Hegarty v Software AG (UK) Ltd [1999] UKEAT 522_98_2901

EAT
Hegarty v Software AG (UK) Ltd
[1999] UKEAT 522_98_2901 · 1999-01-29
MR JUSTICE CHARLES: The parties to this appeal are Mr Hegarty, who was the Applicant below and the Appellant before us and Software AG (UK) Limited, the Respondents below and before us. The appeal is against a decision of the Industrial Tribunal sitting at Bedford who heard the case on 29 January 1998 and sent their Extended Reasons to the parties on 3 March 1998. The decision of the Tribunal was that the Applicant was not unfairly dismissed. As appears below we recite much of the Extended Reasons of the Tribunal and we are grateful to them for providing a succinct account of the facts in those Extended Reasons. We are also grateful to the representatives of both the parties who have appeared before us.Mr Hegarty was represented by Mr Hochhauser QC who appears with those instructing him, Charles Russell on a pro bono basis and the Respondent was represented by Mr Campion of Eversheds. We would like to record that both of them have made our task much easier and we are grateful for that.

The background

The historical background appears from paragraphs 7 to 12 of the Extended Reasons which are in the following terms:"7. I will now deal with the background facts to this case. The respondents carry on business as suppliers of software. In the United Kingdom, they have offices in St Albans and Derby. The managing director is based in St Albans. The applicant has been unemployed and was doing some work on an agency basis through Blue Arrow. He was requested to do some work of a chauffeuring nature for the respondents and he did so. This must have been a success because he was subsequently offered employment. However, the offer of employment was not as a chauffeur but as an office services assistant. This was put in writing and he was subsequently supplied with a statement of terms and conditions of employment (R1 - 3-9). This does not use the word "chauffeur". However, for practical reasons the applicant was engaged in this type of work for the major part of the time when he was working for the respondents up to February 1997.8. The chauffeuring aspect of his duties involved driving Mr Graham, both from home to work and to meetings, other employees to the airport and the main German board when they were over in this country. In addition to the driving duties, the applicant performed various office tasks of an unskilled nature. Examples were changing light bulbs and moving office furniture. His terms of employment, which are in document R1/9, provided for 42 hours a week.9. In practice, the applicant was working considerable amounts of overtime for which he was not being paid. This is because Mr Graham would customarily get to work early and come home late. The question of overtime was raised and, on 18 September 1995, the applicant was awarded an ex gratia payment of £1,500. In addition to the payment of £1,500, the applicant would henceforth be paid overtime for hours worked and above his contractual hours.10. His terms were further altered in that he received a clothing allowance of £500 a year which was in connection with the chauffeuring aspect of his job and in addition he received a free medical. R1 - 32-39 sets out his new terms. His hours were increased to 45 hours a week.11. The applicant was obviously satisfactory as an employee because he was awarded the position of "employee of the year". It is not clear if this was for 1995 or 1996. It makes no difference for our purposes.12. However, the satisfactory relationship between the applicant and the respondents was altered from February 1997 when Mr Graham was dismissed. His replacement was Mr Jacobson. Mr Jacobson had been an employee of the respondents for approximately a year when he was promoted to take Mr Graham's place. Mr Jacobson had different views concerning chauffeuring or transporting employees. For himself, he wished to drive and not be driven. For other employees, he took the view that the general policy of the parent company and other subsidiaries should be followed. Their policy was that the employees should make use of taxis, trains etc. and that private chauffeuring should be not followed. He decided to implement this so far as the respondent company is concerned."The more immediate background appears in paragraphs 13 to 17 of the Extended Reasons:
"13. The respondents decided therefore to change the applicant's terms of employment to indicate this. The hours of employment changed from 45 hours to 37½. His pay was increased from £16,849.77 to £17,692. Although the change was made in February, as we understand it it was backdated to the beginning of the year. The adverse effect so far as the applicant was concerned was that paid overtime would finish. R1 45-50 sets out the new terms. The applicant did not accept these terms; he queried them. This was initially with his manager, Mrs Atkinson and then with Mr Rigley the Personnel Manager.
14. There were meetings which are set out in the bundle of documents. In R1/59, the applicant was given a new Role Profile. This sets out new responsibilities in the information technology area. In addition to the questions he raised concerning terms and conditions of employment, he raised the point that the word "chauffeur" was not in his statement of terms and conditions of employment (R1 -60). Neither Mrs Atkinson nor Mr Rigley were able to resolve the applicant's doubts and difficulties with the proposed terms.15. The applicant then decided to exercise his rights under the grievance procedure. R1 - 69-70 sets out his grievance. He saw Mr Rigley and Mr Hoban under the grievance procedure on 19 May 1997. Complaints were loss of income through loss of overtime and concerns over the accuracy of the Role Profile with reference to driving. The notes of that are in the documents and we accept them as correct (R1 - 76-79). Mr Hoban wrote to the applicant dealing with the grievance. It is R1 92-96. He refused to allow the applicant paid overtime and held that the reference in providing "logistics service" as opposed to chauffeuring was sufficient. He did indicate that if the applicant did not accept the new terms then an alternative was redundancy as the driving element in the job had diminished.16. The applicant questioned the whole position and felt that his rights as an employee were being infringed. He considered his position and decided to make an application to an Industrial Tribunal. He did so, and presented a complaint on 5 June 1997. This is the complaint concerning the statement of terms and conditions of employment. In addition he appealed to Mr Jacobson. This was by letter dated 23 May 1997 (R1 - 56). A hearing was arranged for 30 May 1997 Mr Jacobson heard his appeal and rejected it. He clarified that overtime would be payable in exceptional circumstances to the applicant if express permission was granted by his manager. R1 - 120 of 9 June 1997 sets out the position of the respondents. The applicant was still not satisfied. He was given until 13 June to consider his position. There was a further exchange of letters. The time for the applicant to consider was extended to 20 June 1997. There was a suggestion of a compromise agreement.17. The applicant wrote stating that he was not satisfied with any of the alternatives and he would claim before an Industrial Tribunal (R1 - 129-130). Mr Rigley and Mrs Atkinson came down from Derby to see him on 19 June. The matter could not be resolved satisfactorily and Mr Rigley dismissed the applicant. The reason which he was given at the time was redundancy. The applicant was told to leave the premises and did so. In fact, in the documents it appears that 20 June has been the date taken as the date of termination of employment. He was paid a redundancy payment and pay in lieu of notice."The result of the other proceedings referred to in paragraph 16 was that the following order was made by consent on 29 January 1998."IT IS ORDERED by consent that the statement of terms of employment given to the applicant by the respondents should be amended so that the words "provide logistical support" be deleted and substituted by the following words "(1) Responsible for the provision of 'chauffeur service' to senior personnel and clients for and on behalf of the Company, as designated by the Office Manager, which may necessitate working unsociable hours, for which an additional payment will be made. (2) Responsible for the co-ordination of the movement of materials, such as parcels and posts, receiving goods into the office, moving materials and equipment (i.e. exhibition seminar set-up) and transportation of materials, including vehicles, for and on behalf of the Company, as designated by the 'office services manager'." and upon such substitution the Originating Application is withdrawn.On the making of that Order, the Tribunal gave the following reasons:

REASONS

1. The applicant had presented a complaint concerning terms and conditions of employment. Before the hearing, in a letter of 6 January 1998, the respondents had accepted particulars of his complaint which had been supplied by the applicant as being correct. In these circumstances Mr Campion submitted that the complaint should be disposed.2. The matter was canvassed with the applicant. He was particularly concerned with whether or not his complaint of unfair dismissal would be inhibited in any way if the particulars complaint was disposed of this way. He was no longer an employee and so not working under the terms, but he obviously wished his complaint of unfair dismissal to be dealt with fully and not prejudiced in any way. I explained that the evidence would not in any way be prevented from being put forward. All the matters would come out. In these circumstances the parties agreed that the complaint be disposed of in this way and the applicant's application was withdrawn."The essential reasoning of the Tribunal, for present purposes, is contained in paragraphs 21 to 25 and 28 of the Extended Reasons:
"21. This is complicated in this case by the fact that what normally happens when an employee's conditions of employment are about to be changed because of a diminution of work, that he or she is informed of this fact, there is then consultation and discussions of alternative employment. In the present case, however, what has happened was that the applicant was presented with the facts of alternative employment before the issue of redundancy was raised. His discussion with the respondents initially was over the alternative employment conditions which were being raised rather than considering redundancy as such. A course that might have happened would be if the respondents were to impose terms and conditions upon the applicant, he were not to accept it, resign and then he could claim constructive dismissal by alleging that the respondents had broken his terms of employment. That was a possibility. It did not happen, because the applicant and the respondents were still in dialogue up to the end of June when it was the respondents who decided to terminate the contract. However, the course of constructive dismissal is something which could easily have occurred in this case. Having said that, we as a Tribunal are all agreed that it would have made no difference to the end result because the basic facts are the same.
22. The respondents have relied upon redundancy. The definition of redundancy is set out in section 139 of the Employment Rights Act 1996 and reads:(1) For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to -(a) the fact that his employer has ceased or intends to cease - (i) to carry on the business for the purposes of which the employee was employed by him, or(ii) to carry on that business in the place where the employee was so employed, or(b) the fact that the requirements of that business - (i) for employees to carry out work of a particular kind, or(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer,

have ceased or diminished or are expected to cease or diminish."

23. In the present case, the relevant provision is section 139(1)(b)(i). Was the position that the reason for the dismissal was that the respondents' requirements for an employee (the applicant) to carry out work as a driver had diminished or were expected to diminish? They were not going to cease, because he was still going to be required to do some driving, albeit in a diminished manner. He was said that driving would still be needed. The only difference would be that it would be done by Mr Jacobson himself or by taxi or other public transport. However, the position is that the company's requirements for employees to do that kind of work had diminished. The way they wanted to organise their business was that they did not need a private driver such as the applicant. It was because of this that the respondents decided that his services were no longer needed in the form and terms which he had had previously. The hours were to be reduced, the function was to be changed, the question of driving was to be replaced by utilising the applicant as an information technology worker. The applicant's old job had to a large extent disappeared. Was that the reason they dismissed him, or was it because he was asserting his statutory right concerning the terms and conditions of employment?24. We accept the evidence of the respondents through Mr Rigley that the applicant was dismissed because of the diminution in the need of the employers for him to carry out his work as a driver. Redundancy was the reason for dismissal. We accept that they were aware of the fact that he was bringing a complaint concerning asserting a statutory right. We accept the evidence, however, that this was not a factor in the decision to dismiss him. Indeed, if one looks at the file, the respondents spent a considerable amount of time trying to resolve the question of the applicant's employment. Whilst perhaps towards the end they felt there was no need to bring matters to a head, and this would appear to be the case with Mr Jacobson fixing time limits, we are satisfied that the question of the applicant asserting his rights was not a reason let alone the principal reason for his dismissal, but rather it was the question of his old employment having come to an end. The dismissal was not unfair under section 104. Further there is no question of unfair selection for redundancy with asserting a statutory right for the reason for selection. The applicant was not compared with other employees for selection for dismissal. Section 105 of the Employment Rights Act has no application.25. We then have to consider whether the dismissal was fair or unfair, a reason having been shown (section 98(4) of the Employment Rights Act 1996). In redundancy cases, the two matters that come up time and time again are, firstly, whether there has been adequate consultation. Here, we are satisfied there was adequate consultation. Indeed, it has been more extensive than is frequently the case. There were a number of meetings, the applicant was not inhibited in discussing the matter, the discussions went on for a number of months, the applicant saw the highest officer in the UK company and we are satisfied there was adequate consultation.28. We have considered another way of looking at the case. Could there be said to be a dismissal when the respondents imposed the new terms? This is not our finding as the applicant continued but under protest. However if we were wrong over this would it have made a difference to the decision? The answer is it would not. The reason would still be redundancy. An alternative job was offered. The consultation period would not be less but in the circumstances adequate. The dismissal would be fair."When was the dismissal? We regard this as the crucial question on this appeal. It is clear from paragraphs 7, 21 and 28 of the Extended Reasons that the Tribunal concluded that Mr Hegarty was dismissed in June 1997. Before us, but not in his Originating Application, Mr Hegarty disputes this and it was argued before us today on his behalf that the dismissal took place in February 1997. The Respondents do not accept this.The issue centres on the approach and reasoning in Hogg v Dover College [1990] ICR 39 in particular at pages 42D, 42G to 43D, 43G and 44B. We will set out the passage at 42D-G, there Mr

Justice Garland says:

"The trite law is that of course employment results from a contract. It is the contract at which one has to look, not the relationship of the employer and employee.
Up to 31 July, the applicant, who was well and sympathetically treated by the employers, was head of history; he was employed to teach full-time at a full salary plus such allowances to which he was entitled. On 31 July, he was told that he was no longer head of history; that he would not be employed full-time and he would come down to eight periods a week plus general studies and religious education; that the salary he would receive would be exactly half the new scale which superseded the Burnham scale.It seems to us, both as a matter of law and common sense, that he was being told that his former contract was from that moment gone. There was no question of any continued performance of it. It is suggested, on behalf of the employers, that there was a variation, but again, it seems to us quite elementary, that you can vary by consent terms of a contract, but you simply cannot hold a pistol to somebody's head and say:
"henceforth you are to be employed on wholly different terms which are in fact less than 50 per cent of your previous contract. We come unhesitatingly to the conclusion that there was a dismissal on 31 July;......."
Mr Justice Garland in the judgment of the Tribunal in that case then goes on to consider an alternative namely that there was a repudiatory breach which was accepted and thus a constructive dismissal. But the primary conclusion is that, as at 31 July, the contract was from that moment gone.The other case we were referred to is Alcan Extrusions v Yates [1996] IRLR 327 where Hogg v Dover College is cited. In that case the Tribunal had applied the approach in Hogg v Dover College and the challenge was that they had got it wrong. Paragraph 23 of the judgment identifies the heart of the issue and is in the following terms:
"We entire agree with Counsel for the Appellant that it is only aware on an objective construction of the relevant letters or rather conduct on the part of an employer. It is plain that an employer must be taken to be saying your former contract has from this moment gone or your former contract is being wholly withdrawn from you that there can be a dismissal under section 55(2)(a) other than of course in simple cases of direct termination of the contract of employment by such words as "you are sacked" otherwise we agree with him the case must stand or fall within section 55(2)(c) the equivalent sections now appear in the Employment Rights Act."
It is clear, and indeed was common ground between the parties, that in this case the Tribunal did not have in mind the Hogg case and the Alcan case and did not apply their minds to the question raised by the passages we have just referred to.On that basis, in our judgment, this appeal must be allowed. The issue for us, however, does not stop there because we have to consider whether it would be right for us to determine the case, or to remit it. In our judgment, this issue turns on whether on the basis of the findings of the Tribunal and the common ground as to the factual position, we can conclude to use the phrase in the Alcan case, that in February the position was that the Respondents must be taken to be saying, "your former contract has from this moment gone" or to use the approach in the Hogg case which is to much the same effect, when Mr Justice Garland said "as a matter of law and common sense that the employee was being told that his former contract was from that moment gone".As appears from the Extended Reasons and the documents before us and the Tribunal, in February a document was sent by the Respondents to Mr Hegarty, entitled particulars of terms of employment. On behalf of the Respondents, Mr Campion in our judgment, very properly and fairly, accepted that the position in February on receipt of that document by Mr Hegarty was that his employer the Respondents was saying, these are your terms of employment from now on.At, or shortly after, that time, a dispute arose between the parties as to whether the terms of employment in that document were terms that the employer was entitled to impose or put another way, whether the earlier terms of Mr Hegarty's employment, were that his primary function was to be a chauffeur, which I think is a better way of putting it, because on any basis, the employer was taking the stance as we understand it, that the particulars of terms of employment sent in February were different to those that had existed before that date.The consent agreement referred to earlier solves any difficulty as to what was the difference in the position in Mr Hegarty's terms of employment before and after February, because that consent agreement identifies that before February, Mr Hegarty's terms and conditions were that he was primarily employed as a chauffeur. Correctly and properly, in our judgment, no point has been made that the consent order as to the terms of Mr Hegarty's employment had the effect that Mr Hegarty should be treated as having been employed on those terms up until June 1997, with the effect that any unilateral change or imposition of new terms in February 1997 was superseded. That point would have been completely at odds with the stance of the parties explained by the Chairman in his Extended Reasons and in the contemporaneous correspondence to which we have been referred.Returning therefore to what we regard to be the central question. The position falls to be judged against the background that immediately before the receipt by Mr Hegarty in February 1997 of the particulars of terms of employment, he was employed primarily as a chauffeur who was entitled to, and was receiving, overtime. But the particulars of terms of employment provided to him in February, provide a different description of his job and a different pay structure. Also it is common ground that what the Respondents were then saying was: these are your terms of employment from now on.In our judgment, given that factual position and common ground, and posing the questions referred to above and posed in the Hogg case and the Alcan case, as a matter of law and common sense, the position was that the Respondents were telling Mr Hegarty that from the receipt of the document in February, his former contract was gone.In our judgment, this is not altered by the fact that thereafter following protest from Mr Hegarty, the Respondents and Mr Hegarty entered into discussion and then a grievance procedure, or by the points made by Mr Campion on behalf of the Respondents, that they were prepared to try and negotiate changes to the document which we have found they imposed upon Mr Hegarty in February.It follows in our judgment in accordance with the decision in the Hogg and Alcan cases that Mr Hegarty was dismissed in February. The question then arises whether if judged as at February the Respondents could argue that they could reasonably have concluded that consultation thereafter would be useless so that the failure to consult or warn before that dismissal, would not necessarily render it unfair. In our judgment that is a hopeless point so far as the Respondents are concerned and it was not pressed before us again in our judgment, quite rightly by Mr Campion, because Respondents own conduct after February indicates that there was at least a possibility that consultation would reach a satisfactory result.The point that was urged before us on behalf of the Respondents, was that if the dismissal had taken place in June rather than in February, and applying the approach that is permissible under Polkey , then on the facts of this case, judged at June, any further consultation or warning would have been useless. We would have accepted that that was an arguable point and if we had concluded that it was not clear that the dismissal had taken place in February, that the assessment of this point was a matter which would have to go back to the Tribunal.However, for the reasons given, we have concluded that any Tribunal properly directing itself having regarding to the Hogg the Alcan cases, would reach the conclusion that the dismissal took place in February and on that basis that the dismissal was unfair and we will therefore substitute that finding for the finding reached by the Tribunal. The issues as to what happened thereafter will be issues that will fall to be taken into account in assessing compensation.We are all of the view that the remaining issues in the case should be remitted to a new Tribunal. We take on board Mr Campion's point that that is not an indication that there is any criticism of the earlier Tribunal who did not consider the cases we refer to largely we think because they were not drawn to their attention at the time, and that again is no criticism of those that were there. It simply was not done.We have had two factors in mind in deciding that we think it would be difficult, for the same Tribunal to consider the remaining issues which have a factual overlap with matters considered at the earlier hearing. First, it is always in our judgment difficult to ensure that you are not being influenced by earlier reasoning and in particular, it is never easy to demonstrate then that justice is being seen to be done. Albeit that it probably would be being done. The other is a purely pragmatic reason that we suspect, and it is no more on suspicion that the matter will be heard more quickly, if the same three people do not have to reconvene.