Adams & Anor v Telecom Security Ltd [1993] UKEAT 584_91_1406

EAT
Adams & Anor v Telecom Security Ltd
[1993] UKEAT 584_91_1406 · 1993-06-14

JUDGE HAGUE:

These are appeals brought by two employees, Mr Adams and Mr Fitzgerald, against the decision of an Industrial Tribunal sitting at London (North) and entered in the register on 23 August 1991. The Tribunal dismissed their claims of unfair dismissal by the employer, Telecom Security Ltd ("the Company"), a subsidiary of British Telecommunications PLC. The claims were made by separate originating applications, but they raised similar questions on similar facts and were heard together by the Tribunal which delivered a single decision. We think that technically there are probably two separate appeals before us, but nothing turns on that.Mr Adams and Mr Fitzgerald were employed as installers (or "installation technicians", to use the wording of their letter of appointments) to survey, install and service alarm systems. Installers worked largely from home but were based at one of the Company's branch depots, where they would call once a week or so to collect stock and for administrative reasons and the like. The areas covered by each branch were defined, but installers could be sent to a place outside the area in which they usually operated.Mr Adams commenced his employment on 11 July 1988. His terms of employment were set out in a letter of appointment dated 20 June 1988. That letter is silent as to which branch he would be based at or the area he would be expected to cover. He started at the Ilford branch, but was then sent to the Brent Cross branch. When that closed he was sent to the Tottenham branch.Mr Fitzgerald commenced his employment on 26 October 1988. His terms of employment were set out in a letter of appointment dated 12 September 1988, which likewise was silent as to the branch he would be based at and the area he would be expected to cover. He started at the Brent Cross branch, and when that closed he was sent to the Hayes, Middlesex, branch. According to his evidence, he complained about the difficulties this entailed because of the distance from his home in Letchworth, Hertfordshire, but there was some conflict of evidence about this. At all events, he left Hayes and went to the Tottenham branch.In October 1990, the Company took the decision to close the Tottenham branch, for a number of reasons. There had been a falling off of work, the rent was likely to be raised, and (somewhat ironically and embarrassingly) there had been a serious burglary which had resulted in the loss of a great deal of computing and other expensive equipment. Two meetings were called with the workforce based there. The first took place on 30 October 1990. Mr Adams was present, but Mr Fitzgerald was on holiday. The workforce was told that the Tottenham branch was to close, but that the Company intended to send all 14 employees to either the Hayes or the Ilford branch. The employees were asked if they had individual preferences. Shortly afterwards Mr Adams indicated his preference for Ilford. On his return from holiday, Mr Fitzgerald was told about the closure, and he also indicated a preference for Ilford.At the second meeting on 16 November 1990, at which both Mr Adams and Mr Fitzgerald were present, the workforce were informed that too few of them had indicated a preference for Hayes and too many for Ilford. They were also told that a new third option, that of voluntary redundancy, would be considered.A day of two later Mr Fitzgerald was told that his preference for Ilford could not be met, and that he would have to go to Hayes. He asked about the voluntary redundancy package. He did not wish to return to Hayes and decided to accept voluntary redundancy. He received a cheque for his redundancy package, which was more than the statutory redundancy payments would have been. He signed a receipt for the cheque which stated that "I. ........ accept this in full and final settlement of my employment relationship with Telecom Security Limited" .Mr Adams also opted for the voluntary redundancy package. Although his preference for Ilford was going to be met, he was not sure of the way in which he would be treated there and thought he might be given the less attractive jobs. He received a similar cheque, and signed a receipt in the same form.By their originating applications claiming unfair dismissal, both Mr Adams and Mr Fitzgerald stated (in the details under paragraph 10):
"It is accepted that the applicant was genuinely dismissed by reason of redundancy but it is submitted that the dismissal was unfair for the following reasons."
Those reasons were briefly that(1) the Company had given no notice of redundancy and there had been no consultation;(2) the Company's offer of alternative was on unreasonable terms and in particular no advice was given about the right to a 4-week trial period under section 84(3) Employment Protection (Consolidation) Act 1978;(3) the Company had made insufficient efforts to find suitable alternative work, and in particular did not investigate the possibility of employment with its holding company British Telecommunications PLC; and(4) the Company's conduct was in general unreasonable in all the circumstances.The Company's notice of appearance (IT3) in each case did not take (as at any rate one possible defence) any point that the termination of the contract of employment had been by mutual consent so that there had been no "dismissal" under section 55 of the 1978 Act, as might perhaps have been expected. The box marked YES in answer to the question "Was theapplicant dismissed" was ticked, and the reason given was filled in as "Redundancy" . (The Company thus accepted, albeit implicitly, that despite the employees' consent the circumstances of the termination of their contracts rendered them dismissals within section 55.) The details of the Company's defence were set out by way of amendment to paragraph 8 of each notice of appearance. The history of the matter in each case was set out, and it was denied(1) that there had been no notice of redundancy and no consultation,(2) that the offer of alternative work was made on unreasonable terms,(3) that there had been insufficient efforts to find alternative work, and(4) that the Company's conduct was unreasonable.The battle-lines before the Tribunal were thus clearly drawn. It was common ground on the pleadings in each case that there had been a dismissal, that the reason for dismissal was redundancy and that this reason was a genuine one. There was thus effectively an agreement that the Company had established the reason for dismissal, which was for the potentially fair reason of redundancy within section 57(2)(c). The issue in each case was the reasonableness of the conduct of the Company in treating that as a sufficient reason for the dismissal, under section 57(3). The evidence was directed to that issue and to the various matters raised in the originating applications and the amended notices of appearance which we have mentioned.However, the Tribunal did not find it necessary to deal with that issue and those matters. After setting out the facts, the Tribunal said this:
"The view of the Tribunal is that the closure of the Tottenham branch did not pose a threat of redundancy to any of the 14 employees therein. It was made absolutely clear at the meeting on 30 October and subsequently, that there was work for them at the other branches in areas which they had worked in from the Tottenham branch. The suggestion of voluntary redundancy came at a later stage and it was a matter entirely for the employees as to whether they availed themselves of the voluntary redundancy package. Had no employee taken this voluntary redundancy they would all have been allocated either to Hayes or Ilford.
We have read the letters of appointment sent to both Applicants at pages R1 10 and 20 and despite certain variations, they are identical. Nowhere is there any reference to relocation or to the Applicants having to remain in a particular location nor is there any reference to mobility. All we have to go on was what appears to have been custom and practice over the last two years in the case of both Applicants and to note that during this period they had each moved to three locations without apparently raising any protest. We are satisfied that the Applicants took the offer of voluntary redundancy and that if they had not done so the Respondent would have been in a position to send either Applicant to either depot had they so wished. We do not consider it necessary to make any findings on any of the matters raised by Mr McDonough because we do not consider that a redundancy situation existed on the closure of the Tottenham branch. At no time were any of the employees, previously working from Tottenham, in a position where they were going to be dismissed on the grounds of redundancy."Although the Tribunal had stated, at the beginning of their Decision, that Mr Adams and Mr Fitzgerald had both been dismissed on 30 November 1990, the above findings appear to contradict that. At all events, the findings made it clear that (contrary to the agreement between the parties) the employees' contracts had not been terminated by reason of redundancy.In our view, this reasoning of the Tribunal was unsatisfactory. As Sir Denys Buckley said in Murphy -v- Epsom College [1985] ICR 80 at p.92:
"I agree with the observation of the appeal tribunal that natural justice requires that a party should not have a case decided on a ground on which he had no opportunity to be heard."
The employees would have had a powerful argument that they were indeed dismissed for redundancy. Under section 81(2)(a) Employment Protection (Consolidation) Act 1978 an employee is dismissed for redundancy where the dismissal is attributable wholly or mainly to "the fact that his employer has ceased, or intends to cease, to carry on the business ............. in the placewhere the employee was so employed." It is settled that the place where the employee was so employed is not confined to the place where he worked but extends to any place where under his employment of contract he could be required to work: see UK Atomic Energy Authority -v- Claydon [1974] ICR 128. The Tribunal evidently thought that an appropriate mobility clause should be implied in the employees' service contracts, from the custom and practice of the parties in the previous years. But in our view this is by no means clear, for what happened in previous years is equally referable to offers of suitable alternative employment.Mr McDonough on behalf of the employees argued firstly that as the Tribunal had expressly found that redundancy was not the reason for their dismissal, the Company had failed to establish a potentially fair reason for dismissal. The result was therefore (he argued) that the Company had failed to discharge the onus put on an employer by section 57(1), so that the employees were entitled to succeed. In support of this argument, Mr McDonough referred to and relied strongly on the decision of the Court of Appeal in Nelson -v- BBC [1977] ICR 649. In that case, the BBC's defence to a claim of unfair dismissal was that the employee had been dismissed for redundancy. That defence was contested but upheld by the Industrial Tribunal which held that the employers had acted reasonably in treating that as a sufficient reason for the dismissal so that the dismissal was not unfair. However this Appeal Tribunal found that the Industrial Tribunal had erred in law in finding the reason for the dismissal was redundancy, but nevertheless dismissed the employee's appeal on the ground that the facts established on the question of the reasonableness of the employer's conduct showed that he had been dismissed "for some other substantial reason" , under what is now section 57(1)(b) of the Act. The Court of Appeal agreed that the dismissal had not been for redundancy, but held that as redundancy was the only reason for dismissal pleaded, no application to amend had been made, and the evidence and arguments had been directed solely to that issue, this Appeal Tribunal was not entitled to substitute a finding of a dismissal "for some other substantial reason" . Roskill LJ said at p.688A:
"What the Employment Appeal Tribunal did here was to look at facts which had been found in an altogether different context, namely the context of paragraph 6(8) [now section 57(3) of the 1978 Act], after making a finding of redundancy under paragraph 6(2) [now section 57(2)(c)], and then treat those findings as if they could properly be applied to an unpleaded defence by the corporation, never raised before the industrial tribunal with no findings of fact by that tribunal directed towards it, to support dismissal under paragraph 6(1) [now section 57(1)]."
The Court of Appeal went to hold that the employers had thus failed to establish a potentially fair reason for dismissal, so that the employee was entitled to succeed. The case was therefore remitted to the industrial tribunal to determine the compensation or other relief to which the employee was consequently entitled. In the circumstances of the case, which it was emphasised were very special, the Court of Appeal refused to allow an amendment to raise what would be essentially a new case at such a late stage: see per Megaw LJ at pp. 660G - 661B.Mr McDonough submitted that in the same way, the Company in this case had failed to establish the redundancy ground, which was the only ground relied on by the Company, so that the dismissal was automatically unfair. He said that, applying Nelson -v- BBC we were bound to hold that the employees had been unfairly dismissed, and should remit the cases to the industrial tribunal solely to determine the compensation payable, without allowing any amendment or permitting the employers to deal with the reasonableness of their conduct under s.57(3).We cannot accept those submissions. In our view Nelson -v- BBC was a very different case on the facts, in particular because, unlike the present case, there was no agreement as to the reason for dismissal and it was therefore not conducted on the basis of such agreement. That factor alone, in our view, would make it unfair on the employers to have the case decided against them on a point on which there was not argument: see the dicta of Buckley LJ in Murphy -v- Epsom College cited above. But in addition, it seems to us that in the present case (unlike Nelson -v- BBC ) all the relevant facts were sufficiently set out in the Company's amended notices of appearance and dealt with in the evidence. The sole difficulty relates to the admissions of dismissal and the reasons for dismissal put forward in the notices of appearance.Mr Brennan, Counsel for the Company, submitted that Mr McDonough's argument and reliance on Nelson -v- BBC confused the substance of the matter with the label the employer puts on it. On this, he referred us to Hotson -v- Wisbech Conservative Club [1984] IRLR 422, in which the question arose whether an employer was tied by the reason for dismissal set out in his notice of appearance. Waite J answered that question in following way (at paras 15-17):
"The position, according to authority, appears to be as follows. In satisfying the Industrial Tribunal as to the reason for the dismissal under s.57(1) of the 1978 Act, the employer is not tied to the label he happens to put upon the particular facts relied on. Thus he may say `I made the employee redundant'. But he will not be prevented from saying later `No I have changed my mind. It was really a case of incapability.' Nor will he be prevented from running the two as alternatives: either redundancy or lack of capability. By the same token, the Industrial Tribunal may (it appears) of its own motion declare that the reasons relied upon by the employer was not the real reason; for the real reason may be something that he shrank from mentioning, either through ignorance of the technicalities involved or perhaps through sheer kindness of heart or natural delicacy. In the same way, some other substantial reason under s.57(1)(b) may be advanced by the employer or found by the Tribunal to be the real reason for dismissal, differing from the sole or principal reason, such as redundancy or incapability, that my have been advanced by the employer himself.
That appears to us to the effect of the decisions of the Court of Appeal in Abernethy v Mott, Hay & Anderson [1974] IRLR 213 and of this Appeal Tribunal in Gorman v London Computer Training Centre [1978] IRLR 22. What the employer may not do, however, is to change after the date of dismissal the facts upon which he relied at the time as the basis for dismissal. That is made plain by the decision of the Court of Appeal in Monie v Coral Racing Ltd [1980] IRLR 464.Finally, even in those cases where what is referred to in the authorities as no more than a change of label is involved - in the cases we have mentioned, for example, where lack of capability is treated as an alternative label for redundancy - great care must always be taken to ensure that the employee is not placed, as a result of the change in the label given to the reason for his dismissal, at a procedural or evidential disadvantage. That is made plain by the decision of the Appeal Tribunal in Murphy v Epsom College [1983] IRLR 395."We consider that the above passage applies equally to a case where the employer may wish to say in the alternative that there has been no dismissal at all. Where an employee has accepted a voluntary redundancy package, the distinction between an agreed termination of employment on the one hand and a dismissal which is not unfair must always be a narrow one. We therefore agree with Mr Brennan that, on the facts of this case, Mr McDonough's reliance on Nelson -v- BBC confuses substance with label and is not justified. In our judgment Nelson -v- BBC was a very different kind of case, and plainly distinguishable. We therefore reject Mr McDonough's first submission.Mr McDonough submitted in the alternative that we should nevertheless substitute a finding that the employees had been unfairly dismissed on the ground that the reason for dismissal was redundancy and that it was clear that the dismissal was unfair, particularly as a result of lack of consultation and the failure of the Company to offer a 4-week trial period pursuant to section 84(3) of the 1978 Act. (In support of the latter point Mr McDonough referred us to Elliott -v- Richard Stump Ltd [1987] IRLR 215, but that case concerned a direct refusal by employers to allow a trial period and in our judgment is not in point.) It is sufficient for us to say that this argument was very far-fetched and we reject it.Mr McDonough's next, and altogether more forceful, submission was the case should be remitted to a differently constituted tribunal for rehearing. He said that the employees had a powerful argument that the ground of dismissal was indeed redundancy (we have dealt with this above), and that their contentions under section 57(3) ought to be properly considered. He referred to the dicta in Murphy -v- Epsom College mentioned above. Mr Brennan, relying on the passage in the Hotson case set out above, submitted that the findings of the Tribunal were open to them on the evidence and unassailable, so that the Tribunal's decision should be upheld. He said that the Tribunal had properly dealt with the substance of the matter, and whether one said that there had been no dismissal or labelled the ground of dismissal as "redundancy" or "some other substantial reason" was immaterial. He also said that if an employee volunteered for redundancy, there could be only one answer to the question whether the employer had acted reasonably, citing in support dicta in Tocher -v- General Motors Scotland Ltd [1981] IRLR 55; but we cannot agree that this would necessarily be the case, for much might depend on the circumstances in which the employee volunteered.In this connection, we bear in mind that, as mentioned in the passage from the Hotson case set out above, great care must be taken to ensure that an employee is not placed, as a result of a change in the label given as the reason for his dismissal, at a procedural or evidential disadvantage. We consider that there is some risk that this might be so if we accept Mr Brennan's submission, and so we prefer that of Mr McDonough. Accordingly, notwithstanding the obvious disadvantages, we have come to the conclusion that in the circumstances of the case there is no satisfactory alternative to remitting the cases to be reheard by a differently constituted tribunal. We do allow the appeals of Mr Adams and Mr Fitzgerald and so order.Finally, the question arises as to whether, as Mr McDonough submitted, the Company ought not to be allowed to amend its notice of appearance and should be restricted to its original case of dismissal for redundancy. We consider that, in the light of the passage in the Hotson case cited above, the Company ought to be allowed to amend, provided that the amendments relate only to the issues of whether or not there was a dismissal and if so the ground of dismissal, and do not materially add to or vary the factual substance of the Company's case as set out in paragraph 8 of the amended notice of appearance. Subject to those observations, we think that the question of any amendment should be left to the newly constituted tribunal.