Redfern v Red Bank Manufacturing Co Ltd [1997] UKEAT 1187_96_2207

EAT

Redfern v Red Bank Manufacturing Co Ltd

[1997] UKEAT 1187_96_2207 · 1997-07-22

MR JUSTICE KIRKWOOD : Mr James Redfern appeals against the decision of an Industrial Tribunal sitting on Leicester on 8th August 1996 that his contract of employment was not broken by the employer. Accordingly his pleaded claim for compensation for breach of contract was dismissed.

The majority of the Industrial Tribunal found that the terms of alternative employment offered to Mr Redfern were reasonable in all circumstances, so that upon his refusal to accept them there was no breach of contract. The majority also found that Mr Redfern had been out of time for opting for a redundancy.

The employer, Red Bank Manufacturing Co. Ltd. is in the business of making bricks and clay tiles and the like, for use in the building trade. Mr Redfern was employed by the Company from 10th October 1970. The latest contract of employment available to us is one of 8th December 1993 which sets out his job title, and it contains what has been referred to as "mobility clause". His wages at that time were £4.97 per hour. That figure subsequently increased over time to £5.32 an hour. Normal hours of work were 39 per week. There was provision as to notice and so on.

In the Summer and early Autumn of 1995, the recession in the building trade continued. The expected upturn in the industry had not materialised. The employer had large stocks of materials. The employer had to take drastic steps and had to rationalise its manufacturing operations in order to survive. To that end, the employer had continuous and useful negotiations with the Transport & General Workers Union of which Mr Redfern was a member. There were lay-offs; there were redundancies which did not in fact involve Mr Redfern. The employees were kept informed. For example, on 12th September 1995, the employer wrote to Mr Redfern in these terms:

"The continuing poor performance in the construction industry shows no signs of improvement during the coming year and we have found it necessary to completely rationalise our manufacturing operations. We continue to consult and discuss all matters relating to this major reorganisation with your local Transport & General Workers' Union officials. Regretfully, we have already declared 47 redundancies and the re-opening of the clayware factory has been delayed to 18 September 1995."

The letter continued in that sort of vein, informing Mr Redfern, as others were informed, of the progress, and of the thinking of the employer.

On 22nd September 1995 the employer wrote to Mr Redfern:

"The reopening of the brick plant is still uncertain and the lay-off is likely to be prolonged.

Taking any holiday entitlement during the early part of the lay-off may have cushioned you financially be we are concerned that this extended lay-off could cause you further hardship. We understand that A & A Recruitment, Ashby are busy at the moment and could be in a position to place you in temporary employment.

We are presently accepting volunteers for redundancy, therefore if you wish to be considered you should contact Sharon Pethick in the personnel department."

The letter then goes on to set out the arrangements for Mr Redfern to see union representatives during the day or at their homes in the evening should he wish to do so.

On 16th October 1995, the employer wrote to Mr Redfern an important letter:

"Sales in the brick industry continue to decline in a very weak construction market, and it is against this deteriorating situation that we have had to declare a further 33 redundancies which have been notified today.

You have not been selected for redundancy but we regret we do not anticipate being in a position to recommence brick production until 5 February 1996 and must therefore inform you that you will continue to be laid-off.

Following on from our letter of 12 September 1995 we have now completed our plans for the operational changes in the brick plant and we confirm that you will recommence full-time employment on reopening. We give you notice that you job will be Day Cleaner at the rate of pay of £4.03 per hour, all other terms and conditions of employment being unchanged.

Would you please signify your acceptance of the changes to your particulars of employment by completing and returning the enclosed form by 18 November 1995.

Thank you for your patience in these difficult times, but we expect that the changes made to brick production operations will prove to be a firm basis upon which we can build an efficient production facility providing in the future, long term, uninterrupted employment."

It appears that sometime after that Mr Redfern made an enquiry as to the money that would come to him were he to opt for redundancy and that information was sent to him on 26th October in a document to which I shall make further reference in a moment.

On 9th November 1995 a more cheerful letter to Mr Redfern:

"We are pleased to advise you that we are now in a position to bring back all laid-off personnel, and the redundancy situation is no longer applicable. Your next guarantee payment is due to be paid on 16th November 1995 and as we are unable to offer both employment and the guarantee payment in the same week we have to postpone your return until 7.00 am on Monday 20th November 1995. If you wish, you may report for work on Monday 13th November but you will not be paid the guarantee payment."

On 14th November 1995 Mr Redfern responded to the letter of 16th October in which the terms of employment following the restructuring were set out. He made some deletions to it so that it read:

"I acknowledge your letter of 16 October 1995 but I do not accept the proposed changes to my contract of employment "

He then signed that and dated it 14th November 1995.

On 20th November 1995 the employers had a meeting with Mr Redfern in which they plainly tried to persuade him to take the job that was offered. They were not successful in that. They offered him another 24 hours to consider the position, but he said no. The upshot was that they had to write to him on 20th November:

"Following your refusal to work under the changed terms of employment which we had consulted and collectively agreed upon with local and area representatives of the TGWU we regret we have no alternative but to terminate your employment with Red Bank with effect from today's date. I enclose details of the meetings you had with Mr K A Russell this morning. These will be filed with our records and if you consider there are any errors or misunderstandings you should notify these to me in writing as soon as possible."

Then, there is a paragraph about the P45, holiday entitlement and so on; and it concludes:

"We thank you for the service you have given to Red Bank over the part 25 years and we are sorry that your employment with us has had to end in this way."

The last letter in the history is a letter of 1st December 1995 in which the employer set out a further offer of work to Mr Redfern indicating that whilst for the moment he was being offered a job as a day cleaner at what had now become £4.20 per hour, from the beginning of January 1996, there was other work available and on offer to him paying in excess of £6 per hour average.

That is the factual background.

The litigation that flows from it seems to us to have gone wrong from the beginning. On 2nd February 1996 Mr Redfern applied to an Industrial Tribunal with the assistance, it is to be noted, of a solicitor, Mr D H Walton. The Originating Application - form IT1, is defective in that it does not specify in Box 1 the type of complaint the tribunal was being asked to decide. The only clue as to that is in the particulars of the complaint in Box 12 which concludes with these words:

"I therefore claim compensation for breach of contract."

However, in its extremely short extended reasons, handed down on 11th September 1996, the tribunal seems to indicate that it was asked to consider three matters namely, breach of contract, unfair dismissal and a contractual entitlement to a redundancy payment. To the extent that it considered those three matters, the tribunal does not, at least in respect of the first two, set out the statutory or other legal framework upon which it approached its task. On the questions of breach of contract and unfair dismissal, the tribunal said:

"2. The question that we have to decide is whether those reduced terms that were offered, were in all the circumstances reasonable bearing in mind the recession in the building industry, the agreement of the union and the desire of the respondent to keep people working in the department that he was opening up.

3. The majority view in this Tribunal is that the terms were, in the circumstances, reasonable and therefore, because the applicant refused to accept them there was no breach of contract and the dismissal was not unfair. The minority view, however, is that the new offer of pay was so fundamentally reduced as to make the refusal by the applicant quite reasonable."

It seems to us that the first question for the tribunal to consider was whether there was a breach of contract. There, the starkest, though not necessarily the only point, is the apparent 25% reduction in the basic rate of pay which may have carried with it a knock on detriment in its impact on holiday pay and pension rights. Whether it did in fact do so, we do not know, because the tribunal made no findings. Again, how important a feature that pay reduction in fact was, whether in fact the new offer amounted to a breach of the employer's contractual obligation to pay wages at a basic rate of £5.32 per hour, as it appears on the surface to have done, may depend upon detailed evidence and findings as to the overall wage package. We have no such findings.

Miss Whipple asks us to draw an inference that the basic hourly wage reduction is not in fact significant, and to draw the inference from the tribunal's finding that the terms that were offered were, in all the circumstances, reasonable.

We are quite unable to draw any such inference, because the tribunal was looking at other matters. In particular, it was looking at the recession in the building industry.

The way the case is put to us on the respondent's behalf, is that there was a dismissal but that the respondent was entitled to dismiss summarily. The tribunal did not address that question at all.

Upon dismissal, the letter that is of 20th November 1995, the employee may have been entitled to notice or to pay in lieu of notice. In the absence of either, he was entitled to damages in a sum equal to the amount of pay in lieu of notice he should have received, subject of course to his duty to mitigate his loss. Alternatively, the employer was entitled to dismiss summarily. The refusal of a lower paid job does not of itself entitle the employer to dismiss summarily. Without more, such refusal may go to mitigation of loss. In saying that, however, we recognise that the employer may well wish to argue that all was not as it appears on the documents, that on a proper interpretation of those documents supplemented by oral evidence, in other words on the case as a whole, it was entitled to dismiss summarily. If there was indeed a breach of contract so that a right of damages arise, it would become necessary to give close consideration to the employee' duty of mitigate his loss. A number of considerations would come into play, but those might well include the refusal of the offer contained in the letter of 16th October 1995, and of the further offer of work contained in the letter of 1st December 1995.

A decision on the question of breach of contract does not necessarily determine the question of unfair dismissal. There certainly was a dismissal. The proper approach for the Industrial Tribunal was therefore to consider the provisions of s.91(1), (2) and (4) of the Employment Rights Act 1996 or, as appropriate, its predecessor.

In its extended reasons to which I have referred, the tribunal makes no mention of s.91. Miss Whipple asked us to infer that the tribunal clearly had those provisions in mind. But in the light of what seems to us to be the generally confused approach of the tribunal to the questions before it, we are unable to draw such an inference. Indeed, the tribunal's reasons seem to us to have had s.141 of the 1996 Act as some sort of guide to them. S.141 applies to redundancy claims, it does not apply to unfair dismissal.

In respect of both these matters, Miss Whipple has urged upon us that there are here sufficient findings of fact in the extended reasons to enable us to apply them to the law as it should have been applied and to substitute a decision of our own for that of the tribunal concurring, but by a different route, with the decision in fact made. But as Miss Whipple developed that argument, it became necessary for her, repeatedly I think, to refer to evidence in fact given before the tribunal, but as to which the extended reasons are silent. That merely illustrated the difficulty that faces us.

Much as we would have liked to avoid the expense and trouble of any further litigation, we simply do not have sufficient findings of fact from the tribunal for a substitution of our own decision.

Even though it was not raised in the Originating Application, the Industrial Tribunal considered a point on what has been referred to as the contractual right to a redundancy payment. It turns on a document which is at page 35 in the bundle of documents before us. It is headed:

"REDUNDANCY FIGURES FOR MR J REDFERN (42)

26 October 1995

Redundancy figures for termination of employment on 3 November 1995 are as follows:

[ There is reference to a period of service finishing on :] 3.11.95 ... [ and at the end :]

If you wish to take redundancy, please sign and return this form to Mrs Sharon Pethick, Personnel Department.

I wish to take redundancy on 3 November 1995.

[ There is a place for signature and for the date of the signature. ]"

Mr Redfern had been into the office to ask what he would get if he opted for voluntary redundancy, and that document of 26th October 1995 which set out figures which I have not read out, was the answer. There were three clear reference on it to termination for redundancy on 3rd November 1995.

Mr Redfern returned it so as to arrive on 9th November 1995. He dated it 8th November 1995 and said that he wished to take redundancy not on 3rd November 1995, but by crossing out the 3 and inserting 17, he said he wished to take redundancy on 17th November 1995.

The response was that that was too late. The document as sent back by Mr Redfern is endorsed with these words:

"Redundancy offered for 3rd only. No extension."

It is signed by Mrs Seal, who is the Executive Director, Personnel and Administration.

In his Originating Application, Mr Redfern said this:

"I had been notified (on the 22nd September 1995) that volunteers for redundancy were being taken. On the 26th October 1995 redundancy pay calculations were prepared for me at my request. On the 17th November 1995 [ that is said to be a typing error for 8th November ] I notified the Respondent Company that I wished to be considered for a redundancy payment. I was advised the situation had changed and that redundancies were no longer available."

It will be clear by reference back to correspondence to which I have already referred, that it was the case that in the first part of November 1995 the situation in the industry had eased so that the employer was ready to have Mr Redfern back at work on 13th November 1995, and he could have started that day but for the point about the guarantee payment which led to an alternative suggestion of 20th November 1995.

For the appellant, Mr Redfern, two arguments are presented about this offer of redundancy. The first is that the 3rd November 1995 was not a contractual date. This was not a time limited offer. We noted, however, that in argument Mr Beard for the appellant contended neither that it was an offer open indefinitely, nor could he say what its 'sell by date' may have been. The second argument is that one of the respondent's witnesses said in evidence to the tribunal that if Mr Redfern had indicated on 8th November 1995 that he would take redundancy from 3rd November 1995, he would in fact have been paid.

It is plain to us that the key to this offer was the date of redundancy, rather than the exact date of acceptance.

For the respondent the primary argument was that this was an offer that was not accepted. Alternatively, that the purported acceptance with altered dates was a counter offer.

The Industrial Tribunal's conclusion on this aspect of the case was in these terms:

"4. The second point which was brought up by the applicant was on the question of redundancy. He went into see the respondent to inquire what money would be payable to him if he chose to become redundant because at that time there was an option to be redundant. He was sent the terms of pay and on the form it said that the redundancy terms were valid until 3 November 1995."

I think, pausing there, that the words "were valid" are an interpolation by the Industrial Tribunal. However that may be, their finding goes on:

"The applicant did not accept those terms until 8 November and by that time the conditions in the respondent's firm had changed and work was available to the applicant. The respondent refused to make the applicant redundant and therefore refused to pay him redundancy pay. Was there a breach of contract there? The words of offer and acceptance had been put before us this afternoon and again there is a majority view that the offer was made to expire on 3 November 1995. It was not accepted within the time."

A perversity argument is put forward on the appellant's behalf in respect of that finding. But we really find no merit in it at all. We are satisfied that there is no reason for us to disturb the finding of the Industrial Tribunal on this contractual remedy point, and the appeal in that regard will be dismissed.

In the course of argument, we raised the point that on a proper analysis of the events of October and November 1995, there might potentially have been a fourth point open to be raised before and considered by the Industrial Tribunal, namely statutory redundancy. That was not however raised by Mr Redfern in his Originating Application. It was not considered by the Industrial Tribunal. It was mentioned neither in the Notice of Appeal, nor in the skeleton argument in support of the appeal. It is accordingly far too late for it to be raised now.

In the result, this case will be remitted for a fresh hearing by a newly constituted tribunal on the breach of contract and unfair dismissal points only.

No order for costs.