London Borough Of Newham v Newham College Of Further Education & Ors [1996] UKEAT 876_95_3101

EAT
London Borough Of Newham v Newham College Of Further Education & Ors
[1996] UKEAT 876_95_3101 · 1996-01-31
MR JUSTICE TUCKER: The Appellants in this case are the London Borough of Newham. They appeal against the decision of the Industrial Tribunal sitting at Stratford in East London on 1 June 1995. That decision was given on the determination of a preliminary issue, as to whether either of the two Respondents to an application, should be dismissed from the proceedings. The other Respondent in addition to the Appellants was Newham College of Further Education. The Tribunal unanimously decided that the claim against the College was dismissed. The Applicants are Mr David Gander and Ms Laura Gander. They did not appear before the Tribunal and have not appeared before us. They are not concerned in the resolution of the preliminary issue. Their claims are for unfair dismissal and for redundancy payments, arising from their employment as part-time lecturers at the College, which used to be called Newham Community College.The point to be resolved in the preliminary issue, is which of the two Respondents, the Council or the College, is the appropriate Respondent to meet these claims. The matter arises in this way: until their dismissals in 1992, the Applicants were employed at the College. At that time it was the Community College, and it was maintained by the Appellants in their capacity as a local education authority. However, on 30 September 1992, the Further and Higher Education Act 1992 came into effect. On 1 April 1993, pursuant to the provisions of that Act, the College was incorporated; it became a separate entity, and it changed its name to the Newham College of Further Education. The Act dealt with the vesting of property and liabilities in the new body.

(b) which provides:

"23. Transfer of property, etc: institutions maintained by local education authorities (b) all rights and liabilities of any such authority subsisting immediately before that date which were acquired or incurred for those purposes, shall be transferred to, and by virtue of this Act vest in, that corporation."
So far so good. All rights and liabilities shall be transferred.

(a) which provides:

"61(2) References in this Part of this Act, except section 26, to the transfer of any person's rights or liabilities do not include-- (a) rights or liabilities under a contract of employment"
And so the rights and liabilities of the local education authority which are transferred to the new College, do not include any persons rights or liabilities under a contract of employment, which remain with the Council. The question for resolution is whether the liabilities arising out of the claims for unfair dismissal or redundancy pay are "liabilities under a contract of employment". If they are, then they remain vested in the Council, and it is the Council who are the proper Respondents to the claim. If they are not liabilities under a contract, then they are transferred to the College, who are the proper Respondents.The Tribunal had the benefit of submissions from Counsel, including Mr Katan for the College, who has also appeared before us. The Tribunal made a careful review of the arguments presented on either side. They looked at the relevant statutory provisions. They set out their conclusions in these words contained in paragraph 15 of their reasons:
"... In our view the right not to be unfairly dismissed and the right to a redundancy payment are both rights under the contract of employment. Looked at another way it would be somewhat eccentric if a claim for wrongful dismissal, being a contractual right lay against the old employer whilst a claim for a redundancy payment or unfair dismissal fell to be contested by the new body corporate who had no hand in the dismissal and, as in this case, may have no records relating to these employees.
It seems to us to accord with commonsense to treat all those rights which are derived directly from the employment relationship as being "rights under the contract of employment" rather than to separate contractual rights from statutory rights and impose obligations for the former on the old authority and for the latter on the new corporation."In reaching that decision, the Tribunal were clearly influenced by the split in responsibility which would occur if they adopted the view urged upon them on behalf of the Council. However, with respect to the careful way in which the Tribunal approached this question of law, we believe that they were wrong. First, in our opinion the meaning of the phrase "under a contract of employment" is plain and unambiguous. Adopting the literal rule of construction, it connotes rights or liabilities which derive from the contract itself. It is trite law, though the courts have nevertheless on occasions had to state it, that claims in respect of unfair dismissal and redundancy pay, are not rights which arise out of or under a contract, but are creatures of statute. It is worth quoting a passage from the judgment of Mr Justice Phillips in W Devis & Sons Ltd v Atkins [1976] ICR 196 page 203 where the learned judge said this:
"... it has to be borne in mind, I think, that there is a considerable difference between the position at common law and the position under the Industrial Relations Act 1971 and, now, under the Trade Union and Labour Relations Act 1974. The common law is concerned merely with the contractual relationship between the parties, whereas a complaint of unfair dismissal under the Act of 1974 is concerned with the statutory right of an employee not to be unfairly dismissed. It is important to note, I think, that the expression "unfair dismissal" is in no sense a common sense expression capable of being understood by the man in the street, which at first sight one would think it is. In fact, under the Act, it is narrowly and, to some extent, arbitrarily defined. And so the concept of unfair dismissal is not really a common sense concept; it is a form of words which could be translated as being equivalent to dismissal "contrary to the statute" and to which the label "unfair dismissal" has been given."
The statute has changed and the statutory rights now arise under the provisions of the Employment Protection (Consolidation) Act 1978 . See for example, Section 54(1) which provides:
"(1) In every employment to which this section applies every employee shall have the right not to be unfairly dismissed by his employer."
Second, the wording of Section 26 of the Further and Higher Education Act seems to us to reinforce this view. That section it will be remembered, was expressly excepted from the provisions of Section 61. It is the section which applies to any person who was employed immediately before the operative date, and accordingly, does not apply to the Applicants in the present case. Relevant parts of that section are in ss2 and 3, which provide:
"(2) A contract of employment between a person to whom this section applies and the transferor shall have effect from the operative date as if originally made between that person and the corporation.
(3) Without prejudice to subsection (2) above-- (a) all the transferor's rights, powers, duties and liabilities under or in connection with a contract to which that subsection applies shall by virtue of this section be transferred to the corporation on the operative date."In our opinion, the additional words "in connection with" are significant. They are not to be regarded as otiose. They are, we believe intended to mark a distinction between this section and Section 61. If the words "in connection with a contract" had been included in Section 61(2)(a) as they could have been, then it may well be that the statutory rights would be included. But the words do not appear in that sub-section. They are clear words and we cannot agree with the Tribunal's reasons for disregarding them. Thirdly, we disagree with the view which the Tribunal appear to have formed that the use of the phrase "under a contract of employment" in Sections 81 and 153 of the 1978 Act , supports the contention that the relevant rights arose under the contract of employment. We accept the submission of Mr Howe for the Appellants, but the fact that the person is employed under a contract of employment, is merely the qualifying condition which entitles him or her to make the statutory claims.Finally, there is in our opinion, a clear distinction to be drawn between contractual obligations freely entered into between two contracting parties, and statutory obligations which are imposed by Parliament, and also between the rights which are a corollary to those obligations. It was in our opinion, the intention of Parliament and of the draftsman of the Act to preserve this distinction.Mr Katan has striven to uphold the Tribunal's decision in a number of attractively argued submissions. Thus he submits that although as he has to concede, the rights not to be unfairly dismissed and to redundancy pay do arise out of the statute and were new rights created by the Industrial Relations Act 1971 , they only come into operation under a contract of employment. This we think is a misunderstanding of the situation, since as we have said, the contract of employment is merely the qualifying event. Mr Katan also draws attention to the phrase "acquired or incurred" for those purposes, in Section 23(2)(b). He submits in reliance on sub-section 2(a), that the purpose is the purpose of the institution. He goes on to submit that there must be an element of intention in the word "purpose" and that the alleged liability is one that is not countenanced at the time of the alleged dismissal, and so, if a liability has been incurred, it is accidental and there is no element of intention. Mr Katan bases this submission on the decision of the House of Lords in the case of Sweet v Parsley [1969] 1 All E.R.347 . But that was a case far removed from the subject matter of the present case. It was concerned with mens rea in the criminal law. We do not derive any assistance from it.We acknowledge, that as a result of the view which we have formed, there will be a split of responsibility, according to whether an action for wrongful dismissal or an application for unfair dismissal is brought. That must be the inevitable consequence, but nevertheless it is a consequence of plain words which were used by the draftsman of the Act. We agree with Mr Howe's submission that it is not so absurd or ridiculous as to compel us to the view that our opinion is not correct, or that the clear words of the statute should not be given their plain meaning.Accordingly for the reasons which we have sought to set out, we have come to the conclusion that the Industrial Tribunal reached a decision which was wrong in law. We therefore quash that decision. Our unanimous decision is that it is the claim against the Appellants, the London Borough of Newham, that is dismissed. The claim must proceed against the Respondents, the Newham College of Further Education.