Clayton v Fysons Conveyors Ltd [1994] UKEAT 182_93_2806

EAT
Clayton v Fysons Conveyors Ltd
[1994] UKEAT 182_93_2806 · 1994-06-28
MR JUSTICE MORISON: We have heard these two appeals together with the consent of the Appellants. Mr Clayton and Mr Grief, whom we shall hereafter refer to as "the employees", claimed that they are entitled to redundancy payments from Fysons Conveyors Limited, whom we shall call "the Company", arising out of the termination of their employment in circumstances described by the Industrial Tribunal in their decision.The Industrial Tribunal dismissed their claim and the employees now appeal. The Company has gone into receivership and the Receiver has indicated that they would not be attending the appeal and has not done so.The facts may be briefly summarised. First, the employees had been employed by C J R Fyson & Son Limited, who we will call "Fysons" which went into administrative Receivership on the 18th July 1990. As a result of a series of transactions the part of Fysons business in which the employees were engaged was transferred to the Company. This was a transfer to which the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 applied, as the Industrial Tribunal had held in an earlier decision entered in the Register on the 20th March 1992.Accordingly, under the provisions of Regulation 5 their contracts of employment should have been transferred across so that they became employed by the Company as if their contracts of employment with Fysons had been made with the Company. However, the Company was not prepared to engage them on their existing terms and instead indicated that it would take them on their terms. The basis of the rejection of the employees entitlement to a redundancy payment was that the employers had made an offer of suitable alternative employment which they had unreasonably refused and were thus disentitled to the payment to which they otherwise would have been entitled. The essential difference between the two contracts are set out in paragraph 3 of the Industrial Tribunal decision. There is a reduction of guaranteed hours and hence a reduction of gross weekly pay of some £15. Overtime payments were smaller under the new contract than under the old. The leave entitlement was shorter. There was no linkage of pay to the RPI. There was a generous bonus scheme before, the new bonus scheme was unspecific. A generous sick pay scheme became a right simply to receive statutory sick pay only. Of the 18 employees affected, 13 accepted the new contract, the Applicants refused. The reason for the Industrial Tribunal's decision is summarised in paragraph 7.1 of their decision, which is as follows:
"Our reasons are that, whilst the terms and conditions of employment were more disadvantageous to the applicant, the terms were accepted by more than the majority of the work force taken over and were not so disadvantageous as in the tribunal's view, having regard to the economic circumstances prevailing, and in the knowledge that the previous employer - and we can certainly infer, no doubt partly because of the generous terms of the contract of employment then in force - went into receivership. The guaranteed hours were shorter, the pay was less and the fringe benefits were less, but none of these reductions in terms and conditions were unreasonably unfair or unreasonable in themselves."
This Employment Appeal Tribunal has had occasion to deal with a similar point arising out of the same transfer. In the case of Sennitt v. Fysons Conveyors Limited (EAT/297/93), it was decided on 5th October that despite the fact that the Appellant was dismissed a matter of hours before he received the offer of employment from the Company Section 82(3) of the 1978 Act still applied because the relationship in time between the making of the offer and the ending of his employment under the previous contract was not to be calculated by reference to the stopwatch. Thus the Section applied to the facts of that case which is the same as the facts here. The Employment Appeal Tribunal then went on to decide whether on the facts there was an unreasonable refusal of a suitable offer of employment. The Industrial Tribunal had used really exactly the same reasoning in that case as here, as set out in paragraph 7.1 of their decision, and the Employment Appeal Tribunal took the view that they, that is the Industrial Tribunal, had taken too narrow a view of what was suitable. The Industrial Tribunal had simply looked at the matter from the point of view of the economics of the business. The Employment Appeal Tribunal saw no irreconcilability, as they put it, between the reasonableness of an employer seeking to bring about radical alterations to contracts of employment to make the business financially viable and, at the same time, those alterations conferring rights on the employees not to accept the proffered employment because they constituted a constructive dismissal of the employee. On that ground the Employment Appeal Tribunal upheld the employee's appeal. There seems to us nothing we can or should add to that decision of the Employment Appeal Tribunal and on the same grounds as they did we should allow the appeal of the employees. The offers of alternative employment may have been financially necessary but not of suitable alternative employment, so far as the employees are concerned.Accordingly, this appeal will succeed and it will be allowed. That means that the employees are entitled to a redundancy payment. For the same reasons as given by the Employment Appeal Tribunal in the case to which we have referred there is no need for us, as they also found, to deal with the second and alternative argument that even if the offer was of suitable alternative employment nonetheless the employees were unreasonable in refusing to accept it. Those are matters which could arise for determination but not on the facts of this case in the light of our decision as to the suitability of the offer. Accordingly, the appeal will be allowed.