Cornwall Aluminium Windows Co Ltd v Dawidiuk [1997] UKEAT 1405_96_2306

EAT

Cornwall Aluminium Windows Co Ltd v Dawidiuk

[1997] UKEAT 1405_96_2306 · 1997-06-23

JUDGE HULL QC:

This is an appeal to us by Cornwall Aluminium Windows Co Ltd; the Respondent, Mr Andrew Dawidiuk, being an ex-employee of that company. He was employed by the Appellant company from May 1979 until May 1996, in other words for seventeen years. On 3 June 1996 he was laid off. That is the date that he gives, the employers give a date slightly earlier in May 1995 [they are wrong about the date, it is May 1996]. After being away from work for six weeks or so, Mr Dawidiuk gave notice to his employers that he was leaving their employment and they replied by offering to take him back.

Mr Dawidiuk complained to the Industrial Tribunal that in the circumstances he wanted redundancy pay. He said he had been dismissed by his employers by reason of redundancy and he made other monetary claims, which did not concern the Industrial Tribunal, in due course. He made his complaint on 14 August 1996. The Respondents, in their IT3 (Notice of Appearance) said this:

"Mr Dawiduik was laid off on 3 June 1996. He was paid his guaranteed pay and his week-in-hand."

They say that he had given the company notice of his intention to terminate his employment but orders had picked up again and he was asked to return to work. They say he had been fairly treated in all respects.

The matter came before the Industrial Tribunal. They referred, as they had to, to the contract of employment and they said that the question was whether the statutory provisions for laying-off applied. They referred to Section 147 of the Employment Rights Act 1996 which reads as follows:

"(1) For the purposes of this Part an employee shall be taken to be laid off for a week if— (a) he is employed under a contract on terms and conditions such that his remuneration under the contract depends on his being provided by the employer with work of the kind which he is employed to do, but (b) he is not entitled to any remuneration under the contract in respect of the week because the employer does not provide such work for him."

So there are two things which are to be established if Section 147 of the Employment Rights Act is to apply. That is to say that first of all the employee is employed under a contract on terms and conditions such that his remuneration depends upon his being provided with work and, secondly, that he is not entitled to any remuneration under the contract because the employer does not provide such work for him. Those two things of course usually go together. It is usually provided in contracts to which the statute applies that the rate of pay shall be 'so much', dependent upon work being done (of course it has to be provided) and that if work is not provided and cannot be provided, then there is to be no pay in respect of a particular hour or particular week in which work is not done. That is one particular type of contract. If there is such a contract, then of course there are various statutory provisions designed by way of guaranteed pay and by way of redundancy pay, if the lay-off continues, to compensate to some extent the employee for the situation in which he finds himself. The employer is doing nothing unlawful in those circumstances in saying to his employee "today I have no work for you, orders have fallen off, please go home. I will let you know when I can give you work again". There is nothing unlawful, no breach of contract in the employer doing that; if he does that, the employee acquires certain rights under the statute, as I have said.

The Industrial Tribunal then looked at the terms of employment. They looked at the contract. We have looked it at ourselves. It is headed 'Statement of Terms and Conditions'. Is it a contract of the sort which I have referred to; a contract under which pay depends on work being provided and varies with the amount of work and where pay need not be paid if there is no work?

The Tribunal looked at that and we look at that. Of course construing such a contract saying what it means, is a question of law and we are just as much entitled to look at the contract as the Industrial Tribunal was. The contract says:

"Your wage is £108 per week paid in arrears on a Friday by Cash"

I should say that the contract is dated 15 April 1985 and of course Mr Dawidiuk's pay has gone up since then. But that is what the statement of terms and conditions says, subject of course to the pay now being more. It says "Your wage is...". It does not say "your normal wage is" or "subject to provisions with regard to lay-off and short-time" or "even subject to rules" or anything of that sort, it simply says "Your wage is...".

On the face of it, therefore, Mr Dawidiuk was entitled to be paid £108 per week. It did not matter if there was no work for him on a particular day, or if his employers said to him "you may as well go and watch soccer today, there is no work for you". He was still entitled to say "while I am employed my pay is £108 per week". One knows of course that this is a common term. The employee knows that if on a particular day he is absent, through no fault of his own perhaps, or because the employer says "do not come in on that day" or even "do not come in this week", he is still going to get his pay. On the face of it, that is what the contract is saying. The normal hours of work it says are 40 per week, 8.00 a.m. to 4.30 p.m. Then we come to a term about company rules. After dealing with various other matters these terms and conditions say:

"Company Rules

These can be found in the Employee Information Folder and it is your duty to familiarise yourself with them and observe them at all times."

On the face of it a company rule can have two possible significances. Either it can be a rule in the ordinary sense, in which case it is simply a rule such as "there is to be no whistling in the corridors", or "employees in the office are to wear a jacket and tie", or "sober dress will be worn", or "wireless and radios are not to be played" or "smoking is not permitted on the premises". These are the rules which the employer imposes on the employee. They are not terms of his contract. The term of his contract is that he will carry out the work which he is given to do and which he is contractually bound to do and will do it in the way which the employer tells him to. So rules may come under that but they are not reciprocal obligations. The employer can change them from time to time, at any time. He can say "smoking is only to be in the rest room" or whatever it may be. These are rules which are laid down by the employer and which he can vary, not terms of the contract. But of course it is quite possible for a rule to be made a term of the contract. If the employer says "this rule is to be a term of the contract; it is to be added to the contract; it is binding upon both of us; I for my part will do this, you for your part will do that", that is the essence of a contractual term, if the employee agrees; and names do not matter; if it is called a rule, so be it.

We now look under "company rules". The statement of terms and conditions does not say that these rules are to be binding on the employer and the employee. It tells the employee that he is to observe them. There is nothing about the employer observing them. It does not say "these rules are part of your contract of employment", or anything of that nature. We turn to the rules and see that they are part of a number of documents which are contained in a folder which the employee is to consult. There is a provision here for guaranteed pay:

"The Company undertakes to provide payments as detailed in The Employment Protection (Consolidation) Act 1978 to employees who suffer loss of wages (ie, lay-off without pay) as a result of the Company's inability to provide work for the following reasons:..."

The reasons are set out which are rather wider, or at any rate more explicit, than the reasons given in the statute:

"This undertaking is associated with certain conditions. Failure to comply with these conditions would involve suspension of the programme."

and it contains certain exclusions.

So there is provision for guaranteed pay: the company undertakes to provide guaranteed pay in the event of lay-offs, to employees who suffer loss of wages. Who are the employees who will suffer loss of wages? The answer must be those whose contract entitles the employers to say they shall not be paid when they are laid off. So this in essence is a circular argument. One has to look at the contract to see whether the employees are going to lose pay if they are laid off; if so, then the company repeats its statutory obligation to pay guaranteed pay: nothing incidentally here about the right to redundancy pay. As well as the indications I have identified, it does seem unlikely that these rules can be part of Mr Dawidiuk's contract, in the sense which Mrs Pascoe urges. She says that this means that any employee to whom the rules apply need not be paid: must not be paid if he is laid off. But in fact one looks at the contract and sees that this employee, Mr Dawidiuk, is entitled to be paid, without any qualification, for every week in which he is employed. As I said in argument, and it seems right, there may be employees here who have contracts which provide that if they are laid off, then there is an express term of the contract that they will not be paid during the lay-off period, except for their statutory rights. They of course would get the benefit of that rule, or so one supposes. That is evidently the employer's intention. Although the rules, on the face of it, would apply to everybody, the contract does not apply to everybody. The contract which we have been looking at is the contract which applies to Mr Dawidiuk.

We turn to see what the Industrial Tribunal said about this. They said in their full reasons:

"9 The question is whether this contract can be interpreted as falling within Section 147 as a contract for payment for work as and when required. In our judgement, that is not possible, either expressly or by implication. The contract is clear, it provides for his pay to be £108.00 per week and then it mentions his hours. There is no provision there that his pay is dependent on work being provided. Had that been the intention it could have been stated. It is a very important provision.

10 Such contracts do exist and no doubt operate reasonably satisfactorily but for the contract to provide for such an arrangement it must be absolutely clear." ...

and so the Tribunal found that this was not such a contract and that Mr Dawidiuk was entitled to be paid during the period in which he remained an employee, but was not being found work by his employers.

Now there is the appeal to us. The appeal is put very shortly in the Notice of Appeal:

"S147 of the Employment Rights Act 1996 was not breached in any way. There was a diminution in the work provided by the employer and as a result the employee was laid off in accordance with his terms and conditions and Company Rules."

In the Skeleton Argument, which has been sent to us by Mrs Pascoe on behalf of the company, paragraph 1 states:

"There was an implied term in the contract of employment that lay-offs without pay but on Guarantee Pay could take place as it was custom and practice within the company to do so as evidenced in February 1990 and September 1992."

That does seem to us to be quite wrong in law. If there is an express term, it cannot be over- ridden by an implied term, as that is a fundamental principle of contract law. Nor can custom and practice replace the term if parties choose to enter into express terms; then they are bound by them, subject to an action to rectify the contract, or of course in this case, as in any employment contract, the employer could have applied to the Industrial Tribunal to change the terms as stated under the terms and conditions, and said they were inappropriate and not in accordance with the parties' agreement, so could the employee. Nothing of that sort happened.

The terms were put forward by the employers as being the terms on which Mr Dawidiuk was employed, so the question of an implied term could not arise; and the same applied to custom and practice. Of course there is a much more fundamental approach to this. The question of implied terms can only arise from matters of fact which must be found by the Industrial Tribunal. The same applies to questions of custom and practice. We are not here to say what the customs are in Cornwall with regard to this particular industry: it is the duty of the Industrial Tribunal. The matter would have to be raised with the Industrial Tribunal if the contract were silent on the subject and the Tribunal would have to make findings of fact which enabled them to reach a conclusion.

Having considered everything that we have read and everything which Mrs Pascoe has written to us and said to us, we have come to the conclusion that this appeal is quite hopeless. Putting it very shortly, the reasons given by the Industrial Tribunal are reasons which appear to us to be irresistible. Insofar as questions of fact arise, they are not for us. But insofar as they are conclusions of law, we find that those conclusions are entirely correct. We have been referred to two authorities which appear to us not to carry the employer's argument any further, and in those circumstances the appeal must be dismissed.

We award costs if we come to the conclusion that there were no reasonable grounds for asserting an appeal, then we are entitled to award costs against the unsuccessful party. No submissions to the contrary have been made to us. We think that this was an appeal which was unreasonably brought in the sense that it had no reasonable grounds and no reasonable prospects of success and in those circumstances we think that it is right for us to order costs of £80 to be paid by the Appellant to Mr Dawidiuk. That is our order.