Shumba & Ors v Park Cakes Ltd (Redundancy : Contractual scheme) [2012] UKEAT 0219_11_2811

EAT
Shumba & Ors v Park Cakes Ltd (Redundancy : Contractual scheme)
[2012] UKEAT 0219_11_2811 · 2012-11-28
[1]This appeal concerns part of a judgment given by the Employment Tribunal sitting in Manchester (Employment Judge Vinecombe presiding) dated 7 February 2011. The underlying proceedings were brought by Mr Walter Shumba, Ms Nazleen Amin, Mr Thomas Patterson and Mrs Angela Buckley (“the Claimants”). They were each dismissed for redundancy on 17 July 2009 by Park Cakes Limited (“the Respondent”). They said that they were contractually entitled to an enhanced redundancy payment. The Employment Tribunal rejected that claim. That is the issue with which this appeal is concerned.[2]The Employment Tribunal was also concerned with claims of unfair dismissal by the Claimants. Those claims were successful; they occupied a substantial amount of the time of the Tribunal below and much of its reasoning. The Respondent has not appealed against the Tribunal’s findings of unfair dismissal. Background[3]The Claimants all worked as section managers at a factory in Oldham which produced cakes and other confectionary products. They were first employed at dates between 1990 and 2001. During that period – and for some years before - the business was run by a company within the Northern Foods group.[4]In respect of most employees at the Oldham factory there was a recognised trade union, the Bakers Food and Allied Workers Union (“BFAWU”). Although the Claimants were union members, as section managers they fell within a class known as “non-negotiated employees”. The union did not have negotiating rights in respect of them.[5]In January 2007 the business was sold to the Vision Group and is now owned by the Respondent. The employment of the Claimants transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). In 2009 the Respondent reduced the number of section managers. The Claimants were made redundant. They asserted that they were entitled to enhanced redundancy payments. The Respondent denied this entitlement.[6]It was the Claimants’ case that the right to an enhanced redundancy payment derived either from an express term or from a term to be implied into their contracts of employment by custom and practice, established during the time when Northern Foods owned the business. It was said that Northern Foods had always paid twice the statutory package (i.e. 2 or 3 weeks’ pay per year of service) with no cap on the amount of weekly pay, plus an additional £600. The Tribunal rejected the Claimants’ case on both grounds. On appeal the Claimants challenges the reasoning and conclusion of the Tribunal only in respect of the alleged implied term.[7]W e were told that the question whether the Respondent’s employees were entitled to enhanced redundancy payments based on the Northern Foods package had a general importance for the Respondent and for its employees beyond the Claimants in this case. We take it that a substantial number of employees from the Northern Foods days continue to be employed by the Respondent. The law[8]It is convenient, before turning to the detail of the appeal, to have in mind the principal authorities which were cited to the Tribunal and upon which the Tribunal relied. To a significant extent the Tribunal’s findings are formulated by reference to these authorities. 9. T he first was Duke v Reliance Systems Ltd [1982] IRLR 347, EAT, where the employer was seeking to imply a contractual normal retiring age of 60. Browne-Wilkinson J said (page 349):
“[T]here was no evidence that the employers' policy of retirement for women at the age of 60 had been communicated to such employees in 1978 nor was there any evidence of any universal practice to that effect. A policy adopted by management unilaterally cannot become a term of the employees' contracts on the grounds that it is an established custom and practice unless it is at least shown that the policy has been drawn to the attention of the employees or has been followed without exception for a substantial period.”
[10]In Quinn v Calder Industrial Materials [1996] IRLR 12 the Appeal Tribunal was concerned with a claim by an employee that an enhanced redundancy scheme, enshrined in a policy of the employer, was a term of his contract.[11]Lord Coulsfield, giving the judgment of the Appeal Tribunal, observed that the law recognised more than one type of implied term. In a case such as Quinn , where the employee sought to establish that a policy had become a term of the contract by custom and practice (paragraph 6): – “The question whether there is an implied term in the present case is really a different way of putting the question of what terms the parties have actually agreed. In order to answer that question, it is necessary to consider the whole circumstances of the formation of the contract and the parties' actings before, and, even, after, the contract, to gather what terms they had actually agreed.”[12]Lord Coulsfield referred to Duke , noted the words “at least” in the judgment of Browne-Wilkinson J, and continued:
“In a case such as the present, the factors to which Browne-Wilkinson J referred are likely to be among the most important circumstances to be taken into account, but they have to be taken into account along with all the other circumstances of the case. Thus, for example, in our view, the question is not whether the period for which a policy has been followed is 'substantial' in some abstract sense, but whether, in relation to the other circumstances, it is sufficient to support the inference that that policy has achieved the status of a contractual term. Again, with regard to communication, the question seems to us to be not so much whether the policy has been made or become known directly to the employees or through intermediaries, but whether the circumstances in which it was made or has become known support the inference that the employers intended to become contractually bound by it.”
[13]In Albion Automotive Limited v Walker [2002] EWCA Civ 94 the question was again whether a policy offering enhanced redundancy terms was contractual. Peter Gibson LJ accepted a submission from counsel to the effect that the following factors were likely to be relevant in that case (see paras 15 and 18):
“(a) whether the policy was drawn to the attention of employees; (b) whether it was followed without exception for a substantial period; (c) the number of occasions on which it was followed; (d) whether payments were made automatically; (e) whether the nature of communication of the policy supported the inference that the employers intended to be contractually bound; (f) whether the policy was adopted by agreement; (g) whether employees had a reasonable expectation that the enhanced payment would be made; (h) whether terms were incorporated in a written agreement; (i) whether the terms were consistently applied.”
[14]Standing back for a moment from these authorities, it is important (we think) to keep in mind that the fundamental question is the one which Lord Coulsfield identified in Quinn – namely, whether the circumstances in which the enhanced redundancy package had been made known or had become known supported the inference that the employers intended to become contractually bound by it. It is well established that this question is to be determined not by an examination of the employer’s private intentions, but by an objective examination of the circumstances. In Albion the Court of Appeal did not seek to lay down an exhaustive list of considerations relevant to that question, still less to attribute weight to individual considerations.[15]These were the cases before the Employment Tribunal. Ms Ingrid Simler, QC on behalf of the Respondent submitted that the true test was whether the custom or practice was “so universal that no workman could be supposed to have entered into the employment without looking to it as part of the contract”. For this proposition she relied on Henry v London General Transport Services Limited [2002] IRLR 472 at paragraph 28. In that case the question was whether changes were incorporated into the contracts of individual employees by virtue of collective bargaining. The parties agreed that the question was whether this was a custom of the trade, where the test is whether the custom is “reasonable, certain and notorious”. Pill LJ recorded that agreement in his judgment at paragraph 28.[16]W e do not accept Ms Simler’s submission. The formulation which was agreed by the parties in Henry may be appropriate to the question whether individual employees are bound by, and entitled to take advantage of, terms reached as part of collective bargaining: we need express no view on that question. There may be a useful analogy with “custom of the trade” because collective bargaining is widely operated in many industries with consequences which are generally understood by employees. It has no application, however, to the question whether a particular employer is bound by enhanced redundancy terms which that employer has operated for many years. There is no useful analogy with cases on custom of the trade. The question is to be determined in the way in which Quinn and Albion indicate. The material before the Tribunal: witness evidence[17]Given the nature of this appeal it is necessary to outline the material which the Tribunal received concerning the Respondent’s practice of paying enhanced redundancy payments during the Northern Foods era.[18]The longest serving witness was Mr Roy Streeter, called on behalf of the Claimants, who had worked for the business since 1978 and became successively a shop steward and then, from 1996, the BFAWU full time officer with responsibility for the business. His statement contained the following evidence. He recalled that what he described as the Northern Foods redundancy scheme was already in place when he started. He said that he had been involved in a whole series of redundancy exercises – at least seven – and on each occasion the company had paid the enhanced package. He said that everyone – shop floor, supervisory or management, received the enhanced payment. There was never any question that employees who were being made redundant would receive a lesser amount. They did not need to negotiate for it; it was offered automatically.[19]On the Respondent’s behalf Ms Isabella McGauley gave evidence. She was head of human resources, employed by the Respondent since 2006 – while the business was still owned by the Northern Foods Group, but less than a year before the transfer. The Respondent did not call any management witness to give direct evidence concerning the enhanced redundancy terms prior to 2006.[20]Ms McGauley’s statement was to the following effect. She confirmed that prior to the transfer Northern Foods had in place an enhanced redundancy payment policy which she said was “non contractual”. She said that the policy ran across all the businesses within the Northern Foods Group; that it set out the maximum payable; that there was “a certain amount of flexibility by management in each business” – even flexibility not to pay if financial circumstances did not permit. The policy was never systematically provided to employees; and never communicated to them. She did not accept that it had ever been applied on an automatic basis. In 2006 she recalled that representatives were told that enhanced payments were subject to confirmation by the business. She firmly believed that both management and union regarded the policy as non-contractual.[21]M s McGauley accepted that in 2006 employees were given the enhanced redundancy terms. She said it was because there was a threatened strike if payments were not made. Mr Streeter denied that strike action was threatened. This seems to have been the only direct dispute between them on the evidence. The materials before the Tribunal: documents[22]Before we turn to the Tribunal’s reasons, it is relevant to summarise some documentary material which the Tribunal had before it.[23]Firstly, the Claimants had written terms and conditions of employment. These made no reference to an enhanced redundancy payment. They said, under the heading “Other terms and conditions of employment” that the Employee Handbook contained “additional information regarding terms and conditions of employment”. The Employee Handbook made no reference to an enhanced redundancy payment.[24]Secondly, there were two documents dating back to the Northern Food days which either were, or evidenced, agreements between the employers and BFAWU concerning employees other than supervisors or section managers such as the Claimants. These were relevant because the Claimants’ case was that the enhanced redundancy payment applied across the board to all permanent employees who were compulsorily dismissed for redundancy.[25]There was an agreement operative from 29 December 1985 which related to most workers – adult workers, part-time workers, apprentices, juveniles and new starters. Being a collective agreement it was stated to be “binding in honour only and not intended to be legally enforceable”, but it would no doubt form the basis of provisions in the contracts of employees. That agreement was wide-ranging and covered many issues relating to wages, other allowances, and other working conditions. It specifically stated that redundancy payments would be in accordance with the statutory scheme.[26]T here was also an agreement between the company and BAFWU regarding the employment of temporary workers; the agreement itself does not seem to have been available, but it was contained in an old handbook for managers. Mr Streeter placed some reliance on this agreement when he was cross examined. Clause 10 of that agreement is of some potential importance. Under the heading “Security of Employment” it provided as follows:
“SECURITY OF EMPLOYMENT If a job loss situation were to arise the Company would reserve the right to firstly, remove all temporary employees out of the business and secondly, to select for redundancy by L.I.F.O. from those permanent employees with less than 3 years’ service before the need to look for redundancies from other sectors of the workforce. In the first nine months of employment the employee would have temporary status. Between 9 and 24 months service the employee would have permanent status and the entitlement to one weeks notice of termination of employment and 2 weeks pay in lieu of notice. Between 24 and 36 months service the employee would have permanent status and would be entitled to a redundancy package of equal to twice the statutory package with no upper earnings limit plus an additional £600 ex gratia payment.”
[27]Thirdly, there were documents internal to the Respondent, prepared for the HR department, not given to employees generally.[28]One such document was entitled “Redundancy non-negotiated employees”. This is a document of particular importance, because it is common ground that the Claimants were non-negotiated employees to whom it would apply. The document described itself as a “redundancy policy”. It dealt with alternative employment and the giving of notice. It contained a section headed “Redundancy payments”. Under the rubric of “Entitlements” it set out the enhanced payment for which the Claimants now contend. It set out a definition of pay. It said that “minimum entitlement” was one month’s pay. It gave guidance as to benefits – for example, private medical insurance could be extended for the duration of the notice period. Later, under the heading “General”, it stated (para 8):
“The above specifies the policy limits to apply to redundancy packages. In no circumstances should these limits be exceeded without the prior authority of the Personnel Executive.”
[29]Another document was entitled “Redundancy – Local Company Schemes”. This too described itself as a policy; but, unlike the other policy, it expressly stated that it was providing “guidelines”. This too contained a rubric “Entitlements” setting out the enhanced payment for which the Claimants now contend. It said, however, that redundancy payments should not exceed the guidelines except where local agreements currently existed.[30]Fourthly, there was a Question and Answer document prepared at the time of the TUPE transfer. This contained the following:
“Will current customary rules apply to any future redundancy? If not will we resort to state entitlement? A There are no known plans for redundancy. As part of the data provided to Vision within the sale process they have been made fully aware of the Northern Foods redundancy terms. They have not indicated any plan for change.”
[31]Finally, there were numerous documents which showed that enhanced redundancy payments – at the level of twice statutory package with no cap - had been made on numerous occasions in the past during the period when Northern Foods owned the Respondent. These documents were disclosed by the Respondent.[32]In 1993 there were two pro-forma redundancy estimates prepared for employees. The pro formas make provision for redundancy payments to be calculated on the basis of statutory redundancy entitlement together with company enhancement. As completed in handwriting, they indeed offered twice the statutory entitlement with no cap on a week’s pay.[33]In 2002 there were further redundancy estimates. One refers to and sets out both a “redundancy calculation” and a “Northern Foods Calculation”. It is based upon twice statutory entitlement without any cap on earnings. Another was prepared for a development manager taking voluntary redundancy. It refers and sets out terms of a “Northern Foods Enhanced Redundancy”. It is slightly more generous than twice statutory entitlement without any cap on earnings.[34]In 2004 the Respondent’s then personnel director prepared a redundancy quotation for a specialist employee – a “critical path co-ordinator”. This referred to “Enhanced Northern Foods Redundancy Entitlement”. The calculation is based on twice statutory scheme without any cap on earnings. Four members of supervisory management were also given quotations for redundancy in 2004 which referred to “Company’s Enhanced Redundancy Payment”. The redundancy quotations are based upon twice statutory scheme without any cap on earnings.[35]In 2005 three employees were made compulsorily redundant. The redundancy calculations do not appear to have survived, but the leaver’s forms make it plain that enhanced redundancy payments were made to them. The enhanced payments are multiples of the employees’ weekly pay without any statutory cap. Without redundancy calculations it is impossible to be certain that the payments are twice the number of weeks allowed by the statutory scheme, but the payments are entirely consistent with this being the case.[36]In 2006 three employees were made redundant: in two cases the redundancy appears to have been compulsory; in one case voluntary. The letters written to them make plain that enhanced redundancy payments were made to them, based again on twice statutory entitlement without a cap on earnings.[37]It follows that up to the acquisition of the Respondent by the Vision Group all the documentary evidence suggests that employees were made redundant on enhanced terms. With the single exception of the development manager, the formula was twice statutory entitlement with no cap on earnings: in the case of the development manager the payment was slightly more generous.[38]T he position changed after acquisition by the Vision Group. Employees who opted for voluntary redundancy received terms less than the enhanced redundancy terms. But in rounds of compulsory redundancies employees had been offered the enhanced redundancy terms.[39]The documentary evidence produced by the Respondent is less clear concerning the £600 payment. It will be recalled that in clause 10 of the agreement relating to temporary workers this was described as an “ex gratia payment”. In 1993 the form used made specific provision for a redundancy severance payment in addition to the enhanced redundancy payment. One form is completed with the figure of £600 in handwriting: the other contains no figure. In 2002 the letters and estimates do not refer to payment of £600: notice periods, however, are particularly generous, and the development manager was paid more than twice the number of weeks allowed for in the statutory scheme. In 2004 there is no reference to a payment of £600 in the surviving documents relating to the critical path co-ordinator; but each of the other four employees received an additional payment of £600 - described as “ex-gratia severance payment of £600” and a “one off payment” - said to be dependent on working normally up to the agreed date of termination. In 2005 there is no reference to a payment of £600. In 2006, however, by which time Ms McGauley was employed by the Respondent, the sum of £600 was paid to each of three employees, described as a “severance payment”. The Tribunal’s reasons[40]As we have said, the Tribunal’s reasoning largely dealt with the unfair dismissal claims. Its reasons concerning the alleged enhanced redundancy term are to be found in paragraphs 65 to 78 (which set out findings of fact, on which we have already drawn in this judgment) and in paragraphs 97 to 110.[41]The Tribunal held, correctly, that the burden of proving that there was an implied term of the contract and a breach of it rested upon the Claimants. The Tribunal cited Quinn and Albion . It continued as follows: – “105. The Tribunal was satisfied that there was no formal policy giving rise to the payment of the enhanced redundancy pay to which the claimants say they were entitled. The Tribunal was also satisfied that the ‘guideline’ documents were not drawn to the attention of employees nor was any document or policy indicating that the employees were entitled to an enhanced redundancy payment.106. Enhanced redundancy pay had been paid to employees in the past, although it was not clear on how many occasions it was paid, but the Tribunal was unable to infer that it was paid without exception. If there was a policy entitling employees to an enhanced redundancy payment there would be no requirement for guidelines. The existence of documents giving managers a discretion to make enhanced redundancy payments within certain limits infers that firstly, the enhanced redundancy payment sought by the claimants was not the ‘normal’ payment and secondly that an enhanced payment would not be made on every occasion.107. The Tribunal was not satisfied that payments of the enhanced redundancy pay claimed by the claimants was paid automatically. Miss McGauley was involved in the collective consultations prior to the transfer of the business to the respondent. It is clear from the documents that the Tribunal were referred to that there were discussions on redundancy terms. If there had been a contractual entitlement to enhanced terms such discussions would be otiose.108. Undoubtedly the claimants had an expectation that they would receive an enhanced redundancy payment because they were aware that other employees had received enhanced payments. However the Tribunal agreed with Mr Choong’s submission that this expectation was not based on any agreement or policy drawn to their attention or indication from the respondent that it intended to be contractually bound to pay an enhanced redundancy payment.109. Accordingly the Tribunal concluded that a policy relating to the payment of enhanced redundancy payments had not been drawn to the attention of the claimants nor was it satisfied that enhanced redundancy payments had been paid to redundant employees in the past without exception.110. The claimants have not proved on the balance of probabilities that there was an implied term entitling them to an enhanced redundancy payment and their claim fails and is dismissed. The appeal - preliminary[42]There is an appeal to the Employment Appeal Tribunal only on a question of law, and Mr Charles Prior started with the difficulty that the Employment Tribunal cited principles of law derived from the leading cases. He put his appeal in two ways. He argued that the Tribunal reached some conclusions which were impermissible – perverse, he would say, in the true legal sense. He also argued that, while the Tribunal directed itself correctly in law, it did not apply the law correctly.[43]The limits of a perversity appeal are well known. A perversity appeal is essentially a complaint about the Tribunal’s findings of fact (or sometimes its evaluation of those facts). Because Parliament has expressly provided that there is to be an appeal to the Appeal Tribunal only on a question of law, there is only the most limited scope for such an appeal. Thus in the leading case, Yeboah v Crofton (2002) IRLR 634 at para 93 Mummery LJ said: - “Such an appeal ought only to succeed where an overwhelming case is made out that the Employment Tribunal reached a decision which no reasonable tribunal, on a proper appreciation of the evidence and the law, would have reached. Even in cases where the Appeal Tribunal has "grave doubts" about the decision of the Employment Tribunal, it must proceed with "great care", British Telecommunications PLC –v- Sheridan [1990] IRLR 27 at para 34.”[44]He explained (paras 94 and 95): “Over the years there have been frequent attempts, consistently resisted by the Employment Appeal Tribunal, to present appeals on fact as questions of law. The technique sometimes employed is to trawl through the Extended Reasons of an Employment Tribunal, selecting adverse findings of fact on specific issues on which there was a conflict of oral evidence, and alleging, without adequate particulars, supporting material or even proper grounds, that these particular findings of fact are perverse and that therefore the overall decision is perverse. An application is often made to obtain the notes of evidence made by the chairman in the hope of demonstrating that the notes are silent or incomplete on factual points, that the findings of fact were not therefore supported by the evidence and that a question of law accordingly arises for the determination of the Employment Appeal Tribunal.[95]Inevitably there will from time to time be cases in which an Employment Tribunal has unfortunately erred by misunderstanding the evidence, leading it to make a crucial finding of fact unsupported by evidence or contrary to uncontradicted evidence. In such cases the appeal will usually succeed. But no appeal on a question of law should be allowed to be turned into a rehearing of parts of the evidence by the Employment Appeal Tribunal. I am, of course, well aware that this is easier said than done, especially when, as here, neither side was legally represented on the first level of appeal. As the Employment Appeal Tribunal was well aware, unrepresented litigants have understandable problems in separating questions of law from proof of facts and in distinguishing the making of legal submissions from submissions of fact, even giving evidence in the course of submissions. ”[45]We need to say a word about the procedure which has been followed by the parties in connection with this aspect of the appeal. It became clear after service of the Notice of Appeal and the Answer that there were disputes between the parties as to whether certain findings of the Tribunal were in accordance with the evidence below. The Claimants’ solicitors were ordered to provide a schedule of that which appeared to be in dispute; there were some 26 entries on it; the Respondent’ solicitors responded; and the Employment Judge, when consulted, accepted the responses put in by the Respondent’s solicitors on 17 items, regarding the rest as essentially submissions. The appeal came on for hearing; there was still no unanimity, the Claimant remaining in disagreement. The appeal was adjourned for the Employment Judge’s notes to be provided, and he has provided them.[46]Even by the time of the hearing the Employment Judge’s notes remained the subject of disagreement. All the parties did, by way of preparation for the hearing, was to put in the bundle lengthy notes of all the evidence at the Tribunal hearing – which was concerned, as we have said, to a large extent with issues of unfair dismissal. This is not a satisfactory procedure. The items in dispute having been identified and dealt with serially by the Employment Judge, the notes of each side relevant to those issues should have been separately identified and set out, issue by issue, so that each dispute could be followed. Having heard the appeal we do not think any of the disputes over evidence are central to its resolution: indeed they were relied on only to a limited extent by either advocate. But the volume of indigestible documentation was a costly and unnecessary inconvenience. It was compounded by the inclusion, within the appeal bundle, of a very substantial quantity of material which had been relevant to the issue of unfair dismissal before the Tribunal but which was irrelevant to the issue under appeal. It is always helpful to the Appeal Tribunal if papers are prepared and agreed so as to exclude that which is plainly irrelevant and unnecessary. Payment without exception[47]The principal attack by Mr Prior was upon the Tribunal’s conclusion, in paragraph 106 of its reasons, that: “Enhanced redundancy pay had been paid to employees in the past, although it was not clear on how many occasions it was paid, but the Tribunal was unable to infer that it was paid without exception.[48]Mr Prior submits that the only finding open to the Tribunal on the evidence was that every redundancy during the Northern Foods era had led to payment in accordance with the Northern Foods redundancy terms without exception. He says(1) Mr Streeter’s evidence was unequivocally to this effect and he was not cross-examined upon it;(2) Mr Streeter’s evidence derived considerable support from documents produced on disclosure;(3) the Respondent adduced no evidence at all of any exception in the Northern Foods era;(4) Ms McGauley agreed in cross examination that prior to the transfer the non-negotiated employees (such as the Claimants) always received the Northern Foods redundancy terms.[49]Ms Simler QC for the Respondent says that the Tribunal was entitled to doubt whether enhanced redundancy pay was paid without exception. She relies on the 1985 agreement, which provides for most workers to receive statutory redundancy pay, and makes no mention at all of enhanced redundancy pay. She accepts that there was no explicit assessment of Mr Streeter’s evidence: she says it is only possible to infer that Mr Streeter was not regarded as a reliable witness. She prays in aid cases on perversity, such as Neale v Hereford and Worcester County Council [1986] IRLR 168, Piggott Bros v Jackson [1991] IRLR 39 and Stewart v Cleveland Guest (Engineering) [1994] IRLR 440 and Yeboah v Crofton from which we have already cited.[50]On this question the Appeal Tribunal is not unanimous. We shall set out, in paragraphs 51 - 59 the conclusions of His Honour Judge Richardson and Baroness Drake. We shall then set out in paragraphs 60 to 66 the conclusions of Mr Mallender.[51]The Majority. In our judgment the evidence of Mr Streeter was of critical importance on this issue. He was successively a shop steward and the full-time union representative throughout the period in question. The factory was fully unionised. He indeed said in the clearest terms that the enhanced payment was paid across the board throughout his time without exception. Given his position, if an exception was made to the payment of enhanced redundancy terms it is extremely unlikely – we would say virtually inconceivable - that he would not know about it. It would have been a matter of great controversy. It is true that he primarily represented shop floor staff rather than management; but it was not and is not suggested that there was any significant difference in practice as regards the two groups; and, as we have seen, the supervisory staff such as the Claimants were his members.[52]Mr Streeter’s evidence – that the payment was made without exception – derives support not only from the documents concerning payment during the period 1993 to 2006 but also from clause 10 of the agreement regarding the employment of temporary workers, from which we have already quoted. To our mind this provision only makes sense if it was recognised on both the management and union side that permanent workers were entitled to an enhanced redundancy package. It strongly supports his evidence that enhanced payments were made without exception during the Northern Foods era, at least from the time of this agreement. It is difficult to envisage any circumstances in which the Respondent’s management would accept the language of entitlement in this agreement if it did not, as a matter of practice, at the time of this agreement always make enhanced payments on redundancy to permanent workers. The Tribunal referred to clause 10 in its findings of fact, but did not return to it in its conclusions.[53]There is no finding in the Tribunal’s reasons as to whether it considered Mr Streeter an honest and reliable witness. If he was an honest and reliable witness, then the evidence as to what happened on the ground prior to 2007 was all one way: Ms McGauley agreed that the enhanced payment was paid in a round of redundancies during 2006; Mr Streeter said that it was paid on all previous occasions (and the Claimants gave evidence that they had not heard of any exceptions during their employment). We do not consider that the Tribunal was, for the most part, faced with a conflict of evidence on this issue between Ms McGauley and Mr Streeter. Ms McGauley was not employed until the very end of the relevant period, and the Respondent called no evidence on this question from any member of management or employee who was employed prior to 2006.[54]The Tribunal made no explicit assessment of Mr Streeter’s evidence. There are, we think, two possibilities: one is that they were unsure of his credibility and reliability, but gave no reasons. The other is that they overlooked the importance of his evidence and made a finding which really cannot stand with his evidence. If the former were the case, the challenge would be to the adequacy of the Tribunal’s reasoning. If the latter, the challenge is properly a perversity challenge.[55]We have found ourselves asking why the Tribunal has not dealt with Mr Streeter’s evidence in its conclusions. It said that it was “unable to infer” that payment was made without exception. But this was not wholly or mainly a question of inference, since it was Mr Streeter’s evidence that payment was made without exception, and there was no evidence to the contrary. We have reached the conclusion that the Tribunal overlooked the central importance of Mr Streeter’s evidence on this question; this is why it said it was “unable to infer” that the question whether payment was made without exception, rather than making an assessment of his evidence. In our judgment the question whether payments had been made during the Northern Foods era was not wholly or even mainly a question of inference; the evidence all pointed to payment being made without exception; and it was not rational for the Tribunal to reject the Claimants’ case by saying that it was “unable to infer” that payment was made without exception without addressing and assessing Mr Streeter’s evidence. We conclude that the Tribunal did not have a rational basis for rejecting this part of the case for the Claimants. In our judgment the Tribunal should have proceeded on the basis that for many years during the Northern Foods era enhanced redundancy payments were made without exception.[56]Does this amount to an error of law? We consider that it does. The issue was one of great significance in the context of the case. The Tribunal has not set out any rational basis for rejecting the evidence that payment was made without exception, and we cannot see any. The burden of proof was of course upon the Claimants: but the Claimants brought evidence capable of discharging that burden; and it required to be rationally assessed. We keep in mind also that the question of entitlement to enhanced redundancy payment was not the main issue in the case, and that the Tribunal was faced with a great deal of oral and documentary evidence concerning the three claims of unfair dismissal; this makes the Tribunal’s error understandable and puts it in context, but in our judgment it remains an error.[57]Mr Mallender, as we shall see, places significance on the fact that the additional sum of £600 was not or may not have been paid on every occasion. We accept that the Tribunal might legitimately have drawn a distinction between the enhanced redundancy terms themselves (which were of great value to employees) and the additional sum of £600 (variously described as an ex-gratia or “one off” sum). The Tribunal, however, did not draw this distinction. It said rather that it was not satisfied that enhanced redundancy pay was paid without exception. As we have seen, all the documents show that enhanced redundancy pay was always paid: there is no exception, and we cannot see any rational basis for doubting that enhanced redundancy pay was always paid.[58]We should make it clear that we have not decided this part of the case on the basis that Mr Streeter was not cross-examined on the issue. Mr Streeter’s evidence was not agreed; at least one or two questions were asked in cross-examination as to the extent of his knowledge of the redundancy scheme; there could hardly have been a direct and positive challenge to his evidence since the Respondent was not in a position to put forward any positive case to the effect that it did not always pay enhanced terms during the Northern Foods era. We rest our conclusion on the way in which the Tribunal dealt with the issue in its reasoning, not on the narrower basis that there was a failure to cross-examine.[59]A s we have seen, the importance of the question whether enhanced payments were made without exception is that it is one of the gateways identified in Duke for the establishment of a contractual term by custom and practice; and it was considered in Quinn and Albion to be a factor of considerable importance. Since we have found that the Tribunal fell into error in this respect, we will have to assess the significance of this error to the Tribunal’s finding. Before we do so, however, there are other arguments to address.60. The minority (Mr Mallender). The issue before the EAT was whether the Tribunal came to a perverse decision in holding that Ms McGauley’s evidence regarding the level of redundancy terms paid in the years prior to the TUPE transfer was to be preferred to that of Mr Streeter. The Tribunal was not explicit in providing reasons for this but this Appeal was not on these grounds.61. The difference of evidence was something that the Tribunal had to resolve because the whole case concerning whether or not there was an implied term depended on it. To find that there was perversity - given Yeboah v Crofton - is a high hurdle to straddle and in the judgement of Mr Mallender this case failed to reach that level.62. In his view the evidence submitted by both sides was not of a high standard and the Tribunal cannot be blamed for that. Evidence was submitted by the Appellant that enhanced terms had always applied to redundancies (see the witness statement from Mr Streeter) prior to the TUPE transfer. This conflicted with Ms McGauley’s contention that enhanced terms were not automatically paid and required prior management approval in each case.63. In the Further and Better particulars supplied by the Claimants it was clear that the enhanced terms sought included double statutory redundancy terms and a “further payment of £600”. In Mr Mallender’s view the evidence about this £600 payment was important.64. The background was as folIows. In 2004 employees who were made redundant were paid an additional sum of £600 and PILN conditional upon “working normally up to agreed date of termination”. In 2005 the £600 payment was not made and there was no conditional “normal working” clause attached to payment in lieu of notice. By 2006 the £600 payment was back in but was not dependant on normal working. Thus there was a variation in redundancy terms at least between 2004 and 2006. This evidence was available to the Tribunal although again it is not explicitly dealt with in the reasons.65. Finally Mr Hulme’s witness statement referred to enhanced terms “normally” being paid with the £600 payment. In his evidence Mr Streeter conceded that there were issues with the £600 payment. To Mr Mallender and one assumes to the Tribunal this did not seem like evidence of an automatic contractual payment which could become an implied term.66. Standing back from the evidence as a whole the Tribunal who heard and evaluated the witnesses and reviewed all the evidence over some 8 days were best placed to make a balance of probabilities judgement. The Tribunal made a clear finding at clause 107 that “It was not satisfied that payments of the enhanced redundancy pay claimed by the claimants’ was paid automatically” and in clause 109 “nor was it satisfied that enhanced redundancy payments had been paid to redundant employees without exception”. In Mr Mallender’s view there was no error of law in the Tribunal coming to these conclusions. The redundancy policies[67]On both sides submissions were made to us concerning the redundancy policies and the Tribunal’s conclusions concerning them. It will be recalled that the policy entitled “Redundancy non-negotiated employees” was directly applicable to the circumstances of the Claimants.[68]Mr Prior attacks the finding in paragraph 105 of the Tribunal’s reasons that there was no “formal policy giving rise to the payment of the enhanced redundancy pay to which the claimants say they were entitled”. He submits that the document was plainly a formal policy and that it contained no discretion as to the making of enhanced redundancy payments. It set out what were described as “entitlements” to redundancy payments in precisely the terms which the Claimants sought – double the number of weeks allowed by the statutory scheme, with no limit on weekly pay.[69]Ms Simler says that the Tribunal, in paragraph 7.4, was not ignoring the document in question; rather the Tribunal was finding that it was a guideline as opposed to a formal policy requiring management to pay a specific sum. She submitted that this was a key factor in favour of the Tribunal’s conclusions. If the policy reserved a discretion to management it was inconsistent with the existence of an implied term.[70]We have already described the document entitled “Redundancy non-negotiated employees”; we must say that on the ordinary use of language it meets the description of “formal policy”; it is not a permissible use of language to describe it as anything less than a “formal policy”; and we are critical of the Tribunal’s use of language at this point.[71]We do not, however, accept that the Tribunal had overlooked the document; we think in context that the Tribunal’s meaning, although erroneously expressed, is clear. They found that the document gave guidelines for the payment of enhanced redundancy pay: see paragraph 103, and the next sentence of paragraph 105.[72]In our judgment this conclusion is not perverse. Although this document, unlike the other redundancy policy, does not use the word “guidelines” the last paragraph of the document states that it “specifies the policy limits”; and there are significant parts of the document which are not prescriptive. It can be read as a document setting out policy and identifying the limits within which management may act. We do not accept Mr Prior’s submission that the Tribunal was perverse in this respect.[73]Nor, however, do we accept Ms Simler’s submission that the terms of the policy are decisive of the question whether there was an implied term. This was, as we have seen, an internal policy. It was not circulated to employees or to the union. The Tribunal did not make findings as to its provenance: we know only that it existed by the time Ms McGauley was involved. There was, as we have seen, evidence that for many years enhanced payments were made without exception. The terms of the internal policy deserve careful consideration, but they must be assessed in the context of the evidence as a whole.[74]M r Prior then criticises the Tribunal’s conclusion concerning discussion in collective consultations prior to the transfer of the business. The Tribunal said that: – “If there had been a contractual entitlement to enhanced terms those discussions would have been otiose.”[75]The discussions to which the Tribunal refers are exemplified by the question and answer which we have already quoted – in particular the question as to whether “current customary rules” will continue. It is of course trite law that on a TUPE transfer (which was envisaged in this case) the employee transfers with the benefit of existing contractual terms. It is technically true to say that discussions about it would not have been necessary.[76]The Tribunal did not suggest that this point concerning discussions in collective consultation was in any way decisive to its reasoning. To our mind it would not be a decisive point. If there had been an express term of the contract discussions would indeed have been entirely otiose. But where there was no written entitlement to “current customary rules” we do not find it surprising that the issue was raised in collective consultations. While we do not criticise the Tribunal for making this point, we do not think it is in any way decisive of the issues the Tribunal had to determine.[77]Mr Prior next criticises the Tribunal’s finding in paragraph 108 that:
“The expectation was not based on any agreement or policy drawn to their attention or indication from the Respondent that it intended to be contractually bound to pay an enhanced redundancy payment.”
[78]Mr Prior argues that the question and answer to which we have referred show that the policy was well known; and he points to the fact that the Northern Food terms had been offered on every previous occasion – even to one of the Claimants, Mr Shumba, when he was previously at risk of voluntary redundancy.[79]In our judgment there is nothing perverse about this conclusion by the Tribunal. The fact that a policy becomes known to employees, or has been applied to relevant employees in the past, does not mean that the policy has been “drawn to the attention” of employees in the sense in which that expression was used in Duke and Albion . The Tribunal was entitled to find that the policy had not been drawn to the attention of employees: its findings of fact in paragraphs 69 and 78 were sufficient for this purpose. Outcome[80]We return to our conclusion, by a majority, that the Tribunal erred in law in rejecting the Claimants’ case that enhanced redundancy payments were made without exception for many years during the Northern Foods era.[81]Mr Prior submitted that, once granted he has brought home his case that the policy had been applied without exception by management for a substantial period, it follows that the Tribunal ought to have found an implied term: he derives this proposition from Duke , which, he argued, should be read disjunctively (so that it was sufficient to prove that the policy had been applied without exception by management). He argued that there was only in reality one permissible conclusion for the Tribunal.[82]We reject this argument. It is not the law that every policy which management consistently applies thereby becomes a term of the contract of an employee who may potentially benefit from it. It is well understood by employers and employees alike that employers are entitled to have policies about a range of matters which are not intended to be, and do not become, contractual.[83]As we have already noted, Ms Simler argued that even if enhanced redundancy payments were made without exception, the claims were bound to fail because the element of discretion in the documented policy was inconsistent with the existence of an implied term. For the reasons we have given, we rejected this argument.[84]By a majority, we have reached the conclusion that the Tribunal’s error was a significant one. It was a substantial factor leading to the Tribunal’s rejection of the Claimants’ case.[85]The Appeal Tribunal is restricted to consideration of questions of law. It does not decide disputed questions of fact for itself. It can substitute its own decision only if it is plain, once the law is applied, what the correct decision should be. It follows that the claims to enhanced redundancy payments must be remitted for re-hearing.[86]We have considered – applying well known criteria set out in Sinclair Roche & Temperley v Heard [2004] IRLR 763 – whether remission should be to the same, or a differently constituted, Tribunal. We have reached the conclusion that remission should be to a differently constituted Tribunal. As we said at the outset of this judgment, the issue has an importance beyond these three claims. We think it would be unsatisfactory to remit the matter to the same Tribunal to decide it upon evidence given a considerable time ago, especially when (as here) it has not expressed findings on the honesty and reliability of a key witness. We think the better course is to remit the matter for hearing by a freshly constituted Tribunal which will hear evidence again. This may, of course, include further evidence on either side. Assuming that Mr Streeter gives evidence, and assuming that his evidence is challenged, it will be important to assess his credibility and reliability. The significance of clause 10 of the agreement concerning temporary workers will be an important matter to take into account; as will the written policies produced by the Respondent. The Tribunal should approach the matter entirely afresh and reach its own conclusions.