EBAC Ltd v Wymer [1994] UKEAT 967_93_1512

EAT
EBAC Ltd v Wymer
[1994] UKEAT 967_93_1512 · 1994-12-15

JUDGE BYRT QC:

This is an appeal from the decision of the Industrial Tribunal sitting at Middlesbrough on 14 and 15 April 1993.The Tribunal came to the unanimous decision that the employee, Mr Wymer, had been dismissed unfairly.The background facts of this appeal are as follows. The employers were a privately-owned company with about 100 employees based at Bishop Auckland, who manufactured humidifiers and air-conditioning equipment. It was a seasonal business. Mr Wymer, a man of 28, is one of approximately 30 operators employed in the sheet metal department, as a brake press operator and at the time of his dismissal he had been so employed for about five years.On 21 August 1992 he was dismissed. Late in 1991/early 1992 the company had faced reduced sales and excessive production capacity and they had to find 40 people for redundancy, out of 127 potential candidates.The process of selection went on through most of January 1992 and, unbeknown to him, for reasons that I will explain in a minute, Mr Wymer was selected for redundancy at that time. However, since early January of that year, Mr Wymer had been seconded to the domestic repairs section because of shortage of work in the sheet metal section. He understood that his transfer had only been a temporary arrangement and he suffered no diminution in his wage. He was paid at the rate of a sheet metal worker notwithstanding the fact that the wages paid in the domestic repairs section was less. He continued working there until July, believing that when work picked up, he would return to his old job as a sheet metal worker.It is relevant at this stage to note that in May 1992 he, along with all the other work force, had signed new contracts of employment to reduce the seasonal fluctuations in demand. There was an increase in pay but they had to work different hours in different seasons. Thus, between May and August, they had to work 35 hours per week, between September and November 43 hours per week and between December and April, 39 hours per week. There was an overall average of working hours of 39 hours per week.In July his problems began. He was informed that his transfer to the domestic repairs section now was permanent and that, indeed, the salary he was to receive was to be adjusted downwards, as was compatible with people working in that section. Mr Wymer refused to accept this position and said that he had only transferred to the section permanently on condition that his terms of remuneration and so on remained as they had been when he had been a sheet metal worker.On 12 August he met management. It was the first time on that date that he heard he had been selected previously for redundancy and that he would have been made redundant in the January if he had not gone to the domestic repairs section. The choice now which that was put to him was that either he stayed permanently in the domestic repairs section or he would be made redundant forthwith. Mr Wymer refused the reduction in his salary. He was told to think it over and he was given until 17 August to do so. On 17 August he held to his position and on 18 August he was told that he was made redundant with effect from 18 September. In fact, he was given pay in lieu of notice and his employment ceased on 21 August and he received two weeks' redundancy pay.After his dismissal, a vacancy appeared in the sheet metal section and on 27 August he was offered a position in the section and told that all previous entitlements would remain the same on his return, that is, including there would be no break in service. Mr Wymer accepted those terms and on 2 September returned to work. Thereafter disputes arose as to the terms, the employers saying there was no break in service, that he had to work the scheduled working hours of 43 hours per week and he had to return the cheque for redundancy that he had received. Those disputes were not resolved and on 19 September, Mr Wymer left the company of his own volition.On 19 January 1994 he made an originating application to the Industrial Tribunal claiming that he had been unfairly dismissed on 21 August 1993.The Tribunal's conclusions were that on 21 August, Mr Wymer was dismissed for redundancy. They went on to consider whether the employers had acted reasonably in treating that as a ground for dismissal, pursuant to s.57(3) and they found that the employers had failed to act reasonably in a number of respects. In January 1992 they found they had failed to adopt and to apply reasonable objective criteria for selection of candidates for redundancy. Two, they found there had been no attempt to consult with Mr Wymer about selection and, three, they found that it was unreasonable to activate the redundancy selection that had taken place some six months earlier after the original selection without any real assessment and, as I understand it, the employers in this case do not seek to challenge those conclusions.It is further contended that on 2 September, Mr Wymer's contract was renewed or he was re-engaged under a new contract, so that s.84 of the 1978 Act applied, with the effect that Mr Wymer's dismissal on 21 August vanishes with the consequence of course that when he left of his own volition on 19 September he left without compensation.Following receipt of the Tribunal's decision, the employers persuaded the Tribunal to review their determination in respect of the applicability of s.84. There was a further hearing arranged on 9 September 1993, when the Tribunal heard further argument. The result of that further hearing was that the Tribunal confirmed their earlier decision and, in particular, their decision that s.84 did not apply. The ratio of their decision is that s.84 only applies in relation to claims made under that part of the Act in which s.84 lies, that it, Part VI. That is in cases where claims are made for payments owing to redundancy. In this case, so the Tribunal says, it was dealing with a claim not for redundancy but for unfair dismissal and that fell under Part V of the Act, a part in respect of which s.84 they said had no applicability.In support of that contention, the Tribunal relied on the case of Hempell vWH Smith & Sons Ltd [1986] ICR 365 . The employee in that case had been given notice in March 1982 that she would be made redundant. In September, during her period of notice, she was re-engaged in a different division but in the same company. It was agreed that there would be an 8-week trial period during which either the employee or the management could give the other notice on the basis that the new employment was unsuitable. In October the employers did terminate the employee's employment on the basis of her unsuitability for the job she was doing. In consequence, the employee claimed she was unfairly dismissed in the October. The employers claimed that s.84(6) applied, which gave them the right to dismiss during the trial period for any reason whatsoever and, therefore, they could not be amenable to a finding of unfair dismissal. Mr Justice Gibson rejected the employer's argument, saying unfair dismissal fell to be determined under s.57 of Part V. Part VI contains provisions governing rights of employees to redundancy payments. As s.84 falls within Part VI it was the natural construction of that part of the Act that its provisions only apply for the purposes of Part VI. In his judgment he went on and said that the provisions of s.84 were designed:"to provide a defence to an employer faced with a claim for redundancy payments on a dismissal in circumstances where the employee [had] even before the dismissal obtained another job with the same ... employer" .He said he would be surprised:
"... if Parliament had intended to permit an employer to dismiss an employee unfairly [even] in the trial period."
...
"In our opinion, section 84 was not relevant to the employee's complaint of unfair dismissal [in the] October ..."
The originating application claimed not redundancy payment but re-engagement. Had she claimed redundancy payments, he said, whether by reason of dismissal in the September or the October, s.84 would have been relevant to defeat the claim in the light of the payment received by her of redundancy payment on 17 September and, in so deciding, the Employment Appeal Tribunal, which he chaired, found the Industrial Tribunal had erred in applying s.84.Mr Hodgson, who has argued the case before us today on behalf of the employers, relied in part upon the case of Singer Company (UK) Ltd v Ferrier , a decision of this Tribunal. In that case, an employee was dismissed for industrial action but was re-engaged before dismissal took effect. Subsequently, he was declared redundant and he claimed that he had been unfairly selected for redundancy. It was held by the Employment Appeal Tribunal that he had been re-engaged so that s.84 applied so as to provide continuity of employment, namely, the original dismissal had vanished and, therefore, the employees were entitled to claim redundancy payments. The employers argued that s.84(1) did not apply, so as to provide continuous employment for the claimants and, therefore, they were not entitled to redundancy payments.The Employment Appeal Tribunal confirmed the Tribunal's decision, holding that s.84(1) applied as it seems to all sorts of dismissals, presumably fair and unfair. The point that s.84 is only applicable in cases of dismissal or redundancy, was not the subject of argument before that Tribunal.This decision is criticised by Harvey in Industrial Relations and Employment Law at Section III, page 208. It states:
"Section 84 is dealing only with the question of whether an employee is dismissed for the purposes of the redundancy scheme and it causes to vanish only a dismissal by reason of redundancy."
It has no application to a case like Ferrier when there is no question of redundancy on the occasion of the original dismissal. Unhappily, to date there was no authority that he could cite to support that contention and the question remains, does s.84 apply, no matter what the basis of the claim made in consequence of the original dismissal, as in this case, on 21 August. Mr Hodgson says, "Yes" and he says so in reliance, in part, on Singer's case but he also says, "This is a case where dismissal was for redundancy, though the claim was for unfair selection and that, therefore, s.84 does apply". In part also he relies upon the excerpt from Harvey's book that I have referred to. It might be said that he could pray in aid the observations of Mr Justice Gibson in the Hempell case, where he says that s.84 was designed to provide employers with a defence when faced with a claim for a redundancy payment on a dismissal in circumstances where there had been re-engagement.The question, therefore, is does the nature of the claim following a dismissal determine applicability of s.84 as the Industrial Tribunal held or the does the reason for dismissal determine that question? Our disadvantage in determining this matter is that unhappily there has been no appearance on behalf of the employees to argue the contrary case.Our judgment is that it is the substantive reason for the dismissal which determines the applicability of s.84. The facts in the Hempell case are, indeed, radically different than those which apply in the present one and, in our judgment, one has to read the observations of Mr Justice Gibson in that case in the context of that case and do what one can to apply them to the fact of this.We decided, as I have already indicated, that it is the substantive reason for the dismissal which determines the applicability of s.84 and not the procedural aspects of such a dismissal, which determines whether it has been a fair or unfair dismissal. In this case, dismissal was for redundancy. Section 84 is there to provide the employer with a defence to a claim by an employee substantially based upon the redundancy situation.Those being our conclusions, this appeal must be allowed but our decision only covers a limited aspect of the applicability of s.84. There is another issue which has to be decided. It is essentially a question of fact and would need to be determined by an industrial tribunal. In this case there was a break in time between the date of the dismissal on 21 August and the employee's re-employment on 2 September. This fact makes it a crucial issue whether the second contract was a renewal or a re-engagement within the meaning of s.84(1). A break is permissible where there has been a renewal but in the case of a re-engagement it has to take place before the moment of ultimate dismissal. It must be for a tribunal to decide in this case as to whether, on the facts of this case, there has been a renewal or a re-engagement. It is, in our view, difficult that we should offer the Industrial Tribunal that determines this matter guidance as to the precise definitions and meanings of the words "renewal" and "re-engagement". There is difficulty in this particular definition but we do not feel that on this occasion we are qualified to give guidance on the basis that the notice of appeal which was entered in this matter, does not raise this as an issue for our determination and, in addition to that, the employee, as I said, has not been represented before us and, quite plainly, they should be afforded the opportunity of arguing those matters which are relevant to that issue and they will have that opportunity if this case is remitted to an industrial tribunal to determine.In our view, it is obviously sensible that the Industrial Tribunal, who has given so much attention and care to this case hitherto, should be the tribunal to determine these issues and, accordingly, our direction is that the case is remitted to the same Tribunal in order that they might be determined.