McHugh v Hempsall Bulk Transport Ltd [1992] UKEAT 410_90_0106

EAT
McHugh v Hempsall Bulk Transport Ltd
[1992] UKEAT 410_90_0106 · 1992-06-01

JUDGE HAGUE:

This an appeal against certain parts of a decision of an Industrial Tribunal sitting at Lincoln which was sent to the parties on the 13th June 1990. The parts appealed against relate to the non-payment of some holiday pay to which the Appellant, Mr McHugh, claims to be entitled and to his claim for redundancy payment.We can deal with the holiday pay issue quite shortly. Before the Tribunal there was a dispute as to whether Mr McHugh was entitled to his unused holiday allowance for previous years. He made a complaint under Section 5 of the Wages Act 1986, claiming that there had been a deduction from his wages contrary to Section 1 of that Act. The Tribunal did not determine that issue, because it held it had no jurisdiction to do so and said that Mr McHugh's claim, if he wished to pursue it, had to be brought in the County Court. In coming to that conclusion the Tribunal understandably followed two decisions of this Tribunal which had recently been reported at that time, Barlow v. Whittle [1990] ICR 270 and Alsop v. Star Vehicle Contracts Ltd [1990] ICR 378. However, subsequently to those decisions and after the decision of the Industrial Tribunal, a case called Delaney v. Staples (trading as De Montfort Recruitment) [1991] ICR 331, came before the Court of Appeal. In that case the employee, as part of her claim, claimed that she was owed holiday pay. The Industrial Tribunal had assumed jurisdiction to determine that claim. This Tribunal had held that the Industrial Tribunal did not have that jurisdiction. This Tribunal's decision was overruled by the Court of Appeal. The leading judgment was given by Nicholls LJ who, after dealing in some detail with the Alsop case and with the statutory provisions, said this at page 341 H:
"For these reasons, on the first question raised by this appeal, I prefer the views expressed on this point by the appeal tribunal in Greg May (Carpet Fitters & Contractors) Ltd v. Dring [1990] ICR 188 and Kournavous v. J R Masterton & Sons (Demolition) Ltd [1990] ICR 387. It follows that I do not agree with the contrary views expressed in Barlow v. Whittle [1990] ICR 270 and the Alsop case [1990] ICR 378. In the present case the industrial tribunal was correct in entertaining Miss Delaney's complaint regarding her holiday pay and unpaid commission."
The other members of the Court, Ralph Gibson LJ and Lord Donaldson of Lymington MR, agreed with Nicholls LJ on this jurisdiction point, Ralph Gibson LJ explaining that he had had some initial difficulty on it. Delaney v. Staples went to the House of Lords, but only different issues (see 1992 IRLR 191). However, the concluding remarks of Lord Browne-Wilkinson at para.30 appear to assume that the Court of Appeal's decision on the jurisdiction point on holiday pay was correct.The upshot of that, in our view, is that there is a clear decision of the Court of Appeal binding on us that an Industrial Tribunal does have jurisdiction to entertain a claim of this kind. Accordingly it seems to us that the case will have to be remitted to an Industrial Tribunal to consider the facts and merits of Mr McHugh's claim concerning his holiday pay, which as we have said were not dealt with at all by the Tribunal below. The case will therefore be remitted to an Industrial Tribunal, which need not necessarily be the same Tribunal.The second point concerning redundancy pay is a little more involved. The facts are that for over nineteen years up to the 9th February 1990 Mr McHugh had been employed by the Respondents as the driver of heavy goods vehicles. At the time he held a Class 2 HGV licence. At the end of 1989 the Respondents made a decision to sell off part of their business (the Industrial Tribunal refers to it as "the bulk haulage business") to a Company called Robertshaw Transport Services Limited. On the 7th December 1989 Mr Robertshaw, who was the leading light of Robertshaw Transport Services Ltd, met the drivers employed by the Respondents, including Mr McHugh, and made them a offer of employment on the take-over of the business which was then intended to be effective from the 1st January 1990. That transfer was concluded by a written agreement between the Respondents and Robertshaw Transport Services Ltd which is dated 8th January 1990 but it seems clearly to have taken effect from either the 1st January or the 2nd January 1990; in practical terms it would be the 2nd January because the 1st January would be a Bank Holiday.In the meantime what had happened as regards Mr McHugh was this. He had not made any reply to the offer of employment made by Mr Robertshaw. On the 28th December Mr Wilson, the Transport Manager of the Respondents, wrote a letter to him saying this:"In view of the pending take-over by Robertshaw Transport Services Ltd on 1 January 1990, could you please clarify in writing whether or not you intend to continue your service with Mr Robertshaw".Two days later on the 30th December Mr Wilson wrote again to Mr McHugh saying this:
"In view of the take-over by Robertshaw Transport Services on the 2 January 1990, you will still be wholly employed by Hempsall Bulk Transport.
As we have no class 2 vehicle for you to drive, you will be hire to Robertshaw Transport Services for a period of time. Could you please reply to the letter we sent you on 28 December 1989, A.S.A.P."On the 5th January 1990 Mr McHugh wrote back to Mr Wilson saying this:
"I do not intend to go to Mr Robertshaw Transport Services Ltd. Therefore I hope to stay in Hempsall Bulk Transport."
Pausing at that point it seems to us perfectly plain that, although there had been the transfer of the bulk haulage business to Robertshaw Transport Services Ltd, Mr McHugh remained in the employment of the Respondents. That is stated in express terms by the letter of 30th December and not unnaturally Mr McHugh seems to have taken the view he had a certain option in the matter. The position therefore, as we see it, is that Mr McHugh remained in the Respondents' employment for an indefinite period after the transfer.For the first few weeks of 1990, Mr McHugh, as the Tribunal says in paragraph 14 of its decision:
"remained in the employ of the respondents by whom he was lent to Mr Robertshaw who had not, at that time, engaged another driver."
However, early in February Robertshaw Transport Services Ltd found that they had no further need of Mr McHugh's services. We quote again from paragraph 14 of the Tribunal's decision:
"The respondents had no vehicle which the applicant could drive and they had no suitable work to offer him. He was dismissed with pay in lieu of notice and the reason for his dismissal was redundancy."
We turn now to the relevant statutory provisions. Section 81(1) of the Employment Protection (Consolidation) Act 1978 provides that:
"Where an employee who has been continuously employed for the requisite period - (a) is dismissed by his employer by reason of redundancy, or . . . . . . . . .
then, subject to the following provisions 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 Schedules 4, 13 and 14."There are certain exceptions to that right to a redundancy payment, one of them being where the employer makes an offer to the employee of (putting it broadly) some other employment. The relevant provisions are contained in Section 82(3) and (5). Those are adapted to a situation where there is a new employer after a change of ownership of the business or part of the business, who makes a similar offer of other employment. That adaptation is made by Section 94. Section 82(3) reads as follows:
"If an employer makes an employee an offer (whether in writing or not) before the ending of his employment under the previous contract to renew his contract of employment, or to re-engage him under a new contract of employment, so that the renewal or re-engagement would take effect either immediately on the ending of his employment under the previous contract or after an interval of not more than four weeks thereafter, the provisions of subsections (5) and (6) shall have effect."
Subsection (5) reads:
"If an employer makes an employee such an offer as is referred to in subsection (3) and either - (a) the provisions of the contract as renewed, or the new contract, as to the capacity and place in which he would be employed, and as to the other terms and conditions of his employment, would not differ from the corresponding provisions of the previous contract; or (b) the first-mentioned provisions would differ (wholly or in part) from those corresponding provisions, but the offer constitutes an offer of suitable employment in relation to the employee;
and in either case the employee unreasonably refuses that offer, he shall not be entitled to a redundancy payment by reason of his dismissal."Subsection (1) of Section 94, relating to the change of ownership of business, reads:
"The provisions of this section shall have effect where - (a) a change occurs (whether by virtue of a sale or other disposition or by operation of law) in the ownership of a business for the purposes of which a person is employed, or of a part of such a business, and (b) in connection with that change the person by who the employee is employed immediately before the change occurs (in this section referred to as `the previous owner') terminates the employee's contract of employment, whether by notice or without notice."
Pausing at that point we will for the moment assume in favour of the Respondents that those conditions were satisfied. Mr McMullen advanced an alternative argument to the effect that they were not in fact satisfied and we will return to that briefly in a moment. Subsection (3) of Section 94 reads:
"If the new owner offers to renew the employee's contract of employment (with the substitution of the new owner for the previous owner) or to re-engage him under a new contract of employment, subsections (3) to (6) of Section 82 shall have effect, subject to subsection (4), in relation to that offer as they would have had effect in relation to the like offer made by the previous owner."
The Industrial Tribunal in this case, after setting out those provisions, said this at paragraph 22 of their Reasons:
"The questions which therefore arise in this case are whether the offer made to the applicant by Robertshaw Transport Services Ltd was an offer of suitable employment in relation to him and if so whether that offer was unreasonably refused by the applicant."
The Tribunal then went on to consider those questions, which they resolved in favour of the Respondents. Mr McMullen on behalf of Mr McHugh has accepted that the Tribunal's findings in that respect were findings to which they were entitled to come on the evidence and were not perverse, and so cannot be challenged in this Tribunal as being erroneous in law.What Mr McMullen says, however, is that the Tribunal did not pose themselves the right questions, or at any rate that there was a prior question which ought to have been answered and which the Industrial Tribunal overlooked. As he put it, what the Tribunal ought to have addressed itself to was the question of Mr McHugh's dismissal which took place on the 9th February 1990. In that respect the offer made by Robertshaw and Mr McHugh's refusal of that offer, which related to the earlier date of the 1st January 1990, were not material. In our judgment Mr McMullen's submission on that is well-founded. We think the matter is really determined by Section 82(3), the material crucial words of which are the following:
"so that the renewal or re-engagement would take effect either immediately on the ending of his employment under the previous contract or after an interval of not more than four weeks thereafter"
Robertshaw's offer was not an offer of employment which would take effect on the ending of Mr McHugh's employment by the Respondents. When the offer was made and when it was refused his employment had not been terminated and was not going to be terminated, as the letter of the 5th January makes abundantly clear. It seems to us that in those circumstances the offer made by Robertshaw was not an offer which comes within the scope of Section 82(3).The matter might have been different, indeed probably would have been different, if the Respondents had terminated Mr McHugh's contract, with or without notice, on or before the 1st January 1990, or if Robertshaw's offer had been for a job which would take effect immediately after Mr McHugh's employment with the Respondents ceased. But as events showed, Robertshaw's offer was not an offer of the latter kind, nor was the offer renewed when Mr McHugh's employment with the Respondents did in fact cease some four to five weeks later. In our judgment it is what the situation was as regards redundancy at that date, on the 9th February, which is crucial. So, in the circumstances of this case, what happened earlier as regards the offer of alternative employment is not material. It follows the questions that the Industrial Tribunal asked itself simply did not arise, the exception to the right to redundancy payment in Section 82(3) does not apply and Mr McHugh is entitled to his redundancy payment; as we have said there is a clear finding that he was dismissed by the Respondents by reason of redundancy. There is an equally clear and lucid finding in paragraph 6 of the Tribunal's Reasons of the amount of redundancy payment which Mr McHugh would be entitled to if he were redundant, the amount of that being found to be £2,704.70. In view of those clear findings we think it is unnecessary for this part of the decision to be remitted to the Tribunal.In view of the foregoing it is unnecessary for us to consider Mr McMullen's alternative argument that the conditions of Section 94(1) had not been complied with and we say nothing on that one way or the other. We were also, very properly, referred by Mr McMullen to the Transfer of Undertakings (Protection of Employment) Regulations 1981 which were referred to before the Tribunal but which the Tribunal found were not applicable. Under Regulation 5 of those Rules the contract of employment of a person employed by the transfer or of an undertaking or part of an undertaking is not terminated upon the transfer. However, it is a necessary condition of that Regulation that the benefit of the employee's contract of employment is transferred to the transferee. That did not happen in this case because Mr McHugh remained employed by the Respondents. We agree with the Industrial Tribunal, although perhaps for slightly different reasons, that the 1981 Regulations have no relevance.We can therefore, on this point, simply allow the appeal and substitute a decision that Mr McHugh is entitled to a redundancy payment in the sum of £2,704.70.