Appeal No. UKEATS/0003/13/BI
EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH EH3 7HF
At
the Tribunal
On
25 June 2013
Before
THE
HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)
MR P PAGLIARI
MR M SMITH OBE JP
MR
RONALD FRANCIS APPELLANT
PERTEMPS
RECRUITMENT PARTNERSHIP LTD RESPONDENT
Transcript of Proceedings
JUDGMENT
SUMMARY
UNFAIR DISMISSAL – Dismissal/ambiguous resignation
An employee was employed by an agency
which placed him in work with a client whose identity was specified in the
contract of employment. When that client no longer had need for the services
of the Claimant, he was offered the choice of 2 weeks’ notice, plus redundancy
pay, or 2 week’s notice, with the agency seeking out fresh work with a view to
his entering into a new contract to do that work. He chose the former. The
Tribunal thought the termination of the employment was consensual, such that no
claim for unfair dismissal could be maintained. It was held that the question
to be asked for the purposes of unfair dismissal proceedings was whether the contract
of employment had been terminated by the employer, not the similar question
arising if the question had been the right to a redundancy payment, which
(expressed broadly) is whether the employment relationship had been brought
to an end. The ET had construed the contract as providing that the Claimant
was to work for a specific client. It was right to do so. The contract by
which the agency provided that the Claimant would work for that client ended;
no party argued it was frustrated; the agency could no longer perform it. In
the circumstances it was terminated by the agency. The choices offered to the Claimant
both involved his being given notice.
An argument that “notice” and
“redundancy” were loose terms, not intended to have their formal meaning, and
that when HR wrote to the Claimant to tell him he could appeal against his
redundancy and he exercised the right to do so, this was meaningless (since he
had already asked to be given notice and to be paid redundancy pay) was
rejected as unrealistic.
The appeal was allowed and a finding
that there had been dismissal was substituted.
THE HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)
1.
The issue in this appeal is whether the Claimant was dismissed by his
employer so as to found a claim potentially for unfair dismissal. An
Employment Tribunal at Edinburgh, Judge Craig and members, decided on 17
October 2012 that the Claimant was not dismissed. He had chosen to leave the
employment of the Respondent, so there was no unfair dismissal. A claim for a
protective award under section 188 of the Trade Union & Labour Relation
Consolidation Act to the effect that there had been no consultation as
required was dismissed, there being no obligation to consult. Full Reasons
were given on 2 November 2012.
The Essential Facts
2.
We can state the central facts shortly. The Claimant was employed under
a contract which ended as long ago as 28 December 2006. The reason why it has
taken so long to reach this stage, on effectively a preliminary determination
of a necessary pre-condition for the claim of unfair dismissal, is that there
was an appeal by the Claimant against an earlier Tribunal decision. The
grounds were procedural. The matter proceeded to the Inner House of the Court
of Session. On 1 March 2012 the appeal was allowed and the matter remitted to
a fresh Tribunal for reconsideration.
3.
The Claimant was employed by Pertemps, who operate a recruitment
business supplying contract labour to clients. Though employed by Pertemps, as
was common ground, his specific assignment was as an administrative assistant
to work under the direction of a specified client, Transco, to whose business
SGN later succeeded. At a time while the Claimant was off sick SGN decided
that the work in respect of which he was engaged for them would transfer from
Midlothian to its existing staff at Hillingdon in Glasgow. The need for SGN to
utilise the Claimant’s services thus ended.
4.
In the light of that, when the Claimant returned to work for Pertemps on
12 December 2006 he had a conversation with a Miss Robertson. She explained
that there were two options. In paragraph 37 the Tribunal set them out:
“37 Depending on how you feel yourself, whether
you are happy for Pertemps to keep on looking for another assignment for you
elsewhere, and we do have other bits and pieces in at the moment or things
coming up in the New Year, that we’ll be happy obviously to speak to you about
or … there might be an entitlement for you to a redundancy payment from
Pertemps because of the work you have previously … for the last 2 ½ years … has
come to a natural end.”
5.
Paragraph 38 of the Tribunal’s decision said this:
“38 She explained that in each option the Claimant
would receive a payment of two weeks pay which she described as notice pay.”
6.
This thus appears to be a finding that the Claimant had a choice
presented to him by his employer. The choice was: option A, to be given two
weeks notice on the basis that Pertemps would keep looking for alternative
employment; or option B, to be given two weeks notice, but to be paid
redundancy pay instead of Pertemps seeking an alternative employment for him. The
language which Miss Robertson had used was that of “notice” and of “redundancy”
with their connotations of dismissal
7.
The Claimant at first thought he would accept option A but later changed
his mind to option B, because he said he lacked faith that he would be engaged
through Pertemps to work in a possible opening at the Scottish Parliament.
8.
Two days after the meeting the Claimant emailed Miss Robertson to
“confirm that I would like to be paid two weeks notice and Pertemps will
continue to look for work for me”; this was therefore option A. At the same
time Miss Robertson emailed him, thanking him for the confirmation saying:
“I can confirm that your two week notice period will commence on
Tuesday 12th December, when you attended a meeting at the Pertemps
office, and will continue until Tuesday 26th December 2006.”
9.
The Claimant attended at the jobcentre. It became plain to him there
that he would not receive unemployment benefit unless he were no longer in an
employment relationship. On 28 December he emailed Pertemps to express no
confidence that the Scottish Parliament would clear him for employment and to
say that he should accept the three weeks redundancy money; therefore option
B.
10.
By a letter dated 3 January 2007 Pertemps wrote to the Claimant. The
letter was written by an HR advisor, not Miss Robertson. It is formal in its
terms. It said materially:
“Following your meeting of 12th December 2006 it is
with regret that I confirm the position of Process Assistant will become
redundant with effect from 12th December 2006 … Please treat this
letter as formal notice of redundancy.”
11.
It set out the calculation of a proposed redundancy payment and then
said this:
“In accordance with your contract of employment you are entitled
to two weeks notice, therefore your last date of employment will be recorded as
26th December 2006.”
12.
The last paragraph of the letter told him that he had the right to
appeal, “against the decision to terminate your employment”. He exercised the
appeal right there confirmed. An appeal followed, at the conclusion of which in
February 2007 the regional manager confirmed the decision regarding the
redundancy.
13.
These facts were not significantly in dispute.
The Tribunal Decision
14.
The Tribunal asked itself who had brought the contract of employment to
an end. At paragraph 95, having set out citations from the case of Birch
& Humber v The University of Liverpool [1985] IRLR 165 CA and Burton
Alton & Johnston v Peck [1975] IRLR 87 it expressed its conclusion
that, “… the parties mutually terminated the contract. There was no
dismissal.”
15.
The Tribunal’s reasoning was that the Claimant was under no pressure to
end the contract (paragraph 98), there was in reality no real likelihood of work
with and for the Respondent (paragraph 100), and that he could not claim
Jobseekers Allowance whilst he remained an employee (paragraph 102). At no
point however did the Tribunal consider the application of the statutory test
in section 95 of the Employment Rights Act to the contract before it.
It did, however, express views about that contract. Between paragraphs 14 and
20 it gave what it regarded as the proper interpretation of the contract. It
set out at paragraph 15 that the Claimant had been employed to work for Transco
under its direction though employed by Pertemps, that the Claimant’s place of
work was in St John’s in Edinburgh, and noted that the contract provided that
Pertemps might transfer the contract employee (the Claimant) to another
location on a temporary or permanent basis for operational business reasons.
The contract provided that if it were terminated Pertemps would take reasonable
steps to find alternative employment for the Claimant.
16.
At paragraph 20 the Tribunal said:
“Of those employed by the Respondent by September 2006 only one
other employee was employed on the same contractual terms as the Claimant. All
others were employed on contracts that did not name a specific client and which
entitled the Respondent to place the employee with any client or on any assignment
as its needs required.”
17.
The distinction which the Tribunal drew between the Claimant’s contract,
specifying in its view a specific client, and the contract of others, which did
not, was a matter to which it returned at paragraph 108. It was dealing there
with the meaning of the contract, though in the context of the claim for a
protective award under the 1992 Act, and commented that the evidence was clear
that:
“… all but the claimant and one other employee working at Vantage
Point were on contracts that would have entailed their being moved elsewhere so
there was no basis for asserting a proposal to dismiss.”
18.
In other words, the Tribunal took the view that the distinction between
the Claimant’s contract and that of other employees working for Pertemps in the
general interests of SGN was that he (and the one other who shared the term
that they worked for a specific client) potentially would be dismissed if the
work at SGN came to an end, because in their case neither could assert a right
to be moved or to move elsewhere, and nor could Pertemps do so without breaking
the provision that the Claimant worked for SGN unless it had the consent of the
Claimant to that variation.
19.
The Tribunal in concluding as it did that there had been a mutual or
consensual parting of the ways did not apply in any clear terms the analysis of
the contract to which it had come. The matter is important, since section 95
of the Employment Rights Act 1996 provides in subsection 1:
“For the purposes of this Part an employee is dismissed by his
employer if … (a) the contract under which
he is employed is terminated by the employer whether with or without
notice.” (emphasis added)
20.
The reference to “this Part” is to Part X, “Unfair Dismissal”. There is
a separate right to be paid a redundancy payment, which comes under Part XI,
Chapter 2: virtually identical words to those which appear in section 95(1)
also appear there in section 136:
“… for the purposes of this Part an employee is dismissed by his
employer if … (a) the contract under which he is employed by the employer is
terminated by the employer whether with or without notice.”
21.
However, section 138 goes on to set out situations where the statute
provides that, despite that definition, there is actually no dismissal where
the contract is terminated: that is where the employee’s contract is renewed or
he is re-engaged under a new contract. If looked at colloquially, therefore,
the question upon which a claim for unfair dismissal is predicated is whether
the contract is
terminated, whereas the question upon which the right to a redundancy payment
depends might be put broadly as the employment
relationship being terminated.
22.
The focus thus for unfair dismissal is not upon whether the employee
remains in the employment of the Respondent. It is whether the contract under
which the employee was employed is terminated, and if so who terminated the
contract. The interpretation which the Tribunal put upon the contract meant
inevitably that as soon as SGN indicated that they had no further need for the
services of the Claimant his contract with Pertemps could no longer be honoured,
for the Tribunal’s interpretation was that the contract required SGN as his
client.
23.
There was no Respondent’s notice which put in issue the interpretation of
the contract to which the Tribunal had come. That may be because Mr Hardman,
who appeared for Pertemps and who has argued the Respondent’s case with no
little skill, submitted that the Tribunal had not come to such a conclusion.
For the reasons we have already intimated we think it plain that the Tribunal
did, but in the light of those submissions we thought it right to reflect on whether
the Tribunal had indeed come to a correct conclusion. The construction of a
contract is a matter of law and therefore it is open to an appeal court with a
jurisdiction limited to points of law to review.
24.
The contract provides under the heading, “Background” that Pertemps had
been awarded a contract to supply contract employees to Transco Connections, “hereinafter
referred to as the client”. Under the heading “Duties”, the contract employee (i.e.
the Claimant) “agrees to work under the direction of the client in the
execution of his/her duties.” The client was (or became) SGN. It was made
clear that nonetheless he remained an employee of Pertemps.
25.
Mr Hardman argues that the clauses which follow about the place of work
(to which the Tribunal drew attention, as we have noted), mean that Pertemps
could within the contract nonetheless assign the Claimant to another client.
That in our view is not a tenable construction of this contract for these
reasons. First the heading is “Place of Work”. The right to transfer the
contract employee relates therefore not from one client to another, but from
one place at which the work has to be done to another. The wording is
carefully drawn. It reserves the right to transfer the contract employee, “To
another location on a temporary or permanent basis, for operational or other
business reasons”. It says nothing about transfer to another client.
26.
The other clauses of the contract are consistent with the Tribunal’s
construction. We agree with the Tribunal’s construction.
27.
In his argument Mr Hardman, though submitting as he did that the
contract permitted Pertemps to reallocate this Claimant to another client,
accepted albeit reluctantly that the contract as it was would have to be varied
for this to happen. He is right in that: but that reluctant concession
demonstrates that the contract could not continue in force as it was once SGN
had no further need of the Claimant’s services, and therefore had to be
terminated unless rescued by the consent of the parties which it never was.
28.
If the Tribunal had focused not upon the employment relationship, but
upon the contract of employment, it could have reached no other conclusion but that
that contract had come to an end without the Claimant having in any way
consented to that taking place. It follows that the conclusion of the Tribunal
is wrong. We suspect it committed the error, understandable in the particular
circumstances of this case, of focusing upon the employment relationship and
its continuation rather than on the contract which could not continue as it had
before.
29.
No one has suggested that the contract was in way frustrated. The
contract was with Pertemps. Pertemps could in the circumstances no longer
honour it. That was the background necessary to contextualise the
conversations of 12 December to which we shall come: but we should add that the
references in the contract to Pertemps making efforts to secure alternative
employment are to efforts made without obligation, and therefore expressly of
non-contractual effect - see under the heading, “Redundancy” - though in any
event, if the issue had been the right to a redundancy payment and whether
dismissal for redundancy was fair, we would expect an employer, particularly a
responsible one such as Pertemps, to take appropriate steps to see if
alternative work could be obtained. The guideline cases suggest it. None of
that, however relevant it might be to rights on redundancy, could affect the
issue of whether there was a dismissal or a consensual parting.
30.
What we have said so far is sufficient to dispose of this appeal. There
was no other conclusion on the facts set out and accepted by the Tribunal to
which this Tribunal could come other than that the contract was terminated and that
Pertemps could no longer honour its side of the bargain.
31.
However, if matters had rested with the findings in fact which the
Tribunal made as to the nature of the termination, we think that the Tribunal
would have been in error there too. As we have pointed out, its discussion was
predicated effectively upon the Claimant having a choice. The choice the
Tribunal appears to have envisaged was between his remaining in employment on
the one hand (the Tribunal’s option A) or receiving a redundancy payment
coupled with notice payment (the Tribunal’s option B). That depends upon a
critical look at the discussions which occurred and the documents.
32.
The Tribunal set out, perhaps not as clearly as it might have done, that
the Claimant was given two options by Miss Robertson; see paragraphs 37 and 38.
Where an employee is given two options, both of which involve dismissal, albeit
the two options are distinguished by different terms upon which the dismissal is
to be effected, the only sensible conclusion is that the dismissal is intended
by the person offering those options. The position is illuminated by the cases
to which the Tribunal referred, and by the useful discussion in Optare
Group Ltd v Transport & General Workers Union [2007] IRLR 931 in
which the Appeal Tribunal, presided over by Wilkie J, reviewed the case-law.
The factual position may very from case to case. Arnold J in Sheffield v
Oxford Controls Company Ltd [1979] IRLR 133 had set out, as recorded by
Wilkie J that where an employee resigns, in circumstances in which that resignation
is determined upon by him because he prefers to resign rather than be
dismissed, having been threatened by his employer that if he does not resign he
will be dismissed, the mechanics of the resignation do not cause it to be other
than a dismissal. The principle is one of causation. In that example, the threat
is the cause of the termination. He went on to observe:
“Where the willingness is brought about by other considerations
and the actual causation of the resignation is no longer the threat which had
been made but is the state of mind of the resigning employee, that he is
willing and content to resign on the terms which he has negotiated and which
are satisfactory to him then we think there is no room for the principle to be
derived from the decided cases. In such a case he resigns because he was
willing to resign as a result of the offered terms which are to him
satisfactory terms on which to resign. He is no longer impelled or compelled
by the threat to dismiss or resign but a new matter has come into the history;
namely that he has been brought into a condition of mind in which the threat is
no longer the operative factor of his decision, and has been replaced by the
emergence of terms which are satisfactory.”
33.
There the Judge was contrasting two particular factual circumstances.
In this area, as in so many in employment, each case must turn upon its own
facts, but the principle may be expressed that the issue is determining on the
evidence who it was that brought the contract to an end.
34.
Even if we were wrong on our analysis of the contract, we here would
have regarded the Tribunal’s reasoning as flawed in taking a view of the
meeting of 12 December which was simply not the view that it appeared to have
expressed earlier in its own reasoning. Moreover, it is a view which we, for
our part, regard as out of step with industrial reality.
35.
When Mr Hardman addressed us he explained that Miss Robertson, in using
the words, “notice period”, must not or could not have meant “notice” in the
terms of contractual notice. Plainly the Tribunal could not have so regarded
it. What else was it? He speculated that it was the offer of two weeks’ pay
as a form of gratuitous payment by Pertemps in recognition of the service which
the Claimant had had with SGN. It was empathetic. It had to be looked at in
the matrix of fact, and it had to be recognised that the parties were using the
loose language which employers and employees unfamiliar with the precise
requirements of the law might well adopt. When the use of the word,
“Redundancy” appeared, as it did on a number of occasions throughout a record
of what Miss Robertson had said, that too was an expression used in a loose
sense. The Tribunal must have concluded that she had not meant to say that the
Claimant was indeed redundant because there was no work which Pertemps had for
him to do at SGN. The word must rather have been referring simply to the end
of an assignment, whilst Pertemps retained the ability within the contract to
re-assign the Claimant elsewhere on some other client’s business. He noted the
Tribunal’s reliance on the letter of 28 December 2006. It came in response to
an email from Miss Robertson two days after the meeting confirming a “two week
notice period” but that was used in the same loose sense.
36.
The letter of 3 January 2007 from Mr Cox of HR, describing itself as a
formal notice of redundancy, was a standard form letter which Mr.Hardman
speculated was produced for this employee effectively because the button on the
word processor was pressed. The matters it mentioned there did not a represent
the reality of the situation. The right to have an appeal which appeared to be
conferred by the letter, which right was in appearance exercised, was, as the
Tribunal found, no exercise of any actual right to appeal because the Claimant
had not been dismissed in the first place.
37.
These submissions do not seem to us to be realistic. They involve
speculating that words do not mean what they say on their face, and the appeal
process had no actual significance, though the parties at the time pretended it
did.
38.
Despite this, it is right to note that in the Claimant’s own
documentation he referred to his having made a choice. He now presents this as
the choice between two dismissal options, one with redundancy pay and one
without, but that was not necessarily always the way in which he put it. At
times he seemed to have been arguing that he should have been regarded as
continuing in employment. It is doubtless that these difficulties which placed
the Tribunal in the position it was in when attempting to unravel the events of
2006; complicated no doubt by the agency and contract worker relationships
which underlay it.
39.
All that said, we have concluded that the logic of the Tribunal
proceeded on a basis which is not consistent with its own reasoning. It
certainly does not explain how it regarded the words “notice” and “redundancy” as
having a meaning other than the obvious, nor set out an understanding of the
formal letter consistent with its overall factual conclusion that the
termination of employment was consensual. As we have indicated, we have come to
the conclusion that the result is simply wrong in law.
Conclusion
40.
In conclusion therefore this appeal must be allowed. The basis upon
which we have decided is covered by the grounds of appeal, in particular at
paragraph 2. The parties are agreed that this decision on appeal cannot
dispose of the claim for unfair dismissal, which must continue upon the basis
that there was a dismissal. It will be for the employer to show the reason for
that. The parties are agreed that that matter should return to a fresh,
differently constituted Tribunal.
41.
We say nothing about the likely outcome, save that it is plain to us
that the amount of money at stake may not be high. We would have hoped that
the parties would, even before now, have come to terms. We recommend
mediation. Though Pertemps say through Mr Hardman that that has been offered,
the Claimant for his part does not accept that it has, but both parties are
before us agreed that mediation would be sensible if it is approached in the
proper spirit.
42.
Our formal order, albeit with a recommendation for mediation, must be remission
to a fresh Tribunal to consider the case on the basis that there has been a
dismissal.
