(b) of the National Agreement may be quite different in a case in which a National Conference is called for before the termination from its effect when the Conference is not called for until after the termination. Unfortunately, it appears that, in one respect at least, the circumstances of the present case were not fully put before the Industrial Tribunal. As we have seen, the Industrial Tribunal proceeded on the basis that the date of termination, 21 June, inserted in the letters was a mistake. From the discussion before us, it appears that there was never any ground for holding that view. It is true that, when the matter was before the Industrial Tribunal, some evidence was given to that effect, but, from the explanations made to us, it appears that the date 21 June appeared in the letter because it was associated with the expiry of a consultation period, which was thought to be relevant to the redundancies. It can perhaps be argued that the evidence was before the Industrial Tribunal and they were entitled to proceed upon it, but the misunderstanding may have misled the Industrial Tribunal, and it seems to us that we have to take it into account. Bearing that in mind, it appears to us that the reasoning by which the Industrial Tribunal reached their conclusion that Friday 14 June was the date of termination was inadequate. The Industrial Tribunal appear to have accepted that the date of 14 June was given or agreed verbally, but in reaching that view they have made no attempt to consider the terms of the earlier communication to which we have referred, as well as those of the letter of 14 June nor have they made any attempt to construe the terms of the letter as a whole, taking account not only of the relevance of the date of 21 June but of the reference to "pay in lieu of notice" contained later on in the letter. It is understandable that they should have proceeded as they did, if they understood that the letter of 14 June contained a mistake on a material point. However, if the whole terms of the letter, are considered, along with the earlier communication, we find it hard to see that they are consistent with the conclusion that the date 21 June can be put aside. In our view, the Industrial Tribunal have not approached the matter properly in that they have not paid attention to and construed together, all the material relevant to the question of the effective date of termination. In these circumstances it seems to us that the Industrial Tribunal misdirected themselves in arriving at their conclusion and that their conclusion cannot stand.

Various arguments were addressed to us with regard to the proper construction of paragraph 1.2(b) of the National Agreement. It was however said on behalf of the Respondents, that the whole circumstances relevant to the Agreement were not before the Industrial Tribunal in that there was no evidence either as to the incorporation of any terms into individual contracts of employment or as to any other terms which might have been incorporated and might have been relevant to the decision which the Industrial Tribunal had to take. In these circumstances we do not think it appropriate to express any concluded view as to the proper construction of the terms of the National Agreement or their effect in the present case. We do however require to deal with one the argument addressed to us, to a limited extent.

One of the submissions on behalf of the Respondents was that, even if the effective date of termination of the Appellant's contract remained 21st June, as the letter of 14 June said the question, for the purposes of S.55 (4) of the 1978 Act, was whether the employee remained employed under a contract of employment after that date. Reference was made to the two cases cited by the Industrial Tribunal, and it was urged that, even though a person might continue to be an employee for certain purposes notice had been given and the date of the notice had expired, and even if such a person might continue to be described as an employee in a contract document for the purposes of, for example, an appeal procedure, it did not follow that he continued to be a person employed under a contract of employment. It was submitted that the tests for the continuance of a contract of employment were predominantly whether the employee continued to be entitled to pay and continued to be entitled to carry out the work of the employment. It was however conceded in the course of argument that it was possible that a contract might contain terms which had the effect that, although the employee was not being paid and was not entitled to work, nevertheless the contract of employment did continue for the purposes of the application of S.55(4). It was however submitted that that could only occur in a very extreme and very clear contractual situation.

If the Respondents' argument on this issue were obviously bound to succeed, there would be no point in remitting the case for further consideration. We do not, however, think that the argument is bound to succeed. It is sufficient for the present purpose case to say that it seems to us that there is a contrast between the provisions of subparagraph (a) and subparagraph (b) of paragraph 1.2 of the National Agreement. Paragraph (a) deals with the case in which there is gross misconduct and an instant dismissal and specifically provides that in that case the person concerned will no longer be an employee of the company as from the time of the dismissal. Paragraph (b) on the other hand specifically provides that the person concerned will remain an employee until the procedure for the external Conference is exhausted. Even though no reference is made to payment or continuance of work, it seems to us that it could be said to be difficult to understand what can have been in the minds of those who agreed to these terms other than that the contract of employment should continue in being for all purposes, including the purposes of S.55(4) until the Conference procedure is exhausted. That argument may be supported by reference to the terms of the National Agreement which stress the importance of the preservation of the status quo until any dispute is resolved. Accordingly it seems to us that, provided the Conference procedure is put into effect before the expiry of any notice of termination, it is arguable that the effective date of termination does not arrive until the Conference procedure has been exhausted. In our opinion, therefore, it cannot be said that there is no point in making a remit. The whole matter will have to be open for the consideration of an Industrial Tribunal in the light of any further evidence that the parties wish to put before it, including, of course, any evidence as to the contract terms and the incorporation of those terms into individual contracts of employment.

An argument was also addressed to us to the effect that, even if the date of termination was held to be the 14 June, in terms of the Agreement the putting into effect of the Conference procedure would postpone the date of termination of the employment but we do not require to deal with this argument and we prefer to say no more about it. In the circumstances, we shall allow the appeal and remit to an Industrial Tribunal to reconsider the whole issue of the jurisdiction.