Kilden v Cowell Nicola Shipping Ltd [1997] UKEAT 165_96_1405

EAT
Kilden v Cowell Nicola Shipping Ltd
[1997] UKEAT 165_96_1405 · 1997-05-14

JUDGE PETER CLARK :

This is an appeal by the applicant before the Stratford Industrial Tribunal sitting on 21st December 1995 against that tribunal's decision that she had not completed two years continuous service for the purposes of qualifying for unfair dismissal protection. Extended reasons for that decision are dated 25th January 1996.It raises interesting questions as to the statutory continuity provisions.

The Facts

These were not controversial.The appellant commenced employment with the respondent as a traffic clerk on 14th October 1991.By letter dated 9th September 1993 she was dismissed with immediate effect by reason of redundancy.On 14th September 1993 the respondent made a severance payment to the appellant totalling £1,629.29 which included the sum of £346.16 described as redundancy pay. That sum represented two weeks pay, and she was treated as having completed two years service so as to entitle her to a redundancy payment although in fact she had not completed two years service.By letter dated 30th September 1993 the respondent wrote to the appellant in these terms:

"Dear Tina

Following your telephone conversation with Sue Bryant, I am delighted to confirm offering you your previous position in the Company under the same terms and conditions as before.If convenient it would be appreciated if you could commence your duties tomorrow, 1 October, failing which we look forward to seeing you in the office on Monday morning 4 October.Would you kindly acknowledge your acceptance by signing the attached copy letter."During that telephone conversation with Sue Bryant the tribunal found, the appellant was asked, in effect, whether she would like her old job back.She recommenced employment at the beginning of October 1993, on condition that her continuity of service would be preserved. The respondent confirmed its assent by letter dated 14th October 1993 which read:

"Dear Miss Kilden

Further to our conversation, we confirm that although there was a short break in your employment with this company, it will not be taken into consideration when calculating your length of service."She continued in the employment until, by letter dated 27th July 1995, the respondent again dismissed her by reason of redundancy with immediate effect. She received four weeks pay in lieu of notice; accrued holiday pay and a redundancy payment based on two years service.She then presented a complaint of unfair dismissal, relying on a period of continuous service from 14th October 1991 until 28th July 1995.

The Industrial Tribunal Decision

The respondent took the preliminary point that there had been a break in continuity and that she had less than two years continuous service.Mr Stagg, who appeared on behalf of the appellant below, took three points on continuity.(1) that continuity was preserved under s.84(1) of the Employment Protection (Consolidation) Act 1978 ["EPCA"] (s,138(1) of the Employment Rights Act 1996 ["ERA"]) for the purpose of bringing a claim of unfair dismissal, or(2) that the break in employment in September 1993 was a period when the appellant was absent from work on account of a temporary cessation of work within the meaning of paragraph 9(1)(b) of Schedule 13 to EPCA (now s.212(3)(b) ERA), or(3) it was a period when she was absent from work in circumstances such that, by arrangement or custom, she is regarded as continuing in the employment of the respondent for any purpose. Paragraph 9(1)(c) of Schedule 13 to EPCA (s.212(3)(c) ERA).The tribunal rejected all three arguments. It held:(1) that her re-employment in October 1993 was a re-engagement and not a renewal of her contract, and since the offer of re-engagement was not made before the ending of the old contract the case did not fall within s.84(1) EPCA.(2) Paragraph 9(1)(b) of Schedule 13 applied to lay offs and not redundancy dismissal such as this.(3) Paragraph 9(1)(c) did not apply because the offer of re-employment in October 1993 was not made by way of compromise of a claim by the appellant. cf. Ingram v Foxon [1984] ICR 685 .

The Appeal

Mr Stagg does not challenge the tribunal's third finding in relation to paragraph 9(1)(c) of the Schedule. That must be correct, since the arrangement must in any event be entered into before the break in employment. See Murphy v A Birrell & Sons Ltd [1978] IRLR 458 . However, he does challenge the first two findings.

S.84(1) EPCA

S.84(1) reads:
"(1) If an employee's contract of employment is renewed, or he is re-engaged under a new contract of employment in pursuance of an offer (whether in writing or not) made by his employer before the ending of his employment under the previous contract, and the renewal or re-engagement takes effect either immediately on the ending of that employment or after an interval of not more than four weeks thereafter, then, subject to subsections (3) to (6) the employee shall not be regarded as having been dismissed by his employer by reason of the ending of his employment under the previous contract."
That provision has raised difficult questions of interpretation; as to the distinction between renewal and re-engagement, and as to whether the offer of a renewal, as opposed to re-engagement, must be made before the ending of the old contract.However, Mr West takes a more fundamental point. He submits that the preservation of continuity under s.84(1) applies only to claims for redundancy payments, and not to unfair dismissal claims. He relies upon the decision of the Employment Appeal Tribunal in Hempell vWH Smith & Sons Ltd [1986] ICR 365 ; where are page 369F-G, Peter Gibson J said this:
"Part VI of the Act [ EPCA ] is headed "Redundancy Payments." That part contains the provision governing the right of an employee to such payments. It has its own provisions governing entitlement to such payments by reference to a period of continuous service. When a provision is intended to apply not only for the purposes of that Part but for the purposes of the Act, the provision contains an express statement to that effect: see section 81(2) and section 90(1). Section 84 falls within Part VI, and in the absence of anything to indicate that the provisions of that section are to apply more widely, we think that on their natural construction they apply only for the purposes of Part VI."
Mr Stagg counters that submission by reference to the later Employment Appeal Tribunal decision in EBAC Ltd v Wymer [1995] ICR 466 , Judge Byrt QC presiding, where Hempell was considered and apparently distinguished. At page 471A-B, Judge Byrt said:
"Our judgment is that it is the substantive reason for the dismissal which determines the applicability of section 84. The facts in Hempell's case are, indeed, radically different than those in the present case and, in our judgment, one has to read the observations of Peter Gibson J. in that case in the context of that case and do what one can to apply them to the facts of the present case. We decided that it is the substantive reason for the dismissal which determines the applicability of section 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."
Here, submits Mr Stagg, we are dealing with a claim for unfair dismissal where the reason for dismissal was redundancy. We should apply the most recent, reasoned decision of the Employment Appeal Tribunal, which considered the earlier case of Hempell . S.84(1) may be relied upon by the appellant to show continuity for the purposes of an unfair dismissal claim.We reject Mr Stagg's submission. We are not formally bound by earlier decisions of the Employment Appeal Tribunal, although in the interests of consistency we will not lightly depart from them. What we are bound by are the words of the statute. In our judgment it is clear, as Peter Gibson J held, that s.84 is concerned only with claims for redundancy payments and not unfair dismissal claims, whatever the reason for dismissal. We do not feel able to distinguish the case of Hempell and we shall follow it in preference to the reasoning in EBAC .We are further confirmed in our view by the drafting of s.138(1) ERA, which is said to be a consolidating statute. In re-enacting s.84(1) EPCA s.138(1) adds to the phrase "the employee shall not be regarded as having been dismissed by his employer", the words "for the purposes of this Part". That is a reference to Part XI ERA, headed "Redundancy Payments etc.", which equates with Part VI of the EPCA to which Peter Gibson J referred in Hempell . The addition of the word "etc." to "Redundancy Payments" in the ERA is not, in our view, material.In these circumstances we reject Mr Stagg's first submission.

Absent from work on account of a temporary cessation of work

The Industrial Tribunal deal with this submission at paragraph 9 of their reasons in this way:"9 Mr Stagg's second submission concerns the operation of Schedule 13 of the Act and paragraph 9 of that schedule. Mr Stagg submits that by virtue of paragraph 9(1)(b) of the schedule ("paragraph 9(1)(b)"), the period from 9 September 1993 until about October 1993 when the Applicant was not working for the Respondent, should count towards the Applicant's continuity of employment. Paragraph 9(1)(b) states that any week in which the employee was not employed by the employer is to be taken into account for the purposes of calculating continuity of employment if that week was a week in which the employee was:"absent from work on account of a temporary cessation of work.".We think that paragraph 9(1)(b) has in mind a situation where an employer lay offs an employee. We do not think it applies in circumstances where the employer had made an employee redundant owing to a diminution in the amount of the work the employee was employed to carry out."Mr Stagg submits that there is no warrant in paragraph 9(1)(b) of the Schedule (now s.212(3)(b) ERA) to draw a distinction between lay off and dismissal by reason of redundancy.He relies upon a passage in the speech of Lord Morris of Borth-y-Gest in Fitzgerald v Hall Russell & Co Ltd [1970] AC 984 at 994C-995A as authority for the propositioning that the question is, looking back at a period which was an interval between two periods of employment, was the employee absent on account of a temporary cessation of work? "Temporary" is a question of degree. The question is one of causation; why was the employee absent from work; was it because the employer had no work for him or her during the relevant period? A distinction can be made where the reason for dismissal was, for example, conduct, or, in the case of McAree v GKN Sankey Ltd [1976] IRLR 58 relied on by Mr West, where the cause of the employee's absence was industrial action. Or where the amount of work remains the same, but is redistributed amongst existing employees. See Byrne v Birmingham District Council [1987] ICR 519 . However, that is not this case.We cannot go behind the respondent's own letters of 9th and 30th September 1993 and the tribunal's findings of fact. The appellant was dismissed because there was no work for her on 9th September 1993. She was then given her old job back at the beginning of October. There is no ground for distinguishing between lay off and redundancy. In that respect the tribunal fell into error.We shall set aside the tribunal's finding under paragraph 9(1)(b). The question then arises as to whether we should remit the case for rehearing on that point, or whether we can properly decide the issue on the primary facts as found under our powers contained in s.35 Industrial Tribunals Act 1996 . Mr Stagg urges us to take the latter course; Mr West the former.Having tested those submissions it seems to us that we have all the necessary primary facts to reach a conclusion. The gap of less than four weeks was temporary; the reason for the absence was the cessation of work for the appellant. The conditions laid down in what is now s.212(3)(b) ERA are met. We therefore declare that the appellant had more than two years continuous service so as to qualify for unfair dismissal protection.Accordingly, we shall allow this appeal and remit the case to a fresh Industrial Tribunal for determination of the merits of the unfair dismissal complaint.