London Borough Of Southwark v Johnstone & Ors [1998] UKEAT 641_97_2611

EAT
London Borough Of Southwark v Johnstone & Ors
[1998] UKEAT 641_97_2611 · 1998-11-26

JUDGE PETER CLARK:

This is yet another appeal against a decision of a Chairman sitting alone to hear a preliminary issue. The observations of the President in Sutcliffe -v- Big C's and Marine ([1998] IRLR 428 as to the desirability of the whole of the case, particularly in relation to the breach of contract claim brought by all 13 Applicants in this matter, being heard apply. However, the appeal has been listed before us and we must adjudicate on it.As so often happens at such preliminary hearings there is no comprehensive investigation of the factual matrix in which the point at issue is set. We shall therefore, for the purposes of this appeal only, take the background from the Chairman's findings and the Appellant Council's detailed Notice of Appearance making it clear that we are not, of course, purporting to make any findings of fact of our own.The Applicants were employed by the Council as Neighbourhood Housing Officers (grade S01/S02) or Assistants (grade 4/5). In November 1990 the Council introduced a Neighbourhood Housing Officer Career Grade Scheme. We shall assume, without deciding that the Scheme formed a term of the Applicants' contracts of employment for the purpose of this appeal. The effect of the Scheme was to give the employee an entitlement to be considered for regrading after 12 months in post following a satisfactory assessment. In November 1991 the Scheme was reviewed by the Director of Housing, who decided to suspend its operation. Staff were informed of that decision by letter dated 11 February 1992.Following consultation meetings with the trade union in May and August 1992 a revised Scheme was agreed and formed a collective agreement which we shall assume was incorporated into the individual contracts of employment.Local managers raised doubts about the workability of the revised Scheme. As a result the Director of Housing decided to suspend the agreed Scheme. Staff were notified by letter of 20 May 1993.Consultation with the union then followed which failed to result in agreement. By September 1995 the Council had decided, particularly for Compulsory Competitive Tendering purposes, that the Scheme would not apply to Housing Officers. Further consultation took place until in December 1995 the Council decided that the Scheme would be withdrawn from 24 March 1996. Accordingly on 22 December 1995 the Council wrote to all Applicants individually in these terms, so far as is material.The letter was headed:
"Notice of variation, notice of termination of employment and offer of re-engagement - Southwark Homes
. ........

Notice of Variation

The Council supports the system of collective bargaining that is specified in your Contract of Employment. However, after extensive consultation it has not been possible, at this stage, to reach an agreement with the representative Trade Unions. Therefore, I am writing to you to seek your agreement to a variation to your Contract of Employment as follows:"There then followed a number of matters including the retrospective career grading schemes. The letter continues:

"Notice of Termination & Offer of Re-engagement

This letter is to provide you with notice that with effect from 25th March 1996, your Contract of Employment will be varied as detailed above."and later:
"If you do not raise any issues to change management's decision regarding the above or do not agree to these variations, the variations will take effect on 25th March 1996. This letter gives you notice that the Council intends to terminate your Contract of Employment and simultaneously to offer you a contract on the terms and conditions that incorporates the variations stated above."
and finally:
"Therefore, this letter is a formal notice of termination of employment and is a formal offer of re-engagement. This notice expires on 24th March 1996. You may accept this offer of re-engagement at any time before 24th March 1996, in which case your acceptance will also have the effect of withdrawing the notice of termination of employment. I would point out that a delay in your acceptance may cause a break in your continuity of service."
There was attached to that letter a response with various options inviting the employee to tick the appropriate box. At that stage, none of the Applicants signed that response form. On 15 March 1996 the Council sent a further letter to all Applicants notifying an amendment to the variation of the terms and conditions of employment. That amendment is not relevant to the issues which were before Chairman but attached to the letter was a revised form of acceptance to be signed by the Applicants. Between the 15th and 24th March 1996, all of the Applicants completed and signed the form accompanying the letter of 15 March. Each applicant ticked the boxes for the first two paragraphs of that form which read as follows:
"I do accept the variation to my contract and the offer of re-employment in accordance with the terms stated in the original notice of variation and as amended in this letter.
I agree to the terms stated regarding the 'retrospective career grading Scheme' and that this Scheme will supersede the Scheme included in my existing contract of employment."Together with those completed response forms the Applicants, who were then advised by their trade union, enclosed a further document which they signed and which read as follows:
"I am writing to you in response to your letter received week ending 22 December 1995 and Keith Fernett's letter of 15 March 1996 in which notice was given of Southwark Homes intention to dismiss me on 24th March if I do not agree to changes to my contract of employment.
I am most concerned that you intend to follow this course of action. However, should you proceed with your intention, I wish to give you notice that I intend to accept the new terms without prejudice to my legal rights and under duress. I shall [ sic ] to mitigate any losses incurred under the new contract".On those facts the Applicants contended that the Contract of Employment of each of them was terminated on 24 March to be replaced by a new contract which came into force on 25 March 1996 and that so far as there was any agreement for the variation of the existing contract such agreement was obtained under duress.The Applicants presented complaints of breach of contract to the Employment Tribunal. No point is taken on those applications being premature insofar as they predate the 24 March 1996. In addition, Ms Green complained of unfair dismissal.The nature of the breach of contract claim was that in failing to consider the Applicants for career progression the Council was in breach of the regrading Scheme, which formed a term of their contracts. That claim arose before the alleged termination of employment on 24 March 1996.The preliminary issue before the Chairman, Mr R. Peters, sitting alone at the London (South) Employment Tribunal on 13 March 1997 was whether or not there had been a termination of the Applicants employment within the meaning of Article 3(C) of the Employment Tribunal Extension of Jurisdiction Order 1994 , made originally under section 131 of the Employment Protection Consolidation Act 1978, now section 3 of the Employment Tribunals Act 1996 .Article 3(C) provides that a claim for damages for breach of contract may be brought before an Employment Tribunal if the claim arises or is outstanding on the termination of the employees' employment.The Chairman ruled that, on the facts before him, the employment had terminated in each case on 24 March 1996, so that the Tribunal had jurisdiction to entertain claims for breach of contract, and further that Ms Green was dismissed by the Council on that date and accordingly the Tribunal also had jurisdiction to consider her additional claim for unfair dismissal.Against that decision the Council now appeals.Mr Fletcher submits that the Chairman made certain findings which were properly for the full Employment Tribunal hearing the substantive case, if the jurisdictional objection failed. That may be. We would have had more sympathy with that argument had it not been the Council which was eager to have a preliminary hearing. We have already made observations about the desirability of having the whole case heard at one time.Specifically, he submits that the Chairman was wrong to conclude in paragraph 16 of his Extended Written Reasons dated 7 April 1997, that the Council did not have a contractual power to vary the terms of the contract without specific assent by the Applicants under the general power contained in paragraph 29 of the Terms and Conditions of Employment.Paragraph 29 reads:

"29. GENERAL CONDITIONS

During your employment with the Council your Terms and Conditions of Service will be as those laid down by the following negotiating body and supplemented or varied by decisions of the Council and set out in the Staff Code."We reject that submission. It is clear to us from the letter of 22 December 1995 that the Council did not purport to vary the Terms and Conditions of Service by "decision" under paragraph 29. Instead, it sought to effect a variation by consent, failing which, it served contractual notice of termination coupled with an offer of re-engagement on different terms.The two main points taken in the appeal are, first that there was no termination of the contracts of employment on 24 March 1996, construing the letter of 22 December 1995 and the documents exchanged in March 1996. Secondly, that even if the contracts were then terminated, the employment was not for the purpose of Article 3(C). We shall deal with each point in turn.Was there a termination of the Applicants contracts of employment? It is clear from Hogg -v- Dover College [1990] ICR 39 and Alcan Extrusions -v- Yates [1996] IRLR 327 that an employee may be dismissed within the meaning of section 95(1)(a) or (C) of the Employment Rights Act 1996 even although he continues in the employment on different terms immediately following the dismissal. Here, it is said that on a proper construction of the relevant correspondence, what happened was there was a concensual variation of the contract and the notice of dismissal was withdrawn by agreement. It is common ground that a notice of dismissal cannot be withdrawn unilaterally as a matter of law. We cannot accept that submission. It is clear that the Applicants objected to the change in terms; the Chairman was entitled to conclude there was no concensual variation; nor did the Applicants agree to a withdrawal of the notice given by the Council on 22 December 1995. Their reference to accepting the new terms under duress simply means, in our judgment, that under protest, they accepted that the employer had lawfully terminated the contract by notice and further that they would accept re-engagement under the new terms rather than be out work, but it seems to us that the Chairman was entitled to conclude that there was nothing there to indicate a consensual variation of the original terms of the contract. That disposes of any appeal in relation specifically to Ms Green's claim of unfair dismissal.Can there be a termination of the contract without a termination of the employment for the purposes of Article 3(C)? We think not. We respectfully adopt the approach of the Employment Appeal Tribunal in Sarker -v- South Tees Acute Hospital NHS Trust [1997] IRLR 328 , that the phrase "the termination of the employees employment" must in Article 3(C) be construed by reference to the termination of the contract of employment. That construction is also consistent with the definition of employment contained in the Principal Act, that is now section 42(1) of the Employment Tribunals Act 1996 :'employment' means employment under a contract of employment.Further, the limitation provisions contained in Article 7 of the Order are tied to the effective date of termination of the contract of employment. That does not allow of a termination of employment other than by termination of the contract of employment.For these reasons we have concluded that on the narrow preliminary issue before the Chairman, this appeal must be dismissed. The case shall now go forward to a full hearing. Thus, the taking of the preliminary point has led to two hearings, unnecessary delay and expense. We repeat our observations made at the beginning of this judgment.