Alcan Extrusions v Yates & Others [1996] UKEAT 980_95_0502

EAT
Alcan Extrusions v Yates & Others
[1996] UKEAT 980_95_0502 · 1996-02-05

JUDGE C SMITH QC :

This is an appeal by the employers, Respondents before the Industrial Tribunal, Alcan Extrusions, against the decision of an Industrial Tribunal sitting at Reading on 28 July 1995, when the Chairman sitting alone decided on a preliminary issue that the Applicants before the Industrial Tribunal, Mr T J Yates and 61 others were dismissed, applying section 55(2)(a) of the Employment Protection (Consolidation) Act 1978.The Respondent employees before the Industrial Tribunal claimed unfair dismissal on the grounds that the Appellants had ended their contracts of employment with effect from 3 January 1995.The Chairman sitting alone upheld that claim and held, following the decision in Hogg v Dover College [1990] ICR 39 , a decision of the Employment Appeal Tribunal, that the Respondents were all directly dismissed within the meaning of s.55(2)(a) of the 1978 Act. The Chairman also concluded had he had to decide the point that:

"... it may also be true that they have been constructively dismissed"

within section 55(2)(c) of the 1978 Act.Before we come to the able submissions that have been made to us and consider the decision, we must state the background to the matter shortly. The details with regard to the background and the factual circumstances in relation to this matter are all to be found in the reserved extended reasons, to which full reference should be made for the details should the matter go any further because what we now say is no more than a bare summary.All the Respondents worked for the Appellants at their factory at Banbury as press crew men on numbers 5 and 10 presses. They were all members of the Union, the GMB, the Boilermakers Union. In paragraphs 6-11 of the extended reasons, the Chairman analysed the contractual position from the documents in some detail and concluded at paragraph 12 that the agreement in the yellow book, incorporated into the Respondents' individual contracts of employment, provided for predictable weekly operation and that the Appellant employers wished to change that state of affairs.As the Chairman found, the Appellants wished to change the system of work fundamentally to a new continuous shift pattern and by the 20 November 1994, if not before, the employers were maintaining that, in the absence of agreement, they were entitled to impose a change to a continuous shift system of work. In paragraphs 12-19 of the decision, the Chairman carefully recorded the ultimately unsuccessful negotiations which took place from about August 1994 onwards between the Appellants and the Union acting on behalf of the Respondents and he summarised the changes brought about by the proposed new arrangements. For the details of the changes it is appropriate to look at the findings of the Industrial Tribunal. In summary only, the "old" contract, as we will call it, called for a 37-hour week worked on shifts, i.e., a traditional shift system, from 6 am on Monday to 6 am on Saturday. Whereas the proposed "new" contract called for a continuous rolling shift system, including Saturday and Sunday shifts and Bank Holidays. There were considerable consequential changes as well. Under the "old" contract outside the shift system, overtime was paid, putting the matter shortly. Under the "new", no overtime for weekends and Bank Holidays. Under the "old" contract, there was more freedom of choice in relation to holidays, whereas under the "new" contract, choice of holidays was more restricted.There was also a difference in relation to shift premiums adversely to the employees and there was a difference in relation to start-up payments under the new contract. No start-up payments were payable save in respect of the summer and Christmas shut-downs.Those were the matters summarised by the learned Chairman in that way. As the Chairman of the Industrial Tribunal recorded, letters were sent to all the Respondents in November and December 1994, copies of which we have seen, which are at pages 63-75, 76 and 79 of the bundle respectively, which required the employees to transfer to a continuous working shift pattern with effect from 4 January 1995. As appears from the bundle of documents before us and before the Industrial Tribunal, a pro forma letter of reply was sent by all the Respondents, which is at page 78, stating that they regarded the changes as amounting to a fundamental breach and tantamount to dismissal. The letters went on to stipulate that the Respondents would work under protest, reserving their rights to claim unfair dismissal and redundancy entitlement. As the learned Chairman found, since the beginning of January 1995 the Respondents have continued to work under protest.It was in the light of those findings of fact that the learned Chairman went on to address the issues in the case and, in particular, that which he postulated in paragraph 20 of the decision, which he expressed in this way:
"The submissions to the Tribunal centred on the questions whether the respondents had a right to vary the arrangements contained in the agreement referred to at paragraph 6 above, and whether the changes which they effected unilaterally were truly material changes to the applicants' contracts of employment. The legal argument centred around the decision of the EAT in Hogg v Dover College . Was there a termination of the contracts of employment under which the applicants worked followed by a substitution of new terms and conditions? Was there a direct dismissal under the terms of Section 55(2)(a) of the Employment Protection (Consolidation) Act 1978 or a constructive dismissal of the applicants by virtue of Section 55(2)(c)?"
That was how the learned Chairman posed the issues which he had to determine and he then went on to consider the case of Hogg which we have already referred to in considerable details at paragraphs 21-24 of the decision.After reciting the submissions that were made to him by Counsel on each side, he then reached his findings, which are to be found particularly in paragraphs 30, 31 and 32. He first of all concluded in paragraph 30 that the Respondents had acted in breach of contract in making the changes they had. He held that they had no right under the terms of the original agreement, unilaterally, to make changes, as he put it, whereby the Respondents were compelled, if they remained in work with the Appellants, to change from one pattern of shift-working to another. As he put it:
"The 1988 agreement makes an essential distinction between the shift pattern upon which the applicants were working and the rolling shift pattern which such other departments as the security department worked. The two were never contemplated as being one and the same. There was an essential distinction between them."
He then went on to consider the position in the light of the authority of Hogg and concluded that the facts and the position in which the Respondents found themselves were essentially the same as the more simple situation, as he put it, which arose in Hogg 's case. He continued:
"I conclude that the applicants' former contracts of employment providing for employment in jobs with a steady and predictable pattern of shift employment were removed from them and replaced by an altogether more demanding and previously uncontemplated regime of rolling shift pattern work which the applicants were certainly not obliged to undertake by their contracts of employment. I unhesitatingly adopt the part of the judgment of Garland J set out at paragraph 23 above."
He there cited a passage from Mr Justice Garland's judgment which he set out in paragraph 23.In paragraph 32 he concluded that the Respondents were all directly dismissed in those circumstances.It is that decision, expressed in that way, which we have to consider in the light of the submissions that have been made to us today.The submission which was made to us by Counsel for the Appellants, Mr Reddiford, was to the effect that the Chairman had misdirected himself in relation to the decision in the case of Hogg , so that he asked himself the wrong question and, in that way, had come wrongly to conclude that there was an express dismissal here within s.55(2)(a) of the 1978 Act, whereas it was his submission that such a conclusion was not open to the learned Chairman in the circumstances here. He submitted, as we understood his submission, that it is only where, as in Hogg , that a letter from an employer or other conduct on the part of an employer, objectively considered, can be construed as a statement that the former contract has gone and was being withdrawn from the employee, that the situation is truly comparable to the case where an employer says in terms to an employee, "You must go". Anything less than that, he submitted, falls to be considered as a potentially repudiatory breach, which gives the employee the options whether to remain under the old contract or to resign or to work under protest. The exercise of the latter two options bringing about a dismissal under s.55(2)(c) of the 1978 Act.His submission was that the Chairman must either have misconstrued Hogg or reached a conclusion which was perverse since, in his submission, on their proper construction, the employer's letters before the learned Chairman amounted to no more than the wrongful imposition of contractual changes to a contract which remained in existence. He submitted that such a situation cannot amount to a s.55(2)(a) dismissal but must always be characterized as giving the employee the options which we have outlined above. He placed reliance upon the case of Rasool & Others v Hepworth Pipe Co Ltd [1980] ICR 494 and, in particular, the passage from Mr Justice Waterhouse's judgment in the Employment Appeal Tribunal at page 503 at F where Mr Justice Waterhouse applied the well-known test applied by the Court of Appeal as laid down in the Western Excavating (ECC) Ltd v Sharp [1978] ICR 221 and, in particular, cited the passage from Lord Denning's judgment, which is cited in Rasool at page 504:
"Paragraph 5(2)(a) deals with cases where the employer himself terminates the contract by dismissing the man with or without notice. That is, when the employer says to the man: `You must go'. Paragraph 5(2)(c) deals with the cases where the employee himself terminates the contract by saying: `I can't stand it any longer. I want my cards.'"
Further, he relied upon the dictum of Lord Oliver in his judgment in the case of Rigby v Ferodo Limited [1988] ICR 29 at page 35 where the learned Law Lord said:
"For my part, I can see no reason in law or logic why, leaving aside for the moment the extreme case of outright dismissal or walk-out, a contract of employment should be on any different footing from any other contract as regards the principle that `an unaccepted repudiation is a thing writ in water and of no value to anybody': per Asquith LJ in Howard v Pickford Truck Co. Ltd 1951] 1 KB 417, 421."
He submitted, accordingly, that since there had been no finding made by the learned Chairman one way or the other as to whether there was or was not a repudiatory breach of contract, the case should go back to an Industrial Tribunal to make the necessary findings in order to see whether there was a constructive dismissal under s.55(2)(c) of the 1978 Act.Mr Bowers, on the other hand, submitted on behalf of the Respondents that the Appellants were seeking to put far too restrictive a construction on the wording of s.55(2)(a), which he reminded us was in these terms:"if the contract under which he is employed ... is terminated by the employer" .He submitted that it is crucial to bear in mind that it is the contract of employment itself which must be looked, not the relationship of employer and employee. He submitted that on the proper construction of the letters at pages 63, 76 and 79 of the bundle to which we have already referred, it was perfectly open to the learned Chairman of the Industrial Tribunal to find that the employers were in effect saying:

"Your old contract has gone."

to these employees so that they were, in effect, giving the Respondent employees no option except to consent to a new, quite different and, from their point of view, inferior contract. He submitted that this was a permissible application of the principle in Hogg properly understood. He submitted that what Hogg establishes is(a) that you must look to see if the original contract has been terminated,(b) that the fact that an employer is proposing to employ employees on wholly different terms and on a wholly different basis can give rise to a termination under s.55(2)(a),(c) that the correct way to look at the question under s.55(2)(a) is to ask whether the old contract has been wholly withdrawn from the employee and(d) whether the action of the employer is sufficient to amount to satisfy the s.55(2)(a) test is a matter of fact and degree for the Industrial Tribunal to decide. He submits that it is quite clear from the terms of the decision that the learned Chairman did apply Hogg and apply it correctly, did ask himself the correct question and reached a conclusion well within the band of reasonable conclusions of fact which an Industrial Tribunal could reach.He further submitted, as very much an alternative submission, that if he is wrong about all of that it is quite clear that the Industrial Tribunal were finding repudiatory breaches and, accordingly, clear that there had been a constructive dismissal.We entirely agree with Counsel for the Appellants that it is only where, on an objective construction of the relevant letters or other conduct on the part of an employer, that it is plain that an employer must be taken to be saying, "Your former contract has, from this moment, gone" or "Your former contract is being wholly withdrawn from you" that there can be a dismissal under s.55(2)(a) other than, of course, in simple cases of direct termination of the contract of employment by such words as "you are sacked". Otherwise, we agree with him the case must stand or fall within s.55(2)(c).However, in our judgment, it does not follow from that that very substantial departures by an employer from the terms of an existing contract can only qualify as a potential dismissal under s.55(2)(c). In our judgment, the departure may, in a given case, be so substantial as to amount to the withdrawal of the whole contract. In our judgment, with respect to him, the learned judge in Hogg was quite correct in saying that whether a letter or letters or other conduct of an employer has such an effect, is a matter of degree and, we would hold accordingly, a question of fact for the Industrial Tribunal to decide. We fully accept that in many cases to construe letters or other conduct on the part of an employer which puts forward no more than variations in a contract of employment as amounting to a termination or withdrawal of such a contract, would be quite inappropriate and wrong. But in our judgment, Counsel for the Appellants was driven to the untenable position, as we believe it to be, that even very substantial departures from an original contract of employment could never amount, on an objective construction, to the termination of the original contract and its replacement by the offer of a different and inferior contract of employment but must always be characterised as breaches of the original contract.In our judgment, Counsel for the Respondents, Mr Bowers, was correct in submitting that whether or not the action of an employer in imposing radically different terms has the effect of withdrawing and thus terminating the original contract, must ultimately be a matter of fact and degree for the Industrial Tribunal to decide, provided always they ask themselves the correct question, namely, was the old contract being withdrawn or removed from the employee?In our judgment, looking at the letters at pages 63, 75, 76 and 79 and the findings of the Industrial Tribunal at paragraphs 13-15 of the decision, the learned Chairman of the Industrial Tribunal was entitled, on what we regard as the correct application of Hogg , to reach the conclusion which he expressed at paragraph 31 in these terms:
"I conclude that the applicants' former contracts of employment providing for employment in jobs with a steady and predictable pattern of shift employment were removed from them and replaced by an altogether more demanding and previously uncontemplated regime of rolling shift pattern work which the applicants were certainly not obliged to undertake by their contracts of employment."
In our judgment, he was entitled to conclude that the new terms were so radically different from the old as to pass beyond mere repudiatory variation of the old contract, so that they could properly be characterised as the removal of the old contract and the offer, by way of substitution, of a new and substantially inferior contract. In our judgment, that amounted to a finding of fact, which was correctly arrived at by the Industrial Tribunal on a correct application of the principle in Hogg .In our judgment, it is neither practicable nor appropriate to lay down any hard and fast rule as to when such conduct on the part of an employer will have such an effect and when it will not, provided that the principle is understood, namely, that the conduct must amount to the withdrawal or removal of the old contract. We respectfully adopt the trenchant views of Lord Justice Lawson in Western Excavating (ECC) Ltd v Sharp [1978] ICR 221 at page 229 to the effect that much must be left to the commonsense of the Industrial Tribunal to reach the just conclusion in all the circumstances.Accordingly, for the reasons we have given, the appeal is dismissed.