MRS A WATSON v PINGUIN FOODS UK LIMITED [2006] UKEAT 0120_06_0706

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2006] UKEAT 0120_06_0706

Case No Appeal No. UKEAT/0120/06

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MRS A WATSONAPPELLANT

PINGUIN FOODS UK LIMITEDRESPONDENT

Before

His Honour Judge Reid

Date 7 June 2006

[1]APPEARANCES For the Appellant MS A BOUKASSI (Solicitor) Messrs Ward Gethin 8-12 Tuesday Market Place King's Lynn Norfolk PE30 1JT For the Respondent Mr B BROWN (Representative) Pinguin Foods UK Ltd Scania Way Kings Lynn Norfolk PE30 4LR SUMMARY Unfair Dismissal – Compensation Appellant was employed by Respondent's predecessor but dismissed for redundancy. Respondent took over the predecessor's (insolvent) business. DTI accepted Appellant's dismissed not connected to transfer and paid Appellant's notice pay and redundancy pay. Respondent then re-employed Appellant and agreed to treat her as if her employment was continuous. ET held no TUPE as far as Appellant was concerned (unlike those who had not been dismissed before the advent of Respondent), and when Respondent unfairly dismissed Appellant, her basic award should be calculated by reference to her employment only with the Appellant. Held: no error of law. HIS HONOUR JUDGE REID QC This is an appeal against a remedies hearing decision given by an Employment Tribunal (ET) held at Norwich. The remedies hearing took place on 7 and 14 November last year and it followed on from a decision following a hearing on 13 June of last year and discussion on 16 June, with Judgment sent to the parties on 4 July that the Appellant, Mrs Watson, had been unfairly dismissed. At the remedies hearing, the Respondent employer was ordered to pay compensation in the sum of £840 by way of basic award, and £1671.62 by way of compensatory award. On this appeal, Ms Boukassi, the solicitor on behalf of the Appellant, has sought to challenge both of those sums.

[2]I can deal first and very briefly with the challenge to the amount awarded by way of compensatory award. The Tribunal, in dealing with that, took the view that the employee had settled fairly comfortably into part-time work and that she could have got work in Kings Lynn for more hours if she chose to do so, but was happy where she was. The Tribunal felt that employment would have been made available to her within a relatively short period of time had she put herself in the way of looking for it. They had also made a finding on the basis of her evidence:

"When she was employed by the respondent she used to get a lift to work every day, but in evidence she told us that the person from whom she obtained a lift experienced a bereavement in July 2005 and stopped working so that the lift would not have carried on beyond that date."

In those circumstances, the Tribunal took the view that the amount of the award by way of compensatory award should be a modest amount.

[3]The appeal against that decision is based on the proposition that the finding was perverse. The Appellant has not seen fit to provide any note of evidence of what took place before the Tribunal. There are assertions in the skeleton argument that, for example, the lift would have continued as she had numerous other work colleagues who would have been in a position to provide her with a lift. There was a submission that it would not have been possible for her to find alternative work in local factories because the shift pattern would not have enabled her to use public transport. A further submission was that the Tribunal were wrong to find that if the Appellant had sought re-employment this would have been at a rate that was the same or similar to that which she received from the Respondent. The assertion was that she there received more than the normal amounts of pay in that area.

[4]There is no way in which this Tribunal can say, on the material that has been put before it, that there is any error in the finding of the Employment Tribunal as to her work pattern, what work would have been available, what transport would have been available or her apparent satisfaction at being at a local part-time job. It is noticeable that she is a lady who is not in the first flush of youth, and she might very well have taken the view that the time had come to wind down to some extent.

[5]The Appellant had to clear a high hurdle if she was to make good an assertion of perversity. On the extremely scanty material she chose to put before us she simply did not get off the ground.

[6]In relation to the other leg of her argument, the point is this. The basic award of £840 was made on the basis of a comparatively short period of employment, i.e. two years service from 19 June 2002, which was the date when the Respondents took over the factory. What is said is that the appropriate period of service for assessing the basic award should have been some 27 years, because she had previously been employed by other employers at the same factory and there had, on two occasions, been TUPE transfers which resulted in her having continuity of employment. The dates are as follows. She began employment with Frigoscandia on 4 October 1976. On 24 June 1996, Frigoscandia was taken over by Fisher Foods and there is no doubt that at that stage there was a transfer and there was continuity of employment under the TUPE regulations. On 22 May 2002 Fisher Foods was placed in receivership. On 10 June, 28 of the employees were retained, but the remainder were all sent home, i.e. dismissed. On 19 June, the present Respondents, Pinguin Foods UK Ltd, agreed a sale and transfer.

[7]At about the same time an application was made on behalf of those workers who had been dismissed to the Department of Trade and Industry (DTI) for a redundancy payment. It took the DTI some considerable time to investigate what had happened. On 9 October they wrote to the Operations Director of Pinguin Foods, saying, amongst other things, this:

"Thank you for the further information that you sent to Lara Mustafa, our legal advisor, concerning the breakdown and recommencement of negotiations for the business (or part of it) of Fisher Foods Ltd. This was very informative and has fully clarified the matter for the Redundancy Payment Service. In the light of this information, it is our opinion that the dismissal of the employees on 10 June 2002 was not in connection with the transfer of the undertaking to your company and therefore all the employees dismissed on that date are entitled to redundancy payments from the National Insurance Fund."

It then goes on:

"Claims for wages and holiday pay accrued prior to the insolvency date of 22 May 2002 will be paid. Compensatory notice pay (less any mitigating income) for the statutory period will also be paid. Claims for unpaid pension contributions (within the statutory limitations) from the Trustees of the pension scheme for Fisher Foods will also be considered."

[8]On 12 November, Mr Brown, the HR Adviser of Pinguin Foods, received another letter from the DTI in which the author said:

"In my letter of 9 October 2002 to Colin Taylor, I explained that the Department took the view that the reason for the dismissal of the majority of the employees of Fisher Foods on 10 June 2002 was not connected with the transfer of the undertaking to your company, which occurred at a later date. At no time have I implied that the Department, or its legal adviser, stated that there was NOT a relevant transfer of an undertaking within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) and I am sorry if you have misunderstood the Department's stance in this matter. First of all, the Department is satisfied that there is a relevant transfer of the undertaking (or part of one) from Fisher Foods Ltd to Pinguin Foods UK Ltd on or about 20 June. At no time was there any doubt about there being a relevant transfer of an undertaking within the meaning TUPE. Secondly, the Department is satisfied, after seeking legal advice, that the employees who were dismissed on 10 June 2002 were not dismissed to facilitate the transfer and that those dismissals were unconnected to the subsequent transfer of the undertaking. This means there was a genuine redundancy situation at the time of their dismissal and their contracts of employment are not protected by TUPE. This is why payments may be made from the National Insurance fund for those particular employees."

[9]That was the view being expressed by the Department, and pursuant to that view, the Appellant received from the DTI notice payment amounting to some £2,500 and a redundancy payment amounting to almost £5,500. However, once Pinguin had taken over, Pinguin discussed matters with the shop steward committee and made an announcement on 22 November:

"Dear Colleague Following discussions this afternoon between the Pinguin Management and the Shop Stewards Committee, we are pleased to confirm that all employees either terminated through redundancy by the receivers, KPMG or retained by the receivers, KPMG to ensure an orderly wind down of the Fisher Foods Ltd operations, are deemed to have continuity of employment from the date from which they first commenced with Frigoscandia or the Albert Fisher Group or its associated companies. This is effective immediately and means all payments will be reinstated, retrospectively, with immediate effect."

[10]There was then a letter mis-dated 2 June (it should probably be 22 June) to a variety of employees including, it is said, the Appellant, which is headed:

"To all ex-Fisher Foods Limited Frozen Produce Division, Kings Lynn employees terminated by the Receivers of The Albert Fisher Group Plc on the grounds of redundancy, 18 June 2002. Transfer of Undertaking to Pinguin Foods UK Limited"

The letter then sets out the history, saying:

"As you will be aware, the Albert Fisher Group Plc and its subsidiary Company Fisher Foods Limited, Frozen Produce Division, Kings Lynn were placed in receivership in 22 May 2002. Strenuous efforts were made to find a buyer for the Fisher Foods Limited Frozen Produce Division, Kings Lynn business. Unfortunately, this could not be achieved within the time scales and consequently, the Receivers terminated your employment on the grounds of redundancy on 18 June 2002. As part of this process, you were given the necessary application form to claim your statutory redundancy pay from the Government. The purpose of this letter is to advise you that a buyer for the business has now been found and the transfer of the business took place on 20 June 2002. The new employer has indicated they wish to take on all employees previously employed by Fisher Foods Limited, Frozen Produce Division, Kings Lynn and this means that a TUPE transfer situation exists. This letter is formal individual confirmation of your proposed transfer to Pinguin Foods UK Limited. This decision, which due to special circumstances could not be communicated to you sooner, means that your role transferred to Pinguin Foods UK Limited on 20 June 2002. Employees who transfer automatically become employees of the new employer. Service is counted as continuous from the first date on which employment commenced with The Albert Fisher Group Plc and its subsidiary companies, or any previous employer that transferred you under a TUPE transfer to the Albert Fisher Group Plc and its subsidiary companies. With the exception of pension considerations, transferred employees retain all the rights and obligations existing under their contracts of employment with the previous employer and these are transferred to the new employer."

It then goes on to deal with some practical matters.

[11]What confronted the Tribunal at the hearing were two apparently separate and, at first blush, contradictory assertions. One was the assertion, as was the fact, that there had been a dismissal and a payment of redundancy payment, and that the subsequent acquisition of the business did not comprise a TUPE arrangement, so far as those who had been dismissed were concerned, as opposed to the 28 who had not been dismissed. The other was an assertion by Pinguin that in effect everything in the garden was lovely and the employees were to be treated as carrying on with their employment. In our view, what the Tribunal had to do was to make a decision as to which of those two assertions was correct.

[12]The Tribunal was not assisted by the fact that the ET3 referred to the employee's period of employment as being continuous from 1976, but clearly - at least by the remedies hearing - that concession had been withdrawn, and the remedies hearing was conducted on the basis that there had indeed been a termination of employment and a fresh contract of employment commenced subsequently in 2002.

[13]The Tribunal dealt with this at paragraphs 9 and 10 of the remedies decision, but did not, I think, deal with it with as much clarity as they might have wished. However, what is clear from that decision is that they took the view that there had been a determination and there had been a new contract. The consequence of that was(a) that the Appellant had rightly received her redundancy and notice pay from the DTI - which was of course paid to her substantially after the new engagement had commenced, and in respect of which it is not suggested any steps had been taken to make any repayment – but

(b) the new employer was happy to deem that there had been a continuity of employment. The words used in the Company announcement are "deemed to have continuity of employment". In line with that, the employer was prepared, when the Appellant was dismissed, to pay her twelve weeks pay in lieu of notice.

[14]That does not mean that she had in fact got continuity of employment, or that there had in fact been a TUPE transfer of her employment. Her employment, as the contemporaneous documents show, had come to an end before the Respondent came on the scene and not in connection with the transfer to the Respondent. It follows that whilst - as a matter of good will and no doubt of the negotiation with the union - the employer was prepared, for notice purposes and the like, to treat her as having continuous employment, for statutory purposes, in determining the basic award, one must look at the true situation rather than the paternalistic and benevolent situation that the employer was prepared to treat as existing.

[15]It follows that the decision which the Tribunal came to was one that they were fully entitled to reach and that, in those circumstances, there is no indication of any error of law. It further follows from that, that the interesting question as to whether the redundancy payment and notice payment received from the DTI should be taken into account - which in our view it would not have to be - does not arise, nor does the question arise as to how and when Mrs Watson would be making a repayment, presumably plus interest, to the DTI of those monies that she had received under what would have appeared to have been a mistake of fact. The appeal will therefore be dismissed.