OPTICAL EXPRESS LTD v MS L WILLIAMS [2007] UKEAT 0036_07_1207

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2007] UKEAT 0036_07_1207

Case No Appeal No. UKEAT/0036/07

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

OPTICAL EXPRESS LTDAPPELLANT

MS L WILLIAMSRESPONDENT

Before

Mr Justice Burton

Sir Alistair Graham Kbe Mr D Norman

Date 12 July 2007

[1]APPEARANCES For the Appellant MR ROD MCKENZIE (Solicitor) Messrs Harper MacLeod Solicitors The Ca'd'oro Building 45 Gordon Street Glasgow G1 3PE For the Respondent MISS HELEN MULHOLLAND (of Counsel) Instructed by: Messrs Forbes Solicitors Rutherford House 4 Wellington Street (St. Johns) Blackburn, Lancs BB1 8DD SUMMARY Redundancy - trial period Contract of employment – sick pay and holiday pay Claimant accepted (with reservations) an offer of alternative employment within s138(1) of the 1996 Act and failed (notwithstanding having legal advisers) to give notice within the 28-day period in accordance with s138(2)/(3). The Employment Tribunal found that there was a "common law" trial period which nevertheless enabled her, after the expiry of the 28-day period, to accept a repudiatory breach by the Appellant employer as constructive dismissal and claim a statutory redundancy period claim. Held : s138(1) debars reliance on constructive dismissal leading to a redundancy payment unless there is operation of s138(2)/(3) and Turvey did not decide otherwise. Claimant was also disentitled to accrued holiday pay awarded by the Tribunal by the express term of her contract of employment. THE HONOURABLE MR JUSTICE BURTON This has been the hearing of an appeal by the Respondent below Maitland Limited, against the decision of the Employment Tribunal at Manchester after a hearing on 31 August 2006, in reasons handed down on 23 November 2006. The finding by the Employment Tribunal was, unanimously, that the Claimant was constructively dismissed by the Respondent by reason of redundancy, and was entitled to a statutory redundancy payment under the Employment Rights Act 1996 . The Tribunal concluded that the Claimant was not entitled to an enhanced redundancy payment by virtue of her contract of employment. It is quite apparent that it was primarily as to that latter sum, that a) the concern of the Claimant originally had revolved, and b) a good deal of the time before the Tribunal was taken up, because of course a contractual redundancy payment, particularly one resulting, if it had, from earlier employment transferred under TUPE to the Appellant company would have been of considerable value, but she failed in her claim. The Tribunal also found that she was entitled under her contract of employment to accrued holiday pay based on her service in 2005/2006, and this depended on an interpretation as to whether she was contractually entitled to holiday pay in arrear, it being common ground that she had in fact taken holiday in the relevant year for which she had been paid.

[2]The Claimant had been employed by Boots as a manager from April 1978. She became a multi-site practice manager in 2000, and was responsible for two dental practices in Southport and Bolton, and a chiropody practice in Chester, in charge of 33 employees. Her main experience was in managing dental practices. In January 2005, the Respondent which trades under the name Optical Express bought all Boots dental practices, by way of a transfer of undertakings under the TUPE Regulations. The chiropody practice of Boots was not transferred. The Claimant remained a multi-site manager, but now only of dental practices, and responsible for fewer staff. She was informed in September 2004 by Boots that the Southport practice would be transferred to Liverpool, but in January 2005 she was told by the Respondent that it would cease to exist. She was offered a position as dual services manager in Bolton, which she accepted, managing a dental and an optical service. Although the Claimant in some of the correspondence referred to her post as dual-site manager, in fact both businesses were based in Bolton. Her terms and conditions of employment continued as before, with Boots. It was agreed that, if either party was unhappy with the change, she could revert to a dual site dental manager rather than run the dental and optical offices.

[3]Unfortunately, however, that did not work out for business reasons, because the Appellant decided in August 2005 that it had to close the dental clinic in Bolton, because of a shortage of dentists. As a result it is common ground that her position would become redundant. The Claimant was naturally insistent that she had been in charge of both dental and optical services, and that although she accepted that the dental practice in Bolton would be closed, she would wish to retain the status of multi-site dental manager.

[4]There was, as was required and as was proper, a number of consultation meetings during the consultation period, some five, culminating in a meeting of 22 November. At a consultation meeting on 9 September it was suggested that she became manager of the Bolton optical store, thus shedding her dental responsibilities, and to an extent, her multi-site responsibility also, but at a protected salary, that is without losing any of her present salary. She wrote a lengthy letter on 13 October, which is the first of the correspondence to which we shall be referring, to Miss Kelly, in charge of HR, as we understand it, at Optical Express, setting out the reasons why she included that the offer of manager of Bolton optical store with protected salary was not a suitable alternative: she had little experience of the optician business: she would be supervising only four employees: it was in a retail environment, when her skills lay in the management of dental services: although her salary would be protected, the normal salary level indicated the lower status of the position.

[5]The last of the consultation meetings was on 22 November. We have minutes of that meeting, which were before the Tribunal. The minutes contain this exchange (insofar as it can be deciphered from handwriting) at one stage between Ms Kelly and the Claimant:

"JK (Ms Kelly): I need to write formally offering [that is offering the job at Bolton which the Appellant was asserting to be suitable]. It would therefore be for you to accept or decline. I would urge you to think four week trial period, see how feel, if know doesn't suit then we can talk, if don't accept then you would be resigning. Claimant: I wouldn't be resigning JK: You would be resigning Claimant: I wouldn't be terminating JK: We deem it suitable, if within the trial you would resign Claimant: I will take legal advice JK: I'll prepare offer letter"

[6]The reference to the four week trial period is to the statutory provisions which have formed the centrepiece of the argument before us. Those provisions are now contained in the Employment Rights Act 1996 , s136 and s138. They originate, of course, from The Redundancy Payments Act 1965 , amended by the Employment Protection Act 1975 . They were consolidated in the Employment Protection Consolidation Act 1978 , Part 6. For our purposes, and this is of some relevance as will be seen later, it does not appear that the provisions, albeit set out in a slightly different format and in different section numbering, have changed since 1975 or 1978. s136, under the heading "Dismissal by reason of redundancy…Circumstances in which an employee is dismissed", reads as follows: (1) Subject to the provisions of this section and sections 137 and 138, for the purposes of this Part an employee is dismissed by his employer if (and only if ) - (a) the contract under which he is employed by the employer is terminated by the employer (whether with or without notice)… (c) the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct.

[7]We have not read (b);(a) is the ordinary situation of dismissal by the employer; (c) refers to what can be called constructive dismissal, a fundamental breach by the employer subsequently accepted by the employee. s137 no longer exists, so the only section that is relevant so far as prevailing over subsection 136(1), as referred to in that subsection, is s138, headed up 'No dismissal in cases of renewal of contract or reengagement'. It reads as follows: 138 No dismissal in cases of renewal of contract or re-engagement (1) Where- (a) 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 before the end of his employment under the previous contract, and

(b) the renewal or re-engagement takes effect either immediately on, or after an interval of not more than four weeks after, the end of that employment the employee shall not be regarded for the purposes of this Part as dismissed by his employer by reason of the ending of his employment under the previous contract. (2) Subsection 1 does not apply if (a) the provisions of the contract as renewed, or of the new contract, as to- (i) the capacity and place in which the employee is employed, and (ii) the other terms and conditions of his employment differ (wholly or in part) from the corresponding provisions of the previous contract, and (b) during the period specified in subsection (3) – (i) the employee (for whatever reason) terminates the renewed or new contract, or gives notice to terminate it and it is in consequence terminated, or (ii) the employer, for a reason connected with or arising out of any difference between the renewed or new contract and the previous contract, terminates the renewed or new contract, or gives notice to terminate it and it is in consequence terminated. (3) The period referred to in subsection (2)(b) is the period – (a) beginning at the end of the employee's employment under the previous contract, and (b) ending with – (i) the period of four weeks beginning with the date on which the employee starts work under the renewed or new contract, or (ii) such longer period as may be agreed in accordance with subsection (6) for the purpose of retraining the employee for employment under that contract; And it is this Part referred to as the "trial period".

[8]It can be seen that the four week period, described as the trial period, being the new contract of employment under which the employee is reengaged in pursuance of the offer, is one which can be extended but only in the limited circumstances described in subsection 138(3)(b), and in relation to which more particular requirements are laid down in subsection 138(6)(b), by which the extension for the period of retraining needs to be, inter alia, in writing.

[9]The significant point about this is that, if the employee exercises a wholly unilateral right to terminate the trial period, he or she can do so, and can then return to the position he or she would have been in, but for the acceptance of the trial period. But the time within which the notice can be given is limited to the duration of the trail period itself. It cannot be done after the expiry of the trial period. This, it seems to us, makes a perfectly logical statutory scheme. If no offer of alternative employment is made, then the employer may be entitled to establish fair dismissal, although it is much more likely that he is not, but, in any event, the employee can straightforwardly claim a redundancy payment by virtue of the dismissal under s 136(1)(a), or s 136(1)(c), if such would be the case. If the offer is made, but is declined by the employee, then the employee takes the risk that it will be found that such was an unreasonable refusal i.e. that the employment was not a suitable alternative employment. That is a risk, although as it turns out in this case, this Tribunal did reach the conclusion, at paragraph 6 of this judgment, that the offer of the job of manager of an optical store was not an offer of suitable alternative employment, and therefore that it would be reasonable for the Claimant to refuse it. If, however, the offer is made and accepted, then there is the get-out provision, favourable to the employee in the sense that it can be exercised unilaterally, but restricted by virtue of the fact that there is a 28-day period in which the right must be exercised.

[10]If he or she does exercise the right to terminate, and if the employment was suitable, then he or she will have been at risk in refusing it, see s 141(4)(c), but will at least have been able to find out whether it seemed unsuitable, rather than risk outright rejection, and then find at the end of the day that, unknown to him or her, it would have been perfectly suitable after all. There is the restriction by reference to s 141(4)(d) that the employee can be disentitled to a redundancy payment if during the trial period he unreasonably terminates the contract, but that, it seems to us, is most unlikely to occur if the employment was unsuitable, unless it is concluded by a Tribunal that the employee simply did not give the employment a chance, and perhaps terminated almost immediately after the beginning of the trial period.

[11]That seems to us to be a straightforward and sensible procedure which will be well understood by employers and employees. It is always a risky business deciding whether offers of alternative employment are suitable. It is also a risky business establishing whether or not there has been a constructive dismissal. But the risk is taken out of the situation to an extent if both parties operate and comply with this very straightforward procedure. That is what was on offer from the Appellant, as indicated in the minutes of the meeting to which we have referred. It was the employer's view that the offer was suitable. In her witness statement, which we have seen because it was produced for us in an agreed bundle, it was not suggested by the Claimant that the offer was not believed by the employers to be suitable. Indeed, at paragraph 12 of her witness statement, she confirms her belief:

"that the [Appellant] believed…that the position was a suitable alternative."

It might be said, as per Mandy Rice Davies, that "they would, wouldn't they?" It would equally be said that the employee was understandably very concerned about whether the offer, whereby she would be shedding her major experience, could possibly be said to be suitable. Nevertheless, the employer gave the advice to which we have referred, which, right or wrong, was certainly on the basis of their view that she ought to, and would be very unwise not to, try the trial period.

[12]It should be stated at this stage that the Appellant at all material times did have legal advice, and certainly had legal advice before that meeting, and so when she said as recorded in the minutes, "I will take legal advice" she already knew from whom she was going to get it. It is not a surprise that Counsel Ms Mulholland, who has appeared before us today, although she did not appear below, accepted that it was indeed the right course for the Appellant, and indeed any employee in her position to "suck it and see" by taking up the trial offer, and so to that extent, albeit that it was clearly in the Appellant's interest to encourage her in strong terms to take up the suggestion of a four week trial period, it must be said that that was also in her interest. Nevertheless, she was, in light of the lengthy reasoning already set out in the 13 October letter, understandably very reluctant to go forward, because she was pessimistic as to the outcome. But the offer was made in a letter from Ms Kelly dated 23 November 2005. The position was store manager, at her protected current salary, and it was a four week trial period:

"during [which] time both parties will be able to assess suitability for the position. I will also ensure that any additional training and familiarisation is provided to support you during this time."

She then refers to the meeting of 22 November. "During my meeting with you on 22 November 2005 you stated that you would not accept the position offered as you felt that the role being offered was not a suitable alternative. I advised you that the Company believe that the position is a suitable alternative. I would appreciate it if you would write to me to advise if you would like to accept the position offered."

[13]The Claimant did accept the offer of the four week trial period, pursuant to section 138 of the 1996 Act. She wrote a letter of 27 November, once again outlining her concerns and her grave reservations, but closed the letter:

"On that basis I will enter into a 4 week trial period to assess the suitability for the alternative role. At the end of the 4 week trial period if I do not believe the position is suitable please confirm that my contractual redundancy entitlement will be available and made to me."

That last sentence emphasizes what we have already stated must have been clearly her primary consideration, namely to preserve her right to a contractual redundancy payment. Sadly, in the event, that was not to be her entitlement as found by the Tribunal.

[14]There was no reply to that letter, and it is clearly unfortunate that there was none, although one can imagine that the Respondent was only hoping that she would indeed accept the offer, and was not in a position to confirm that her contractual redundancy entitlement would be available at the end of the period, no doubt first because it was not, in the event, to be her entitlement, and, secondly, in that much would have depended upon whether her rejection of the alternative employment was reasonable. Nevertheless, it would have been, at the least, good industrial practice to have replied to the letter.

[15]There is a further letter, dated 30 November 2005, which shows that there were at least some conversations between them, because she produced a medical certificate which showed that she was not well at the time. Fortunately, the more serious condition, which it was feared she might have, did not eventuate. In that letter of 30 November 2005, the Claimant confirmed the basis of the agreement between them:

"I have accepted to enter the four week trial period. This was due to commence on Monday 5 December 2005, however as you are aware, due to my illness you have agreed to suspend the start of the trial period until I am well and fit to return to work."

[16]She was well and did return to work, and the trial period, as suspended, was extended, and on this occasion the Appellant did reply, by letter dated 12 December 2005, confirming the altering of the dates of the trial period, so that the end date was now 13 January 2006. Two weeks into the trial period, the solicitors for the Claimant, who had been giving advice, no doubt, previously, for the first time wrote open correspondence, and they too set out the concerns and reservations that, already by that time, the Claimant continued to have, and they conclude their letter of 22 December 2005 by stating:

"Despite this, my client has undertaken a four week trial. I am instructed that the trial is proving unsuccessful and I am therefore instructed to write to you to seek your confirmation that she may reject the position that has been offered to her."

There was no need for any confirmation to be sought at that time, because, as we have earlier indicated, if she was to give notice, she could perfectly well do so unilaterally. Clearly there were concerns as to the effect on her if she terminated, and was left to argue that the employment was unsuitable, but that was clearly her firm belief and, as it turns out, had she done so, she would have succeeded in the light of the Tribunal's view; but the one thing that is clear is that this was not a termination of the new employment, and of the trial period, pursuant to the terms of s138(2) and (3). The Tribunal so found, although, when it came to the Employment Tribunal hearing, Mr Byrne, the author of that letter, representing the Claimant before the Tribunal had unsuccessfully sought to argue that it was a termination letter.

[17]There was a response by the Appellant to that letter in the light of such expression of dissatisfaction, and requesting the attendance of the Claimant at a grievance hearing on 12 January 2006. There does not seem to us to be any criticism of the Appellant in giving that answer.

[18]The 6th January sees the second of two letters sent by the Claimant's solicitors during the trial period, which had still not expired. That correctly recites the position in the first paragraph:

"My client has now been offered an alternative position at Optical Express…It is my understanding that my client was invited to consider the alternative position under the provisions of Section 138 of The Employment Rights Act 1996. Specifically, under the provisions of Section 138(3) [which we note is the very provision which required that, if the Claimant was going to get out of the notice period under s 138, she had to give her notice before its expiry] my client was offered a four week period in order to ascertain whether the new contract that was being offered to her was acceptable. Upon my client giving you notice that the trial has been unsuccessful, the position reverts to that detailed in Section 136, namely her employment is ended and her redundancy payment made. This is the confirmation that she seeks."

But, once again, it was not likely that the Appellant would give such confirmation, given their position, expressly stated on more than one occasion, that the alternative employment which they were offering was suitable. That did not mean that the Claimant was compelled to continue in that employment; to the contrary, she could at any stage, still with a week to go before the expiry of the notice period, have given the necessary notice.

[19]Once again, Mr Byrne, the author of that letter, and advocate for the Claimant at the hearing, sought to argue at the hearing that this amounted to termination of the contract within the trial period. It plainly was not, and the Tribunal so found. There has been no cross-appeal against the finding by the Tribunal that neither by the letter of 22 December nor by the letter of 6 January did the Claimant give the necessary notice under s138(2) and (3) of termination, as she could have done.

[20]By letter of 26 January, Mr Byrne of the Claimant's solicitors wrote a further letter, once again correctly referring to the legal position, but repeating his client's concerns:

"I therefore repeat once again that my client's position has been made redundant. She has been provided with alternative employment on a trial basis under the provisions of Section 138 of the Employment Rights Act 1996. By virtue of my letter dated 22 December you were given notice that my client deemed the trial to be unsuccessful, and that she has rejected the position that had been offered to her."

Whether by that stage it was being appreciated by those advising the Claimant that she had missed the boat, and a retrospective characterisation of the letter of 22 December as a termination letter was being put forward is unclear. All that can be said is that, as we have said earlier in this judgment, and as the Employment Tribunal found, the letter of 22 December constituted no such thing.

[21]It was now a fortnight after the termination of the trial period and there had been no notice within the trial period. When, the following day, notice was given, it purported to be termination, but was of course out of time under s138(2) and (3). The letter sent by the Claimant said:

"In the circumstances I hereby provide you with notice of the termination of my employment."

She concluded the letter by saying:

" I believe that the erosion of my position and status, the failure of my employers to reply to the correspondence submitted by my solicitors, and the overall variation of my contractual position following the transfer of the business to Optical Express represents a fundamental breach of my contract, thereby entitling me to resign."

[22]The case that was put forward at the Tribunal was, as we have indicated, that the Claimant was entitled to a redundancy payment, and that notice had been given during the period. Unfortunately, it was no doubt made clear by the Tribunal in the course of argument, and certainly was the result in the end, that that was not so. We have been told by Mr McKenzie, who ably appeared below and before us on behalf of the Appellant company, that it was the Chairman of the Tribunal who drew the attention of the parties to the case of Turvey v C. W. Cheyney & Son Ltd

[1979] IRLR 105

, by reference to IDS Brief, which he had apparently read during one of the short adjournments. It was by reference, it seems, to conclusions drawn from that case that the Tribunal reached a decision in favour of the Claimant, which is now appealed by the Appellant. There was, in the original ET1 at paragraph 7, the following plea:

"Further and in the alternative, the Claimant claims that the Respondent has behaved in a manner which has breached the implied term of trust and confidence existing between the Claimant and the Respondent. Firstly, the Respondent has failed to identify that the position offered to the Claimant was not suitable alternative employment. This is despite the fact that this has been highlighted to the Respondent in numerous letters. The Claimant believes that the Respondent deliberately ignored the letters to avoid paying a substantial statutory and contractual entitlement upon redundancy. This position was further exacerbated by the failure by the Respondent to deal with correspondence issued by the Claimant's solicitor throughout the period of December 2005 and January 2006." [We pause to say that there was not a total of failure, as we have indicated, by virtue of the setting up of the grievance hearing. ] The Claimant states that the Respondent's failure to deal with this correspondence, bearing in mind the extremely important nature of its contents, represents a breach of the implied term of trust and confidence, thereby causing her to resign by a letter dated 27 January 2006."

[23]We have been told by Mr McKenzie and by Mr Byrne, who appeared below though he has not been the advocate before us, through Ms Mulholland, that there was debate before the Tribunal as to whether the failure to reply, or reply adequately, to correspondence by the solicitors amounted to a fundamental breach of contract, or a breach of the implied term of trust and confidence, and Mr McKenzie has told us that he relied on authorities to the contrary. That was not the basis of any finding by the Tribunal, nor has it been argued before us today. But the significance is that there was a plea included in the ET1, a pleaded breach of the implied term of trust and confidence, albeit not on the basis that was eventually found by the Tribunal, to which we will refer. It is plain that it was necessary to include such a plea in the ET1, simply to show that there was a dismissal pursuant to s136(1(c), that is, a constructive dismissal, on the basis of which a redundancy claim, statutory and contractual, could be put forward. It does not appear to us that there was - and certainly the Employment Tribunal did not so understand it as we shall describe later - a claim for compensation for unfair constructive dismissal, but rather, only, a claim for a straightforward redundancy payment.

[24]Turvey having been referred to by the Tribunal, the parties found themselves involved in an argument which was, it seems different from that which either of them had expected; and what was found by the Tribunal was that, notwithstanding that the statutory period had not been complied with, there was, alongside the statutory procedure, what was called a "common law" trial period which would enable the Tribunal to find a redundancy payment in favour of the Claimant. This is contained in three relevant paragraphs of the judgment of the Tribunal as follows:

"12. In a few cases, the courts have held that an employee may be entitled to a 'common law' trial period which is not necessarily limited to four weeks. These are constructive dismissal cases where an employer, faced with a redundancy situation, imposes new terms and conditions in breach of the employment contract. If the imposed changes amount to a fundamental breach the employee may either resign immediately, or continue working under protest for a reasonable trial period."

[25]That is plainly good sense. If an employer does impose a change in terms of employment on an employee without notice, that is, if accepted, a breach likely to amount to a constructive dismissal, and, if there is a redundancy situation, then that is likely to lead to a redundancy payment on that dismissal, leaving aside any question of unfairness. What is also said is that, at common law, there is no specified period for acceptance of a repudiatory breach, and a common law decision will be made as to what period is reasonable.

[26]The Tribunal continued by referring to Turvey :

"In Turvey v CW Cheyney and Son Ltd [1979] IRLR 105 Turvey was a polisher. Work diminished and he was offered a job in a different department. He agreed to take the new job on trial. More than four weeks later he left because he did not like the new work. It was held by the EAT that Turvey was not dismissed until he accepted the employer's repudiation, which he did by leaving the new job within a reasonable time, and he was entitled to a redundancy payment. A similar case was Air Canada v Lee [1978] IRLR 392. 13. The Tribunal finds that the Claimant made it clear from the first time the alternative job was suggested to her that she did not consider it suitable and was unwilling to take it and she repeated this in meetings and in letters, as did her solicitor. She was put under pressure to accept the trial period at a time when she was seriously concerned about her health. She was told by Jo Kelly, the human resources manager at the time, that she would be resigning if she didn't accept the suitable alternative and would therefore lose her redundancy rights, when it must have been apparent to the respondent that the new job was not suitable. The employer never gave the claimant express notice of dismissal, the letter of 23 November merely states that her position in Bolton has been selected for redundancy and will disappear on 2December, only just over a week later. The Tribunal finds the respondent was in fundamental breach of contract in imposing the alternative job on the claimant and that the claimant had a reasonable period within which to decide whether to accept to accept or reject it. It was understandable that the claimant did not wish to resign without an assurance that she would receive her redundancy money. On the other hand, the respondent was aware that making the claimant redundant would be costly. The respondent is a large company with its own human resources department, yet the letters from the claimant's solicitor were not answered. [Not quite accurate, as we have indicated.] The respondent argued that it did reply to the letter of 22 December in the letter 5 January 2006, but that letter did not answer any of the points raised in the solicitor's letter, merely inviting the Claimant to a grievance meeting, which was fixed for the day before the four week trial period expired. The Tribunal does not accept Miss Ross's explanation that because the HR department was being restructured at the time, the letter from the claimant's solicitor dated 6 January was overlooked. The Tribunal finds it reasonable for the claimant to delay her resignation until it became clear that she was not going to receive a reply to her solicitor's letters." 14. For the above reasons the Tribunal finds that the claimant was constructively dismissed. The employer committed a fundamental breach of the duty of trust and confidence in imposing on her a new contract which was clearly unsuitable, at a time when she was unwell. She resigned within a reasonable period. The reason for dismissal was redundancy, so that she is entitled to a statutory redundancy payment under the Employment Rights Act 1996."

[27]There are a number of problems about those paragraphs, which are central to the Tribunal's conclusion. The first is factual, and we shall return to it.

[28]Mr McKenzie submits that insofar as there was a finding by the Tribunal that there was a fundamental breach of the duty of trust and confidence, by virtue of the Respondent imposing on the Claimant a contract which it knew to be unsuitable, or which was so obviously unsuitable that it must have known, such are conclusions which are not available to have been found on the basis of the evidence before the Tribunal. We shall return to the question of perversity insofar as it is necessary, but it must be recorded at this stage first, that, as we have earlier indicated by reference to the witness statement of the Claimant, she did not assert that the employers acted in bad faith because they knew that the position was not a suitable alternative: indeed, the reverse. And in terms of imposing on her a new contract, subject always to the strength of view expressed by Ms Kelly in the meeting of 22 November – the minutes of which we have quoted - it can hardly have been said to have been imposed, when there was time given, with the benefit of legal advice, to decide whether to accept it. In any event, the new contract was terminable unilaterally at any time, provided it was done within the 28 day period, which, particularly after the agreed extension of the beginning of the trial period, post-dated the period of illness that the Appellant had, and was at a time when she had the benefit of solicitors writing letters on her behalf.

[29]But the greater problem is as to whether in fact the Tribunal was justified in relying upon Turvey and Air Canada in reaching the conclusion it did. There is a fundamental difficulty, as we see it, in the way of the Tribunal's conclusion that alongside this very sensible, comprehensible, and straightforward statutory system, there remained the opportunity for what they call a "common law" trial period. It is quite plain that if there was a constructive dismissal, with no accompaniment of an offer, then accepted, of alternative employment, the employee would have the common law opportunity to accept or reject; and the fact that the employee went on working, either on the same or on different terms, would not, absent evidence of waiver, prevent acceptance of repudiation and hence a constructive dismissal after a common law trial period. But where, as here, there is an express offer and an express acceptance of an s138 contract of re-engagement for a trial period, it appears to us that it is impossible to suggest that the common law trial period runs alongside.

[30]The terms of s138 are utterly clear. Where there is an offer and acceptance of the new contract of employment in accordance with s138:

"the employee shall not be regarded for the purposes of this Part as dismissed by his employer by reason of the ending of his employment under the previous contract."

Consequently, he is debarred, and cannot assert constructive dismissal at all. However, that right is re-granted to the employee, if, within the trial period, he or she exercises the rights given by s138 (2) and (3). Subsection (1) is expressly stated not to apply in the circumstances of subsection (2, but only if the relevant notice is given in time, as set out in subsection 3. The Tribunal does not address how there can be, given the operation, as there clearly was, of the statutory procedure, the common law trial period sat alongside. It can only be by reference to the two cases to which the Tribunal referred, which they thought might give that opportunity, and to which end they made, perhaps, the findings set out in their paragraphs 13 and 14. It must be recalled that what is sought to be construed is the imposition of new terms and conditions in breach of the employment contract, as signposted in paragraph 12 in the context of the reference to Turvey and Air Canada . But the trial period, as we have earlier stated, was easily terminable at the option of the Claimant.

[31]We turn then first to Air Canada v Lee, because it was first in time. Ms Mulholland frankly accepted that she could not rely on Air Canada in establishing any proposition that the common law trial period survived the statutory scheme, because the facts of Air Canada were so very different. In Air Canada the Respondent employee was found to be entitled to a redundancy payment, notwithstanding that she moved to a new location on a trial basis and that her resignation came after the trial period was well in excess of four weeks. However, in that case there was no operation of the statutory period. The reference to the trial period came about subsequently, because of reference to the statute, but the parties themselves did not operate the statutory procedure. As is clear from paragraph 9 of the judgment the duration of the trial period was unspecified. As appears from paragraph 11, matters were dealt with on a wholly informal basis, and the Tribunal concluded that all that had happened was that an employee had postponed a decision to treat the contract as repudiated by virtue of the employer's unilateral change of the terms and conditions. That is a perfectly understandable decision and one entirely consistent with the legislation.

[32]The other case is the case of Turvey , to which the Tribunal referred and to which we have referred. Once again, it is not at all clear that there was operation of the statutory procedure by the employer, and such does not appear from the short summary of the facts of the case in the judgment of the Employment Appeal Tribunal presided over by Bristow J. It is recounted that there were four applicants in the case employed as polishers. In May 1977, following a decline in the trade, work in the polishing department where they worked had diminished and was about to cease, and each of them was offered a job in a different department.

The judge continues:

"3. From the notes of evidence at the Industrial Tribunal it appears that three of the four applicants said that they would take the different jobs they were offered on trial; that is to say, they did not at once make a new contract or renew their contracts of employment by agreeing to the variation in its terms, namely that they should work in a different job which, under their existing contract, the company could not require them to do. 4. The evidence of the fourth suggests, though the note shows that this aspect of the problem is not fully explored, that she worked at the new job with an implied reservation that she was doing so, like the other three, on trial."

[33]The submission was made by Mr Peter Clark, Counsel for the employees, that for an employee to stay on beyond the four week period did not preclude him from relying on the employer's original repudiation of the contract. Reference was made to s3 of the Redundancy Payments Act , which was in, as we have earlier indicated, materially identical terms (as amended by the 1975 Act) to the present legislation. Bristow J referred to Air Canada and concluded that there was what he called a 'period X' which was an employee's "common law" period, and he said this:

"20. He has a period X in which to make up his mind. If his decision is not to take a new job, he is treated as dismissed at the moment he brings period X to an end by leaving the new job. If his decision is to take the new job and he brings period X to an end by making a new contract or renewing the old one with variations, he then has the further trial period created by s3(5) in which to make up his mind, before losing his right to say 'You dismissed me by repudiating the old contract'… So he has his common law period X protection plus his statutory trial period protection."

[34]There is no addressing by the learned judge of the express terms of s138(1), which we are satisfied were present in the 1975 amendment to the 1965 Act. We have seen the provisions of section 84 of the Employment Protection Consolidation Act 1978 which we understand to have been simply a re-enactment of the 1975 legislation, and there was a provision in similar terms. We are satisfied, as we indicated at the outset of this judgment, in construing s138, that where the offer of re-engagement, in accordance with the 28-day period, by reference to s138 is accepted, then there is no right for the employee to rely on the original dismissal or constructive dismissal in order to claim a redundancy payment.

[35]Of course, he may have the right, if he has not waived it, to be able to make other claims, but not a claim which justifies him being able to say that he is dismissed for the purpose of a redundancy claim. That was not addressed in Turvey , and it may be that the decision is wrong on that basis. However, it appears more likely to us that the reason that it was not specifically addressed was because it does not appear, as we have earlier indicated, that the statutory procedure was in fact followed in Turvey , anymore than it was in Air Canada . The consideration of the legislation was being given by objective application to the fact of the case, in which all that had happened was a trial period was agreed to be worked by the employees, it was held without prejudice to their right to accept termination and claim a redundancy payment.

[36]No other cases are referred to by Ms Mulholland, on which she relies, although reference was made to the decision of this Tribunal in East Suffolk Local Health Services NHS Trust v Palmer

[1997] ICR 425

, which we do not find at all persuasive and which in particular has not addressed the problem which is now before us; and she accepts that, on the face of it, Meek v J Allen Rubber Co Ltd and others

[1980] IRLR 21

is unhelpful to her cause.

[37]We are entirely satisfied that this Tribunal was not entitled in law to conclude that a right to a statutory redundancy payment survived, notwithstanding the operation of, but non-compliance with, the statutory procedure under s138. There are many cases which have been considered in which the question as to whether the notice having been given in the period was a good one, or whether the period could be extended otherwise than in accordance with the strict terms of the provisions in s138(6). Of course there will be hard cases, but the much better and more sensible course is for both employer and employee to know where they are, in terms of the availability of this procedure. In this case, both went into it with their eyes open. Understandably the Claimant was reluctant, had reservations, but, particularly with the benefit of legal advice, she should and could have exercised her right in time. Indeed, it would appear that there is little justification for her not having been advised that if she was going to exercise her right she had to do so within the 28-day period. No doubt she may consider whether she has any remedy in that regard.

[38]We turn to the factual findings in paragraphs 13 and 14 of the Tribunal's Reasons. It is clear from what we have said, that, even if there was a repudiatory breach by the Appellant in the way in which they brought the contract of employment to an end and/or offered the s 138 trial period, by the acceptance of that offer, and its non-termination within the statutory period, the Claimant lost the right to claim redundancy, and to that extent the Tribunal was wrong. There is however also, as we have indicated, a very considerable question over whether the Tribunal was entitled to reach the actual findings that it did. It was suggested that she was put under pressure to accept the trial period. That, of course, is a matter which it was open to the Tribunal to conclude, as a result of its consideration of the minutes, to which we have referred, even though it was not the subject of any assertion in that regard by the Claimant in her witness statement. We have, however, already indicated that we find it difficult to see what the causative consequence of that was, in the sense that, even if she was put under pressure to sign the document, she was free to give notice relatively shortly thereafter. However, it was not simply that the Tribunal concluded that the Claimant was put under pressure to accept the alternative employment; it was coupled with a finding by the Tribunal, which Ms Mulholland has accepted was one, effectively, of bad faith, namely that the Appellant imposed that period when they knew or must have known that the employment was unsuitable, an allegation which the Claimant herself did not make. It appears to us that to make a finding of bad faith on the facts of this case was not open to them.

[39]However, we do not need to rest our judgment on that conclusion, because we have already indicated that even if there was a repudiatory breach of the contract justifying a case of constructive dismissal, it does not assist the Claimant to recover a redundancy payment. What it might have done, if there was justification for the Tribunal's conclusion, would have been to have left available a claim of unfair constructive dismissal, leading on to compensation and the basic award, or wrongful constructive dismissal, leading on to some claim or other for damages, limited of course to notice period. The Tribunal made no such findings in either regard. They limited their conclusion to the fact that because of these matters, this led to constructive dismissal in respect of which the Claimant was entitled to a redundancy payment. Indeed, their express finding is not of unfair dismissal or wrongful dismissal, but of constructive dismissal by reason of redundancy and entitlement to redundancy payment. There is no cross-appeal in respect of that finding, and we are satisfied that there should have been, if there were to be any kind of suggestion that, instead of recovery of a redundancy payment, some kind of basic award plus compensatory award could have been the outcome.

[40]As we have indicated that we do not conclude that the Tribunal was entitled to make the findings of fact, that does not arise, but even if we had concluded that they were entitled to make those findings, the only remedy they might have led to, not being one of statutory redundancy entitlement, was a remedy which a Tribunal itself, even if asked for – and it is not clear that they were – did not make, and in respect of which there is no cross-appeal. In those circumstances, the appeal by the Respondent in respect of the redundancy payment must succeed.

[41]There is a second ground of appeal in respect of the accrued holiday pay to which we referred in opening. This is straightforward, because there was no oral evidence given, and we see nothing in the Claimant's statement in that regard, other than an immaterial matter which is referred to in the judgment of the Employment Tribunal to which we shall refer, and fell to be construed by reference to two documents, both of them being Boots documents of course, ante-dating the transfer of undertaking to the Appellant company.

[42]The first document is a document called 'Boots Employee Handbook', and it contains what were plainly general terms and conditions of employment, applicable to all Boots employees, no doubt including the Claimant; and that refers to holiday pay schemes which operated in the employees' area at the time they joined, which were preserved by that document. The case for the Claimant is, that when she joined, she joined on a holiday scheme whereby holidays were in arrear, as opposed to the statement made in this Handbook which says:

"All new employees join on the current year holiday scheme."

The longer-serving colleagues may have joined at a time and place when different holiday schemes apply. That document clearly would have preserved the entitlement of the Claimant to receive holiday pay in arrears, such that when she took her holiday in the year 2004/5 she would in fact have been taking her 2003/4 holiday.

[43]However, a subsequent document, which enshrined her terms and conditions of employment, was signed by Boots Healthcare Services and by the Claimant in 2004, and this plainly superseded the earlier document, insofar as there is no reference to the Handbook in the document. It would be clear that if anything was not dealt with in this contract, then it could well be asserted either that there was a further term implied by custom and practice, or an oral term or a continuation of a term contained in the earlier Employee Handbook. But, subject to that, this now contained her terms and conditions of employment, which were those which were transferred from Boots to the Appellant on the transfer of undertaking.

[44]Under holidays, the express provision was that "Holiday entitlement may only be carried forward into the next holiday year in exceptional circumstances where your Line Manager has specifically determined that this is necessary in order to meet the needs of the business." It is wholly clear that, whatever may have been the position prior to 2004, there was, as from 2004 onwards, no question of entitlement in respect of untaken holidays from previous years. Thus, when she left, she was paid only in respect of unpaid holidays without reference to any alleged accrued holidays.

[45]The Tribunal made a finding, as we have indicated, whereby they awarded the holiday pay in her favour. They said this in the very short conclusion at paragraph 28, in which we must of course, though sympathising with their aim to give some money to the Claimant, look at the matter as a matter of law, however hard that may be to a party such as this Claimant.

[46]The Tribunal said:

"28. The Tribunal finds that Section 3 of the Employee Handbook is a contractual document, [we agree with that] and must be read together with the terms and conditions. The claimant who was a credible witness, gave evidence that there had been no change in holiday arrangements in 2004/5."

We interpose to say that that plainly was said, and we accept the finding by the Employment Tribunal, as we must, but it is clear that there was no change in the holiday arrangement, in the sense that she took holidays in that year. There was no evidence, at any rate none referred to before us or by the Employment Tribunal, that there was any express statement when she took those holidays as to whether they related to an entitlement or accrued entitlement, or to an entitlement by reference to a contact still in existence. They then conclude as follows:

"Where the two documents conflict, the Tribunal prefers the more detailed provisions of the Employee Handbook. The Tribunal finds that these provisions were omitted from the written statement by mistake, because it was a standard form document to be applied to new employees who did not have the option of the accrued holiday system. The Tribunal determines that the claimant is entitled to accrued holiday pay based on her service in 2005/6."

[47]In the absence of any evidence, it seems difficult to see how the Tribunal could have reached the conclusion that the provisions were omitted by mistake, but if that were so then there would need to be some conclusion by the Tribunal that, on one of the traditional bases, the document should be rectified on the basis that it did not accurately record the agreement between the parties. There was clearly no evidence at all to justify such a conclusion.

[48]As to whether the Tribunal preferred the more detailed provisions of the employee handbook, we too would like to prefer the more detailed provisions if we could possibly do so in order to assist the Claimant to receive some money, but unfortunately that is not the legal test. The legal test is whether there is anything which could be said to contradict the terms of the signed contract between the parties, and that provision here is entirely clear. There is no role for either some implied term of for some hangover from an earlier contract, in the light of the clear express term of the 2004 contract to which we have referred. In those circumstances we must conclude that the Tribunal erred in law in its application of the 'preferring' or 'omitting' test and consequently we reverse its conclusion, and we must allow the appeal on those grounds.