Whitewater Leisure Management Ltd v Franklin & Anor [1998] UKEAT 964_98_0111

EAT

Whitewater Leisure Management Ltd v Franklin & Anor

[1998] UKEAT 964_98_0111 · 1998-11-01

JUDGE PETER CLARK:

Both Applicants before the London (North) Employment Tribunal were employed by the London Borough of Brent in its Direct Service Organisation providing leisure facilities known a Forward Leisure. Mr Franklin commenced his employment with Brent in June 1976, and was at the material time its director. Mrs Jones was employed as Quality Manager, her employment having commenced in October 1983.

On 4 December 1995 the business of Forward Leisure was transferred to the Respondent, Whitewater Leisure Management Limited. On 29 March 1996, both Applicants were dismissed by Whitewater by reason of redundancy.

Each then presented Originating Applications to the Employment Tribunal claiming, so far as is material to this appeal, damages for breach of contract in that it was said that Whitewater had failed to make contractual enhanced redundancy payments in accordance with a term in their contract with Brent which had continued during their employment with Whitewater following the relevant transfer. On dismissal Whitewater had paid the statutory redundancy payment, based on a weeks pay as capped by provisions of the Employment Rights Act 1996 . The contractual term contended for disapplied that cap and allowed for payment on the basis of the actual weekly wage.

It was argued below on behalf of Whitewater, on the basis of the Court of Appeal's decision in Allsop v North Tyneside Metropolitan Borough Council

[1992] ICR 639

, that Brent's redundancy scheme for payment over and above the statutory redundancy payment as calculated under the Employment Rights Act was ultra vires, and thus unenforceable by way of a claim for breach of contract against the new employer. The Tribunal rejected that contention on the grounds that the relevant statutory regulations and in particular, Regulation 5 of The Local Government (Compensation for Redundancy and Premature Retirement) Regulations 1984 , permitted Brent to disapply the Employment Rights Act limit on a week's pay for the purpose of calculating the enhanced redundancy payment. Against that part of the Employment Tribunal decision Whitewater now appeals.

Mr Duggan has submitted that a blanket policy on the part of Brent to pay the enhanced redundancy payment to employees who were dismissed by reason of redundancy was not a proper exercise of that authority's discretion. The operation of such a blanket policy takes away the proper exercise of discretion. He referred us in particular to Regulation 5 of 1984 Regulations which provides:

"Compensation

5. The authority by whom a person to whom this Part applies has ceased to be employed may pay him compensation which does not exceed the difference between-

(a) the redundancy payment to which he is entitled under Part VI of the 1978 Act [now Section 162 of the 1996 Act], and

(b) the redundancy payment to which he would have been so entitled if paragraph 8(1)(c) of Schedule 14 to the 1978 Act) [now section 227(1)(c) of the 1996 Act] has been repealed."

He submits that the exercise of the authority's discretion to make the increased redundancy payment can only arise as and when a person is dismissed by reason of redundancy. On this ground also he submits that any blanket policy in advance of such dismissals must be ultra vires. As support for this proposition, he relies upon the judgments of the Court of Appeal in Allsop ; in particular, he has referred us to the judgment of

Lord Justice Parker at page 647 F, where his Lordship said:

"Here there is a discretion to the authority to pay on redundancy an amount being the difference between the redundancy payment under the Act of 1978 and the higher amount specified. Again the result, if the council are right, would be that, although given a discretion to pay up to but not exceeding a certain sum, it would be free (subject against to "Wednesbury" challenge) to pay a higher amount."

In our view, this appeal is wholly misconceived. The point in Allsop related to the fact that there the local authority made enhanced redundancy payments in excess of the higher figure based on the actual weekly wage for which provision was expressly made in Regulation 5 of the 1984 Regulations . In so doing, the Court of Appeal held that that authority was acting ultra vires. It did not as we understand the report make any observations about the principle of the blanket policy of applying a particular enhanced redundancy scheme, to all of an authorities employees who fell to be dismissed by reason of redundancy.

Further there is no suggestion in the report that an authority is unable to make the higher redundancy payments specifically provided for in Regulation 5 and which is the payment which was made by Brent under their redundancy payment scheme. It seems to us that the Employment Tribunal was perfectly entitled to take the view that it did, namely that this was an intra vires redundancy payment scheme, which formed part and parcel of each employee's terms and conditions of employment, and that upon the relevant transfer taking place that term continued in force, in particular in the contracts of employment of these two Applicants. In these circumstances, we see no point which ought to go forward to a full appeal hearing and accordingly the appeal is dismissed at this stage.